STOP THE PRESS Paul Cheesbrough, CIO of the Telegraph Media Group, on spearheading the newspaper’s digital transformation
THE VOICE OF WISDOM www.cxo.eu.com • Q2 2010
Lessons in leadership from Saatchi & Saatchi’s Chairman Bob Seelert
GEARING UP FOR CHANGE With Alejandro Martinez, CIO of General Motors Europe
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FROM THE EDITOR 7
Instant gratification Why digitalisation has created a world of demanding customers. here was a time, not so long ago, where if you wanted to find out what was going on in the world you bought a newspaper. Likewise, to make a customer complaint or enquire about product you rang a company’s call centre. Today, there is no need for such time consuming pursuits because both can be done at the click of a button. The digital revolution has transformed consumers’ expectations and their relationships with the brands they buy. This is illustrated in two of our current issue’s lead features. One, a report on the power of social media and the other, an interview with Paul Cheesbrough, CIO of the Telegraph Media Group, which is leading the way to digitalisation in the UK media.
T
Both examples show the huge investments companies are having to make in their online presence to satisfy a consumer population that wants nothing less than instant gratification. In
our report on social media we explore the way websites like Twitter and Facebook allow customers to make or break a brand’s reputation and how crucial it is for companies to respond quickly to any criticism of their products. The feature looks at how social media can be a powerful marketing tool when it comes to spreading the message about a new product or gauging customer opinion. Companies that choose to ignore this phenomenon do so at their peril. Meanwhile Paul Cheesbrough describes the digital transformation of the Telegraph newspaper to reflect a changing world in which readers want instant access to the latest news and are no longer prepared to wait for the print run to finish. We’ve come too far to ever return to a world of paper, post and telephone calls. The instant gratification generation would never be satisfied with life at that pace. But the situation raises concern over how much quality is being superseded by the need for speed. Companies may conduct their market research
today by listening in to customers chatting online about their products. But will this ever adequately replace in-depth market research and focus groups? Similarly a customer today will complain online and expect an instant response. Can this be delivered at the same level as a one-to-one phone conversation or exchange of letters? And can the race to post stories online as they happen deliver news articles with the same level of in-depth research and investigative reporting? A compromise on quality is perhaps an inevitable by-product of this age of accelerated communication. And with the social media space becoming ever more hotly contested, it seems the pace of change can only get faster.
Diana Milne Editor
“Leaders fundamentally have to do three
“Much to the annoyance of some of my col-
“It’s important to understand the technology but first
things. They have to set direction for the
leagues, my sleeves are rolled up and I’m
you need good business skills and you need to under-
enterprise, establish standards or expec-
ready for action. You’ve got to muck in and
stand your company’s strategy. You are not there to
tations for how the enterprise is going to
get involved in what’s going on. Otherwise
just talk about computerisation, you are there to con-
perform and they have to unleash the
you come up with daft ideas that bear no re-
tribute. You need tremendous business knowledge
energy of the organisation”
semblance to the ability of someone to imple-
and drive and ambition to leverage technology to a
ment them”
greater competitive advantage”
John Suffolk, UK government CIO (Page 34)
GM Europe CIO, Alejandro Martinez (Page 44)
Bob Seelert, Chairman, Saatchi & Saatchi (Page 40)
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CONTENTS 9
40 The voice of wisdom Bob Seelert, worldwide Chairman of Saatchi & Saatchi, on achieving perfection in leadership and never accepting second best
28 How to make friends and influence people Social media can be a company’s best friend or its worst enemy – as confectionary giant Nestlé recently discovered. We report on how to make it your best marketing tool and what to do when social media turns sour
44
34 In the public eye Digital Britain aims to migrate UK government IT to the cloud and achieve billions of pounds in savings. CIO John Suffolk explains
Gearing up for the road to recovery How a crisis breeds opportunity for GM Europe CIO Alejandro Martinez
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CONTENTS 11
92
128
Jorrit Blok
70
EXECUTIVE INTERVIEW 68 Thomas S. Senger, Kofax 78 Adrian Butcher, Open Text 80 Jim Potter, Ricoh Europe 90 Bob Paul, Compuware Corporation 102 Peter Houillon, Kaplan Professional UK 112 Dana Porter, Amdocs 122 Paul Glover, McLaren Solutions
116 50 Forewarned is forearmed
HEAD TO HEAD 66 Cloud computing 86 Managed print services
Lyndon Bird of the Business Continuity Institute on whether European companies are properly prepared to handle an interruption to their daily operations
digital transformation made headlines
82 The paper trail An indepth report on the global managed print services market by market intelligence firm Photizo Group
58 The silver lining
ASK THE EXPERT 54 Jeff Barto, Thawte Inc. 114 Harry Forbes, Nexans Cabling Solutions
The cloud is forecast to fundamentally transform the way organisations operate in the future. But is it all what it’s cracked up to be?
92 Building connections Construction giant Kier Group’s Head of IT Terry Walker on how technology will take the company through the downturn
70 Stop the press Paul Cheesbrough, CIO of the Telegraph Media Group, on why the newspaper’s
100 A force for change Gary Greenwald, Chief Innovation Officer of
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Citigroup, outlines how the financial crisis is driving change within the organisation
being done to nurture the company’s behindthe-scenes superstars
106 A sharper focus
130 People power
Al-Noor Ramji, BT Group CIO, on reveals how the telecoms giant plans to keep ahead of the competition
Hans-Jurgen Bill, Head of HR at Nokia Siemens Networks, discusses the human implications of merging two companies and why job titles just aren’t important anymore
116 In the driving seat Volkswagen UK’s CIO Nick Gaines lifts the lid on his company’s IT roadmap
124 How the dream works Dan Satterthwaite, Head of HR at DreamWorks Animation, delves into what is
134 Serving up success The UK Lawn Tennis Association’s CEO Roger Draper explains how he is raising investment in the game and encouraging children to switch off the TV and pick up their rackets
TROUBLESHOOTER 98 Kim Pedersen, Geodis Wilson
INDUSTRY INSIGHT 49 Guy Tweedale, Jacada 56 Rafael Laguna, Open-Xchange Inc. 76 Peter G. Marsh, Atex 128 Jorrit Blok, OTYS Recruiting Technology
REGULARS
50
16 The brief 18 News 26 In my view 138 Books 142 City guide 144 Gadgets
86
Guido Vanherberghen
The InterContinental, Vienna 19th - 21st October 2010
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UPFRONT
THE BRIEF
16 FROM GREEN TO RED
Could government budget deficits across Europe put the brakes on green energy projects?
H
aving attracted global investment worth US$18 billion last year alone, with a further US$44 billion expected in 2010, green energy is one industry that ap-
UPFRONT.indd 16
pears to be recession proof. For governments worldwide who have already allocated billions of dollars worth of their stimulus packages to going green, it appears to be a safe investment. The EU has recently unveiled its latest package of climate change measures which aim to achieve a 20 percent cut in greenhouse gases by 2020, a 20 percent cut in energy consumption and a 20 percent increase of renewables in the region’s energy mix. A
the next decade, it promises future economic stability and the ability to fi ll the gap left by ailing industries such as construction and car manufacturing. But with many European countries facing crippling budget deficits, is investment in green energy still a realistic prospect at the levels proposed last year? An article published by Business Week in April highlights the fact that already the cracks in many countries’ green agendas are beginning to show as governments fi nd themselves unable to provide the subsidies to provide the lifeblood for many of these projects. It cites the example of Germany, which has already agreed a reduction in subsidies of 15 percent to fund the building of solar parks after July 2010. In the past Germany has been one of the biggest supporters of investment in green energy, having, along with Spain, allocated US$13 million to fund projects. Meanwhile the Czech government is considering an even bigger cut of 30 percent in funding for solar parks and similar subsidies in Italy could be slashed by 25 percent in 2011. Th is mirrors that cuts taking place in the US, where federal grants for wind and solar projects are expected to be cut by key part of the plan is the end of the year, to develop carbon and pose a possible capture and storthreat to the future age technologies of the region’s was invested in with 10 such economy. But it’s green energy plants to be built not just budget in the EU as pilot cuts that could in 2009 projects by 2015. endanger Europe’s Nobody can argue great green promise. with the merits of investExcessive optimism over ing in green technology, energy the number of jobs that will actuand infrastructure. And with the ally be created within the sector is sector expected to create tens of a significant concern, according to thousands of European jobs over some experts. A report published
US$18 billion
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UPFRONT
THE BRIEF
by PricewaterhouseCoopers in March, in partnership with the European Climate Forum, claimed it would be possible for Europe and North Africa to obtain all their energy from renewable energy by 2050, assuming that there is a build up of generation capacity by 2015 to maximise solar and wind energy potential. The report states that “renewable technologies deployed at scale across Europe and North Africa and significant cost reductions would make the renewable power sector a major employer of skilled workers in both Europe and North Africa.” However the research group McKinsey has warned of over-optimism about the job creation potential of the green energy sector in a new study. It points out that unlike traditional labour intensive manufacturing industries, the manpower requirements of the green energy sector are relatively low. Green tech workers responsible for designing and building wind turbines for example, currently only make up 0.6 percent of the US workforce. McKinsey warns that green tech will not solve the immediate problem of sweeping unemployment across Europe. James Manyika, a director at the McKinsey Global Institute, said: The bottom line is that these ‘clean’ industries are too small to create the millions of jobs that are needed right away.” While green energy will undoubtedly be a major driver behind the European economy and its recovery in the next decade, budget deficits and uncertainties over employment opportunities have cast a shadow over its previously sunny outlook. Government subsidies are essential to encourage private investment and with the fortunes of renewable energy projects so closely tied to those of European economies, their futures remain uncertain.
UPFRONT.indd 17
17
NEWS IN PICTURES
A worker walks through a section of the NEL pipeline near Lubmin, Germany which will carry natural gas from Russia arriving through the Nord Stream pipeline from the Baltic Sea across Germany and to other countries in Europe. The Nord Stream project delivers Russian natural gas directly to western Europe.
Winfried Streicher, President of Vereinigung Cockpit union, leads a demonstration of airline pilots at the Rhein-Main Airport in Frankfurt, Germany. The pilots demonstrated over pay and labour contracts.
Britain’s Prime Minister, Gordon Brown, stands with his cabinet as they hold copies of the Labour Manifesto in Birmingham ahead of the general election in May. The manifesto includes plans to support a fragile economic recovery and police corporate takeovers.
Starbucks CEO Howard Schultz, at an event to announce the company’s plans to sell instant coffee in Japan, challenging Nestlé in the world’s biggest instant coffee market.
Polish mourners pack the area in front of the Presidential Palace in Warsaw where thousands of candles and floral wreaths were placed following a tragic crash of the presidential plane near Smolensk in Russia which killed President Leck Kaczynski, his wife and 94 others.
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UPFRONT 18
SPAIN The long-awaited merger agreement between British Airways and Iberia has fi nally been signed. Negotiations had been ongoing since July 2008. The deal, which will create a combined group carrying more than 58 million passengers a year to 200 destinations, is said to be a critical step in BA’s plan to compete with larger European airlines. The two airlines will retain their existing operations and unique brands, but will be owned by a new holding company known as International Airlines Group (IAG). BA CEO Willie Walsh will be chief executive of the new group, while Iberia’s Antonio Vazquez will become the fi rst chairman of IAG.
UPFRONT.indd 18
FRANCE In a move lauded by industry, France has abandoned plans to unilaterally introduce a tax on emissions. French Prime Minister Francois Fillon recently announced that the government will push for a carbon levy at EU-level instead. He also vowed to ask the European Commission to increase its work in the area. The tax, unveiled by President Nicolas Sarkozy in 2009, would have added a few cents to each litre of petrol and each household gas bill, potentially raising an estimated €3.5 billion to €4.5 billion a year. Observers believe one reason for the retreat may be the government’s heavy defeat in local elections at the weekend.
SWEDEN GM has accepted a bid by Dutch Spyker for Swedish auto manufacturer SAAB. After weeks of speculation, employees at SAAB’s Trollhättan, Sweden, manufacturing plant, greeted the news with cautious optimism. The future of SAAB has hung in the balance since GM turned over the business to liquidators earlier this year, and its refusal to accept bids seemed to indicate there was very little hope for the company’s future. A shutdown would have a tremendous negative impact on employees and the town of Trollhättan alike: before the deal was struck, the already hard hit local real estate market had been braced for another nosedive. Details of the deal are still to be announced.
19/4/10 11:19:33
UPFRONT 19
POLAND Several foreign airlines are introducing new routes to Poland in time for the summer season. In late March Luft hansa launched a direct route between Warsaw and Milan, operated by its new Italian subsidiary, Luft hansa Italia. Luft hansa already has well-established routes from most Polish regional airports. Carriers introducing their first fl ights to Poland this year include Royal Air Maroc, which will fly from Warsaw to Casablanca, and Blue Air, which will fly to Cyprus. Low-cost carrier Ryanair has booked 16 new routes into its summer schedule from regional airports in Kraków, Wrocław, Poznań, Bydgoszcz and Szczecin. Thanks to these developments, the gap between Polish national airline Lot’s market share and that of other market players is quickly decreasing.
UPFRONT.indd 19
GERMANY While creditors of bankrupt German department store chain Karstadt have given the insolvency administrator more time to fi nd a buyer, raising its chances of being sold, observers say that many jobs will still be lost. Karstadt’s creditors agreed in mid-April to a new insolvency plan, with one condition – that there be no end-of-April deadline to sell the chain. The proposal to remove the deadline was put forward by the HighStreet consortium led by Goldman Sachs, Deutsche Bank and Pirelli Real Estate. The consortium, which owns about two-thirds of Karstadt’s store space, hopes to join other creditors to cash in on claims in the bankruptcy, estimated at about €2.8 billion.
TURKEY Turkey’s Central Bank has announced a plan to exit extraordinary stimulus measures. In a statement, the bank said that market liquidity will be reduced in preparation for a shift toward a new, higher benchmark interest rate. The bank’s Monetary Policy Committee left its benchmark interest rate at the record low of 6.5 percent in its meeting in mid-April, while announcing plans to reduce liquidity in preparation for a shift to a higher benchmark interest rate. The change will include setting the one-week repo rate at seven percent, half a percentage point above the current benchmark.
19/4/10 11:19:36
UPFRONT 20
TOP FIVE The top five global PC companies in the first quarter of 2010, according to IDC and Gartner:
IPAD LAUNCH MARRED BY WI-FI PROBLEMS Apple may have sold more than 300,000 of its iPad brand on its launch day in the US, but it seems it’s marred with problems already. Some new owners of the tablet have logged onto Apple forums complaining that their iPad had little or no Wi-Fi signal. Michael Arrington at TechCrunch reported “scores of complaints” on Apple forums. “I’m getting one or two bars on my iPad in rooms where my iPhone, iPod touch, both Macbook Pros, Apple TV and Playstation all get full service,” he said to the British paper The Telegraph. The iPad can only connect to the internet via Wi-Fi. Computer experts have warned that without access to the internet “the iPad is DOA (dead on arrival)”. It’s being suggested that the problem could be a weak Wi-Fi antenna, which is located behind the logo on the back of the iPad. Arrington said on his blog: “My un-
derstanding of Wi-Fi issues on devices, particularly cramped devices like the MacBook Air and iPad, is that it’s usually a hardware/ design issue and something that can’t be fi xed via a soft ware patch.” Writing on the Apple support forum one user said: “Signal is weak, downloading anything is painfully slow and it will drop the signal and go offl ine every five to 10 minutes. [It’s] pretty annoying.” The iPad is not yet available in other countries, but will be on sale in parts of Europe, Canada and Australia by the end of April. In the US, it is retailing at US$499 to US$829. Apple said that iPad users had downloaded more than one million applications from its app store and more than 250,000 electronic books. Queues for the new iPad’s launch day were considerably smaller than the crowds that gathered for the iPhone’s debut in July 2007.
FAST FACT EUROPEAN ECONOMIC CONFIDENCE RISES
The estimated wealth of the world’s richest man, Carlos Slim. The Mexican’s fortune accounts for two percent of his country’s annual economic output.
UPFRONT.indd 20
The month of March saw European confidence in the economic outlook improve by the highest in nearly two years, beating economists’ forecasts and signaling that the recovery is strong, as the weaker euro helps exporters. The European recovery is gaining momentum after coming to a nearhalt in the fourth quarter as companies boost output to meet export orders. Europe’s services and manufacturing industries expanded at the fastest pace in two and a half years in March and economic confidence is now at the highest
since four months before the collapse of Lehman Brothers Holdings Inc. The International Monetary Fund said that it expects the global economy to “bounce back” in 2010, BusinessWeek reports.
20/4/10 10:17:30
UPFRONT 21
COLLABORATION IS THE RIGHT TOOL A global study has found that although collaboration tools are being recognised as important, half of organisations are restricting the use of social media tools, but half of all staff are ignoring these rules. SMBs are increasingly using collaboration technology, but many staff are disregarding corporate policies, especially restrictions on social networking usage. The survey by the networking giant Cisco, entitled Collaboration Nations, surveyed 2023 end users and 1011 IT decision-makers (ITDMs) from 10 countries around the world, in medium to large enterprises (i.e. those with more than 250 employees). Many ITDM respondents said that they are planning to increase their spending on collaboration technologies over the next year, identifying video conferencing, web conferencing and internet protocol telephony as primary areas of investment. The report found that 77 percent of IT decision makers plan to increase their spending on collaboration tools this year, and 56 percent expect their spending on collaboration tools to increase by 10 percent or more. Tim Stone, Cisco’s Head of Collaboration Marketing for Europe said to eWeek Europe: “Essentially, we defi ned collaboration as taking place when people from different departments
or businesses work together on the same tasks. Th is included tools that connect both inside and outside the organisation, such as telephones, emails, social networking sites, and then more advanced tools such as IM, video conferencing, mobile apps, and telepresence.”
He added: “The results of the survey were very encouraging towards collaboration, with 96 percent of IT decision makers recognising the importance of collaboration, and only four percent said they had limited use or no role for collaboration within their organisation.”
NOW IS THE TIME TO START E-SIGNING
More and more companies realise that whenever paper is involved, a large amount of time and money is wasted and security risks increase. Therefore many of them have already started automating their business process and document workflow procedures,
UPFRONT.indd 21
leaving the approval stage the only component that requires the need of paper. xyzmo’s next-generation e-signature suite adds digital signature capabilities to your existing infrastructure, closing the gap in going fully paperless by completely eliminating the need to print documents for signing. End customers worldwide embrace our solution with enthusiasm, as embedding a handwritten electronic signature requires no changes in customers’ habits. The customers continue to sign like they always did, but with a distinct advantage of an improved experience, thanks to reduced waiting times and the convenience of remote and secured document handling. Lost documents or missing signatures are a thing of the past, as after the signing process ends, all documents are immediately available for
archiving or further processing. Additionally, digital signatures safeguard electronic documents and files by allowing the authentication of the signatory and verification of the original document. Last but not least, the usage of electronic signatures dramatically increases the efficiency of sales staff and reduces processing times, leaving more time for up/cross selling. We are witnessing a great change in demand for electronic signature solutions, as companies learn that by integrating electronic signatures into their business environment they can dramatically improve results, due to the fact that this solution enables them to achieve two important goals, which are making and saving more money, resulting in a better bottom line with a quick and proven ROI. For more details go to www.xyzmo.com
19/4/10 11:19:40
UPFRONT 16
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THE BRIEF
19/4/10 17:27:24
UPFRONT 23
y log no ch e t
1.5bn
Televisions worldwide
Mobile mark et co mp are
dt oo th er
THE SIZE OF THE GLOBAL MOBILE MARKET
1.4bn
Internet users worldwide
4bn
Mobile phones worldwide
half the population of the planet
Traded Stocks and Financial
6.69%
Daily newspapers worldwide
s a text n es a io par applicat omation c S nic M S mu
Movie Information
5.33%
Business Directory
20.21% Social networking
3.05bn
11.94%
SMS users worldwide
2.6 SMS per day per person world average - the most used communication tool on the planet
the
int
600m
48.7%
News and sports information
46%
How
IM users worldwide
Entertainment news
sed acces t is ne er
use both PC and mobile
n Co ce ac
29%
from PC exclusively
1.3bn
Sma r tp ho n
Email users worldwide S
19% RIM
Apple
6% HTC 3% Fujitsu
tphone Smar p 5 ile web traffic To mob in
49.5%
Windows Mobile
iPhone
2%
Android
6%
Other
$600bn
$50bn
Network Infrastructure
Voice
$200bn
$150bn
Other
Symbian
9%
$800bn
Hardware revenue
14%
iPhone
nue reve ile Service revenue
13%
Nokia
51%
b Mo
from mobile exclusively
45%
19%
13%
e
25%
id e orldw sW ale
Mobile Searc h
MaMob rk i
ing System erat orldwide Op re W le t Sha e
RIM
t ss ent ed bei fro ng mm obiles
Ho co w m
7.13%
480m
Ma
rket
Handsets
$130bn Messaging
$70bn
97.57%
Non-messaging
1.94% Yahoo 0.25% Ask 0.11% MSN
t
US
6.9%
he
9.1%
6.0% 5.2%
RIM RIM Palm Blackberry Blackberry Centro 8300 8100
HTC Dream
23.3% of market made up of traffic from other smartphones
59.3
67.95 64.7 64.64 63.97 62.11 61.84 54.36 48.81 40.06 37.72 36.26 34.88 34.75 26.04 25.45 17.77 16.09 5.52 2.34
84.88 84.5 84.49 84.33 83.86 83.33 82.85 82.28 81.94 79.14 78.75 78.63 75.53 72.24 71.67
101.34 92.98 92.65 90.28 88.5
106.45
Chart shows the number of mobiles for every 100 people within that country, for example: in United States there are 48.81 mobiles for every 100 people
Average
South Korea France Hungary Austrlia Japan New Zealand Slovakia United States Brunel Canada Poland Malaysia Turkey Thailand Mexico Phillippines China Indonesia Vietnam
Czech Republic Finland United Kingdom Norway Greece Denmark Austria Spain Portugal Singapore Switzerland Belgium Ireland Netherlands Germany
Taiwan Luxembourg Hong Kong Italy Iceland Sweden
100 people
Source: www.comscore.com | www.webdevelopersnotes.com | www.marketingcharts.com | metrics.admob.com | Tomi Ahonen
UPFRONT.indd 23
19/4/10 11:19:50
UPFRONT 24
EUROPE AT RISK OF CYBER ATTACK
A parliamentary investigation has found that European governments aren’t doing enough to improve online security, meaning the entire continent is vulnerable to cyberattacks. And because of the way the internet is interlinked across borders, countries with weaker online security are going to have an effect on other European nations if they are compromised. The report from the UK’s House of Lords has suggested that officials in Brussels have failed to boost the union’s internet defences. European countries are reliant on the internet for a wide range of services – including information, communication and commerce – and the global nature of the
online world means they are more closely linked to each other than ever before. Despite this, the report suggests that the drastic differences between security operations in each nation leaves the entire system vulnerable. “The collapse of cybersystems in one country can overlap into others,” Lord Jopling, who chairs the Lords European Union committee, told the Guardian. “The threat can come anywhere – including to individual businesses, fi nancial services such as the City, critical infrastructure or the mechanics of government…and you never know quite who is responsible, which is part of the problem.”
CLOSING THE EQUALITY GAP Deutsche Telekom has stated that by 2015, 30 percent of its middle and upper management positions will be fi lled by women – the fi rst gender quota to be implemented at one of Germany’s top 30 DAX-listed companies. Anne Wenders, a Deutsche Telekom spokesperson, says this is not a “tokenistic gesture aimed at political correctness,” but a new way of thinking that could become a model for other German companies. “Th is is a revolution and it will change the way our company works,” she says, Time stated. Germany lags far behind other Western countries when it comes to gender equality in the workplace and promoting women to top positions. In a survey of 600 global companies conducted by the World Economic Forum earlier this month, Germany ranked 14th out of 20 countries in terms of the percentage of women employed. The study found that only 33 percent of employees at the German companies surveyed are women, compared with 52 percent at the American companies in the poll and 48 percent at the Spanish fi rms. What’s more, only six percent of chief executives in Germany are women, compared with 12 percent in Norway. And just one of Germany’s DAX-listed companies has a woman on its board: Siemens, which appointed Barbara Kux to its eight-person executive committee in 2008.
RECOVERY EXPECTED TO SLOW A new forecast warns that economic recovery in the world’s top industrial nations remains fragile, and that the pace of growth is expected to slow. That assessment comes in a report from the Paris-based Organisation for Economic Cooperation and Development. The OECD analyses economic data for 30 of the world’s leading industria-
UPFRONT.indd 24
lised countries. It says many economies will expand more slowly in the coming months, because both consumers and businesses are still having difficulties getting loans. It also says that while unemployment rates have declined in many of the world’s top industrial economies, many consumers are still struggling to fi nd work, which is hurting demand for a variety of products. Source: www.voanews.com
19/4/10 11:19:51
UPFRONT 25
HARNESSING THE POWER OF LEAN IT
THE CEO GENDER GAP
The next generation of IT Services will take a new approach to business process improvement and information technology. The new approach uses Lean principles to deliver more than cost savings – it drives superior business performance through a relentless focus on waste reduction and continuous improvement. In the latter part of the last century, product manufacturing industries began implementing Lean production systems across their operations. Lean manufacturing helped to create a culture of excellence within the businesses that adopted it and eventually revolutionised the way goods are made. Around 50 years later, Lean is now table stakes in most industries, including service organisations, to remain in competition. Lean principles, including total quality management and a culture of continuous improvement, are recognised as absolutely essential to modern manufacturing and most service industries. It is now high time for the IT operations within these organisations to establish Lean principles as fundamental business technology practice. There is much to be gained: Faster concept-to-market, reduced cycle-time in business processes, improved quality of service and superior customer experience. These principles form the foundation for the next generation of IT Services: Lean IT. The focus of the recent generation of global IT Services was cost reduction, with Western economies taking advantage of the labour cost arbitrage in India and other countries. In the next generation, IT services companies will learn from more mature industries that have implemented Lean to transform how work gets done and value is created. IT services will combine the efficiencies of the global delivery model with leaner, less wasteful approaches. IT will deliver business results beyond cost savings, with a focus on creating competitive advantages including superior customer experience, reduced transaction cycle-times, increased productivity and improved quality. For more information go to www.virtusa.com or contact Clayton Locke at clocke@virtusa.com
UPFRONT.indd 25
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UPFRONT 26
KARREN BRADY, VICE CHAIRMAN OF WEST HAM UNITED, FORMER BIRMINGHAM CITY FC BOSS AND STAR OF TV’S THE APPRENTICE, ON THE CHALLENGES OF LEADERSHIP IN A MAN’S WORLD: I think one of the most important things in business is if someone in the business likes you and guides you, puts you under their wing and guides you to better things. I certainly had that in my Chairman David Sullivan who took a keen interest in my career and did a lot of mentoring for me and that was key to my own success. As much as I’m portrayed as quite ruthless, I’m actually a big softie really. I like to think I’m firm but fair. I like to tell people where they are going wrong and how if they’d tweaked their ideas they would have been better or easier to communicate. Most working women have two personalities. They have their home personality and their work personality. The trick is not to let either one of those personalities drain the life out of the other. It was difficult when I took over at Birmingham FC in 1993. I remember going to an away game at Watford and asking the guy at the desk where the directors’ box was. He took one look at me and said ‘yes dear, the wives go to the ladies’ room’. I said ‘actually I’m not the wife of the director, I am the Managing Director’. That’s what it was like in those days, there were no women around.” It’s a constant struggle (being a working mother) and I think anybody who says it’s easy must be doing something different to me. I do have to sit there and say to myself ‘board meeting or sports day, board meeting or nativity play? When you are at the board meeting you’re wishing you were at sports day and when you’re at sports day you’re wondering what’s happening at the board meeting.
UPFRONT.indd 26
19/4/10 11:20:00
UPFRONT 27
WORK RELATED STRESS
COMPANY INDEX Q2 2010
Saatchi & Saatchi
Companies in this issue are indexed to the first page of the article in which each is mentioned. Acer Active Power African pride Melrose Arch
144 63 142
Salesforce.com
144
Tandberg
2,3
28
Lawn Tennis Association
eBay
44
Lego
18
Telegraph Media Group
28
Lufthansa
18
Thawte
70 54,55
Amazon
64,65,IBC
FIFA
Amdocs
37,112,113
FreshMinds
28
Mercedes
IFC
T-Mobile
Gartner
28
Microsoft
34
Topco
42
General Foods
42
Nestlé
28
28
44
Nexans
8,114,115
AnyDoc Software Apple Atex
75 144 6,76,77
B2M - Solutions
111
British Airways
18
BT Business Continuity Institute CA Canto Centre for Brand Analysis Cisco Coca-Cola Compuware Deutshe Telekom Double-Take Software DreamWorks
UPFRONT.indd 27
General Motors Geodis Wilson Google
142
70
Samsung
Eastman Kodak
134
42
98,99 34
Nike Nokia-Siemens
106
HP
50
HTC
144
Open Text Corp.
Iberia
18
Open-Xchange
140,141
86,87
McLaren Solutions
4,5 44
130
Virtusa
44 10,78,79
21
Yahoo
34
YouTube
28
61
Pampers
28
Photizo Group
95
49
Pitney Bowes
12,86,89
18
Kayser Roth
51
Kier Construction
124
Kofax
102,103
Publicis
42
42
Ricoh Europe
92
Ryanair
18
Saab
18
68,69
73
128,129
57
Kaplan Financial
We Web u Software
25 116
Xyzmo
iStrategy Jacada
Volkswagen
56
Infor
28
28
Vauxhall
28
90,91
142
Unisys
IBM
Otys
The Westcliff
28
121
104,105
15,64,67
Opel
122,123
80,81,OBC
20/4/10 09:10:15
Social Media ed_16 nov 19/04/2010 11:44 Page 28
COVER STORY
How to make
friendsand
influenpcee ople With worldwide social media spending set to hit US$3.1 billion by 2014 according to Forrester Research, it is now perceived as one of the most lucrative marketing tools a company has at its disposal. But as several high profile PR disasters have demonstrated it is also a weapon used by consumers to attack companies, with devastating results. Diana Milne reports on how best to use social media to your company’s advantage – and what to do if the online chat turns toxic.
I
t’s been touted as the most powerful weapon in a marketer’s ar-
Osmond, Co-founder and Managing Director of London-based social media
senal – the fastest way to get a brand’s message across and an research agency FreshMinds, says: “Five years ago if people didn’t like your eavesdropping device without parallel when it comes to gleaning product, they would tell maybe five of their friends. Now they can tell five milcustomer opinion. But as Nestlé recently discovered to its PR team’s lion people with a video, in the space of minutes.” horror, social media has a dark side. The company’s Facebook page, The flipside of this however, is when a company harnesses social media set up to build brand loyalty, became the platform for a hate to start a global conversation about their latest product and achieves the kind campaign against the company after news emerged of exposure that money spent on traditional advertising can no longer that it was sourcing palm oil from Sinar Mas – an buy. A prime example of this is T-Mobile’s award winning Dance T-Mobiles Dance campaign – Indonesian company accused of illegal deforestation. campaign. Masterminded by Saatchi & Saatchi, the campaign launched via YouTub Nestlé’s Facebook page was bombarded with angry started when 350 performers were filmed breaking into a e – became the messages following the release of a video by ‘spontaneous’ dance routine during rush hour at London’s Greenpeace raising awareness of the company’s unethLiverpool Street station. Hidden cameras captured the reacmost viewed video of ical supply chain practices. This was swiftly followed by tion of commuters as hundreds of them joined in with the all time on the widespread criticism of the company’s handling of the routine. Footage was aired online through a specially created entertainm ent channe l crisis by industry insiders posting on Twitter. Nestlé reYouTube channel, which attracted a massive 13 million hits and sponded, first by threatening to remove off-brand logos from its became the 12th all-time most-viewed videos in the entertainment Facebook page and then with a Q&A on its corporate site. category of the site. Fans formed 43 Facebook groups dedicated to the The incident represents every PR department’s worst nightmare and was campaign, with the largest made up of 4500 members and 2500 blogs posted the a huge blow to the company’s all-important brand reputation. But most of all video online. The effects of the campaign on the company’s bottom line were drait is a sign of the times. Social media has created a soapbox from which every matic. Despite being in the midst of a recession the company achieved a 52 perconsumer in the world can air their views to an audience of millions. cent increase in sales following the campaign and T-Mobile stores across the Summing up the power of this tool and just how dangerous it can be, Charlie country experienced record-breaking footfall.
12th
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A user’s guide The experiences of Nestlé and T-Mobile tell very different stories about social media’s role and potential as a business tool. So how can companies ensure they use social media to their advantage and not their peril? Marc Huijbregts is Saatchi and Saatchi’s Digital Director for the EMEA region. His role is to build on the success of integrated digital work such as TMobile’s Dance campaign and to train and educate clients on how to use social media to their advantage. He believes it is easy for companies to underestimate the amount of planning that goes into a successful social media campaign. Indeed, he says, the simplicity of campaigns such as Dance, and the apparent ease with which they go ‘viral’, is deceptive. Speaking of his own experience on the Dance campaign, he says: “One of the great misunderstandings that clients have is that once you have created great compelling content, you just put it onto YouTube then it starts to fly around and spreads like an oil stain. The truth is that there is a very detailed strategy behind these campaigns around what to do and in what sequence. We had a big PR push around the T-Mobile campaign and put together a detailed strategy that involved making decisions like when to post the video online – before the eight o’clock news or afterwards. We also had long discussions with Google to make sure we used all the right Adwords so people googled the right content. And there was a special PR team at the event with six or seven PRs calling all their press contacts and online seeding. There is a misconception that social media campaigns hap-
Top Tweets
pen by themselves. But you have to work with the right people to co-ordinate everything and make specific actions happen.” Key to a successful social media strategy, he adds, is for companies to decide from the start what it is they want to achieve by using social media. Do they want to create a buzz around the launch of a new product, establish lasting relationships with customers or research customer opinion? “Once you have a presence on a social media platform, what are you going to do about it? How will you maintain it and how will you activate people? That requires long term thinking about what you want to achieve,” he says. For companies to ensure they get what they want out of social media, a detailed analysis of the different forms of social media and what each can achieve is essential. Experts agree that no form of social media offers a one-size fits all approach and that each differs in terms of its audience demographic and the type of content platform it offers. “One of the problems right now with social media is that companies are focusing on the tools rather than what is really appropriate for them as a business and how they should be using these tools,” says Osmond. “For some brands, for instance, Twitter isn’t necessary and isn’t important and the people they need to speak to aren’t there. Companies need to understand their business goal and put it into the right social media category.” Summing up the differences between the three most high profile social media platforms – Twitter, Facebook and YouTube – Huijbregts says: “Twitter is your real time communication tool, YouTube is a great
View all >
Charlie Osmond founded the Fres hMinds social media research agency in 2000. He has a long-sta nding interest in branding and social networks and was recently nam ed Young Entrepreneur of the Year by Esquire magazine 1 hour ago
Marc Huijbregts is the Digital Dire ctor for Saatchi & Saatchi EMEA. He is responsible for developing a strategic plan for the agency’s digi tal work and training and educating staff and clients on the potential of digital communications. 4 hours ago
Stephen Cheliotis chairs five inde pendent Superbrands Council the UK, including the Business Superbrands Council. He joined s in Superbrands in 2000 and later bec advised several major organisatio ome its Managing Director. He has ns on brand strategy. 4 hours ago
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content platform and Facebook is for connecting your audience and your fans and creating an everyday diary online so customers can keep track of your company. There’s no one- size-fits-all solution for companies.” Osmond adds: “We find Facebook pages are great for talking to fans and giving them news and information when they want to get it. But they are not very good at driving purchases for example. Whereas building an online community is better at building a brand around a certain area or subject and driving purchases. Twitter is really a customer service device in my view. It’s just a brilliant way for people to voice customer service needs and for companies to demonstrate that they are listening and responding.” Much depends, he says, on whether companies are interested in using social media to create an instant buzz about a new product through a viral campaign or in establishing long-term relationships. “The problem with companies and their approach to creating social media is that they often think only about creating buzz. I think that’s a mistake and not a good use of social media. The way in which brands can benefit from sustained success in social media is very different from creating buzz. You can try to create conversations that get people excited in the short-term and that can be very useful for launching a new product but it won’t have long-term benefits. To create something that’s really viral you need the most creative mind in the world and out of seven million companies in the UK there’s only going to be a handful that can manage that.”
The voice of truth Creating online communities is one of the most powerful ways of connecting customers and building brand loyalty, according to the experts. It is also a powerful market research tool, which allows companies the unprecedented opportunity to listen-in to customers’ conversations about their products, providing instant results at a speed not possible using traditional market research methods such as focus groups. Steven Cheliotis is Chief Executive of the Centre for Brand Analysis and Chairman of the UK Superbrands, Business Superbrands and CoolBrands Council, which compiles annual lists of Europe’s most powerful brands. He says: “Social media is not just about promotion; it’s also a very nice research tool that allows companies to combine the promotion side of marketing with the research side. So rather than just telling people to go out and buy the latest Nike trainers, it’s also about finding out what kind of trainers people want, what colours they are into and letting the message and discussions about that take place online.” Osmond cites the example of www.pampers.com as a particularly successful example of an online community set up by a company, that now provides a valuable market research tool. “Pampers.com is an online community where mothers and mothers-to-be talk about everything that is changing in their lives, and Pampers hosts that conversation. It’s not a social network and it’s not Facebook. As a result, the company, learns about the target market a lot more and has a closer relationship with customers – and therefore much higher sales. It’s a really good example of how a branded community can work for a company.” The creation of branded communities is not the only way to establish a conversation and relationship with customers that can be sustained in the long-term. Osmond particularly admires the work of Nike on its NikePlus website, which links runners together and allows them to compare distances and sporting performance online. “Nike has a device runners can attach to their trainers that links up to their iPod and tells them how far they’ve
The numbers
All figures( Allinnumbers millions in milllions )
Registered users
400
150
Users served each day 60 Status Upated
50 Tweets
Average number of friends 130 Friends
126 Friends
New fans
20 people become fans of pages per day
9 new users per day
5.3 billon fans follow Facebook pages
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Social Media ed_16 nov 19/04/2010 11:44 Page 32
run,” he explains. “They can then plug that back into their computer and compare their running to everybody else’s. It’s a social tool and a way of establishing long-term relationships and additional value for customers. It’s not just a fun video shown once then forgotten about a month later.” He goes on to say that this represents the shapes of things to come for companies in the social media space: “I don’t think many marketers are thinking like this yet, but they will.” For those less savvy companies, even just listening in to what is being said about their products and services online will provide valuable insight. “Sometimes my advice to clients who have low ambition when it comes to online activities is ‘do me a favour and at least analyse what customers are saying about your brands and campaigns online’,” says Huijbregts. “That’s the lowest admission level you can have but if you are not aware of what’s happening online then you don’t know anything. There are quite a few examples of big brands that did not listen to what was happening online and it backfired really hard because they were a week or two late when it came to responding to negative feedback.”
Disaster recovery A rapid response to an online PR crisis is crucial given the speed (as demonstrated by Nestlé) with which it can unfold. Companies no longer have the luxury of waiting for newspapers to print or news broadcasts to be broadcast, before preparing their response and, thanks to websites like Twitter, are often expected to respond in real-time to comments as they appear online. Companies may be encouraged to put social media strategies in place and create sites and online communities to maximise their use of the technology as a
Top Tweets
marketing or research tool. But that’s where their level of control over social media ends. So how can companies regain control over their brand reputation if an online PR crisis breaks out? Cheliotis says the first step is for companies to fully understand what social media is and to embrace the fact that it is not just another form of traditional ‘push’ advertising. “The big difference with social media is that it is not just one-way – it’s a two-way conversation with consumers. You’re not just talking to customers and saying ‘this is what our brand is about’ and expecting them to just absorb the information. They are giving information back. And information isn’t just coming back to you, it is coming to everyone in your online community. So in effect there are people distributing messages directly on your behalf to customers and potential customers. In some cases these may be positive messages and that advocacy is more powerful than advertising can ever be. But of course they can also be negative messages, which are equally as potent but obviously to the detriment of the brand. Companies have to accept it’s a two-way thing and they have to embrace that in order to be successful. You can’t block negative messages or manage the negative messages in a dictatorial way. Because if you do that then people will just take those messages elsewhere.” Osmond adds: “Companies need to have an ethos that if there is something wrong with their products they need to know about it in order to make an improvement. If you have that ethos then being involved in social media is going to tell you what’s wrong quicker so you can make the improvements faster and more accurately. Unfortunately, there are a lot of companies that aren’t ready to hear the brutal and honest feedback.”
View all >
Insider Secrets Photographic giant Eastman Kodak has successfully used Twitter to gather 11,000 followers online. Jeffrey Hayzlett, Chief Marketing Officer and Vice President of Eastman Kodak, describes his company’s social media vision and the joys of twittering.
1 hour ago Our social media activity is very, very heavy. I describe Twitter very much like a fax machine. It’s unlike any other marketing tool that’s out there. I think it’s one that’s going to stick around a little bit longer but there are lots of other great tools that are out there.
you. The second one is education. They educate us; we educate them. The third is about excitement. How do we use that to excite people? Then the fourth is evangelism to get the word out there and turn these people into brand ambassadors.
We approach social media with what I call the “Four Es The first one of those is engagement. Let’s get engaged. Those conversations are going on the internet whether it’s on Facebook or Twitter or on the blogs, with you or without
I started Twittering for my family. The only reason I wanted
32 www.cxo.eu.com
to Twitter was to let them know what I was doing. Then I started gathering all these other followers, and a lot of them were B2B contacts, so it was all these commercial
Social Media ed_16 nov 19/04/2010 11:44 Page 33
In order to properly handle an online PR crisis as it unfolds, compadifferent platforms and told customers he understood their nies should have a robust crisis management plan in place, just as they concerns and because there was so much negative buzz flying would for any other incident that could potentially damage their brand about it had decided to pull the plug on the campaign.” reputation. According to Huijbregts, this is all the more crucial given the Osmond emphasises the need for companies to have a process in place ease with which any company employee can respond to customer comthat allows for a speedy response to criticism or negative publicity. “Speed rements online: “If something does go wrong it’s a very powerful way for ally does surprise people now. You can’t see something hit on a Saturday customers to air their grievance. Companies need a good strategy in place morning and wait until Monday to respond. People want to hear right now regarding how to respond to these incidents, otherwise somebody within what you’re thinking. In the last six months there were five to 10 really high the company could jump into the debate because they feel pasprofile issues that hit because now campaigners and upset customers sionate about it. And they might end up saying somespread their message far and wide very quickly.” thing that has not been approved by the corporate Although companies can have little control over the communications team.” conversations that start about them online, prevenk’s Cheliotis agrees, adding: “How do you tative measures can be taken to limit PR damage Faceboo hit p i stop someone jumping onboard, talking through the relationships companies form with h s r membe for you, when they shouldn’t be? Or intheir customers using social media, according to deed, how do you stop a disgruntled emOsmond. “One of the things about social media 9 0 0 2 ployee jumping on there and revealing is that there is an opportunity to build up a relar e emb in Sept the warts and all in a very open, public tionship with people before the disaster hits. If o t set and is forum? Companies need to prepare you’ve got a potential PR disaster plan you’ve r a each ye e l themselves for all eventualities.” Huijbregts probably got your PR people getting to know jourb u o d goes on to say that major corporations that nalists and people ahead of time. So if a disaster have platforms on all the different forms of social hits and they have an existing personal relationship media constantly monitor what is being said about that will always help.” them online so that they can respond quickly to negativity. Citing One way, of course, for companies to avoid the social media platforms the example of Coca-Cola, he says: “Coca-Cola had a marketing campaign they have created from turning against them is not to create them in the first that was perceived badly by some people and there was some buzz around place. Cheliotis believes some companies are fundamentally unsuited to the sothat in a negative way. The marketing CMO reacted straight away on the cial media world and should avoid embarrassing themselves by getting involved. “I don’t think social media is necessarily for everyone. I do think there is a sort of knee-jerk reaction, a rush to join everything that is new and shiny, and assume that it is important and appropriate for every brand and every sector and every audience. That’s not the case. I’ve certainly seen some brands that have started Twitter or Facebook pages, and you just think, why? Why the hell would anyone want to follow you on Twitter, considering what you do?.
lion 300 mil
printers and photographers. So now it has expanded beyond that. It’s a way for me to interact directly without filters and without someone else telling me what they said or how they said it. I’m directly talking to bloggers. I’m directly talking to photographers. I’m directly talking to commercial printers and our customers and to the CMO of Best Buy, and so forth, through our tweets and through Facebook and a lot of other things. I can see people who say something about our Kodak ZI8 and immediately, I can send them a tweet about it. The key thing is, I’m listening. One of the best attributes an executive can have isn’t about asking questions, but more about listening. We’re hiring a chief listener, someone who actually listens to all those conversations that are going across the landscape of social media and then helps to route those conversations and manage those conversations, because there are so many you can’t keep up. There’s no way one person can possibly do that.
The social outlook Given the rate at which it is becoming an integral part of companies’ marketing plans and a huge influence on consumers’ buying choices, it is unlikely that many companies will be able to ignore social media for long. According to Gartner, Facebook’s membership hit 300 million in September 2009 and is set to double each year. To web savvy customers that translates as 600 million potential customers in 2010 and millions of euros in potential revenue. Osmond compares social media to the growth of the internet in the late 1990s, and warns that to ignore social media is to ignore a fundamental shift in consumers’ relationships with brands. “The main thing to understand is that the expectations that consumers have of brands online is changing and becoming far more demanding. In 1996 people used to look at the internet and ask ‘do we really need a website? Let’s wait and see’. Four years later the expectations of consumers to be able to find a company online was such that it wasn’t even an option anymore. There are still companies that ask whether they should be involved in social media. But in my opinion, in three or four years time it won’t be an option anymore. There has been a massive shift in consumer expectations.” And it’s a shift companies had better gear up for or risk brand invisibility. n
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PUBLIC SECTOR
In the
public eye
34 www.cxo.eu.com
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19/4/10 14:28:03
As the UK prepares for the next general election, behind the scenes, work is underway on a project to transform the public sector’s IT infrastructure. Diana Milne meets the government’s top CIO, John Suffolk, to find out how he will make digital Britain a reality.
A
s the man at the helm of one of the most ambitious government IT projects in history, John Suffolk faces huge pressure to make it work. Having unveiled a highly ambitious plan to migrate many government services to the cloud, the UK government’s top CIO is now in the design phase of putting together the world’s most innovative public sector IT infrastructure. As part of its Digital Britain strategy, not only is the government establishing a G-Cloud to enable public sector bodies to host ICT services from secure shared networks, it is also creating a central applications store and reducing its hundreds of data centres to just 10 to 12 facilities. Given the prospect of looming budget cuts across the UK public sector this project seems extravagant. But the huge longterm cost savings that will be realised once the system is up and running more than justify the initial investments in its creation.
A numbers game Letting the numbers speak for themselves, Suffolk describes the saving’s that will result just from the consolidation of the government’s existing data centres: “I don’t know anybody that would say that we need 130 data centres. A number between nine and 12 seems like a much more sensible amount. When you do that the economics are quite significant. You just save a bucketload of cash. Microsoft, HP and IBM who are working with us on the project say we would save UK£900 million in the first five years of the project and UK£300 million every year after that. That’s serious money.” The same will be true once the government rationalises its plethora of telecommunications infrastructures, and moves to a cloud based public sector network infrastructure. This,
says Suffolk, would result in savings of UK£500 million a year. The application store, meanwhile, will create a central marketplace for the sharing and reusing of online computer programmes by all government departments - a system that will cut down dramatically on the duplication of applications, reducing costs another UK£500 million a year. “If the government is going to use public money to build something, it should be available for any other part of the public sector to use,” says Suffolk. “The application store will catalogue what is already available so departments can discover what we already have and build that into their plans rather than constantly re-inventing the wheel.” But while cost savings are, naturally, a major driver behind the project, improving efficiency in this multi-departmental organisation where IT departments frequently duplicate their efforts, was also a major priority: “Government is very loosely federated into many departments that are pretty much autonomous in terms of how they operate,” says Suffolk. “And with that comes overlap and duplication, naturally.” As well as mproving operational efficiency within the organisation, Suffolk says he is keen to tackle the current problem of a procurement process that is fraught with red tape and debilitatingly time consuming. Existing European procurement guidelines often prohibit participation from smaller independent IT vendors, which, says Suffolk, could offer valuable technology solutions to the government. “I do think that I have talked for England about how complex and time consuming the European procurement process is. Many SMEs tell me they can’t afford to bid because it takes too long and it’s too expensive. That smacks to me of being anti-competitive and anti-innovative. These companies are often asked to prove their systems work in a big way and they can’t afford the
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John Suffolk .indd 35
19/4/10 14:28:04
infrastructure for that. But with cloud based services they will not need to. They can provide the soft ware and service and just load them onto our world, which has the infrastructure and is secure. I think that will bring in thousands of SMEs rather than just only the people with big pockets who can afford to bid for the government work.” He goes on to say that the new system will enable government departments to fi nd technology solutions far faster than under the current system, which can involve an 18-month procurement process. The one challenge Suffolk foresees in introducing these faster procurement processes will be to encourage the market to bid with open source technology: “I think in the future there will be more and more done with open source which we fully support. But it’s quite hard to get the market to bid open source. Under European procurement rules you cannot specify the technology or a brand so it is up to the market to determine what technology they will bid to fulfi l your technology requirements. So we have a lot of work to do with the markets to help them to bid open source.” Although Suffolk and his team have now fi nalised details of what the cloud concept will mean and how it will work, he says the next challenge is to work out how to deploy the new technology. The government is already signed up to several long-term contracts with IT vendors and it must decide whether to wait for these to reach completion before introducing change or to go full steam ahead with its plans alongside existing vendors. Suffolk describes the different approaches it could take: “The first approach is a transition by osmosis, as in when people’s contracts come in for renewal you move to a cloud based contract as part of that renewal exercise. But of course then your timeframe is determined by when contracts expire and some of these have another five or eight years to go. Another approach is to invest upfront. Then the third approach is to work with suppliers of existing services to government and begin to get them to rationalise their data centres and reuse components. Our plan is to have some basic services running this year.”
Election fever Suffolk admits, however, that any targets he has for the start of the project could be changed by the fast approaching UK General Election. “The slight challenge is that there’s an election coming up and I don’t know how it will affect it [the project].” He goes on to say that given the cost savings it will bring, he does not foresee difficulty in justifying the project. “My feeling is that it’s hard to disagree with rationalising data centres or telecoms networks as it saves cash. It’s also very hard to disagree with our sustainability agenda and doing more in a less carbon damaging way. It’s hard also to disagree with our open source reuse policy. But it will be for any new government to detail its new policies and we will execute them” Though Suffolk cannot predict whether a new political power will affect progress on the strategy, there is widespread agreement that whoever takes charge will be introducing sweeping budget cuts across all government departments to help stem the UK’s gaping budget deficit which is believed to total around UK£45 billion. To plug the gap the government needs to fi nd savings of UK£25 billion over the next two years, increasing to UK£46 billion to 2014-15. For Suffolk and his team this will inevitably mean fi nding ways to do more with fewer resources: “The big shift in the next period will be the acceleration of value creation.
We will have less money and people will have to do more with less. I think there will be restrictions on every budget.” Where his department differs from other government departments, however, is the fact that it’s very purpose is to deliver greater efficiency and cost savings meaning it will be a key weapon in the government’s armoury when it comes to defeating the dreading deficits: “The operational efficiency plan which was published in May 2009 identified that if you do reuse systems, introduce cloud computing and shared services, there is evidence that you can take 20 percent out of the utility and infrastructure costs of technology. And I absolutely believe that’s the case.”
Multi-tasking Although the G-Cloud is the most well publicised aspect of the Government ICT Strategy, it is just one of 14 different strands that make up this project. Alongside establishing the cloud and applications store and consolidating data centres, the government’s plan also includes establishing a common desktop strategy, the Greening Government ICT strategy and the Information Security and Assurance Strategy, amongst a host of other initiatives and service delivery targets. Given the mammoth scope of the project, it is not possible for Suffolk to have hands-on involvement in every aspect of it. He says this means recruiting the right deputies is crucial a process he makes sure he is involved in from the start: “You have to make sure that the team around you
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is made up of highly talented individuals and experienced individuals in their own right. I sit on all the recruitment boards for CIOs in departments and I have the fi nal say on whether we employ them or not. When I’ve done that my job is to act as the hand in the small of their back. There is no point in employing them if all you are doing is poking your nose in to day-to-day business. Generally speaking my role is to bring the best people in and give them the tools and support for them
to do a great job then get out of their way. Don’t get me wrong though. If I see something going wrong or pick up a whisper in the press or from a supplier then I will go and with that team to try to resolve the issue.” He goes on to say that as a CIO he would describe himself as hands-on, despite having an essentially strategic role: “Much to the annoyance of some of my colleagues, my sleeves are rolled up and ready for action. You’ve got to muck in and get involved in what’s going on. Otherwise you come up with daft ideas that bear no resemblance to the ability of someone to implement them.” While he makes a point of keeping well abreast of affairs within the various government departments, Suffolk admits he is unable to keep track of the myriad new technologies being introduced constantly into the market. His main priority is just to fi lter out the many that cannot be applied in a government setting: “I don’t try to keep up with it. The pace of technology is accelerating because innovation is now being built on previous innovation. Also a lot of it doesn’t get traction in terms of the markets. So what you learn when you look at something as big as government is that fi rst of all a lot of the technology is completely irrelevant. You have to pick up the ones that are
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a generational movement and that will be here for some time. Those are the ones you track and get involved with. But you can’t track every evolving technology.” Currently he says, not surprisingly, his focus is on developments in cloud computing, particularly the security of cloud computing: “For me it’s anything to do with cloud security. One of the biggest questions I am asking is: ‘Can I trust security soft ware developed by a vendor who I’ll never meet and where I have no knowledge on how they employ, develop or deploy their soft ware.”
Going public
peting so something you are doing in crime might go against something else.” The procurement process too differs greatly, he goes on to explain: “In the private sector I could choose my supplier and the technology whereas in the public sector in Europe they [the supplier] determine the technology and the architecture.” But despite these apparent restrictions Suffolk claims that he enjoys greater freedom in the public sector than he ever did in private sector roles: “If you want to see open doors and the ability to make progress, you will see it in the public sector. If you want to see bureaucracy and many hoops to jump through you will also see that. I think it’s about a state of mind. You have to go in and say ‘now I understand there isn’t one single person who can tell me what to do, there are competing objectives and it’s too big’. Then you go in and say ‘how do I make progress?’ and after that it’s pretty simple.” There’s nothing simple, however, about the project ahead of Suffolk and his team. With multi-departmental participation, targets to achieve billions of pounds worth of savings, and a myriad of external partners to work with, The UK Government’s IT Strategy is the most complex technology project underway in Europe. But with simplifying processes and cutting costs its core aims, it’s a long-term investment in a new way of working that will transform government IT and put it light years ahead of many private sector corporations.
“I think in the future there will be more and more done with open source”
Unlike many senior civil servants Suffolk came to government via the private sector route, having worked in several roles, including as Managing Director of the financial services firm Brittania. Describing the difference between the public and the private worlds, he says: “The fi rst thing I would say is that the private sector is easy in comparison. In the private sector, there’s always a single person who can tell someone what to do. In government that’s not the case. Therefore you have to hone a very different skill in that you make progress on the basis that you have a compelling vision based on fact, rather than you just have a position of power. Secondly, in general business you can track most things that are going on whereas in government you can’t. In a business most objectives are broadly aligned in the same direction. In government they may be com-
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LEADERSHIP
As the worldwide Chairman for Saatchi & Saatchi and the man responsible for rescuing the business and several US firms from collapse, BOB SEELERT’S corporate credentials are exemplary. Now he has decided to share his management and trouble-shooting secrets with aspiring business leaders in a new book. Diana Milne meets him to find out his pearls of wisdom.
The voice of
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H
aving built a reputation as an ace trouble-shooter with numerous high profi le company turnarounds under his belt, the indomitable Bob Seelert is not a man who accepts failure – in any area of his life. Describing the standards he expects from his employees, he recounts the instructions he gave to his PA on her appointment: “The standard of performance for your job is what I call flawlesss execution. What I mean by that is you will ensure I am always in the right ht place at the right time, fully prepared with everything I need in order to perform and that will happen 100 percent of the time. It will happen flawlessly, I’ll never be late and I’ll never be in the wrong place.” Even his leisure activities are pursued in the ruthless spirit of uncompromising perfection. Seelert is a keen golf player, but admits even off the course, his competitive streak won’t rest: “I try to perform at a high level on the golf course. I don’t go out there for a social or relaxation type of thing. I go out there to try to post a good score.” While one can’t help sympathising with Seelert’s PA, it’s this uncompromising approach to life that has driven Seelert’s phenomenally successfully career. After graduating from Harvard College in 1960 he embarked on a 23-year career with General Foods Corporation which ended with him becoming Worldwide CEO of Coffee and International Foods and overseeing one of the biggest mega mergers in US corporate history, the acquisition of General Foods by Philip Morris in 1985. This ability to hold the reins of a company steady in times of turbulence provided the impetus for Seelert’s future career as a corporate turnaround king. To date he has executed turnarounds at the likes of Kayser Roth, a leading leg-wear manufacturer and Topco, a US grocery co-operative. His biggest coup however was the transformation of Saatchi & Saatchi in 1995. At the time when he took over, the Saatchi brothers who founded the agency had been ousted following a rebellion by the company’s board members and went on to form the rival agency M&C Saatchi. Senior figures from the new agency soon defected to the new rival and the company lost around UK£40 million worth of revenue in the space of weeks. As the company teetered on the brink of collapse, Seelert was appointed as CEO of Cordiant, the UK holding company that was formed following the shareholder revolt. In 1997 he moved the company’s headquarters to New York and was made Chairman of the company. He masterminded the merger in 2000 of Saatchi & Saatchi with France’s Publicis Group at a share price 450 percent higher than the starting level. Ever since the company has improved its fi nancial performance yearly.
Getting results For Seelert taking on Saatchi & Saatchi was the biggest challenge of his career. “The thing I’m most proud of is when I came into Saatchi & Saatchi in 1995,” says Seelert. “When the Saatchi brothers were ousted by their board six percent of the revenue had walked out of the door. They’d gone across town to start up a new and supposedly rival agency. The company was losing money, it was literally burning cash. It had too much debt at too high an interest rate. Soon everybody in the company and all the clients were asking ‘should I stay or leave’. That was a really difficult situation. A friend of mine called me at the time and said ‘congratulations but you’d better enjoy it fast because it won’t be there in three months’.” Seelert believes a large part of his success in transforming the country’s fortunes
was due to his strategy off being a very physical b i h i l presence in the company’s offices. “One of the things that I did was to get a very significant personal presencee with as many offices as posssible as quickly as possible. I didn’t isolate myself in an offi ce ffice and just send out bulletins. s. I think I immediately gave some ome sense of inspiration and leadership thatt things were d hi th thi going to work out ok. I got around to offices that accounted for 65 percent of our worldwide revenue within the first six months that I was there. I met with the top 20 clients and with the 10 leading shareholders who owned more than 60 percent of the shares. So I was in 24/7 mode and I was an in-your-face personal presence trying to inspire people and give them confidence that we were going to survive and prosper.” It’s this inspiring leadership that Seelert now hopes to impart to the rest of the world’s aspiring or current business leaders in his novel Start With The Answer. The book contains a series of business lessons based on his own experiences, including leadership case studies, personal conduct and turnaround practices. In the guide, Seelert, claims to offer “timeless wisdom for aspiring leaders”. He says he believe that although the leaders of today face very different challenges from when he started out in his management career, the basic principals remain the same: “The whole challenge of leadership and how to be a great leader is the same today as it was back when I got started. Leaders fundamentally have to do three things. They have to set direction for the enterprise, establish standards or expectations for how the enterprise is going to perform and they have to unleash the energy of the organisation.”
Making dreams come true One surefire way to unleash this energy, claims Seelert, is to set in stone the company’s “inspirational dream” – a message that should be conveyed, preferably, in just 20 words. “Martin Luther King didn’t get up at the Lincoln Memorial and say ‘I have a vision’, he said ‘I have a dream’. Because dreams are a very powerful thing. We created Saatchi & Saatchi’s inspirational dream in 2007 and it is ‘To be revered as the hothouse for world changing ideas that create sustainable growth for our clients.’ That’s 17 words. You should do this in 20 words or less which is very hard to do. But it’s because you want everybody to be able to, in theory, tape that strategy to their forehead. It should be short and memorable so every single person in the company knows what it is.” Also key to inspiring employees is to set high standards for the company’s performance, from the start, says Seelert: “One of my core values is a belief in the long term, in growth, continuous improvement
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BOB SEELERT’S 10 GOLDEN RULES OF LEADERSHIP 1. When formulating goals, start with the answer and work your way back to the solution. Do not get bogged down in the morass of yesterday. Get going toward where you need to be in the immediate future. 2. Get out in front of people immediately and position yourself as the new leader in the company. Tell them who you are, what you believe in, why you are there, your perspective on the situation, and how you intend to proceed. 3. Bring an extraordinarily high sense of urgency to what you are doing, but also look before you leap. People are anxious for results, but this is no time for dead ends. Think carefully about everything you do, but keep moving. 4. Do not sit around headquarters! Get out to where the work is done – plants and field offices. You need this input, and you need to be a motivating force for people. 5. Go out and listen to customers and clients. At Kayser-Roth, one of my first visits was to Wal-Mart. They told me, “Mr. Seelert, we are concerned about the viability of your company as a supplier.” Two years later, we were named their vendor partner of the quarter. If I had not personally gone there to listen and learn, I doubt that this would have happened. 6. Listen to everybody in the organisation who offers an opinion about the business — don’t just hang around with the people who report to you. There are two sides to all coins and stories. You need to understand both. If you can, meet with your competitors or the heads of similar organisations. 7. Recognise that you cannot get the job done alone. Open communications and clearly assigned accountabilities are essential. Your visits to locations provide the forums for rallying and directing the teams, as well as quickly identifying the true talents across the organisation. 8. Lay out your vision, purpose, values, beliefs, objectives, strategies, and plans for accomplishment as quickly as possible. People cannot really get going until you set the right direction. 9. If you do not have the internal resources to get the jobs at hand done, do not be afraid to use outside resources. At Cordiant, we employed Price Waterhouse Business Turnaround Services. At Kayser- Roth and Topco, we hired Luther & Company. 10. Develop the short list of critical priorities and stick to it. At Cordiant, it was two things: stabilise clients and staff, and refinance the company. Accomplishing these two goals set the stage for everything else.
and out competing all of the companies in our peer group. Maybe M b some people l don’t d ’ set expectations i hi high h enough h and d don’t encourage people to come forward and perform at a level that they are really capable of. The coach of an American football team had a great motto: ‘ask a lot of your people, expect a lot of your people. They will usually meet it’.” But does this sort if idealistic leadership sit well with employees at a time of economic turmoil when companies face the daily threat of revenue loss and job cuts? Seelert admits the CEOs of today face very different pressures from those he encountered in his early leadership career, but says he believes an “inspirational dream” and leadership can carry a company through any crisis and enable its core values to remain intact: “Of course, we’ve been caught up in the difficulties of the 2009 economic environment. But we haven’t changed a word of our inspirational dream. When you can write it and sustain it in good times and bad it’s a really powerful statement that can go on forever. Are there more pressures for leaders today? Yes. Is there a faster pace and more wide ranging considerations including political, social and global considerations? Yes. But is the fundamental role of the leader any different today? No. He still has to do the same basic things.” Indeed, Seelert has had plenty of experience of leading a company through times of crisis, having specialised in company takeovers and turnarounds. He describes the experience of running the Maxwell House coffee division when severe weather conditions destroyed a crop of coffee trees: “One of the most demanding operating environments that I was ever in was when I was at Maxwell House and was going through the consequences of what was called the “black frost” in Brazil. The frost actually killed off all the coffee tress and dramatically changed the price of the raw material for us by billions of dollars in a very short period of time. Figuring out how to survive and prosper in the coffee industry through that period was an extremely challenging operating event. Initially the cost of raw material increased by 700 percent and the crisis played out over five years.”
A sign of the times Although he sticks to his belief that economic circumstances have not created a new leadership template, Seelert acknowledges the dramatic ways in which companies’ relationships with their customers have been affected by technology such as social media. The advertising industry has been on the front line of these changes and having been hit hard by the economic downturn, with a 10 percent worldwide plunge in media spending in the past 12 months, it must adapt to survive. Seelert describes the way the advertising industry has transformed following the advent of digital media: “The internet allows instant access and instant gratifica-
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ADVICE TO THE YOUNG AT HEART Bob Seelert offers his advice to first time company leaders:
It’s terribly important to know who you are, what you stand for and then to carry that through your career. Ask yourself what the values, beliefs and principles are that you subscribe to and how you carry those forth. For me those have always been a belief in the long term, in focusing on growth fostering continuous improvement and out-competing our peer group. So you need to rally your organisation, and recognise and reward your employees for their accomplishments. I always stand for the same things so people know who I am and what they can expect. My hope has always been that that has provided inspiration to them and that I’ve led an organisation they have wanted to be a part of. And that’s brought out the best in them and in the company.
tion on any issue or any communication. Th is is having a tremendous impact on our business. When I fi rst started in business, I could have a print and television campaign to launch a product in the United States, which would reach 90 percent of American consumers four of five times within a four-week period. Now that’s completely impossible because media is so fragmented. We used to intrude into people’s homes. Now we need to get invited in by them. We don’t want to bludgeon people over the head with messages now, we want to make connections with them. We live in a world of incredible social interconnectedness now.” He goes on to say, however, that he believes there is still a place in the global business market for traditional media: “The digitally driven world is having a tremendous impact on a lot of mediums, but I don’t think they are going to go away. Some mediums last year were down by as much as 30 percent while the digital world was up by 12 percent. But I don’t think any of these things are going out of business. They are just going to have to fi nd their new place in the sun.” Although he believes the worst of the economic decline is over in the US, he no longer views it as Saatchi & Saatchi’s priority market, predicting that it will be taken over by China – the next stop on his tour of the company’s global offices. “My own view is that we have entered into what I would call the Asian Century and more specifically the Chinese Century. I’m very big on China. It is an incredibly dynamic, growing market, which has fantastic prospects. So if you asked me where I thought the growth was going to be I would say it would be there.” Going on to describe other emerging markets with high potential, he says: “Some of the African countries are growing rapidly in our business as are the Latin American countries. But the Western World is in a different mode right now. It is struggling to recover and media spend in the US for instance, will be down in 2010 for the third consecutive year.” For Seelert, entering the more creative world of advertised represented a major departure from the more pragmatic manufacturing industries he had been accustomed to working in. Summing up the differences between the two worlds, he says: “Our business is all about people and ideas. We don’t have any factories or formulas, products or manufacturing capabilities. Our only assets go up and down in the lift every day. These are very intangible, soft kind of assets as opposed to factories and production lines”. He says too that: “Here at Saatchi & Saatchi we have a lot of right-brained people who are creative and see the world through a different pair of glasses than a left-brained person would. Manufacturing companies have more left brained kinds of people which is why we always hired advertising agencies to get access to the right-brained people who could generate insights and ideas to help build our business.” When asked, however, whether these right-brained creatives make great leaders, he says: “When you’re leading a public company that all comes together in a profit and loss kind of statement, you have to have a certain quantitative appreciation and understanding of how revenue comes in at the top and turns into something called profit at the bottom.” It’s quite clear then which category Seelert falls into. Having masterminded numerous company turnarounds in industries as diverse as creative advertising, fashion and coffee production his ability to generate profit and performance perfection in good times and bad is one any aspiring business leader should learn from.
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MANUFACTURING
GEARING UP ROAD FOR THE
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Plummeting sales, mass layoffs and government bailouts have all been a by-product of the recession for a spluttering global car industry. But for a previously bankrupt General Motors the crisis is all about unearthing opportunities, suggests European CIO Alejandro Martinez. By Julian Rogers
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hen an email landed in my inbox informing me I would be interviewing GM’s Alejandro Martinez, I began mentally packing my faux Ray-Bans and factor 20 sunscreen for a press junket to Spain’s equivalent of Detroit. Less than 48 hours later I fi nd myself, somewhat deflated, deep in an industrial estate in Bracknell (a commuter town 50 kilometres west of London) on a drab Friday lunchtime. There isn’t a tapas bar in sight, nor the click-clack sound of castanets. As it turns out, Bracknell, which has become a hotbed for high-tech multinationals, is the headquarters of GM’s European technology operations. And Martinez, who it transpires is Mexican and not Spanish, is responsible for enterprise-wide IT activities in Europe, including infrastructure and architecture, applications development, re-engineering business processes, networks and outsourcing. The lobby of GM’s communal office building is minimalist and airy, surrounded on all sides by cascading open-plan floors. An imposing glass elevator sits as the focal point of the room. A short wait ensues before a sharply dressed Martinez strides up and greets me with a warm Latin welcome – a fi rm handshake and a broad grin. A discreet GM pin badge adorns the left lapel of his navy blue suit. While this CIO may tick the boxes of IT boss stereotypes with his full beard and specs, albeit neatly trimmed facial hair and designer glasses, he immediately comes across as both animated and loquacious. Much to my relief, I won’t have to trot out my pidgin Spanish due to his superb command of English.
When I quiz him as to why GM Europe’s IT organisation has chosen a backwater like Bracknell in which to set up home Martinez is quick to play up the town’s credentials. “I told my CEO only the other day that around here is the best place to be because a lot of the CIOs for the EMEA region tend to be in the London area, and even in Bracknell.” Th is is a temporary home for Martinez; his department will be upping sticks to an undisclosed location in the near future. “We need to have a creative environment in which to work, although not on the same level as what Google has done,” he laughs. The CIO’s office occupies the corner of an open-plan room stuffed with IT engineers hunched over desktop PCs. His abode is functional rather than flashy: a plain wooden desk, ubiquitous office cheese plant hugging the wall and tightly closed window blinds preventing even the tiniest shaft of light from penetrating the room. It’s from this hub that IT supports the back-office side of the business and customer-facing technologies and drives innovation. Unfortunately for Martinez, the recent economic maelstrom has impacted these efforts somewhat. The past 24 months or so have been not so much a bumpy ride for the embattled auto industry, but more a white-knuckle leap across a ravine in the pitch black of night. A bankrupt GM was forced to go cap-in-hand to the US government for a US$50 billion bailout, while in Europe GM is seeking €2.7 billion in state aid from the German and other European governments. “Yes, there has been a down cycle but my focus is on reorganisation and preparing for the growth,” Martinez explains confidently. “We’re starting to look for ways where IT can improve the competitive advantage of the company,” he asserts, “not just help it survive.” The car industry’s rocky road to recovery has forced automakers like GM, which produces the Opel Vauxhall brands in Europe, to cut their cloth accordingly. For Martinez it has meant rolling out a “major cost reduction crusade” under the watchful eyes of the boardroom bean counters. “All of my staff receive aggressive targets and we monitor these targets on a weekly basis – it is
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strongly governed because we have very high expectations.” GM Europe In a bid to cut expenditure and create efficiencies, Martinez has orchestrated the Founded: 1986 consolidation and virtualisation of GM’s Headquarters: Zurich, data centres, the rollout of unified comSwitzerland munications and the current overhaul of the desktop environment with the latest Operations: 11 operating systems and tools to galvanise manufacturing facilities in 8 countries collaboration across the group. “We are a global company, so the traditional way Employees: 54,500 to interact has changed: we now put more (2009) collaboration tools on the desktop in order Reach: 40 European to share work, share experience, to levermarkets age and be mobile.” He continues: “We have started a major crusade to refresh our mobility strategy, which is not just about devices – it is about the apps and services you are providing the users.” Around 90 percent of GM’s IT is outsourced, although it is run under a standard globalised model. Th is means GM is expected to run IT exactly the same in far-flung places like Brazil, India, Russia and China – a complex operation when IT maturity varies greatly and vendors are not ready to deploy the created a smorgasbord of ideas, says Martinez. “We have found it very global model. The standardised approach has been a tough journey since interesting to see how people from different generations interact because the start in 2004, says Martinez, but the trials and tribulations have been both this generation and the baby boomers are coming up with very strong worth it in the end. “It is very difficult to run global operations under the ideas on how to drive revenue. It has also created a lot of excitement in standardised model, but I think it is worth the effort because the savings the business because it’s a different ball game now, a different mentality are there. You have to have a very strong governance model and engage because the crisis has forced us to change our business model.” with the suppliers because things happen like last year’s crisis and everyAlongside forging this melting pot of creativity, the IT professionals one is trying to cut costs. So you need to hold them accountable.” are required to be in tune with GM’s business strategies and visions. “If you are not a businessman then you cannot be a good CIO,” Martinez reveals with a shrug of his shoulders. “It’s important to understand the technology but first you need good business skills and you need to understand your company’s strategy – you are not there to just talk about computerisation, you are there to contribute. You need tremendous business knowledge and drive and ambition to leverage technology to a greater competitive advantage. So if you don’t speak the business language then you are out of the Brainstorm game and you cannot be seen vis-à-vis with your peers.” GM is proactive in the cross-pollination of skill sets across departWith GM’s IT organisation being forced to do more with less, at least ments. For instance, a good manager in supply chain or finance could quite once a month Martinez encourages his team to come up with new ideas to easily find himself or herself applying their skills to the IT organisation. drive revenue – an ideas factory that he says has produced tangible results This broad knowledge of how various facets of the business keep GM for GM. “I have pushed the team to an area where they don’t feel comfortmoving in the right direction certainly enriches IT and other departments, able,” he explains, “because we as the IT organisation are change agents according to Martinez. “Just knowing IT in the traditional way through and not just a data processing organisation. We sit on the board so our job reading books won’t make you as successful as you could be – you need is to drive revenue, which means we need to have very creative ideas and to have hands-on experience and understand what it takes to build a car.” be innovative.” Martinez himself has spent time getting his hands dirty on the production GM’s IT business now has a specialist team comprised of differing line, an opportunity he has relished. “Every time I go there I learn someages and experience to focus solely on innovation. This diverse group has
“I think the traditional view of IT has changed; you are not aligned to the business, you are the business”
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thing new. I also develop tremendous respect for the people who build our cars and I understand how to be more proactive in providing better tools for them to perform.” For Martinez, the game has altered: “I think the traditional view of IT has changed; you are not aligned to the business, you are the business.”
Brand values Martinez’s department is also looking to further raise the perception of the GM brand and customer loyalty. “We have been looking at ways in which IT can improve the competitive advantage for the company because a crisis brings opportunity. In the last couple of years Opel lost a little bit of connection with the customer so we are focused on repositioning the brand through the use of social media, reinforcing our B2C activities, better CRM and reconnecting with the customer.” Part of this customer engagement is GM Web TV – an online TV channel streaming video interviews, vehicle launches and insights into car design – from the drawing board to the production line. Martinez works in collaboration with the communications department to improve GM’s brand and interact with the public though the website. A community based on social sites has also been established and executives regularly update blogs. “This has created a lot of excitement and we have had some very interesting feedback from customers asking us about new car features and gadgets they would like us to consider. So this has started a completely new open forum in order to listen to the voice of the customer and leverage the power of the crowd.” This interaction with the consumer better helps the company to predict and anticipate customer reaction to a new product, suggests Martinez. He says the online interaction has created a paradigm shift in the way GM talks with the public.
The real deal The web is not just improving communications – it is also there to shift cars. In California, GM cars were sold through online auction giant eBay, which attracted 1.4 million visitors. In Brazil a scheme to sell lowspec vehicles through the internet became a resounding success – eventually racking up almost 400,000 sales in two years. “It sounds odd,” says Martinez. “Can anyone really be interested in buying a car online? But when we conducted the pilot in Brazil the answer was yes.” The idea caught GM’s competitors in the South American country on the back foot and they were unable to claw back the automaker’s online head start. Martinez says GM took advantage of a change in legislation in Brazil and took a punt on the project being a success. “That’s what I love about working for GM, you get to take risks. We decided that it was right to embrace the technology and work with a different mentality.” The major upside of the deal for Brazilian consumers was getting their hands on a brand new GM vehicle with a significant saving over a showroom model. “Perhaps we were lucky [in Brazil] and all stars
were aligned, because in other countries and markets you have complex franchises and regulations that don’t allow it. But we are always looking for opportunities like this.” Marinez is coy when it comes to spilling the beans on any other Brazil-like opportunities. “Watch this space,” is all he will divulge. Closer to home (Europe), Martinez, who was previously CIO for LAAM (Latin America, Africa and Middle East), is seeing rapidly emerging markets like Russia, Ukraine and Uzbekistan becoming significant revenue streams for the business. His LAAM experience has stood him in good stead for working with emerging markets. “The biggest thing I had to learn was how to deal with emerging markets. If you know how to deal with them you are better prepared to face new challenges than an individual who does not have global experience. One advantage to being in a multinational company like GM is you also have an opportunity to work with different cultures and work in different regions. As an executive, you grow a lot and you feel that you’re better prepared to really compete in the global world.”
Breaking down barriers On the subject of a global world, Martinez has become a firm advocate of GM’s ‘IT without boundaries’ initiative. GM used to be fully centralised at its headquarters in Detroit, but now the business adopts a federated model giving different regions more empowerment. This offers Martinez and his CIO counterparts from other regions the flexibility to adapt to specific regional GM needs. “If one market is pushing toward reducing CO2 emissions then we have the flexibility to engage with the central soft ware factories and respond very quickly to market conditions.” IT without boundaries also means collaborating with other regions when the need arises. “Africa and the Middle East are not part of my territory but if someone in Africa has a major problem and our peers in China, who are responsible for this region, are not available because they are on a different time zone then I jump in to help fi x it.” It’s all about having the right mentality to muck in and help, according to Martinez. “We are not bureaucrats here saying ‘Please send me the bill and then I will help you; No, we have a winning mentality and a real sense of urgency because having a system down can cost us lost sales and lost productivity.” This sense of unity and urgency is what GM is relying on to get the business back on track. After all, the car market is a fiercely competitive environment where size, speed and cost play a key role. It appears GM’s renewed focus in the wake of the worst recession in living memory seems to be something Martinez is relishing. “This has been a tremendous shift in priorities for us, although it is not just about cutting costs. You can easily just cut costs but if you don’t drive revenue then your model is broken.” He also puts his faith in GM’s people completing this U-turn in the automaker’s fortunes. “The amount of talent, experience and next generation of leaders we have here gives me tremendous confidence that the team will be able to turn this company around and we’ll come back very strong.”
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INDUSTRY INSIGHT
Improving customer retention through the contact centre Guy Tweedale says now is the time to eliminate desktop complexity and allow customer service representatives to focus on customers, not systems.
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s the green shoots of economic recovery are being reported – if not yet necessarily felt – still-battered companies are realising they need to change from survival mode, where cost-reduction is key, to growth mode. Th is means re-examining how they should conduct business to reflect how their industries’ cultural, operational and general market challenges have changed. To ensure sustainability, effective customer retention strategies – prioritising improvement of customer experience across all channels – are key. Consumers, more market aware than ever before, have heightened expectations when it comes to customer service; they want to do business with companies where, when and how it suits them. They don’t want to listen to hold music. And if they want to get an insurance quote or deal with a gas bill query at 11:00pm it should be an option. Particularly as many consumers are now making selections based on price and service. In order to provide a consistently positive customer experience, companies must rebuild their organisations and their contact centres around the customer. They need to become customercentric. In order to accomplish this, companies will need to break some bad habits in the contact centre.
Effectiveness and efficiency Operational issues in the contact centre plague many large organisations. For example, most companies are faced with departmental silos and inefficiency. Although there is evidence that this is improving, the many old, monolithic systems companies are using – which they are hesitant to replace because of the value of the data on them –
are slowing the pace of change. In addition, high agent churn rates in call centres result in significant training and recruitment expenses, and can negatively impact the customer experience. These challenges pale in comparison to the real issue, which is desktop complexity in the contact centre. With many companies having more than 20 applications and tools on the desktop (most of which were implemented to satisfy the needs of other departments), agents end up spending most of their time – and attention – navigating through dozens of non-integrated applications, rather than focusing on the customer.
Eliminating desktop complexity No-one really wants to call a service provider or retailer. And, in many cases, customers are already frustrated and emotional before they call. They do not want to have to provide their account number eight times or to sit on hold listening to bad music or the agent explaining, “I’m so sorry, my computer is slow today, it’ll just be another minute or two…” How can call centre agents focus on providing a quality customer experience when they are navigating through dozens of applications and screens? A unified desktop solution will integrate all of those disparate applications and present one, easy-to-navigate desktop for the agent. All of the information the agent needs to complete the call easily, quickly and effectively is right there at their
“Companies must rebuild their organisations and their contact centres around the customer” fi ngertips – at the right time – in context to the current conversation. Making agents much more efficient and effective. The leading unified desktop solutions sit on top of current applications, so it is not necessary to tear out existing applications or infrastructure. Companies can keep their existing line-of-business applications such as CRM systems, policy systems, billing systems, and yet the agents will have all of the information they need, when and how they need it. Given the realities of today’s business landscape, now is the time to focus on the customers’ needs. A unified desktop solution is the quickest and most efficient way to improve customer retention while reducing your cost of operations. In other words, it’s the insurance policy you need to keep your customers’ business for years to come.
To find out more go to jacada.com. Guy Tweedale is Senior Vice President of European Operations at Jacada. Tweedale’s 20 years’ experience of managing people, running businesses and interacting with customers gives him the knowledge and skills to lead Jacada’s European team to provide customer-facing organisations with the tools to turn their customer service operations from a cost centre into a strategic, incomegenerating part of the business.
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DISASTER RECOVERY
Forewarned is forearmed The Business Continuity Institute has been campaigning hard to raise awareness of the need for European organisations to deploy disaster recovery solutions. But have companies been listening? CXO meets Lyndon Bird, International and Technical Director at the BCI, to find out. How can business contingency management increase business resilience and drive better performance within organisations? Lyndon Bird. The main purpose of business continuity is to improve the resilience of organisations. So that in the event of any interruptions that they may have to any of their key business processes, they minimise their outage time, and, therefore, manage to continue to operate with much less loss. It’s about looking at your organisation to see how it’s structured, to make sure that you organise your business in a way that you can actually deal with crises and incidents – disasters, or even small-scale problems – in a way that doesn’t actually affect your top line or your bottom line significantly. One of the spin-offs of business continuity is the fact that in order to structure your business properly for resilience you have to look at the way that you have set up many aspects of your business. And you will often find, in doing that analysis, that you can improve performance significantly, through better organisation, better technology, more efficient ways of doing things, and just having the opportunity to look at dependencies and criticalities and priorities in your business.
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Do you think enough companies have implemented business continuity plans? LB. Most companies will have done something in terms of dealing with the possibility of things going wrong. I think it would be insulting and ridiculous to say people don’t think through the fact that certain things could go wrong. But a lot of companies do this from a slightly wrong viewpoint. Many of them approach things from the point of view of looking at specific threats such bad weather or an industrial accident. They see all of these things as individual issues. What we say is look at the key things that you need to deliver, and then work back to what could affect that. Research shows that in the UK, despite the best part of 20 years spent promoting ideas of business continuity, no more than about 50 percent of organisations have taken our advice on board. And many of the surveys tend to suggest that this flattens out, and that the main growth now, in terms of business continuity uptake, is coming from the public sector, rather than the private sector.
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“Despite the best part of 20 years spent promoting ideas of business continuity, no more than about 50 percent of organisations have taken our advice on board”
A recent report from the BCI states that companies are dealing with at least five disruptive events every year. What types of events are these, in your experience? LB. Most people who know a little bit about business continuity think it applies only to the very large disruptions – the catastrophe, the big fire, the terrorist attack. These things are not likely to happen to most companies at all. Or if they do, it would be a once in a lifetime type of incident. The reality is, of course, that if you look at the way business operates, it is constantly having interruptions. My theory about this is that if you were looking at business, say 20 or 30 years ago, they could cope with much more interruption before it started to hit their ability to deliver their products or services. The whole speed now with which we run businesses because of the internet means that the time isn’t there. So rather than just the big incident, anything, really, which could create a problem if it interrupted a key function, could be treated as a businesses continuity issue. So it could be the small fire. It could be the small power outage. It could be just having insufficient staff to do certain things on a particular day. It could be bad weather. If you actually look just at the UK over the last 14 months, we started with G-20 type concerns, about how that was going to affect businesses. Could people get to work? Would companies fail to operate with the protests? We went through a pandemic. We had a series of bad weather, two years running. Then there was a BA strike. And certainly there is the potential in the future for considerable industrial action, as the economy probably is going
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to be tightened by whoever wins the next election. So business continuity is no longer just for dealing with the big fire or the big terrorist attack or that type of thing. It’s for dealing with anything that creates an interruption to your business, beyond that which you can cope with. You mentioned crisis management as well. How is that a problem? LB. I think crisis management is about two things. It’s having access to the information that you need, to be able to make decisions. And that isn’t necessarily about following a detailed plan. Because with most incidents, you don’t know where you are. You don’t know the extent of the damage, at the point that management has to make decisions. You don’t necessarily have the ability, even, to get together and look at things and discuss things. That is where the old-fashioned ways of crisis management fall down. Because the old-fashioned way is to get everyone together in a room, get the flip board out and decide what to do. In the modern day, you’ve got to be quicker than that. You’ve got to use the internet. You’ve got to use chatrooms. You’ve got to use videoconferencing. You’ve got to use whatever technology you can to be able to share information and get those decisions quicker. What do you think are going to be the ongoing trends, in terms of the kinds of systems people can put in place? LB. Clearly, resilience does work better if you haven’t got all your eggs in one basket, so certain technological developments in the IT world will add additional resilience to organisations’ capability to cope with an interruption to operations. Cloud computing, servers, virtualisation and home working are all technologies that switch the emphasis in business continuity from a technical recovery to a management issue. People can now work from different locations without significant issues, which means many of the traditional technical problems created by the loss of computers and traditional data can be resolved. And they are being resolved quite quickly. Another big technology trend is outsourcing and off-shoring, which are fine from a business efficiency point of view. But they’ve got to be built into your business continuity programmes. Just because somebody else is doing something for you, doesn’t mean that if it fails, it makes any difference to you. Problems remain in two other areas: crisis management and people. Unless you have a completely automated business, where people don’t have to do anything other than press a button, then you’re going to have to have a workforce to manage. You’ve got to be able to manage and motivate people and prepare how to deal with them, post-incident. There are so many HR issues in business continuity just as there are so many supply-chain related incidents – things that are outside of your direct control, but will impact your ability to cope. n
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ASK THE EXPERT
Securing your online retail site Jeff Barto checks out the options for web stores.
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s the Internet has become more integral to everyone’s daily lives, people have grown numb to the processes designed to validate certain aspects of their backgrounds. A similar phenomenon has occurred with retail websites, where processes for online businesses have changed a great deal in recent years. Often lost in the administration of online web stores is the need to provide sufficient security to protect customers and brands from attack. An adequate level of information security is required to keep pace with the increasingly sensitive information exchanged over the web and the threats that constantly morph to exploit the various vulnerabilities, inherent to transacting business on-line. Strong identity authentication technologies, such as SSL, have been developed and refined over time to combat these security threats facing both online retailers and their customers. An SSL (Secure Sockets Layer) certificate is an electronic file that uniquely identifies individuals and web sites and enables encrypted communications. SSL certificates serve as a kind of digital passport or credential. Typically the ‘signer’ of an SSL certificate is a Certificate Authority (CA). One of the key purposes of SSL certificates is to help assure consumers that they
are actually doing business with the web site they believe they are accessing. To validate a web site’s legitimacy, CAs perform different types of investigations (similar to background checks done on individuals) before issuing a certificate. Specific authentication processes vary from CA to CA – a key reason for choosing a widely known, respected and trusted CA. As proof, 86
“Online consumers have become savvier, more sceptical, and frankly, more scared. They expect businesses to protect them”
percent of online shoppers feel more confident about entering personal information on sites using security indicators, such as a trust mark. With this in mind, some CAs supply a site seal to display along with their SSL certificates. The seal provides businesses with a visual cue to help communicate their trusted status to customers visiting their website. Within the universe of SSL certificates, there are three levels of security available for the on-
line retailer to choose from (in increasing order to thoroughness): Domain Authentication: CAs conduct a process to verify that an entity requesting a domain authenticated certificate either owns the domain requested or has the right to use that domain name. Organisation Authentication: CAs begin by verifying the organisation’s existence through a government-issued business credential, normally by searching government and private databases. If necessary they may request such items as articles of incorporation, business licenses and fictitious names statements. Before issuing an SSL certificate, CAs verify a company’s identity and confirm it as a legal entity, confirm that it has the right to use the domain name included in the certificate, and verify that the individual who requested the SSL certificate on behalf of the company was authorised to do so. Extended Validation (EV) Authentication: EV has the highest level of authentication available with an SSL certificate. EV authentication adds structure and controls to the organisation authentication process. It begins with an in-depth validation of an entity’s authenticity starting with a signed acknowledgement of agreement from the corporate contact. A company registration document may also be required if the CA is unable to confirm the organisation’s details through a government database. A legal opinion letter may also be requested to confirm other details about the organisation as well as the corporate contact requesting the certificate. The process represents little burden for legitimate organisations but is a substantial obstacle for a fraudster. Identity authentication technologies, like SSL, can help website visitors feel more comfortable about completing on-line transactions – especially for on-line retailers and any site that carries out high-value transactions over the internet. If an organisation wants to assure its site visitors that they are sharing information with the genuine site for that organisation, choosing an SSL certificate is a low cost way of achieving this objective. Online consumers have become savvier, more sceptical, and frankly, more scared. They expect businesses to protect them. SSL products and services from reputable CAs, like Thawte, can go a long way in allaying their concerns while protecting on-line brands and reputations. Jeff Barto is the Product Marketing Manager at Thawte, Inc
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INDUSTRY INSIGHT
PUTTING UNIFIED COMMUNICATIONS IN THE CLOUD Rafael Laguna, of CEO Open-Xchange, says the cloud offers scalability and flexibility at a lower cost. oday, more and more SMBs and enterprises consider moving their communication infrastructure from on-premises to the cloud as the benefits of SaaS (Software as a Service) are just too compelling. Most notably, better scalability and more flexibility at lower cost – without initial investments in hardware and software. In 2009, Gartner predicted that 20 percent of the commercial email market will be using SaaS by 2012. By comparison, in 2007, SaaS represented one percent of the commercial email market. Email is still the number one communication tool for almost all information workers and is increasingly accessible everywhere and anytime. BlackBerry and iPhone are no longer reserved for just executives. Besides email, new communication tools such as instant messaging and Twitter, as well as social networks such as Facebook and LinkedIn entered our lives. The downside of this is that we run the risk of being distracted and overwhelmed with too much information dispersed in too many channels.
ing to catch on to.” The other key feature of unified communications is the integration of VoIP. By combining Open-Xchange with VoIP and Virtual PBX solutions, businesses can replace their traditional phone lines – saving on phone bills. Moreover, the combination of contact information from email and collaboration with IP-based telephony, fax and other services provides users unmatched ease of use for their day-to-day communications.
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“Email is still the number one communication tool for almost all information workers and is increasingly accessible everywhere and anytime” Open-Xchange is a leading email and collaboration solution used by more than 15 million people worldwide as hosted and on-premises business-class email and groupware. OpenXchange introduced a new groupware concept called ‘Social OX’, which aggregates email and contact information in one place – whether per-
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Freedom to switch
Rafael Laguna was co-founder of Open-Xchange Inc. and Chairman of the board until he took over responsibility as CEO in January 2008. Laguna was crucial to Open-Xchange’s extention to Software as a Service in 2006 and formed the partnership with the world’s largest web host by known servers, 1&1 Internet AG.
sonal or business – avoiding time-consuming searching and giving users access to information anywhere, anytime and with any device. Before we end up in confusion with lots of email accounts and address books, Open-Xchange overcomes the barriers between the variety of desktop and web applications, where we store and handle our multiple addresses, appointments, tasks and documents. “People today use a number of different email addresses and social network tools to store contact information generated from their personal and professional lives,” said Philbert Shih, Senior Analyst, Tier1 Research. “Social OX is designed to bring the contact information stored in email and social networks closer together, allowing the user to control everything from a single platform. This is a very useful innovation that messaging vendors are only start-
While more and more small and mediumsize enterprises will move their communication applications into a public cloud, larger organisations will most likely prefer to run their applications in-house or in a private cloud. To avoid lock-in to the cloud, users must ask for SaaS applications that can also run without any changes on-premises on the customers’ own computers. This provides users with the freedom to switch between SaaS and on-premises – with minimal migration effort. In addition, CIOs have to ensure that their communication solutions use standard formats like vCard for contact information, iCal/ICS for appointments and the good old RFCs around email. This is key to keep control over their data. If you lose the control over data formats, you lose control of the data itself, creating a lock-in that commits users to specific applications and services. Open-Xchange is built on Open Source standards that allow users to re-use, import, export and share their data as needed. And open standards enable integration of business applications such as CRM, ERP and BI to the communication infrastructure – consolidating previously disparate islands of information. Communication and business applications merging to an integrated ‘web desktop’ will be the next evolutionary step of Open Source software and the next step of development – free and open data in the cloud. n
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TECHNOLOGY ANALYSIS
Clouds are forecast to fundamentally transform the way organisations operate. But despite the beneďŹ ts, the migration to the cloud is far from being free from IT headaches and critical challenges, as CXO discovers. 58 www.cxo.eu.com
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s technology continues to evolve, more and more elapplications chose security as the main reason for not moving forward, and ements of our lives are being held not on our perthis was true across a majority of industries, including financial services (76 sonal computers at home or in the office, but by percent), energy (75 percent), government (67 percent), retail (61 percent) websites on servers in remote locations we never and technology (40 percent). even see. Data storage is cheap in these environMichelle Bailey, Research Vice President for IDC’s Enterprise ments, often in the range of pennies per gigabyte – Platforms, says: “Security is far and away the overarching concern around so cheap, in fact, that it is often provided in surprispublic cloud environments, and that’s one of the reasons why we at IDC being quantities for free. Think the cloud doesn’t affect you? Then think again. lieve the private cloud has more momentum because you can still control Those photos you uploaded to Flickr last night? In the cloud. Your Facebook security in the way you’ve always been able to control security. I heard profile? That’s in the cloud, too. The YouTube video you posted of Uncle someone say recently that the public cloud will just amplify all the mistakes Brian falling over at cousin Susan’s wedding? Sitting on a server somewhere companies have been making internally, and I think that’s a really good way in a facility – again, in the cloud. to think of it. Having said that, people will learn as they go with the public To the end user, the cloud is invisible. You access an application being cloud, and while there’s going to be mistakes made along the way, ultimately run on a server operated by someone else, through the internet, as opposed that’s where a big part of the market will be going.” to one stored on your own computer’s hard drive. As far as Joe Public is conRolf von Roessing, Vice President of not-for-profit IT governance ascerned, the technology that supports the applications doesn’t matter; it is the sociation ISACA, believes business and IT managers should take the time fact that the applications are always available that is important. One of the earto review their security systems and resources, and ask themselves whether liest ways people used cloud computing was to store and access their email: their information security management can effectively defend their data and rather than buying a server themselves, they signed up for an email account other assets in the cloud. And even if an initial budget to extend and enat a website like Yahoo or Hotmail, had their emails go directly to the hance a firm’s IT security resources to fully support the cloud is not apparprovider’s server and accessed them via the web. Gradually, that model ently available, IT managers should not lose sight of the possibility that came to be the accepted method of delivery for an increasingly some of the direct cost savings that arise from cloud migration varied array of services and products. can be invested in security facilities. “It’s important that in “Cloud computing is one of these concepts that come the rush to embrace the obvious benefits of the cloud, along every once in a while in IT and shakes up the foundabusinesses do not overlook the security implications of tion of the way we think about computing,” says Ric extending their IT resource into what is, to all intents of the data used Telford, VP of Cloud Delivery Services at IBM. “It’s a new and purposes, a virtual environment,” he says. by businesses style of IT delivery model that gives a highly scaleable, And security is not the only issue concerning IT comes from outside quickly provisionable, pay-as-you-go base to IT services – experts. Vint Cerf, founding father of the internet and the company and does so in a way that allows customers to consume techGoogle’s so-called Chief Internet Evangelist, believes that nology in a highly standardised way.” while the cloud is already here, considerable work needs to The business benefits of such an approach are significant. be done in order for its true potential to be fully realised. “We Reducing – even eliminating – hardware and associated operating don’t have any inter-cloud standards,” he warns, comparing the sitcosts is clearly a no-brainer for corporate users, many of whom are already uation to the lack of communication and interoperability between computmoving toward subscription-based software as a service (SaaS) models. er networks he faced back in 1973 when designing the common protocols Online business applications offered by companies such as Salesforce.com that revolutionised – and paved the way for – the worldwide web. “People (for customer relationship management) and Workday (for human resources are going to want to move data around, they’re going to want to ask clouds and financial software) not only replace expensive programmes that would to do things for them. They might even want to have multiple clouds interotherwise need to be run and managed by the company onsite, they can also act with each other in order to take advantage of the computing power ofreduce the need for corporate computer servers and the related costs of mainfered through such combinations. There’s a whole raft of research work still taining them. Instead, companies pay subscription fees for usage rather than to be done and protocols to be designed and standards to be adopted that licensing costly enterprise software. SaaS is a growth industry: a new study by will allow people to manage those assets.” Forrester Research concludes that even in the recent downturn, SaaS providers were seeing double-digit growth in their subscription revenues. A compelling case
80%
Stormy weather ahead Nonetheless, questions and concerns remain, not least around security, liability and interoperability. For instance, how secure are public clouds? What if the cloud goes down? What if there’s a disruption to the network? Security is certainly an issue: the findings of one recent survey from SaaS provider Mimecast show that security concerns were the leading reason given by respondents in all categories for not moving forward with cloud-based applications. Over 46 percent of respondents that had considered cloud-based
With these concerns it is little wonder that some CIOs are resistant to moving to the cloud environment. “Some still are fighting the shift to SaaS and cloud computing,” suggests Philippe Courtot, CEO and Chairman of Qualys Inc. “But, I don’t believe that resistance to the transformation of onpremise business IT to cloud computing-based IT is a viable option. Not for long. The business benefits, cost savings, and reduction in complexity are just too compelling for businesses to overlook.” Although much of the enthusiasm around the cloud has been dampened there is no doubt that the forecast for the cloud is that is here to stay. Research released by Resource on
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Getting to grips with security Demand, an IT recruitment firm, reports a record number of enquiries for Salesforce and SaaS specialists during the first months of 2010. The financial and organisational benefits of switching to cloud-based storage and computing systems are clearly driving this surge in demand, and analyst firm Gartner recently predicted that within the next four years 20 percent of companies will have no appreciable local resources. Bailey stresses that the cloud doesn’t vary from other projects a CIO undertakes: “Moving to the cloud is no different from any other IT project you take on. You pick something that’s going to give you good visibility if it goes well and doesn’t mean you’re going to lose your job if it goes badly. Pick an application that really plays on the strength of the cloud, where timeto-market and scale is important. Grid-based applications, email and your application development environment are all a really good fit for the cloud. Then you’ve got to look at your whole application portfolio, and if things go well there, decide what will be the next tier of applications to bring over.”
The future is now These days, no computer user is an island. A recent study determined that 80 percent of the data used by businesses comes from outside the company, and cloud computing is the technical response to this reality. And while many don’t see it as significantly different from preexisting computing models such as hosted services and outsourcing, the point is that attributes such as usage-based pricing, shared resources, near real-time deployment and user simplification together make business and consumer cloud services easier and cheaper – and often better – to consume than through traditional delivery modes. Paul Maritz is CEO of virtualisation software firm VMware. He thinks the movement to the cloud is inevitable as more and more information – personal, professional and statistical – gets digitised. “Increasingly, individuals are characterised by a body of digital information,” he explains. “And that information needs to live on over a period of decades – the rest of our lives –beyond the lifetime of any device you might have.” Courtot thinks the sky’s the limit with the cloud’s potential. “While the visible shift to cloud computing to date has been the movement of applications and data to the cloud, it's
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A lack of foresight and technological preparedness drastically weakens network security, which presents the biggest known challenge to the success of cloud computing with large-scale organisations. Five ways IT teams can protect themselves against cloud security threats and attacks include: ■ Federated ID: Inherent in a cloud computing environment is the need for workers to log into multiple applications and services. This presents a formidable security pitfall, as organisations may lose control over their ability to ensure strong authentication at the user level. To mitigate this risk, organisations need ‘single sign-on’ capabilities that enable users to access multiple applications and services, including those located outside of the organisation in the public cloud, through a single login. With this ability, organisations can streamline security management and ensure strong authentication within the cloud. ■ Always-on connectivity: When the majority of an organisation’s critical business data is stored in the cloud, network downtime can shut down business operations. Access to cloud services must be always available, even during maintenance, thus requiring high availability technologies and capabilities such as active/active clustering, dynamic server load balancing and ISP load balancing within the network infrastructure. Organisations should seek technologies that are built into their network solutions, rather than purchase them as standalone products to ensure effectiveness, ease of management and reduced network costs. ■ Multi-layer inspection: Rather than implementing first-generation firewalls to protect the cloud at the perimeter, it is recommended to deploy virtual next generation firewall appliances that integrate advanced firewall and IPS capabilities for deep traffic inspection. This will allow organisations to inspect all levels of traffic, from basic web browsing to peer-to-peer applications and encrypted web traffic in the SSL tunnel. Additional IPS appliances should be implemented to protect networks from internal attacks that threaten access to the cloud. ■ Centralised management: Human error is still the greatest network security threat facing both physical and virtual computing environments. As companies deploy additional network devices to secure their virtual networks, they exponentially increase this risk as device management, monitoring and configuration become more tedious and less organised. ■ Virtual desktop protection: To adequately protect virtual desktops, organisations should isolate them from other network segments and implement deep inspection at the network level to prevent both internal and external threats. Those organisations should deploy a multi-pronged approach to security by implementing IPS technology that prevents illegal internal access, protects the clients from malicious servers, as well as providing secure remote access capabilities through IPsec or SSL VPN that protects against unauthorised external access. Source: Stonesoft
not going to stop there. Soon, the day will come when companies outsource not only their software but their network infrastructure, as well. One day, most everything we do on private networks— manage information, applications, infrastructure, and services—will be accessible
instantly and securely from anywhere and from any Web browser. It's time to prepare.” Meanwhile, Bailey anticipates a hybrid model. “You’re going to have some things you always keep in house, some things you send to a service provider and some things you send to the cloud.
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And at the end of the day, it’s all about cost justifying and economics: where is the cheapest place I can run this application without giving up on security and quality? And herein lies the reason why cloud computing is so important: not because it creates greater efficiencies or scalability, or because the economics are so attractive; not because the vendors, marketers and media tell us so; but because it will ubiquitously come to touch every aspect of our increasingly digital lives. The pile of letters on the mat each morning has already given way to the email database on the computer, which in turn is now making way for cloud-based Hotmail or Gmail accounts. The clipping left on the desk of a colleague becomes the attached PDF file, later
“Moving to the cloud is no different from any other IT project you take on. You pick something that’s going to give you good visibility if it goes well and doesn’t mean you’re going to lose your job if it goes badly” Michelle Bailey, IDC
to be superseded by a set of shared bookmarks, hosted offsite. The faded photos in an album are replaced by JPEGs on a hard drive, then a hosted sharing service like Flickr. The tilting CD tower – itself a digital replacement for our scratched and much-loved vinyl – gives way to the MP3-filled hard drive, which then inevitably yields to a service like Spotify: music that is always ‘there’, waiting to be heard, somewhere in the cloud. The point is, the cloud isn’t just about the future; it’s already here, present in both our homes and our places of work. Is cloud computing new? Not really. Will it reshape the way we use and buy IT power? Definitely. Like the internet in the 1990s, the cloud is an aggregation of ideas and solutions that just work. And the cloud will change the IT landscape like the internet changed the world. Adopting it is not a case of if, but when. n
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HEAD TO HEAD
PUT YOUR HEAD IN THE CLOUDS The cloud is being touted as the next big breakthrough in computing for organisations today. CXO sits down with two industry experts to discover the main issues and challenges surrounding this technology.
Industry experts talk of the cloud being the next big breakthrough in computing. What difference can it make to organisations in terms of operational efficiency and profitability? Werner Vogels. Amazon Web Services significantly improves the productivity of enterprise IT organisations by allowing them to focus on their products and services rather than on infrastructure. It is an unspoken truth that doing the heavy lift ing of running IT infrastructure does not differentiate organisations from their competition. Rather than waiting for time consuming hardware procurement and purchasing processes, businesses can quickly and cost-effectively requisition storage and compute resources in the AWS cloud and reduce time-to-market. In addition, using AWS can reduce their IT spend. As the number of applications running in our cloud increases, the operations, management and hardware costs to Amazon are amortised over more users. When we enjoy the economies of scale, we pass those savings onto our customers in the form of lower prices. By using AWS’s infrastructure services, organisations can thus focus their energies on adding value for their customers. Piet Bil. Some have called cloud computing the ‘industrialisation’ of IT delivery for an organisation. Just as the telecommunications industry has industrialised delivery of telecommunication services, where one’s ability to make a telephone call is fully automated, the delivery of IT in support of a particular business function workload is automated so the end user is in control.
Piet Bil is Vice President, IBM Global Technology Services Benelux, responsible for all technology services business, which includes sales and the portfolio towards the market and the delivery. Prior to this, Bil was Managing Director of the Philips and NXP account worldwide. His experience in IBM spans financing, global business services and global technology services in several executive roles.
“This type of efficiency can be achieved across any workload that can be automated for self-service, self-management by the end user including support, analytics, storage solutions, business processes and many more” Piet Bil The infrastructure has been built out with the automation to manage the environment and reduce the human interactions required. Both of these actions can have a dramatic effect on IT and business operational efficiency, and by getting to market much more quickly this can have a dramatic impact on profits as well as reducing expenses associated with delivering the IT-enabled services. This type of efficiency can be achieved across any workload that can be automated for self-service and self-management by the end user including support, analytics, storage solutions, business processes and many more. How real is the vision for cloud computing for the average organisation today? Are we set to see a mass migration of IT functions toward external suppliers? PB. Cloud computing is very much in the early stages of deployment. Organisations today are beginning to explore the opportunities that cloud computing presents, yet are also identifying the challenges a self-service, self-managed IT deployment will have on them. What are the risks associated with data management and recovery, security, resiliency, as well as meeting with key regulatory requirements especially with regards to data privacy. In that cloud computing is a delivery and acquisition model of IT-enabled services it can be in-house resources or external suppliers that deliver it. A recent study by IBM, as well as independent analysts, shows that as much as 60 percent of organisations today prefer “private”
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cloud delivery versus acquiring from external suppliers, many of whom may be an unknown entity. The vision of cloud computing is very real, the migration to a cloud computing deployment is real. But a mass migration to external suppliers is not practical today. WV. Cloud computing is real and it will continue to grow as a viable alternative for in-house infrastructure. Today, companies ranging from small start-ups to large enterprises, across all industries, are leveraging the AWS cloud. We have hundreds of thousands of registered developers to date and this includes a broad spectrum of companies around the world, ranging from young, technology start-ups like Animoto and Playfi sh to established companies such as Eli Lilly, National Geographic, The New York Times Company, NASDAQ, and ESPN. We also have a growing partner ecosystem, which includes companies like Oracle, Sun, My SQL, IBM, Red Hat, and CapGemini. What are the implementation challenges for companies looking to adopt cloud computing? WV. Many companies start using AWS by launching a new application or service in the cloud, and they can use their chosen programming language and tools to do so. But as companies wish to utilise the AWS cloud more fully, they oft en need to migrate existing IT applications – many of which weren’t written to take advantage of the cloud or horizontally scale. Or some of these applications have dependencies on other internal applications that need to move to the cloud too before they can function correctly. We typically see organisations run a proof of concept to get a sense of what it’s like to run in the cloud. We provide additional guidance through our Cloud Architectures whitepaper on utilising AWS features specifically designed to increase reliability and availability, such as regions, availability zones, elastic load balancing and auto scaling. Understanding these features can help users architect fault-tolerant applications in the AWS cloud that far exceed what most organisations can do on their own, with lower cost and faster implementation.
“Many companies start using AWS by launching a new application or service in the cloud, and they can use their chosen programming language and tools to do so” Dr Werner Vogels PB. Challenges to adoption of cloud computing tend to fall into three main categories – operational, risk management and business. Within operational the challenges are how to best enable the self-service, self-management for the end user. Virtualisation, service delivery automation and usage monitoring are all key to addressing the operational challenges of delivering a cloud enabled service. The number one barrier to cloud computing is the security and protection of the data
Dr Werner Vogels is VP & CTO at Amazon.com where he is responsible for driving the company’s technology vision, which is to continuously enhance the innovation on behalf of Amazon’s customers at a global scale. Prior to joining Amazon, he worked as a research scientist at Cornell University. Vogels holds a Ph.D. from the Vrije Universiteit in Amsterdam.
or risk management of cloud. Risk is also associated with the assurance of privacy of the data, and even more important, the resilience or recoverability of the data in the event the environment goes down. Finally, business challenges require a review and updates to existing business processes as well as business attitudes may be required. It is very important to understand and address the impact and benefits of the change on the people within the organisation. Does cloud computing have any implications for data backup, security and compliance? How can these concerns be allayed? PB. Data management and security are the biggest concerns to cloud computing. To address these concerns organisations must be able to assure that the environment will be secure from internal and external attacks. To address security the key areas that can and should be addressed include: governance, people identity and access management, data protection (including resiliency), application and processes, network and endpoint security, and fi nally the physical security of the environment. IBM is leading the way in addressing the concerns about cloud computing with soft ware and services offerings that take into account each aspect of operational, risk management, and business challenges associated with cloud. Additionally, for any services provided on the IBM Cloud, we are addressing these issues by providing environments that are secure, resilient, and compliant from a cross-industry standard, and we can work with an individual organisation that may have their own unique regulations they need to meet. WV. Questions about security are the most common concerns we hear from CTOs and CIOs. At AWS we give customers the tools to make sure their data is secure and acknowledge that their data remains their property, we’re simply very skilled caretakers. We have full-time staff dedicated to security, from policy development to incident response. At Amazon we have developed expertise over 15 years managing our global and secure infrastructure. Our scale has allowed us to make significant investments to build a shared-services infrastructure with the same degree of isolation you’d expect in a private data centre; furthermore, we’ve engineered automatic multi-site replication into our storage services to simplify business continuity plans. We realise businesses are coming under increasing regulations and we strive to build services that allow organisations to remain in compliance. For example, our customers can achieve HIPAA and PCI-DSS Level 2 today.
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EXECUTIVE INTERVIEW
The next big move: enterprise capture With document capture becoming an increasingly important part of organisations’ operations, we get the lowdown from Thomas S. Senger of Kofax. How would you describe the concept of enterprise capture? Thomas S. Senger. Document capture has evolved far beyond its roots in simply scanning to archives. In parallel, traditional centralised capture processes or fragmented capture implementations within large enterprises, where localised departmental solutions have been focusing on specific types of documents, turn out to be a thing of the past. Today, we see a growing trend towards combining basic document capture with data capture at the earliest possible moment: right then, when documents of all formats are initially received in an organisations through multiple contact points in order to feed and initiate transactional and time-sensitive business processes. Th is combination of document capture and data capture in distributed environments is what is called “enterprise capture”. It’s a solution approach, that is literally exploding in all transaction-heavy industries like the fi nancial services sector with its hundreds of thousands of payables, receivables and claims that need to be processed on a daily base.
“The key advantage of taking an enterprise approach to document capture is the ability to immediately deliver extracted and transformed data directly into business systems” TS. The first step in establishing an enterprise-based approach to document capture is to carefully review the types and formats of information that is entering an organisation. Wherever paper-based information is present, both front-office and back-office operations should have ready access to document scanning tools rated for their peak volumes. Ease-of-use is critical for front-office staff to ensure that converting paper to electronic form becomes routine. A clear understanding of what data is needed by various business processes will help when selecting the right classification and extraction tools that can be used to further automate manual handling and reduce bottlenecks. It’s important to have each department in a transactional workflow represented when making these decisions, as information that is critical to one area may be of little significance to another department. However, the key question is probably: is the new system affordable and can it provide a good return on investment?
Where do you see the main benefits of this approach? TS. The key advantage of taking an enterprise approach to document capture is the ability to immediately deliver extracted and transformed data directly into business systems. Moving from “scan-to-archive” to “scan-to-process” has profoundly changed the strategic importance of capture as an enterprise standard. The resulting increase of speed, productivity and accuracy translates directly into competitive advantages. By capturing business-critical data at this early stage and by feeding the won information into an enterprise’s various backend systems, employees in all departments have immediate access to this data and can initiate the respective business case as soon as possible. At the same time, document preparation and transportation costs associated with capture get reduced significantly. Besides these benefits related to efficiency, compliance is also a driver for enterprise capture adoption. Operating a common capture platform helps to facilitate records management and e-discovery processes and documents can be controlled more efficiently.
Kofax has become the leading provider of document driven business process automation solutions. What specifically makes Kofax enterprise level solutions so successful? TS. Well, because we can answer all the questions above with yes. With now over 20 years’ experience dedicated solely to document capture, we are able to provide a single, unified platform for enterprise capture which strictly adheres to a scalable, standards-based, consistent architecture that easily integrates with the largest variety of existing systems. Our solutions deliver a ROI typically within the first 12 months – an argument that gets even more convincing in the fierce economic climate we’re facing these days.
What should companies take into account when they plan to invest into an enterprise capture solution?
Thomas S. Senger is Kofax’s SVP of Applications Software & Services EMEA. Senger oversees all customer-facing sales and services functions in alignment with the company’s newly-introduced hybrid go-to-market model, which supports both direct customer engagements and indirect sales through channel and with alliances partners.
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MEDIA
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When the Telegraph transformed itself from a print publication to a digitally-led web innovator it became front page news in the IT world. Diana Milne grills CIO Paul Cheesbrough to discover the truth behind the headlines.
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hen Paul Cheesbrough was charged with heading up the digitalisation of the UK’s most conservative newspaper, introducing new technology was the easy bit. His biggest challenge was convincing a roomful of the country’s top journalists and a readership with an average age of 55 that digital media is the future. But with revenue plummeting across the UK print industry – including a three percent fall in profits at the Telegraph in 2009 – he had no choice but to make it work: “The cultural change is always the toughest part of making any change,” he says. “For us as a news organisation, making sure the change happened was critical. The industry as a whole was having to go through this change as a matter of course to help their business go forward. So I think people understood the commercial realities of the situation.” While other UK newspapers have been slower to embrace the digital revolution, the Telegraph has become a leading innovator in web publishing, transforming itself from being print dominated to being predominantly digital-led. To the outside world this means improved online content and greater opportunities for interaction. Internally though, the changes have involved a complete overhaul of existing IT systems to a cloud based infrastructure to facilitate greater agility, better use of multimedia tools and improved internal communication. Th is has included the introduction of soft ware-as-a-service (SaaS) applications such as salesforce.com, the replacement of Microsoft applications with the Google Apps suite, and the introduction of a cloud based HR management system.
Embracing change Naturally there was initial resistance to these changes within the organisation, but Cheesbrough says he received valuable support for his plans from the Telegraph’s Editor-in Chief, Will Lewis: “Resistance to change is human nature. The key advantage we had was an inspirational Editor-in-Chief in Will who was leading from the front. And he just made it incredibly clear as to why digital is our future. If we had an editor who said the newspaper is the future we would have had a very different response and reaction from the staff.” The result of this support from the editor is that, according to Cheesbrough, the Telegraph’s journalists now think digital when writing their news stories: “The cultural change we’ve been through was probably one of the most challenging things for any
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news organisation to go through. But the digital side of the business is now entirely front of mind when they are thinking about a story and how they can tell it and communicate it.” One of the biggest cultural barriers Cheesbrough had to overcome when introducing the changes was the age old divide between the commercial and creative sides of the newspaper business. The Telegraph’s digital reinvention was initiated with a view to it becoming more commercially viable whilst retaining its editorial integrity and raison d’etre. To ensure the two aims didn’t clash and to ensure the best use was made of multi media platforms as a way of telling news stories, Will Lewis was put in charge of both the editorial and commercial sides of the digital business. Describing the divide between the two sides of the business Cheesbrough says: “It’s a healthy tension I think. You don’t want one to dominate the other. We’re there to make money at the end of the day but also the editorial integrity is very important. Last year we put commercial responsibility for the digital business underneath the editor, so when we
“Resistance to change is human nature” look at integration, it’s much more than just the newsroom side. We’re looking to integrate the commercial side of what we do as well.” He is keen to stress too that editorial content is only one part of what the Telegraph Media Group actually produces. He wants every part of the organisation to embrace digitalisation – including the retail side of the business: “The overarching transformation that we’re in the midst of is really taking us towards being a digitally-led organisation that happens to have a newspaper. Content is only one part of our business. We’re also a retailer in the sense that we sell holidays and gardening equipment for instance.” One major advantage of digitalisation, which satisfies both the commercial and editorial sides of the business, is that it massively widens the newpaper’s audience, allowing the content to be accessed
About Telegraph Media Group Telegraph Media Group is the multimedia news publisher of The Daily Telegraph, The Sunday Telegraph, Telegraph.co.uk and The Telegraph – a weekly subscription publication for The Telegraph’s overseas audience. The Daily Telegraph is the UK’s biggest selling quality newspaper, with an average daily circulation of 835,000 (ABC June 09). Telegraph Media Group has put digital at the heart of its business and recently won Digital Publisher 2009 at the Association of Online Publishers’ annual awards. Since being the first UK newspaper to have a website in 1994, the group has constantly innovated in the digital environment to bring new products to its audience. Telegraph TV provides a wide range of programmes, while the Telegraph’s mobile site enables users to access its content from a variety of mobile devices.
from anywhere in the world, without the limitations of printed copies. Online, the Telegraph’s biggest audience is now in the US and within the UK it is already attracting a younger readership – a key aim of its digitalisation strategy. “One advantage is that geographically we’ve got a much wider appeal,” says Cheesebrough. “In terms of audience we’ve also brought appeal into other age groups and segments in the UK as well. We do seem to have attracted a younger audience online which would have been difficult when we were just simply a newspaper.” However he says the TMO is very keen not to alienate its traditional readership, so is working on promotional schemes to retain reader loyalty, in tandem with its digital strategy: “It’s something we take really seriously, so with every change we make in print or online, we try not to alienate any of our readers and customers. One example of what we are doing for our traditional customers is the way we’ve utilised things like subscription offers and promotions. We’ve also got things like loyalty schemes that we’re launching at the moment where people who are long-term readers get rewarded. Retaining those customers is absolutely key for us. We’re trying to build on what we’ve got rather than replace what we’ve got.
Behind the scenes Underpinning the Telegraph’s digital transformation are the sweeping changes that have been made to its internal IT systems, most significantly the move to the cloud for its back office processes. The first step in the process was to move the entire group’s 14,00 users over to Google Apps. Th is was followed by the move to the Salesforce.com CRM system for its sales and call centre teams. “The key benefit we’ve achieved from the cloud, is that we’re now a much more agile organisation,” says Cheesbrough. “By plugging into web based systems rather than having a long start up for putting those systems in and a huge expense upfront you can get going
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offered editorial staff major advantages, says Cheesbrough: “It’s basic things like having a 25 gb inbox to store your emails and fi les in rather than having a limit of 150 mb that a lot of companies impose. Being able to search through all your emails using Google’s powerful search engine and the ability to collaborate and share using Google’s inbuilt messenger are also big advantages. That allows you to see who is online and offl ine and send them instant messages. You can create documents despite being in different locations and share them rather than having to email them. These were all big advantages in addition to the significant fi nancial benefits.” Despite approaching the end of the technology transformation project, which has been three years in the making, Cheesbrough is planning yet more improvements on the IT front, in particular to improve the w way the company manages its data and tto focus on the company’s further on ongoing digital development. “We h have a number of projects with a number of leading edge technology companies to improve the the year TMG way that we manage our data to launched its make sure it’s more accessible website w within the newsroom. Because, lik like many organisations, we’ve still got groups g of systems that don’t talk tto each h other so we’re trying to connect those together so, if you’re a journalist, regardless of where the information sits, you can go to one place and fi nd it. The other thing we’re really ramping up is the focus on digital development, so looking at new products and services we can launch alongside telegraph.co.uk to help us make more money.”
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almost immediately with them. We’ve seen cost efficiencies that we’ve been able to reinvest in some of the areas that are growing the business rather than just sinking it all into IT systems.” He goes on to say that under the previous system 95 percent of the company’s staff time and money was spent on operational processes. Th is has now been reduced to 50 percent, freeing up 45 percent of resources for developing new revenue streams. Cost efficiency is not however the only driver behind the TMG’s IT overhaul. The introduction of Google Apps across the organisation has significantly benefited the company’s internal and external communications and document sharing abilities. But, as Cheesbrough explains, the deployment happened almost by accident: “We put Google Apps in as a trial initially when we were looking to renew our contract with Microsoft. At that time we only took it to 10 percent of the company. But the approval rates within the company once we’d trialled it were so big that we started to look at it seriously for the rest of the company.” Further investigation revealed that over a three-year period using Microsoft would cost the company five times more than Google. Moreover it
“We have attracted a younger audience online which would have been difficult when we were just simply a newspaper” The speed with which the TMG has succeeded in transforming itself from a traditional print-led publication to a leader in the digital field is headline-making stuff in itself. But while readers will have noticed big changes, it is the internal cultural shift that is the project’s greatest achievement. Because as Cheesbrough puts it, where technology was once a “lights on operational division in a back room” it is now “an enabler for the business” and crucial to its future viability and economic survival.
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INDUSTRY INSIGHT
sible. This is called multi-level caching. A good web CMS provides intelligent multi-level caching by classifying content according to its rate of change, creating a site that’s highly optimised for performance. Another component for building scalable websites is to separate site traffic from the backend database load. This is called decoupling. When more eyeballs come to your site, the web CMS should automatically provide more server capacity to match the volume of visitors. Some cloud computing and hosting providers will temporarily add server capacity during peak times, which helps to ensure consistent performance without a substantial increase in hardware operating expense. The third component for managing traffic spikes is dynamic rendering. With dynamic rendering, content and format are kept strictly apart, and they only meet in the visitor’s browser. Content can thus be fully and dynamically personalised for the Are you prepared for the day when your website becomes visitor. The end result is a highly engaging user experience, with optimised performance under the centre of the universe, asks Peter G. Marsh. all traffic conditions. our company’s website must handle and unexpected traffic. As a result, you can acPractical Recommendations: in addition high volumes of predictable traffic, as quire new audiences, provide a more rewarding to these technology techniques, it is important well as spikes in unanticipated traffic. customer experience and esfor website administrators to A site like San Diego’s signontablish new opportunities for conduct serious load testing sandiego.com typically has 30-35 million monthadvertising and content monbefore a site is launched or rely page views. However, during a recent spate of etisation. Here are a few techdesigned. Load testing is the California wildfires, the site experienced 10 milnical and practical pointers for only certain way to know how lion page views in one week alone. But spikes in building highly scalable webyour web CMS will perform traffic are not limited to times of disaster. In sites that operate reliably under all conditions. Testing Canada, the website goldline.ca is a proud sponunder all traffic conditions: should be conducted from sor of the Canadian men’s curling team. The site Technical recommendathe customers’ point of view, averaged 650 visitors per day. However, after the tions: there are three important meaning from the internet, team won the gold medal in the Vancouver technology tricks to help prefrom wireless hubs, from moWinter Olympics, the site’s traffic skyrocketed by pare for surges in website traffic bile and e-reader devices, and 363 percent. — caching, decoupling and dyfor all popular browsers. A recent Compuware Equation Research namic rendering. As your comFinally, a good web analytics study found that when a company’s website perputer gurus will confirm, it is programme will help you Peter G. Marsh is Head of Global Product Management and forms poorly during peak traffic times, 78 percent much quicker to access data identify the cause of any trafMarketing at Atex. He joined of the visitors defect to a competitor’s site. The from memory than from disk. fic spikes. Where do most of Atex in 2005 and is responsible for all global product study also found that after a poor experience, 88 Caching is a mechanism to temyour visitors come from? management and marketing activities. Marsh was also the percent of the visitors were less likely to return to porarily store frequently viewed What search terms are drifounder of Deadline Data the original company’s website. Worse still, 47 data in memory for rapid acving eyeballs to your site? Is Systems and the CEO of 5 Fifteen Inc. He holds a B.Sc. in percent left with a negative perception of the cess. Caching improves a webthere a new link pointing to Communications from Boston University. company, and 42 percent discussed this bad exsite’s performance by allowing your site? Discovering this perience with friends or online communities. content to be retrieved quickly information will help you The good news is that if your company’s from memory, rather than balance the load on your site, website and underlying Web CMS (Content fetching the content from the database. and will allow you to better monetise your Management System) is properly designed, the The key to predictable performance is to content by engaging and retaining all these site will be able to handle any volume of expected deliver memory-cached content whenever posnew site visitors. n
SURVIVING AND THRIVING DURING PEAK WEB TRAFFIC
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EXECUTIVE INTERVIEW
Integrated information management Adrian Butcher addresses a missing link in business support from many IT strategies.
What is meant by information management (IM)? Adrian Butcher. Basically, it’s a catch-all term for managing information of all types within the organisation. Although some sits neatly in a corporate database as structured data, more than 80 percent is unstructured or semi-unstructured. Increasingly, it’s managed by enterprise content management (ECM). Anything from office documents to forms to website content, corporate records, emails, drawings, scanned images and documents, and emerging content types like video, wikis, blogs and other social media. Organisations often have structured data sorted but the unstructured information (rarely less than 80 percent of the total) less so – and still less integrated. How does integration apply to all of that and why would we need it? AB. Your core business processes often don’t conveniently depend on one type of information per process – if anything, there’s a trend to more types for any given process. So, for example, asset management needs not just an asset register, but accompanying asset information/documentation; a bank must manage customer interaction as well as administer account payments; a procurement organisation needs to manage contracts alongside finances and efficiently integrate invoices – often in paper form – into its accounts payable process. Different information types, therefore, should be accessed in a single context for individual operational roles. Your operational databases don’t do that. If that’s the why of integrated IM, what’s the how? Give us the high-level picture. AB. Fundamentally, we refer to two integration ‘dimensions’ here: integration with your main information eco-system and between different content types. Eco-system means your current strategic systems – like your desktop (e.g. Microsoft Office, Sharepoint, corporate email), your major ERP or fi nance systems and so on. Integrating different content types means putting together content types that support end-to-end processes. For example, a customer may visit your website (containing web content), request a document, like a PDF, initiate a process through BPM by fi lling in and submitting a form, which needs approvals, then generates a contract and job sheet. Th is could generate an email or whitemail
(scanned in) enquiry, requiring a response through the same medium. All those content types form a case, to be made available, as a whole, to staff, then managed as a record according to policy. Some cases, events and interactions may involve images, drawings or even video or social media content. That sounds complicated – hard to get my head around. Where would one start? AB. Either of two main entry points would be good places to start: ask the CIO if there is an overall enterprise IM or ECM strategy and – if so – how many different platforms support it. A plethora of platforms suggests a strategy not formulated or not yet implemented. Identify a core business process, encompassing different information types in an end-to-end flow, perhaps across different departments, then assess how many systems support that process, how seamlessly it flows, how well it’s reported and how easily employees can access all related information through one interface, which could well be your ERP, desktop or mail interface if that’s most appropriate. Any major point of failure suggests integrated IM/ECM is not yet in place for that process. This sounds like a significant investment in systems and change management – how is it justified? AB. We’d advise looking for benefits in five major areas: process efficiency (unit cost/ speed of execution), process effectiveness (right fi rst time, process compliant), soft but usually larger than expected benefits, like avoidance of duplication or re-work and less wasted time fi nding authoritative information, risk management (compliance with internal and external regulations and laws) and reduced overall IT TCO (total cost of ownership) arising from fewer systems (some from active legacy decommissioning), reduced storage, licence and maintenance costs. To sum up, any organisation without a clear, integrated IM strategy, documented and implemented, linking structured with unstructured information, has an opportunity for beneficial business change. Adrian Butcher is Director of Value Engineering for Open Text in EMEA, a function whose role is helping organisations identify and achieve business value through IM/ ECM investment. He brings more than 20 years in business management and 10 years in information management to this role.
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EXECUTIVE INTERVIEW
A documented success Jim Potter chats to CXO about the tangible differences managed document services (MDS) can make to today’s organisations. What are the economic benefits for companies opting for MDS? Jim Potter. The economic benefits are evident from the start. Our customers are guaranteed up to 30 percent savings with the initial MDS implementation, and those savings grow as we work with our customers to further optimise their print fleet over the lifetime of our partnership. With this ongoing optimisation, our customers are able to reduce their carbon footprint through fleet reduction, minimising paper and reducing energy. Ricoh’s MDS also offers an ‘out-servicing’ model which focuses upon our partnership with our customers and optimises their document and information management workflows. We provide skilled resources to help our customers manage their documents and information, while streamlining their business processes. This enhanced efficiency enables them to become less reliant on manual paper processes, reduce their direct costs and focus their attention on their core business. We are transparent in our governance and our approach and our customers retain the overall control of their own environment.
“Today more than ever, organisations are realising the merits of managed document services”
How has the economic downturn affected the business? Has it been a good opportunity for organisations to look towards MDS? JP. I don’t think there’s a better time than now. Document management services offer much more than just the initial short-term benefits. Today more than ever, organisations are realising the merits of managed document services. At the same time, there is still more awareness to be raised among European business leaders. Research shows the total spend on document management in Europe currently exceeds €14 billion per year, with some companies spending up to five percent of their annual turnover on managing documents. Just over one third have implemented a document governance strategy to address this area. Additionally, document related costs remain largely unmanaged and uncontrolled, with just 45 percent of those companies monitoring these costs on a regular basis. MDS resolves the duplication and inefficiencies being incurred by the mismanagement of the document workflow.
ations. It includes monitoring and reporting solutions for their office and home-based employees. Our document solution also aligned with their green IT strategy and continues to provide significant return on investment. We are also working with a major NGO which employs over 2000 people in Germany. The cost savings from implementing our document services exceeded 30 percent. We also work with a well-known brand that produces athletic footwear and employs more than 30,000 people globally. Its supply chain requires a robust, FSA-compliant and secure billing system. Historically, invoicing was a complex and time consuming process, coordinated in-house with approximately €4 million spent mailing 4.5 million paper invoices a year. The company has outsourced its invoicing to Ricoh. We will manage the transition from paper to electronic processes and over three years it will yield cost savings of an estimated €3m (75 percent).
Could you then give us an example of how you provided MDS for a client
How do you see the need for MDS developing in the next 12-18 months? JP. Adoption is growing rapidly at the moment, regardless of the business size. The popularity of MDS is evidenced by the double-digit growth the market has experienced in 2008 and 2009 with a forecast for 2010 to increase a further 17 percent. There is no doubt that as awareness of the long-term benefits increases, businesses will continue to implement MDS. n
recently and the benefits it delivered for their operations? JP. We are providing Unilever with managed document services across 29 countries in Europe. The services will provide significant return on investment by delivering increased efficiency across all Unilever’s European oper-
Jim Potter is Executive Vice President of Operations at Ricoh Europe. He is responsible for Ricoh Global Services, Outsourcing and Managed Document Services. In addition, he oversees the supply chain and Ricoh's sales operations across EMEA. Ricoh works with organisations around the world to modernise work environments and optimise document efficiency.
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MANAGED PRINT SERVICES
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Amanda Hutchins, Market Research Manager for Photizo Group, on the growing popularity of managed print services.
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n its simplest terms, managed print services is the movement from the traditional decentralised process for purchasing document production equipment (printers, copiers, faxes, and multifunction devices), services and supplies, to one of outsourcing the management of the all or part of the document production and management process to an internal or external department for centralised management and control. While it is possible to do this with an internal organisation most firms find that they can achieve the greatest benefit and optimisation by using an external organisation, which is focused upon providing MPS.
Why MPS To understand why MPS has become so popular you have to first read the facts about a normal, medium-sized organisation’s hardcopy fleet. The average cost of a hardcopy fleet is US$700,000 per year for a firm with 750 employees. That same fleet will require 3700 hours of IT support, will use over 33,000 kWh of electricity and generate over 85.73 tonnes of carbon emissions. Keep in mind that is equivalent to the total CO2 output of 16 cars over an entire year. Prior to implementing an MPS engagement, the majority of firms have a ratio of 2.2:1 employees per hardcopy devices. After implementing an MPS engagement, the ratio is 5.7:1. As is evident, a hardcopy fleet that isn’t managed properly can be time consuming and a money guzzler, not to mention hard on the environment. MPS has repeatedly been shown to save organisations of all different shapes and sizes across the world money, time and resources. There are hundreds of examples of organisations that have saved time, money, and resources by implementing MPS. DOW Chemical was able to achieve savings of US$21 million while reducing the number of devices by 10,500. The Department of Ecology at the University of Washington was able to save US$200,000 in its first year of implementing a MPS programme. Altruist Financial was able to improve work efficiency by 50 percent by implementing document workflow enhancements. Korea Exchange Bank was able to reduce their annual direct costs by 20 percent. In fact, savings from mps are so significant some government organisations are mandating MPS. In January of 2010, the state of Washington passed a bill, which requires all state agencies with 1000 or more employees to adopt an MPS programme.
Market forecast Photizo Group predicts that in 2010 the MPS market will make up 29 percent of the global market for hard copy document output. MPS has been steadily growing since 2006. Most importantly, by 2013 MPS will account for over half of the industry’s revenue. Photizo Group developed three stages to give a framework for describing the customer adoption process used for MPS. The stages have been expanded to better address the steps within each stage. Stage 1 is the control stage, which includes assessments, understanding the user requirements, and planning. Stage 2 has been expanded into Stage
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Research tools Two studies are used in determining the current state of the managed print services market: 2009 MPS Market Size, Share and Forecast and the 2009 MPS Decision Maker Tracking Study. The forecast compiles revenue data for hardware, supplies, services, management, and devices under contract. This information can be viewed globally, or by country. The MPS Decision Maker Tracking Study collects demographics, purchase metrics, and brand metrics from decision makers in the MPS field. Currently this study collects data in North America and Western Europe (Germany, France, UK) and is being conducted in Asia Pacific in 2010.
2a and Stage 2b. Stage 2a is optimise, which includes fleet consolidation, right sizing, and asset deployment. Stage 2b is asset management, which includes on-going, proactive fleet management including redeployment, updating, changing, and deleting devices based on the economics of operating costs and expected savings. Stage 3 has been expanded into Stage 3a and Stage 3b. Stage 3a is document management, which includes simple document management, document workflow, and document archiving. Stage 3b is business process optimisation, which includes process analysis, consulting, workflow analysis, and business process improvement. This is all shown in the Expanded Customer Adoption Model Chart (Figure 1). These stages represent the typical life cycle for adopting MPS. This process can take months or several years depending upon the complexity and size of the organisation. It has been a long held myth that MPS is just for large organisations. Recent data has shown that this is changing. In North America small businesses account for 21 percent of the MPS engagements and medium businesses account for 33 percent. In Western Europe, small and medium businesses each account for 26 percent of the MPS engagements. Some other common characteristics of MPS decision makers are: • In North America, three industries comprise the majority of the respondents (manufacturing, finance and banking, and other). • In Western Europe, three industries comprise almost half of the respondents (manufacturing, finance and banking, and retail or wholesale). • The majority of MPS contracts are at multiple domestic sites within a single country. • There is a high level of interest in MPS and those organisations that are slow to adopt MPS will miss out on savings, improvements in productivity, and lose competitive advantage. • The decision making process is complex and involves all decision makers.
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This implies that vendors cannot expect to win by influencing a single ‘influencer’ category for their specific technology but rather, must engage across a spectrum of decision makers to win the engagement. The Brand Strength Index (Figure 2) represents the likelihood of initial purchase. The higher the brand strength the greater the likelihood of purchase. Brand strength is comprised of a single vendor’s scores on unaided awareness, familiarity, and consideration. Unaided awareness shows the brands people have in the front of their minds. Respondents are asked what brand names they are aware of, without any being supplied to them. Familiarity represents how well known the brand name is to the respondent. The more familiar the name the higher the likelihood of initial purchase. Consideration is how likely the respondent would think of the brand name in the future. Just like familiarity, the higher the consideration the higher the likelihood of initial purchase. In North America and Western Europe the same vendors fill the top three spots for brand strength, but not in the same order. In North America, the top three brand strength vendors are HP, Xerox, and Canon. In Western Europe it is Xerox, Canon, and HP. The Photiza Brand Experience Index represents the likelihood of repeat purchase. The higher the brand experience the greater the likelihood of repeat purchase. Brand experience is comprised of a single vendor’s scores on satisfaction and recommendation. Satisfaction represents how satisfied the respon-
ical Case Study: DOW Chem of devices from • Reduced the number 16,000 to 5,500 yee to device ratio • Increased the emplo from 3:1 to 9:1 uipment • Replaced 8 year old eq reliability • 22% improvement in metrics savings to the • US$21 million net cost company over 5 years untries, 333 • Implemented in 49 co s sites, and 1,700 building
dent is with their current vendor in terms of different factors. Satisfaction is important because it gives vendors an idea of where they are lacking and need improvement. Recommendation represents how likely the respondent is to suggest the vendor to others. This is a critical component of loyalty, because many customers say they are satisfied with a vendor but are not willing to recommend them. The willingness of the customer to rec-
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Figure 1: Expanded customer adoption model Stage 3 3a: Optimize • simple document management • document workflow analysis
Stage 2 Stage 1 Control • assessment • understanding user requirements * planning
Conclusion Organisations continue to look for ways to save money and reduce their impact on the environment. Implementing an MPS programme can save an organisation a substantial amount of money over time. The MPS market is evolving and growing and with that comes the realisation of the immense savings MPS can bring your organisation. Now that you have seen all the benefits implementing an MPS programme brings, it is important to learn what to do next. Below are a few things to consider when implementing a programme.
2a: Optimize • fleet consolidation • fight sizing * asset deployment
3b: Business process optimisation • process analysis • consulting, workflow analysis • business process improvement
2b: Ongoing management • on-going, proactive fleet management (redeployment, etc.)
h e wit rienc e p x E
Vendor skill requirements
ommend a company can overlap into many different areas, not just brand experience. In North America and Western Europe there is a difference between the vendors that lead in brand experience. In North America, HP, Xerox, and Canon lead for brand experience. In Western Europe, Global Imaging Systems, Xerox, and InfoPrint lead for brand experience. Xerox is the only company that is a top three leader in both North America and Western Europe.
ser print aged n a m
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Figure 2: Brand strength index North America
“MPS has repeatedly been shown to save organisations of all different shapes and sizes across the world money, time and resources” Brand experience
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1. Think about your organisation’s needs and what is most important to the organisation. For instance, is a vendor that is skilled in managing the change environment more important than a vendor that is skilled in environmental sustainability? This year Photizo Group is publishing a global Satisfaction and Loyalty Report. This report will rank vendors on many different satisfaction and loyalty factors, which will help end-users determine the vendor’s that match their needs the best. 2. When considering a vendor, also consider the software the vendor uses. All software tools are different. Depending on your contract, you could have a lot of interaction with MPS software. For more information on the software, Photizo Group is publishing a three-phase Software Tools Study. The first phase is available, with the other phases to be released in the first half of 2010. 3. Develop a “road map” for the future of printing in your organisation. Most contracts last three to five years. For this reason, you should think about where you want your managed print services to be in three to five years. For most organisations, it isn’t feasible to implement every part of the MPS in a year. It may be more feasible to switch out all of the devices in the first year, start removing the in-house resources during the second year, and have everything completely outsourced in the third year. Only you will know what works best for your organisation. 4. Keep an open dialogue with your vendors. The more open you are in terms of sharing your objectives, the better the vendor’s solution can be. Also consider getting expert, independent advice, which may be more objective than proposals from vendors, who still want to sell hardware. n
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HEAD TO HEAD
Putting MPS to work
The Managed Print Services (MPS) market, which has mushroomed in recent years, is poised for further exponential growth. We catch up with two industry experts to find out why.
THE PANEL
Guido Vanherberghen is the President of Pitney Bowes Management Services International. Vanherberghen joined Pitney Bowes in 2003 as Vice-President of Business Transformation and has been in his current role since March 2006. He started his career with General Electric and moved into management at Software Sciences (now IBM), Honeywell Bull and spent 10 years at Unisys.
Henry Blum is the Marketing Director for Imaging and Printing Group Services for HP EMEA. Having joined HP in 1983, Blum has a long history within its imaging and printing organisation, including Business Development Manager, Marketing Manager for Digital Workplace Services and Technical Marketing Manager for IPG in Europe.
How can MPS help organisations to optimise their imaging and printing infrastructure as well as improve workflows? Guido Vanherberghen. As technology develops so managing business functions such as print and mail becomes more complex for organisations without the necessary breadth of knowledge and expertise. Bringing in this expertise in the form of an MPS partnership immediately opens the door to the latest solutions and techniques. Expertise can drive efficiencies and boost quality. Examples include best use of colour print, managing employee access to print so that brand integrity is not endangered, re-designing documents to eliminate pre-printed stock, managing print procurement and much more. True efficiency comes from the move away from a reliance on departmental desktop devices to a centralised print operation – whether in-house or remotely situated. Henry Blum. The big benefit of MPS for global enterprises and large organisations is the cost transparency and potential cost reduction it brings to an organisation’s printer and copier fleet. A fleet’s cost would often spiral out of control, since ownership was previously handled by three different departments: IT for the technical deployment and maintenance of printers, facilities management for the copier or MFP decisions and supplies management and purchasing to pay for the equipment and supplies. With the added cost transparency and a
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structured approach to the deployment, MPS allows for a controlled environment where printing cost can be reduced dramatically and the equipment can now be integrated into the overall workflows of the company. Thus printers and MFPs become an important business productivity tool that can help to materialise even more dramatic cost benefits, as for every dollar spent on equipment, about US$9 is spent on workflow related processes. In these tough economic times, organisations are looking at their bottom line. How does MPS help to slash costs and free up time? HB. When looking at deploying an MPS solution, HP fi rst does an assessment of the office print landscape to see where costs can be cut; for example, the average enterprise has 90 different printer models from six different vendors, which are up to nine years rs old. All these need application support, driver updatess and expensive sourcing of breakfi x support and supupplies. After the implementation of an MPS, the fleet is reduced to a handful of models, which can be easily supported and operated with one single driver. Thus costs can be reduced between 28 percent and 45 percent compared to the status quo. Additional management services can be easily integrated: namely the introduction of secure printing strategies rees. duces threats through confidentiality breaches. Integrating pull-print technology means that a PIN he printer or swipe card is needed to trigger a print job at the
the organisational, workflow and security benefits to be found under shift ing from a paper-based to a digital-paper environment. GV. We are delivering productivity gains, cost efficiencies and improved print quality for customers across a number of sectors including financial services organisations, government agencies, retail, travel and transport, telecommunications, utilities and industry. Customers are realising tangible benefits from our MPS offering. Our services have been instrumental in reducing real estate, staffi ng and future proofi ng costs. We are delivering competitive advantages to our customers by providing innovation without the need for massive in-house investment and giving these businesses a significantly faster speed to market with critical customer communications. Centralised Centralis management information tools provide better control over operational spend. Routing work to a central location locat improves efficiency, control and visibility, eradicating ica the expense associated with high-cost desktop d devices, toner usage, staff time, fleet management a more. and
The average enterprise has 90 different printer models from six different vendors
user interface, thus eradicating excess print jobs sitting idle on printers and reducing overall page volume further. GV Our research shows that organisations across Europe are wasting €14.1 billion annually because of fragmented print management. Th is is an astonishing figure at a time when budgets are being minutely scrutinised. We are typically saving businesses an average of 30 percent by streamlining print processes. Workflow control soft ware plays a huge role here, providing businesses with an instant, holistic view of their print spend and helping to control budgets and efficiently schedule work. How are your MPS offerings helping organisations today? Do you have a recent success story? HB. There are many examples of companies significantly reducing expenditure through deploying MPS – one being Telenor, Norway´s leading mobile telecom provider. Telenor recently signed a contract with HP whereby the printing fleet was reduced by 1200 machines to 200 HP multi function devices, with corresponding reduction in maintenance and support. In the UK, Teeside University wanted a new integrated print environment that would improve the student experience while reducing costs. Print costs have since been reduced by UK£132,000. With increasing amounts of content and information being shared digitally and through networks, the print world is changing dynamic and organisations are printing smarter. MPS solutions, especially when integrating multi-function devices, help this transition and ameliorate
How do you see the MPS market evolving over the n next 12-18 months and how is your company best p placed to cope with changes in customers’ needs? GV Remote web-access to print services is one area of GV. deve Our solution enables businesses to submit development. print jo jobs over the web to be processed at our facility. Th is gives businesses busin job-by-job access to powerful best-in-class print technology from the desktop. Additionally, customers and recipients of printed output increasingly demand top-quality and innovation. Our MPS offering provides businesses with the necessary expertise to extract maximum quality and value from available technology. And it’s not all about the print. Finishing techniques such as folding, laminating and shrink wrapping are developing apace and are often critical marketplace differentiators. Transpromo is another fast-developing area – the addition of promotional marketing messages onto bills, statements and other mandatory communications. Again, our MPS expertise is opening the door to this technique to businesses who might otherwise lack the necessary skills and resource to fully exploit a rapidly expanding market opportunity. HB. The MPS market is one of the most exciting growth areas in business technology, with an estimated 30 percent of global enterprises currently deploying MPS solutions – meaning there are still 70 percent of global enterprises that are not. Th is is an excellent opportunity for us as the market leader, not just to drive down costs across these enterprises but also to help them increase their environmental benefits of MPS on a large scale. The fi nancial services industry is a great example of how one vertical market is leading the way in MPS adoption, with eight of the world’s 10 global banking organisations currently using HP MPS solutions. HP is a global IT company and thus has the ability to seamlessly integrate printing into the overall IT infrastructure and the workflows of our clients and to allow them to deploy a coherent IT strategy anywhere in the world.
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EXECUTIVE INTERVIEW
A polished performance Bob Paul discusses how to get the most out of application performance management.
What are the main factors driving organistions to adopt application performance management (APM) disciplines? Bob Paul. We are in the midst of a revolutionary change in how we interact with customers using technology. Our customers and users are increasingly mobile and may be distributed across the globe. These customers use an incredible variety of devices, operating systems and browsers to interact with our business. Applications themselves are becoming increasingly collaborative and complex. And technologies such as virtualisation and cloud computing promise dramatic cost and agility benefits to organisations. These are all exciting changes but they have significant implications to IT.
“The only way to effectively manage today’s ‘borderless applications’ is through an end-to-end approach that encompasses both the enterprise and the internet” Which industries particularly need APM, and why? BP. Any industry relying on applications to underpin critical business processes needs APM. Today, this spans businesses of varying scale, sector and maturity. Certain markets like travel and tourism, retail and gambling/ gaming have undergone a tremendous transformation from being traditional call centre and branch operations to the having majority of their business conducted online. What are the major challenges of managing and optimising customer-facing, internetdelivered applications? BP. One of the biggest challenges is that applications are increasingly ‘borderless’, meaning
that the application is no longer fully contained within the data centre. The application delivery chain now extends from the traditional backend infrastructure out onto the internet, with pieces delivered from third-party providers such as content delivery networks (CDNs) or cloud service providers, using ISPs and wireless carriers to deliver that content to a wide variety of devices. The only place where these borderless applications come together as a whole is at the user’s access device, resulting in only partial control of this complex application delivery chain. If performance deteriorates in any one of these dependencies, the quality of service your application delivers is impacted and your brand reputation suffers. Another challenge is managing browser diversity and the increasing number of devices used to access the internet. For example, popular new browsers like Internet Explorer 8 and Google Chrome handle dynamic content differently, multiplying the risk of performance and compatibility issues for web pages and transactions. Testing web and mobile compatibility for every browser type, version, operating system and mobile device is time consuming and can be prohibitively expensive, but failing to do so results in lost customers and irreparable brand and revenue damage. How should organisations implement comprehensive APM? BP. Achieving comprehensive APM maturity in a short timeframe is possible, especially if a proven stepwise approach is adopted, where people, process and tooling are evolved at a manageable pace. The first step is to gain visibility of the end-user application experience so you can become proactive in identifying and quantifying performance issues before they incur major business impact. The second is to extend visibility deeper, tracing the user’s transaction through the complete application delivery chain (desktop through data centre) to achieve rapid fault determination and re-
covery. The third step is to deliver high levels of business and IT alignment through correlating and reporting application performance and business KPIs through real time role-relevant dashboards. With this structured approach, and the right tools, you can see benefits fast. Please describe how Compuware’s APM solutions have helped organisations recently. BP. The only way to effectively manage today’s ‘borderless applications’ is through an endto-end approach that encompasses both the enterprise and the internet. Compuware provides the only solution that spans this entire application delivery chain from a single, unified dashboard. Our customers include 46 of the top 50 Fortune 500 companies and 12 of the top 20 most visited US websites. Transaction time reductions of over 50 percent and downtime reductions of similar magnitude are not unusual. Th is improvement often drives a significant increase in new website visitors being converted into fi nancially transacting customers. These typical returns are realised in a short space of time and deliver a quantifiable impact to business, but the long-term rewards are most noticeably the preservation of our customers’ brand and reputation.
Bob Paul has served as President and COO of Compuware Corporation since 2008. In this position he has re-engineered the company’s strategy, positioning Compuware for a strong future. Previously, Paul was CEO of Covisint, now a Compuware subsidiary, which represents one of the fastest growing SaaS/ PaaS solutions in the market.
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CONSTRUCTION
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What were the reasons behind the company’s decision to migrate to a Cable & Wireless communications network? Terry Walker. We’ve moved to Cable & Wireless because we felt we’d get a more responsive approach and more of a partnership approach with them. So far that’s proven to be the case. Prior to that we’d been with BT for 10 years. There was a lot of dissatisfaction with BT: it has been broken into various parts and it’s very hard to find a way through that. The organisation is not transparent to the client and I didn’t feel that they were sharing our problems. There was a lot of pain but it wasn’t being shared. Mainly it was to do with getting sites set up quickly. Getting people on site to do the telecoms work when they said they were going to be there. And resolving issues that came up. And it was just not happening in a very effective way. Did you consider contracts with other communications and networking companies? TW. There was a tendering process and we took the view because we’re pretty stretched resource wise that we would use a third party company for this. They are called Total Network Collective. They fronted it for us and they did a very good job. We did a virtual RFP first and they recommended companies which they thought would meet our requirements. We chose Cable & Wireless because we felt they were onboard in terms of a partnership approach. We wanted shared responsibility for resolving the issues. And one of the key things was that we signed up to a performance bond, so if they don’t perform then we get some sensible recompense for that. With BT they do pay if they don’t respond in time but they pay nothing that’s worthwhile. It means that Cable & Wireless have put their money where their mouth is in a way. They are sharing the load with us. Taking the risk. We’re currently in the process of migrating to Cable & Wireless and are still actually finishing that off. We’ve been going on that for about six months now. And we’re letting some of the BT lines just run out naturally.
BUILDING CONNECTIONS
Having just signed a €5.5 million contract with Cable & Wireless to build a new communications network, Kier Group’s investment in IT shows no sign of being dented by the recession. But while technology remains a top priority for the construction giant, head of IT Terry Walker tells CXO that there are tough times ahead in 2010.
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t venture Reading Central, a join with Invista Real Estate
Kier employees on site
Why is it so important for a company like Kier to have a robust communications infrastructure? TW. We have offices and sites across the country and obviously the sites are fairly fast moving. Some can last as little as 12 weeks and others go on for years. Any company needs good internal communications. But when you’re dealing with construction you have to set up a site at very short notice and we’re dealing with very large clients. We work in frameworks whereas in the past people would just want email, now they are using collaband we have to be able to both tender electronically and receive inoration software. We’re also using document management systems structions electronically so when we go on site we need to have and web based systems so we need to move a lot of data rapidly access to all the contract documents and be able to deal with to and from the site. Mainly we’re going to get better bandKier Group amendments electronically. We also need to be able to width than we’ve had before and resolve any issues we had. run collaboration software on site. This may be mandatemploys more than ed by the client and if we don’t have that we can’t start. What are the challenges involved in running techWe can’t dig a hole, we can’t do anything because we nology on so many different construction sites and don’t have the detail we need. So it’s critical these days are there uniform systems across all your sites? people that as soon as we start on site we have the comms infraTW. We offer different types of products depending on the worldwide structure in place. The comms lead time is the biggest issue size of the site. If I’ve got a short run 12-week site then I’ll for us from an IT perspective. probably put in broadband. Where we’ve got a large project, say building a prison that is going on for two or three years, What new technology will Cable & Wireless’s WAN introduce to Kier’s then we’ll put in pretty much office based comms. At one end of the spectrum the main criteria is to get a rapid site set up as fast as possible. construction sites? On the other hand we want resilience and back up and stability. Therefore TW. Cable and Wireless have got some interesting new products which I we over engineer the line to some extent. think will help us. We’re going to get some more bandwidth on site. And
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Can you describe a particular project the company is working on and the IT set-up on the construction site? TW. One we’re doing currently is a prison called Featherstone Prison in the West Midlands and we’re putting in several bandwidths there. We are going to sell some of that bandwidth on to our contractors. So rather than them having to set up their own comms we are going to provide the whole comms side. Cable & Wireless provide the line and are helping us to set up the technology and they are helping us to subdivide the technology so we can sell on the link to our sub contractors. So it’s a close working relationship with them to get that set up.
are very high. There is a big difference in costs in Dubai compared to the UK. We’re just looking at doing some work in Saudi Arabia and that also represents a bit of a problem for us. This is to do with the infrastructure because the places where we work are not necessarily next to any major conurbations. It will be dealt with locally. How high a priority is IT within Kier and how crucial is it to the smooth running of its operations? TW. It’s pretty critical these days. A large part of our business now is also support services. That is very much process driven and the IT systems drive the business. Support services is a 24/7 365 days a year operation so
Kier works on many international projects, including in the Middle East and Dubai in particular. Do you run the same systems in those countries as you do across UK sites? TW. Not directly because in Dubai, for instance, the cost of comms is very high and the cost of putting a line back to the UK is prohibitive. So they use their own local internet service providers in Dubai. Working in Jamaica, we do have comms directly to Jamaica. And they use our systems based in the UK. It depends which country we’re working in and the cost of putting in the solution. Dubai is particularly difficult because the comms costs
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keeping that up and running can be quite a challenge. On the construction side we’re moving to a more rapid site set up pace. We are also moving higher volumes of data and we do rely on IT for receiving all this information. IT is seen by the management as a business tool. We have a top-level steering committee, which is a subset of the board so it is seen as important. Traditionally IT spending in construction is not as high as some other industries but I do I think that is increasing slowly. And I think IT is more important than ever now in terms of communicating with the client and managing the business. What IT projects will you be working on at Kier in the year ahead? TW. This financial year we’re not looking at new projects, we’re looking at consolidating what we’ve got. There’s a lot of work going into buying better so we’re reviewing all our suppliers. The Cable & Wireless choice was one of many buying operations we’ve got going on. We’re currently looking at hardware, voice and printing. We’re doing a lot to try to buy better and standardise what we’ve got. Is managed printing services an area that you will be looking at in particular? TW. We’re going to look at that. It will be difficult for us to do but we’re certainly going to move along that way. We’re going to go out with a tender in the next couple of months. We’ve currently got far too many printers of too many different varieties across the group, bought in different ways. So we need to buy better, standardise and reduce the asset base. Are there any other aspects of IT that you could considering contracting out? TW. Not specifically at the moment. We’ve got a good in-house team and we can do most things ourselves here, more cost effectively than going outside. We go outside for specialist help with back up all our systems and we do that extensively. With our in-house team we don’t really need to rely on outside people too much and we can probably do that more cost effectively ourselves. Many European companies are currently considering the benefits of cloud computing and virtualisation. Are these areas you and your team are looking at? TW. We have had a look at that. We think that will come in but I don’t think it’s in its full form that we can use at the moment but we’re keeping a close eye on it. We’re moving heavily along the virtualisation route because that will save us costs and reduce the hardware requirements. We are looking at servers because for a given investment I can reduce the cost of running a service. I don’t need to buy new hardware every time and it gives me a lot of benefits in terms of disaster recovery. I can recover a system very quickly if it is virtualised. The global construction industry has been hit hard by the economic downturn. Has this affected spending on IT within Kier?
TW. Yes, in the last year we’ve made a move to centralise our IT. In the past we’ve had a hybrid model. Centralising IT has resulted in some cost savings coming out of that. We’re also looking at putting in an asset management system, which would include both hardware and software. We’re finding that hardware is sitting around in various offices. It’s spare and not used whereas I could use that elsewhere in the group. Software, we could put in software harvesting so that if somebody is not using an application we could take it back and reallocate it to another person. There is uncertainty. We are not sure where the bottom of the downturn is going to be in terms of construction. We are thinking it will probably be late this year that things are going to get quite tough. We are building projects that were designed before the recession now and there is not enough stuff going through the design phase for us to build later in the year. The private sector has been badly hit and we’re doing quite a lot of
“IT is seen by the management as a business tool” Terry Walker
public sector work and that has held up well but that may be affected by a change of government so there’s a lot of unknowns at the moment. Does this situation make it difficult to forecast what should be spent on IT projects in the year ahead? TW. Yes it does. We’re going into the budgeting process for next year and I don’t quite know what the finished position will be at this point. I’ll go with a wish list then we’ll have to look at whether we can justify that. The situation is very patchy. Some bits are looking quite positive but other bits we just don’t see the work coming through because of the private sector. We think it will be very difficult for the next 12 months at least. You have worked at Kier for 10 years. How would you describe the experience of working there and how has it changed in the time you have been there? TW. It’s very big. It has traditionally been largely decentralised so it’s quite difficult to co-ordinate things such as IT across the group. Centralising IT has been quite a challenge for the group to get their heads around but it’s throwing up a lot of savings. I’d say also that Kier is a very people orientated company. There’s now much more business understanding of the need for IT and there’s a better understanding of the value cost model. I think we’re moving in the right direction. We’ve achieved a lot in Kier in the last decade. n
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TROUBLESHOOTER
The volatile rate of freight How can companies with global supply chains deal with widely fluctuating freight rates? Geodis Wilson’s Chief Marketing Officer Kim Pedersen explains that partnering with a global freight forwarder is a strategic way to tackle this tricky situation.
of the total cost of their products, so understanding the fluctuations is of strategic importance.
e last nine months, The challenge: Duringvethfluctuated by as much Strategic partnership global freight rates haJune of 2009, a 20-foot But what if these companies reas 400 percent. In to Europe cost US$500. thought their traditional ‘supplier’ container from Asia ainer costs about US$2000. approach to freight forwarding? Today, the same cont , many companies had built And what if they formed a strategic partnership with a large, global Before this happened sing down production fafreight forwarder? Th is opens up business cases for clovour of outsourcing to Asia. fa in pe ro opportunities for a more proacEu in s e ciliti ocketed, some yr sk ve ha es c i pr ht tive approach to solving straeig fr Now that omerang’ ‘bo a in ht ug ca el fe s tegic problems. A long-term e i an of these comp rategy st g cin ur so eir th partnership with a global ng ti situation, re-evalua change. Other companies surf freight forwarder elimievery time the rates proactively and change sourcing nates unavoidable issues these fluctuations normally encountered strategy accordingly. when working with mul-
K
im Pedersen says: There is no question about it – freight prices have been wildly inconsistent. In true supply versus demand form, freight rates went down in 2009 as volume plummeted by 30 percent. Now that volumes are rising, rates are going up as well. Th is has affected all businesses and industries, but in different ways. Companies in areas such as high-tech and pharma are not as sensitive to these changes, because their freight costs are less than five percent of the total cost of their products. One well-known laptop maker told us that they didn’t really care if the rates went up or down, as long as the rates they were paying were the same or lower than those of their competitors. On the other hand, companies who make low-cost products – products like textiles, toys and many consumer goods – can fi nd themselves in a tight spot. For them, freight costs can represent up to 40 percent
tiple suppliers on short-term service agreements. Yes, short-term contracts might make it easier to leave one supplier for another due to cost reasons. However, starting from scratch with a new supplier can easily take up to 100 days of implementation. Renegotiating
chain. Large companies need a large, global logistics provider to be able to share risks in a volatile environment. A long-term partnership opens the door to the increasingly common practice of locking in freight rates for a set time period such as two years. There is also a new trend we are keeping our eye on – hedging fi xed prices for containers, or only on one cost element such as fuel surcharges – to deal with unstable oil prices.
Flexibility and stability The fi nancial crisis seems to have stabilised. Freight rates are calming down a little, but fluctuations between 100-200 percent are going to be par for the course in the foreseeable future. Th is reinforces the fact that companies who are affected by freight rate changes must ensure enough flexibility in their supply chain to be able to capture opportunities and source in the cheapest possible way. The best way to do that is through a long-term partnership with a global freight forwarder. The approach reduces costs, frees up resources, provides flexibility and creates a more stable
“Companies who are affected by freight rate changes must ensure flexibility in their supply chain” prices, setting up and integrating IT and EDI systems – they all use up time and resources. A long-term partnership approach allows companies to work more closely together to investigate new ways of saving freight costs. Vendors can still be changed quickly (i.e. textile companies can change sourcing from China to Turkey), but with consistent cargo visibility to avoid ‘black holes’ in the supply
environment – both operationally and fi nancially. Th is just makes sense. After all, their products have to get to the shelves on time, and they have to be priced to sell. Kim Pedersen is CMO for global logistics provider Geodis Wilson. He has more than 20 years of experience in supply chain management, both from a customer and provider perspective. Building on his experience in Scandinavia, his current role based in Amsterdam for Geodis Wilson brings a global view to logistics solutions.
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A force for change The financ financial cial crisis forced internationall b banks anks to rethink the way they have functione functioned ed ffor or decade decades and to face new levels of scrutiny and regulatory compliance. But, says Gary Greenwald, Chief Innovation Officer of Citigroup, it has also ushered in a new era of forward thinking when it comes to technology. He tells CXO why. How did the financial crisis change the way banks use technology to drive business? Gary Greenwald. I think last year and the crisis we’ve faced has brought to the surface some inherent challenges around how technology is impacting or has impacted our ability to respond to the crisis. If you look at how banks are organised, particularly global banks like Citi, disparate systems and platforms in many countries have to come together to make the payments and transactions banking system work. When you have an event like the Lehman bankruptcy, being able to show where the exposure is and where the unsettled trades are, ends up being very complex.
the investment because my view of regulatory spend is that it is not a competitive differentiator. The goal should be to do it to meet whatever requirement is on the table, but to do it cost effectively and hence free up capex and investment bandwidth for things that do drive business such as new markets and differentiation with clients. We’ve been lucky at Citi to have an investment budget that has obviously accommodated the regulatory requirements. But given the importance of transaction banking, people are innovating and getting to spend on building things over and above just the regulatory things. So I think this has been a good year, and a surprising year for innovation.
What did the crisis highlight as the most important technology requirements in banking? GG. It brought to the surface several technology imperatives. One is the ability to track the flow of data in the same way that say, FedEx can track the delivery of a package. We have to have more activity monitoring software in order to do that. Another technology imperative it has brought to the surface is the need for standardised data. If someone asks the question, ‘what is my exposure to Counterparty X?’ we have to have common identifiers and data nomenclature so that we can put that information together. And without that you’re flying blind and you can’t react to those events or really understand the risks you face.
How would you say the economic downturn has affected the management of businesses both globally and locally and how has it changed the way banks approach innovation? GG. I think it was a Stamford professor who coined the phrase ‘crisis is a terrible thing to waste’. Th is has shown up a lot this last year. I don’t think we wasted this year, in terms of innovation. I think we’ve actually found the real pain points of clients, corporates and counterparties and have worked with them to fi nd solutions, many based on technology crisis. We’re doing work around online analytics and digital signatures. The need has been there, even with this economic crisis, to do that innovation. In terms of the global versus local markets, it’s always a balance of how you run a global market and respond to local nuances market by market, yet get scale. I think what the crisis may have forced is a little more discipline. I see discussions going on within Citi and also in other banks around how to innovate with scale, allowing last mile customisation input from people on the ground. But this means doing it on a global platform with a common infrastructure because otherwise you have a
How do you think regulatory compliance in the wake of the financial crisis will affect banks’ spending? GG. I think there are opportunities to do regulatory spending in a smarter way. Perhaps banks could share the costs of that regulatory spend with other like-minded institutions. Maybe banks could do it once then share
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thousand flowers blooming. That’s a very expensive non-scalable way to do innovation. What’s been learnt from the financial crisis in terms of risk management? GG. One of the issues that I like to talk about regarding banks repositioning comes back to digital identity. Think about the growth in the world of credentialing people for online healthcare records access or access to ecommerce sites. That’s a core competency of banks. We are trusted third parties, we know your customer-type processes and we know about the safe and regulated storage of information. I think banks pushing out in that space is a way, in the minds of consumers or businesses, to retake or make sure we properly claim ground that is a core competency of banks. I think if you’re a student of that space you’ll see more and more activity by banks in this world of digital identities and online credentialing. How do you think the globalisation of financial services will evolve in the next decade? GG. As an innovation guy with a technology and analytical bent, the last thing I want to do is be the crystal ball predictor of what governments will do. Clearly the crisis of the last year has pointed out the interdependency across financial markets. And the need for transparency and importance of governments allowing trade to flow. If I were a wishful thinker, I would say we would like to see that continue. The cost of doing business where there are hundreds of disparate regulations as opposed to fewer that are homogenised, clearly makes sense for many parties, like banks.
Citigroup is one of the world’s biggest financial services institutions with 350,000 employees worldwide and 20 million customer accounts based across over 100 countries. It is made up of 15 different brands, including Citibank, CitiFinancial, Citi Institutional Clients Group and Citi Private Bank. It is organised into two main segments into which the different brands fall; Citicorp and Citi Holdings. The organisation originated in 1812 when Citibank was first set up.
ers in the ecosystem get together to work out how we can deliver value to the different constituencies. As a bank we need to be very much involved in and at the forefront of innovations in mobile banking. It is going to be part of a critical reinvention of core aspects of banking, both on the consumer and institutional side. Do you think non-banking companies will use mobile banking technology to challenge banks with new payment service businesses? GG. Banks have to be paranoid in thinking through threats to business models. We need to be forward thinking, forward looking and at the same time work backwards from where value can be created and turn that into a business model. So I think mobile and other technology is bringing in a broader set of players to the payments industry but that does not mean there’s no role for banks. What it means is that we have to be very creative and innovative in terms of technology but also business models.
Is there a danger that the banking industry could become over regulated, hence risk averse? GG. I think that in the transaction banking industry, the risks are both well understood and reasonably well What particular areas of innovation are you focusmanaged. The crisis in the last year was not in transacsing on at present? tion banking. I spend a lot of time with our regulators. GG. One of the interesting statistics at Citi is that They like that we’re innovating, because where we’ve Gary Greenwald year-over-year in our transaction banking business innovating is tied to the re-engineering of processes our investment in new technology is up significantly. that result in control and efficiency in the whole finanWe have just announced the launch of a new online banking platform cial supply chain. The regulators are supportive of innovation and they for corporates called CitiDirect BE for Banking Evolution, which brings understand that it’s critical to the business model of a transaction services together input from our clients on the pain points they have in running business. their treasuries. It uses visibility, control, working capital efficiency, process simplification and new technologies to create a next generation Transaction banking has been the most resilient area of banking online experience that really tackles the next set of problems in an open during the financial crisis. Would you put this down to innovation? architecture way. It operates with an open portal connected to SWIFT, GG. I put it down to a number of things. Clearly innovation has been very messaging and mobiles. We see this as core to Citi’s continued innovamuch part of transaction banking over the years as technology has allowed things to be done that couldn’t be done in the past and as regulations have tion in the transaction banking market. changed to allow globalisation. And client requirements have evolved to more sophisticated management of liquidity and working capital. So I Currently around six out of seven payments in euros are made using think part of it is tied to innovation and another part is tied to the busicash. How important is it to focus on epayments and mobile payness model of what transaction banking is about as a collector of liabilities. ments instead? As a collector of fees in a very predictable way, that’s in contrast to other GG. I think it’s very important. It’s at the stage where there have been lots businesses that have a little bit more volatility. Having a transaction and of controlled experiments, pilots and discussions with partners. I think the relationship between mobile technologies, mobile capabilities and bankservices business at the core of a bank is a very important thing. Citi, with ing is here to stay. What needs to change are the use cases, value proposiits renewed focus, understands that. One of our aspirations is to build up tions and business models around those. That’s going to take a little time as payments and transaction banking to be an even more important core of banks, mobile network operators, handset manufacturers and other playthe company.
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EXECUTIVE INTERVIEW
Survive and thrive Peter Houillon discusses why a firm commitment to training is vital in good times and bad. Many employers chose to maintain commitments to training and development during the recession – why do you think this is the case? Peter Houillon. Employees are moving between organisations with greater frequency, and even making one or more career changes over the course of their working lives. Yet the reality is also that people expect their employer to provide learning and development opportunities. It’s not so long since employers were engaged in a ‘war for talent’ – and that meant not just rewarding people well but also demonstrating a deeper commitment to development. And of course, we’ve had Generation Y coming through the ranks, making greater demands on their employers to help them enhance their employability, supporting them to develop soft skills alongside the more formal pursuit of professional qualifications. When the recovery starts to look more sustainable, people will be quick off the mark to seek new job opportunities if they feel their development has suffered as a result of neglect by their employer.
Peter Houillon is CEO of Kaplan Professional UK, which provides training for professional qualifications and higher education programmes to more than 55,000 domestic and international students. Previously, he was Chief Operating Officer and Head of the Kaplan Centre in London. He has more than 20 years’ experience in managing and delivering adult training and education.
How are advances in internet technology impacting on the training choices employers face? PH. Online products and services are opening up so many new possibilities for organisations and learners alike. While I don’t anticipate the end of classroom training, we can now deliver ‘live’ over-the-internet training that is increasingly able to mirror the classroom environment for those who can’t access a Kaplan Centre due
“Online products and services are opening up so many new possibilities for organisations and learners alike” to location or time constraints. And the costeffectiveness of online and blended learning courses makes them more attractive to employers who may otherwise have not made that investment in their staff. And, there’s far more that we’re doing online – for instance, Kaplan’s pages on the social networking site Ning.com, where learners can read and discuss Q&As, or catch up with tutors’ blogs. Our technology team is continually developing new ideas and employers and students are highly receptive. Kaplan has recently been accredited to award its own qualifications, in partnership with employers and industry. What will be the advantages for clients of Kaplan Professional Awards? PH. Employers are likely to enjoy improved retention levels, with people feeling more positive about themselves and their employer if they know they’ve been supported to do a better job. It’s a clear demonstration that the employer is giving something back to its em-
ployees – especially as the qualifications that we’re going to be developing will be on the Qualifications and Credit Framework, which makes them transferable. And we consult throughout the process with the originating employer, observing its staff in the workplace, asking them about their jobs, attending existing training events and evaluating alternative methods of assessment. I can tell you that many clients have already told me how excited they are by the prospect of working with us in this new way; it’s an initiative where we will be able to add significant value. You are one of the first training providers to be recognised as a professional qualifications awarding organisation. Why do you think it has taken this long to get the involvement of the trainers? PH. To be successful, you need extremely close working relationships with employers and government departments, as well as being able to meet very strict requirements to ensure quality. You also need to demonstrate that your operations as an awarding organisation are entirely separate to those of the training division. These are quite onerous conditions. We were successful in part because of our longstanding track record of developing unrivalled links with industry. These go back in some cases 50 years. We will use these to develop the highest quality provision specifically targeted at the needs of the workforce. What’s the next step for Kaplan Professional Awards? PH. We will work with employers to develop qualifications specifically meeting needs within their sectors and will then submit these qualifications to the UK qualification regulator for approval to be included on to the Qualifications Credit Framework. We will also be looking at existing qualification provisions designed by Kaplan globally, with a view to developing these, where appropriate, for the QCF. This will create a truly global strategy of learning.
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TELECOMS
A sharper
focus
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In today’s fiercely competitive telecoms space, BT is seeking to diversify its revenues to cater to changing communications trends. But morphing yourself from a predominantly telco business into a global network and IT services provider creates unique challenges, as Joaquín Schmidt learns during an interview with BT Group CIO Al-Noor Ramji. BT recently merged its CIO and CTO functions. Why was this decision taken – was it about making cost savings and better efficiencies within the group or for other reasons? Al-Noor Ramji. I wouldn’t be stating the truth if I didn’t say that we did save money. But that wasn’t the intention. The issue was to accelerate what we call ‘concept to market’. In plain English, it’s about making sure we deliver new products faster to the marketplace by hooking up the research functions, innovation functions, all the way through to the marketplace. This has become crucial for us because you have people worrying about the top line as well as the bottom line. Also, you need to make sure that people who are working in similar disciplines interchange, so there are no silos between and far more opportunity to advance in one of the fields. For instance, lots of architects would like to get into research and vice versa. The size of the CTO function wasn’t huge and we will grow it as we need to as opposed to just going in one direction. We also need to make sure things happen faster so bringing two organisations together was one way of making this happen. The third reason was about convergence. We’re increasingly getting software lead-in, regardless of whether it’s network or product or IT. You can’t install a new network now without software being the long pole in the tent. Do you foresee a trend developing and other companies bringing the two roles and departments together? AR. I spent most of my [working] life outside telcos where it is completely normal. I always had a CTO reporting to me. It’s more to do with telcos, I think, than anything else, where the CTO used to run the networks and research and so on, and the CIO ran what you would call the OSS (operational support systems) side. As software begins to play a bigger role you will begin to see more companies following the way Google has done things with no separation between the CIO and CTO. Vodafone, for example, has gone the other way and the CIO reports to the CTO. So yes I do so see this happening more and more but I don’t know whether it could be called a trend. It should certainly happen if software is a prime driver.
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Blue-sky thinking Could you explain about the benefits of the creation of your five Global Development Centres and the reduction in complexity that the Virtual Data Centres (VDCs) will deliver? AR. First and foremost in a global organisation, which also does so-called outsourcing and offshoring, you need to distribute the people to be near customers, to be with their colleagues and to be organised in such a fashion that the ‘lead to cash process’ is laid out on the floor. If you imagine that going from initial lead or a contract with a customer all the way to billing and then getting paid for it, is a lead to cash process. So how do you lay it out physically on a floor, in a building? Then you combine situating the customer in the middle of it, although the customer comes and goes as you develop things, and link them up by white boarding and video linking in such a natural way that people will actually speak to each other to avoid travel. Avoidance of travel has financial advantages and it speeds up collaboration because you just speak. The microphones are hanging off the ceiling like lights so you speak normally, share things on a white board and you touch it with your finger. It is about a little bit of technology, a little bit of physical collaboration, and a little bit of lay-out that forces people to think through what their customer is going through. As you can imagine, if 24 steps were taking six months to get through it would tell you pretty quickly the customer isn’t going to be too happy. As well as massive savings in collaboration, we found at least a 30 percent saving in costs. How do BT’s VDCs help in slashing your carbon footprint? What other initiatives are you undertaking in an effort to be more ‘green’? AR. The green issue is something we have been doing for a long time and believe in a lot. The VDC obviously has different flavours, including power savings. Most servers in a data centre are running at between five to 15 percent
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BT subsidiary launches mobile ‘cloud’. Dubbed “Silicon Valley’s first phone company”, Ribbit Corp. was snapped up by BT in 2008 for US$105 million. The business recently launched Ribbit Mobile, a free web-based service that allows mobile phone users to manage calls, messages and phones in the ‘cloud’, as the company’s founder and CEO Ted Griggs explains: “The basic idea is that if you have a mobile phone and you have a computer, it links them together, so that if you’re not able to answer your mobile phone, you can answer it on your computer. If you’re not able to answer it on your computer, it will take a message and transcribe that message into text, and then it will send that back out to you, either as an email or an SMS.” Ribbit Mobile’s target market is the mobile professional and the service will work on almost all of the 60 million mobile phones in the UK today. “In the future, no one will buy a mobile phone without a cloud backup,” says Griggs. “Ribbit Mobile represents the first step in that future.”
and at the top end, where people are really good at managing servers, they run at about 30 to 50 percent. By virtualising that layer, you immediately get a reduction in power consumption. And by structuring your data centre in such a way that you only blow air. For example, you suck out air from the top of a rack, whereas typically what you do is you’re blowing cold air either from the top or from the bottom and you’re trying to cool the whole room. On the next layer you’re virtualising the CPUs to actually cross-share. Whereas before you would have disaster recovery as a separate thing, you no longer need that because one data centre will serve as a back-up for another. Or in the same data
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centre, you’ll get virtualisation both within and across data centres. That gets rid of the whole data centre, if you have enough data centres. Clearly, if you’ve only got the one then it doesn’t save you anything. 21CN is one of the biggest IT programmes in the world. What lessons have you learned from this huge project and how much has it delivered thus far in cost savings from the original UK£1 billion target? AR. The total cost savings so far amounting from the switchover to our 21CN network are UK£600million. In terms of lessons learned, when you’re running a very large programme you forget the human element, because you focus on the technology and the massive spend as well as the excitement around building something new. There has to be a migration, because you can’t move everyone overnight from one system to another, or one network to another, because, quite frankly, most of the customers don’t care. Unless you give them something brand new, they don’t want to move. The migration period takes a long time, and people don’t plan for the migration period as much as they plan for the destination. It’s a bit like the desire to get to the top of Everest. You assume you are just going to land by helicopter when in fact you forget you need to have ropes, tents and oxygen on the way up. So I think the lesson learned was migration planning, which is a lot bigger than just the final destination would lead you to believe. For example, part of our plan is to replace the little electronic messages that come up at bus stops to tell you how long it will take for the next one to arrive. This is run by an ISDN line so when do you plan to disconnect it and connect it back up? Another example is Barclays. When do you migrate the whole bank to the system? They won’t take very kindly to you slipping in the odd branch here and there. These sorts of exercises need to be planned very carefully. The next lesson was that people needed to be trained in a very different skillset when you make massive changes. They are used to repairing things that go wrong or they’re used to doing a tiny bit of building but when you’re replacing the whole country’s networks and platforms and systems, suddenly the amount of new stuff you do is enormous. It’s a bit like living in a house and then learning how to build one – it’s not at all the same thing, right? I can do some repairs to a house but I couldn’t build a new one. Also, the silos that we had, had to be broken, whether there were network people not speaking to systems people, across all lines of business. They all had to sit together and work together.
Whilst you were undertaking 21CN, the full force of the recession struck. How are you being affected by the downturn – are budgets being cut and are you being asked to do more with less? AR. Of course, most of us in the world are being affected but the good thing is that we were on target. We were heading that way anyway because of our past investments in 21CN, but, in particular, the ‘right first time’ programme that we ran. The programme yielded a lot of benefits, which reduced costs anyway, while the number of customer complaints has declined and so has the number of phone calls. Again, we’ll give you that data if you wish. But that resulted in cost savings anyway fundamentally. Then we had our platform programme, 21CN, which allowed us to cut costs. We’re now putting in a new operating model, which will reduce costs even further. I guess next year we’ll get another similar amount out. So over three years, we’ve saved a lot of money. BT has transformed itself from a telco business into a global network and IT services company. What’s been the secret of BT’s transformation and what technology milestones are you particularly proud of? AR.That’s a good question. The first thing we’re proud of is the fact that we’ve followed customer demand and listened to customers. That’s always been a problem in a large company, because there are so many people with opinions. A couple of times we were messing around with technology for technology’s sake. We were thrilled that we were going to be the world’s first all-IP network and so on. However, the customers really do want faster speeds and they want different products. From the competitive landscape point of view, we’re in fairly good shape, because we have the biggest ethernet footprint across the UK. So competitively we’ve improved. I think the milestones were obviously 21CN, the ethernet programme, the BT Home Hub, BT Vision, the fibre rollout and Ribbit. These are BT milestones so I’m not trying to take the credit. However, I am probably most pleased with being able to give more than two million customers a home hub. It’s easy to do these things in small numbers or give them to one bit of the country, but rolling them out nationally is totally different.
“We’re proud of the fact that we’ve followed customer demand and listened to customers. That’s always been a problem in a large company, because there are so many people with opinions”
Presumably the planning that has gone into 21CN has been intense? AR. I’ll give you an example: you may need a new kitchen but most of us don’t build kitchens for a living. If you did, however, you would be very careful to make sure the plumber arrived just before the electrician, who arrived just before the cabinetmaker and so on. You can forget this in a large project. People will say, ‘I turned up and the site was closed so I went home’. The guy who went home creates problems for the guys who then turn up later. So the synchronisation of humans and the careful treading of work was enormous. We had 20-odd vendors who had to arrive, and they themselves were outsourcing to others, so it was a big people coordination task.
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What gives you the biggest buzz about being CIO at BT? AR. Getting customers together with the coolest technology. For instance, my mother-in-law has a problem with mobile phones. She asks me why we say they are easy to use. I tell her they’re easy to use because you press the green button and then you dial the number, and then you press a red button. But she says, ‘Why is it red to stop and green to go?’ Then I realised it’s because she’s Indian and red is a good thing in India. Like the Chinese stock market, for example, when it’s red, it’s up. As a Brit, I think red must be a bad thing – stop. On iPhone there is an application for this problem, which is a pretty cool technology. When we see a new technology we have to consider whether we can get it to 10 million people because we are a scale company – a big company. We have to do things for a lot of people. We will never beat your oneman band who will do things for one customer. So bringing customers useful technologies and in scale are the things that give me the biggest buzz. n
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EXECUTIVE INTERVIEW
Make a connection Consumers seek consistent and personal experiences enabled by ubiquitous connectivity and access to on-demand content, information and applications. Dana Porter discusses how this vision of a connected world is leveraged.
How has the demand for constant and convenient connectivity affected the demand for customer experience systems? Dana Porter. By 2017, trillions of devices, most of them not phones, will be connected to the network. We believe that service providers have an opportunity to take the lead in supporting this connected world by adopting new, flexible business models to match the growing demand. Our Connected World Vision is a business view of how service providers can monetise their key assets, such as customer, network and product data, by utilising core capabilities to sell additional services to their customers – consumers, enterprises and partners. The recent Connected World Survey, conducted by analyst fi rm Frost & Sullivan, fi nds that network, device activation and self-service are investment priorities for service providers and these are precisely the areas that our new Amdocs CES 8 portfolio addresses. Amdocs CES 8 enables service providers to expand quicker to realise new connected world opportunities; drive experience through a unique real-time and personalised customer experience; and run leaner by embracing lean and agile operations.
to invest in the connected world. We’ll continue to develop internally, work with the start-up community, and acquire strategically to ensure we’re driving innovation.
How does the Amdocs approach ensure service providers react quickly to upcoming trends? DP. With our unique business model, we offer service providers a complete range of business and operational support systems and a comprehensive portfolio of consulting, systems integration and managed services to enable them to react to any challenge. For example, service providers must manage a huge increase in capacity demand while optimising their investments in the network. Amdocs provides the technology to trend and forecast, and allows them to see where more capacity is needed, how much, and at what rate to build out. The Amdocs Mobile Backhaul solution is a new operational product pack for LTE and WiMax that analyses current, short- and long-term consumption trends of 4G network resources. Amdocs Product Lifecycle Management, meanwhile, governs end-to-end product life cycles from marketing inception through During a time when innovation is a key eledesign, launch and retirement, enabling service ment in an organisation’s investment deciproviders to rapidly define and launch complex sions, what steps is Amdocs taking to ensure products and reduce implementation time. Dana Porter is Vice President and it is at the cutting edge? Head of Global Marketing at Amdocs. DP. Th is industry is going through a dramatic How does your CES 8 solution allow service Porter is responsible for developing change. As part of our mission, we help our cusproviders to differentiate themselves from Amdocs’ vision, delivering strategic tomers maximise their opportunities as the intheir competitors? insight to customers and bringing to dustry transforms. Th is drives our commitment DP. In many ways! Amdocs CES 8 enables sermarket Amdocs’ products, services to develop revolutionary products and services vice providers to personalise (and monetise) and solutions. Porter holds an MBA that help our customers succeed. An imporcustomer interactions, making each more valufrom New York University and an tant part of that is an advanced technologies able. For example, Amdocs Mobile Internet and Industrial Engineering degree from team that works to turn innovative ideas into Amdocs Personalized Mobile Portal deliver a Ben Gurion University in Israel. reality. We also have a dedicated programme personalised browsing experience for the wider called Open Innovation, where we partner with mobile internet and provide consumers with efstart-up companies to maximise the potential of their technologies and ficient access to relevant content, ads and services. Amdocs Smart Device bring them to our customers. Th is is important because the technologies Support and Amdocs Retail Experience drive a unique customer expethat could make an impact might never have been introduced to many rience while offering more capabilities across more channels. And the of the world’s leading service providers without this channel. In addiAmdocs Universal Storefront enables service providers to offer, sell and tion, acquiring technologies is an opportunity in innovation. Recently service physical, network and value-added services in a Web 2.0 portal we’ve acquired two such innovative companies – ChangingWorlds and framework. All of our CES 8 offerings provide unmatched opportunity jNetX – that provide cutting-edge solutions for service providers seeking for our customers to do more in the connected world.
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ASK THE EXPERT
Europe’s mission on emissions With green regulations often perceived as confusing, CXO asks Harry Forbes what is happening in Europe and how this is impacting data centres.
T
he UK is leading the world in introducing its Carbon Reduction Commitment (CRC) whilst the rest of Europe is, for now, on a voluntary code. The US is also fast moving towards legislation to control carbon emissions. Th is month the UK introduces the fi rst mandatory carbon emissions trading scheme. Around 20,000 companies will be affected by the scheme which targets the heaviest energy users – those consuming more than 6000 megawatt hours (mwh) per year. The CRC scheme will act as a cap and trade scheme where participants buy or sell allowances through an emissions trading scheme. Participating companies will face penalties or bonuses depending on their CO2 consumption. The current situation on recording and reducing carbon emissions in Europe is voluntary. However, the EU has introduced a voluntary code specifically with data centres in mind. But why are data centres a focus when it comes to CO2 emissions? Because worldwide they are expected by 2020 to consume around 450 billion kWh and 300 million tonnes of CO2 emissions – equal to those of Portugal, Switzerland, Greece and Sweden combined. The EU Code of Conduct on Data Centres is a set of practical guidelines to improve energy efficiency within the data centre industry. The code aims to inform and stimulate data centre operators and owners to reduce energy
consumption in a cost-effective manner without hampering the mission critical function of data centres. There are already many ways of identifying, reducing or better using energy consumption in data centres and the choice of cabling has a significant role to play in this. Previously data centres had a life span of 10-15 years but now they are expected to run from 20-50 years so the choices made in fi xed infrastructure have long-term repercussions.
“The crosstalk performance allows noise cancellers to be turned down creating potential energy savings of up to 35 percent compared with Cat 6A” Not only must LAN cabling be able to support several generations of bandwidth evolution, but it must also facilitate best practice in energy conservation. Cabling can make a positive contribution to reduced energy consumption in a number of areas. For instance, new advancements of Energy Efficient Ethernet will be able to power down equipment such as servers and switches when in idle mode. Also, the use of higher performance cabling such as Cat 7A not only provides flexibility to support higher bandwidth but the additional headroom allows switch power to
be reduced by up to 40 percent when transmitting data over shorter runs. In addition, the crosstalk performance allows noise cancellers to be turned down creating potential energy savings of up to 35 percent compared with Cat 6A. Cat 7A also provides opportunities to further reduce energy use through improved Digital Signal Processing (DSP) designs. The combined benefits can provide a swift payback on the small initial extra investment in the cabling. An Environmental Monitoring and Access Control (EMAC) tool is also vital in identifying and controlling energy use. The tool allows the user to optimise power consumption and energy use. PDUs distribute power to individual sockets and can automatically switch them on or off depending on the electrical need. They have intelligent connections to rack manager which provides time/date stamped monitoring of volts, amps and sockets used as well as sending email alerts in the event that preset parameters are exceeded. Taking a closer look at cabling is vital if countries outside the UK and US want to avoid government intervention. Self-regulation, however, will only remain if organisations take action to reduce the energy consumption in data centres now. Harry Forbes is Chief Technology Officer at Nexans Cabling Solutions and was educated in electrical and electronic engineering. He has worked in the cabling and networking industries for the past 30 years in various technical roles, and has extensive knowledge of and expertise in enterprise systems and data centre infrastructure requirements.
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AUTOMOTIVE INDUSTRY
Since taking on the role of CIO of Volkswagen UK, Nick Gaines has changed IT from a taboo subject to a key element of the car giant’s business strategy. Diana Milne reports.
A
ny CIO who inherits an outdated and inefficient IT
infrastructure has a tough job on their hands. But when Nick Gaines took up the role at Volkswagen UK in 2008, he faced the added complication of disparate systems across the company’s various brands and an unproductive outsourcing partnership. Immediately he set about the task of first fixing the technology basics before starting to implement a unified IT infrastructure across the group. Describing the system in place when he took up the role, he says: “Basically we were in a position where Volkswagen had become a large business but we hadn’t invested much in our IT infrastructure for a number of years. A lot of our systems were written 20 or 30 years ago and were running on some mainframes that we operate from our business in Spain. And to say these systems that run our core business are ancient would be an understatement.”
Ringing the changes A particular concern for Gaines was the fact that the UK’s core online sales system was run on an outdated mainframe system based at a Volkswagen plant near Barcelona: “The system was based on the old green screen variety of mainframe, and this is what our retailers used to sell cars. So whilst we may have an amazing presence on the internet, hidden behind all of this was some pretty ancient stuff. On top of that we were running computer rooms that should have been demolished as health hazards,” he jokes.
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Gaines blames the state of the company’s outdated IT infrastructure on the fact that nobody within the company had previously taken charge of the situation and developed a road map to change it. There was also, he says, a lack of understanding of the link between IT and the company’s business objectives: “I would say the best description is that no one had loved the IT. And that alignment between what the business needed and what the IT was doing was disconnected.” Gaines was determined to change this and immediately set about creating an agenda for change, starting with phase one, “fixing the basics”. This involved replacing Volkswagen’s core sales and CRM systems and rebuilding its IT infrastructure to put in place proper project and programme delivery methodologies. It also involved putting in place an “IT service management culture” and rebuilding the IT team. He and his team have only just completed this phase and have so far replaced the core sales systems for the Skoda and Seat brands. A new data centre has also been put in place, following the migration of data from Volkswagen UK’s previous facility in Milton Keynes. Gaines hails the project a success so far: “To run a project for two years then bring it in on time, cost and quality is a rare event in the IT industry. So to do it when you’re changing everything around at the same time is an interesting challenge.”
Nick Gaines
Joined up thinking The second phase of Gaines’ action plan is to develop core IT systems that can operate across Volkswagen’s different global businesses and brands. Explaining the thinking behind the project, he says: “What we try to do is, rather than having unique brand-specific and market-specific solutions, with each brand and country doing their own thing, I’ve been working with my colleagues across the rest of Volkswagen and we are choosing common systems and hosting them as shared services to a number of different countries. Some of my colleagues have said, ‘we’re giving up some local autonomy’; but in reality we’re gluing together the business and exploiting capabilities on a global scale.” As well as creating common core sales, vehicle logistics and CRM systems, this involved the virtualisation and building of new data centres and replacing outdated operating systems: “I had a very large number of old servers and other obscure operating systems, which were
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based on unmaintainable hardware, so we’ve virtualised almost everything and then rationalised out the variations of databases, middlewares, operating systems and so on and that’s been quite an interesting activity.” When it came to transforming Volkswagen’s IT, re-assessing the company’s outsourcing arrangements was high on Gaines’ agenda. With this in mind, last May the company signed a five-year contract with India’s largest IT firm Tata Consultancy Services (TCS). The agreement will see TCS support Volkwagen’s business transformation programme and its move to a standardised business platform. The move represented the first time that Volkswagen had implemented a mixed onshore and offshore model for its IT systems. The company also has outsourcing agreements with Cable & Wireless, which handles its telecommunications needs, and T-Systems, which maintains mainframe applications. Gaines describes the advantages of having agreements with multiple outsourcing partners: “What we’ve been able to do is significantly improve service delivery performance and cut costs as well because we’ve been matching the capabilities of our partners to the needs of our business better. If you only have one partner then it’s inevitable they won’t be a good match across all the different things that you want to do and also getting a bit of competition in the mix encourages a better level of performance.”
1 in 5
new cars in Western Europe is produced by Volkswagen
Volkswagen Group The Volkswagen Group, headquarted in Wolfsburg Germany, is one of the world’s leading automobile manufacturers and Europe’s largest carmaker. In Western Europe one in five new cars is manufactured by Volkswagen and in 2008 the group increased the number of cars delivered to customers to 6.257 million. Correspondingly, its group sales rose to €113.8 billion. There are nine car brands manufactured by Volkswagen: Volkswagen, Audi, Bentley, Bugatti, Lamborghini, Scania, SEAT, Skoda and Volkswagen Commercial Vehicles. Each brand operates as its own independent entity. In total, the group operates 61 production plants in 15 European countries as well as sites in the Americas, Asia and Africa. It has nearly 370,000 employees worldwide who produce over 26,600 cars each day. Volkswagen’s cars are sold in more than 150 countries.
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He says that in terms of outsourcing agreements the company has learned from the experiences it had with a previous outsourcing partner: “For a long time we were working with a single outsourced partner and the relationship wasn’t very great. I think that the challenges we’ve had in the past were because we’ve been a little bit too hands-off as a customer and so we’ve adopted a different stance now which is about driving the performance of our partners a bit more proactively and that’s been pretty successful.” Gaines goes on to say that the new arrangements with outsourcing partners have already improved the efficiency of Volkswagen UK’s day-today operations.
IT and between the business and IT. Because at the end of the day we’re not here to do IT. I’m here to sell more cars and more parts, to sell more finance and to drive down costs. IT is just my specialist skill and the extra value I can add. I position IT as the tool with which we can transform the way we do business.” In order to achieve this, Gaines had to build a team with the right attitude, and to recruit members who were “motivated emotionally by the business outcome and not the technical purity or esoteric, architectural beauty of IT”. He believes he has achieved this, creating a team behind him with the right attitude towards IT within the organisation: “The MD said
“The challenges we’ve had in the past were almost because we’ve been a little bit too hands-off as a customer” Building bridges It has been all the more important for Gaines to prove the validity of his IT projects, given what he describes as the previously vast gulf that existed between those working on the technical side of Volkswagen and those in the boardroom: “When I arrived IT wasn’t even the whipping boy. It was almost regarded as something you didn’t want to be anywhere near. It’s hard to put it into words, but people had the lowest possible view of IT in our business.” He says his proudest achievement to date as CIO has been transforming that attitude and raising the profile of IT within the business: “Forget building infrastructure and new applications. By far the biggest journey for our business has been to build a different culture both within
to me the other day that the IT folk have now got a spring in their step. They’ve got a smile and a positive attitude. This is a huge personal journey for most people and we’ve made some tough decisions along the way.” Perhaps the biggest mark of how successfully Gaines has raised the profile of IT within Volkswagen has been the fact that despite the harsh economic conditions, particularly in the auto industry, investment in technology and Gaines’ ambitious plans to overhaul the IT infrastructure have not been affected: “I’m very lucky that we have an enlightened board in Germany as well as the board in the UK who recognise that there’s a huge opportunity to innovate in the sales process and IT is pivotal to that. As a result of that my strategic programmes to rebuild the infrastructure and re-
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engineer the core business processes remained untouched by the recession. Our board voted to protect them throughout this time and that’s been incredibly positive.”
The technology horizon Though Gaines and his team are still deeply entrenched in the transformation of Volkswagen’s IT infrastructure and services, he is already looking ahead at how the company can further capitalise on emerging technologies, such as cloud computing. Because it outsources so many elements of its IT, Volkswagen is already
a user of cloud computing technology. Gaines says he is impressed so far with the speed with which cloud technology enables technology changes to take place: “The interesting thing about cloud computing is the time-to-market speed. You can implement change quicker when you remove the dependency on the end device or the end infrastructure.” He adds, however, that for him the most interesting aspect of the technology in the year ahead will be security – a key challenge for Volkswagen with its disparate brands and global operations: “To bring together cloud-de-
livered services, internal-delivered services and conventional services the biggest challenge for a large enterprise like ours is security. Particularly when I’ve got a heavily outsourced supply chain, globally delivered services from our factories around the world and UK delivered services both from our outsource partners and from here. Actually creating the right security model to match the service to the business is really tricky stuff.” He says this issue becomes even trickier for companies moving from delivering services predominantly internally to delivering cloud services: “The issue is where the boundaries are and how you design security when you’ve got a virtual supply chain running a virtual infrastructure for a virtual business.” As well as cloud computing, Gaines is keen to harness the power of social networking in order to increase loyalty among Volkswagen customers and spread the word about its products: “A customer who has a great experience with us will become an advocate and they will help to sell more cars. They might be tweeting about their new Skoda or whatever and the value they generate could be huge. So we have to be there delivering services that support that world. The change in consumer behaviour is a really exciting place for our business. I think it will drive innovation in the year ahead.” Gaines labels himself a “nerd”, describing his obsession with the latest technologies as “my secret vice”. But he says it’s not IT itself that excites him but its role as a business enabler: “The technology is almost irrelevant to me. All these different technologies are merely different ways of delivering services. What really matters is matching the service you deliver to the needs of the business.” And it’s this ability to translate technology from geek speak to business case that has helped Gaines to put IT at the heart of Volkswagen’s operations. n
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EXECUTIVE INTERVIEW
Managing talent effectively Paul Glover discusses how improving staff capability, team performance and organisational culture can help you to identify and develop your hidden talent more effectively.
Talent management has a different meaning for most organisations that we speak to. How do you recommend that managers approach this critical but challenging issue? Paul Glover. Due to the increasing number of organisations operating in the field, talent management has become quite a grey area. To some it simply means executive recruitment, to others it means complex strategic development programmes for discrete ‘talent pools’. I believe that organisations of any size can gain some very quick wins by underpinning all key people management processes with a strong framework of role capabilities and team culture. This will then allow you to attract, measure, develop and retain your staff using a consistent set of criteria – a crucial benefit considering that an organisation’s people contribute greatly to its competitive advantage. Has organisational leadership been impacted as a result of the current economic situation? PG. Whilst it is not always easy to determine exact styles of leadership, it has been possible for us to ascertain common views over the most important leadership capabilities needed in this climate. We commissioned a joint research project to look at this in detail and the initial results have demonstrated a tendency on the part of respondents to take a transformational view of leadership rather than a transactional one. Surprisingly, innovation, which is often proposed as the answer to economic growth, appeared in the bottom ranking. This could repre-
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sent a significant risk to organisations as the economy continues to recover. For more information and the full report entitled ‘Assessing The Seven Key Capabilities Of Leaders In An Environment Of Economic Recession’, please visit www.mclarensolutions.com/leaders.aspx
Paul Glover is Managing Director of McLaren Solutions, a leading provider of performance-based technology solutions. He has particular expertise implementing solutions for organisations undergoing transformational change, and has 15-years’ experience working across both the public and private sectors. For more information, visit www.mclarensolutions.com
What can organisations do if they are restructuring or downsizing and costs are a key consideration? PG. A challenging economic climate invariably results in significant amounts of organisational change, which can take many different forms.
Most organisations look to achieve efficiencies as part of any merger, acquisition, restructure or downsize and there is often pressure on associated staffing budgets. By investing sensibly in robust measurement of staff capability and team culture prior to any transformation, a new organisation can be created that is ‘fit-for-purpose’ and more efficient as a result. To achieve lasting change following any transformation, it is critical that ‘business-as-usual’ contains a programme of performance measurement, continuous learning and ongoing professional development, hence ensuring that remaining staff feel valued. In what way can technology assist organisations in implementing good people management processes? PG. A lot of organisations have the misconception that implementing technology solutions to assist with people management requires costly enterprise-wide, multi-year IT development programmes. This is not necessarily the case. My advice is firstly to look carefully at the discrete areas where technology can bring real benefits to your organisation: automating the appraisal process; expediting learning needs analysis; simplifying role-profiling; structuring capabilitybased assessment; standardising team culture surveys; informing succession-plans, and so on. When you understand your requirements, it is then highly likely that these benefits can actually be realised with smaller, more modular technology solutions that are better designed for the purpose and, therefore, have quicker ROI. Which factors should organisations take into account when implementing these kinds of solutions? PG. To increase the chances of a successful implementation and gain the most benefit from this kind of investment, you should consider three main points: simplicity, customisation, and message. The solutions should be simple enough for everyone to use, which may mean compromising on certain functions when you first launch. They should be easy to customise and include your own organisational values, competencies and skills requirements. Finally, and by far most importantly, you should have a clear message that explains the strategic purpose behind the solutions – regularly communicating this message will build enthusiasm for the solution and achieve better staff engagement, especially during times of transformational change. n
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HR
The competitive realm of animation thrives on creativity and unbridled imagination. But in the commercial world, that’s not enough. Dan Satterthwaite, Head of HR at DreamWorks Animation, delves into what is being done to nurture the company’s behind-the-scenes superstars. By Nick Pryke he world of HR concerns itself with the management of individuals within an organisation – or at least that’s the presumption. In reality, being the head of an HR division calls upon far more than merely managing staff and assessing potential employees. Being inspirational and motivating while creating a culture in which creativity and innovation can thrive are all pivotal traits of a successful HR leader; and nowhere does this feature more prominently than in the realms of creative industries such as fi lm and animation. No one understands this sentiment quite like Dan Satterthwaite, Head of Human Resources at DreamWorks Animation.
Creative collaboration For Sattherthwaite, the DreamWorks equation is one of relative simplicity: start with incredible stories and characters and then introduce an environment in which a narrative and exceptional visuals can develop. “That inherently is a very natural process,” explains Satterthwaite. “There are all kinds of creative processes and different creative environments in the world. But the way we think of it at DreamWorks is that it’s above all else about creating an environment where people can come together in a really comfortable, safe environment and collaborate creatively to make the films and tell the stories that we do.” To ensure this stays the case, DreamWorks employs a number of different tactics to create and maintain their collaborative environment; from the set up of their campus to the way the company is structured from a managerial, administrative and creative leadership standpoint – every aspect is there for one reason: to make sure that each artist has great leadership, supervision and most importantly, great inspiration.
“Sometimes that’s not all incumbent in the same human being and so building a management team around people that can both manage folks really well, but then also inspire their creativity has its challenges,” says Sattherthwaite. “It definitely has its challenges from a managerial and human resources standpoint, but that’s something we focus on. People principally making films in Los Angeles, California and Bangalore have a technology infrastructure set up so that collaboration can happen in real time, face-to-face, looking at the exact same visuals to make sure that when a character’s being animated and a director needs to give notes or directions on a particular look or aspect of the sequence, that the crew who’s listening to that director talk can also see their face when they’re speaking. It’s not a conference call, it’s video conferencing like you’ve never seen before.” In addition to a commitment to developing the best possible environment for creativity and innovation, Satterthwaite makes sure that his artists are constantly inspired and continue to develop creatively – not an easy task considering that it can take up to three-and-a-half years to produce just one film. The difficulty stems from the need to keep an artist inspired and thinking about future projects while making the current shots as unique and emotional as possible. “For instance,” explains Satterthwaite, “we have a department at the studio called the character effects department which deals with the way that cloth lays on a character. They also deal with animals, birds for example, and the mechanics of how a bird flies, the way that their feathers flutter in the air and the way their feathers fold when they put their wings down. All of that work comes from the mind of a character effects artist.” Out of the 50 or so character effects artists working on the project, two stood out from the crowd in terms of really understanding the nature of birds. So, in order to spread the wealth of knowledge, Sattherthwaite invited an ornithologist in to work with the team on everything ‘bird’: from the way different birds fly, to their feather characteristics and natural interaction with their respective environments. Not only did this educate the effects artists; it inspired them – a core principle of Sattherthwaite’s. However, within the realms of creativity often the lines of control can become blurred, so how does Sattherthwaite
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maintain this balance? “Actually, it’s pretty well defined,” he explains. “We have a production supervisor who’s responsible for the productivity and performance of each of our artists and employees and will work with them. When it comes time to do performance reviews and things like that, the production supervisor is really the lead on making sure that that artist gets the feedback that they need to really be successful. The actual work that the artist is doing is highlighting the action and drawing the audience’s eye to the right area of the scene; giving that kind of direction. Wanting a facial expression to be ever so slightly different, or wanting action to be faster – that comes from the creative lead. They’re reallyy ggivingg the creative direction to that artist on their shot or the he work that they are producing in the moment. The partnernership between that creative lead and the production n supervisor is really making sure that the department is working at the highest possible quality and highest possible productivity. Each of the departments across all of the various projects that we have going on has that kind of partnership in place.”
people within that environment that will ultimately be the deciding factor. As such, assessing a potential employee’s attitude versus their aptitude is equally as critical. Of course, it’s infinitely easier to look at a person’s resume, portfolio or demo reel and assess their work or experience, but making sure that someone is able to fit into the culture of an organisation can be a huge challenge. As Sattherthwaite details, being able to ensure that the cultural fit and introduction to a company is second to none for new employees is one of the most important things that an HR community can do to contribute to the success of their organisation: “The interview process here is extensive. It’s not an easy place to land a p job. One is because it’s a desirable place to be. Two is because there’s a tremendous community of very talented people out in the world to talk to and to consider joining the DreamWorks team. But once someone does come D in and we spend time talking to them about their background experience and what it’s like working b at DreamWorks, there’s a lot of people internally involved in meeting that person. On average, most ccandidates for jobs here will meet between 10 and 15 people; we try and do that within a fairly short timeline. We also do cross-site interviews with the tim collaboration and video conferencing technology that collab because in many cases we are working across various we use be sites. For exam example, we’re currently in production for Shrek Four, sites which is primarily in Los Angeles but we have a crew up in Redwood City. Having the supervisors feel comfortable about the crew that work on both sites is extremely important, so we use cross-site interviewing all the time. There’s a number of things that we do to help make sure that the people
10-15
Number of people job candiates must impress at DreamWorks
Inspirational leadership Despite the fact that this may seem a rather unusual way of running a department in the more general eneral context of business, it has not only proved effective ive but also offered out a few lessons for the masses. A former SVP of HR at Blockbuster, Sattherthwaite understands the wider implications of structuring human resources in such a way as to essentially get back from your employees what you put in. Putting a management structure and role descriptions in place, followed by training and performance reviews and ways to recognise good behaviour, allow for an environment where an employee’s positive traits can be identified and nurtured as completely as possible. “At Blockbuster,” continues Sattherthwaite, “when the online business was being developed and we were creating an online rental company within a company, we wanted it to be a very innovative, nimble, fast moving and creative small organisation; almost a startup within a large corporation. What we decided to do at the time, which proved to be very successful, was to carve it away from the corporation and set up a completely separate entity. We set up the online business in a rented out, empty warehouse miles away so the people that we brought in didn’t feel like they were being brought into a large corporation. Many of those creative, innovative thinkers – especially in web design and online – aren’t as attracted to being in a large corporation as they are to being in a very small, almost startup feel. We were able to appeal to the best of the best as we had created this environment that ultimately had all the benefits of funding and structure that a corporation would offer, but also had the benefits of a very small, intimate feel with a very fast decision-making model, which helped launch that business within a very short period of time.”
New arrivals Indeed, while providing the best possible environment for employees is a fundamental that can only create the potential for success, it is the
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who join the company are not only great in terms of the quality and calibre of their work, but that they’re also going to feel great about being part of the DreamWorks team.” While assessing new employees on the job is the only true way of knowing whether they’re likely to fit into a culture, the time-scale involved remains key; usually it will take about a month or so to fully appreciate how a new employee is fitting in. Most new employees at DreamWorks start work on a Monday and go through a morning of new hire orientation, making sure that everybody understands what DreamWorks is about: philosophies, principles and what the culture is. However, the way the company thinks about creating an environment for people and their expectations is not only levelled at new employees, but also at management and supervision. After all, creating a solid culture is pointless if it’s then left to stagnate and isn’t maintained or developed. “We also share with them some of the things that are in the hopper that aren’t publicly released yet because we still haven’t given them the green light, but they’re ideas that are in development and they’re hugely exciting for people to hear about. Whether they’re going to directly work on one of those projects or whether they just know that they now work for a company who is developing these
here knew that we would make every other choice available before we had to make that choice, and we have not made that choice.”
A secure environment In fact, DreamWorks has not even touched upon mass layoffs in this incredibly tumultuous past year. Of course, this doesn’t include the normal comings and goings of people in the natural cycle of work. But the commitment they have made to their staff has been done to keep people focused on creative work and innovation, which inherently requires people to take risks; without risk there can be no innovation. If people merely survive in an environment where they are fearful, the level of risk taking will diminish severely. Seeing as DreamWorks, and the animation industry as a whole, is driven on precisely that, the company needed to form a bubble in which the uncertainty and fear of the outside world could not affect the work and staff of DreamWorks. And that is exactly what it did. Amongst other tactics, the office walls contain huge posters that get across a work ethos with a twist of humour that only DreamWorks could apply. The idea: to inspire work through feeling secure. “Everyone here knows they’ve got a par-
“The interview process here is extensive. It’s not an easy place to land a job”
kinds of unique stories and characters, it’s very, very exciting for someone on their first day.” But even HR staff have to start somewhere when they enter the company, and Satterthwaite is no exception. Indeed, the DreamWorks culture was already established when Satterthwaite arrived, so it was more a case of keeping an eye on the culture – testing its metaphorical temperature so to speak – and making enhancements where applicable. In short, Satterthwaite has to ‘walk the walk’ in as much as having to personify DreamWorks in an HR context: “None of this comes without bad days and bad days will come along, but I think that what’s most important and stays at the forefront, certainly of my mind, is that you can very quickly remind yourself of the bigger plan that people have a place to be where they feel like they can do their best work, and that the decisions that get made always have the effect of those decisions on people at the forefront. In my two plus years here, which isn’t all that long, I’ve seen it demonstrated time and time again. The message we sent to our people at DreamWorks during the last year was to make sure that people here felt secure; what virtually every other major company was doing in the state, even across the entire country, was mass layoffs – or at least the threat of people losing their jobs – and we wanted to make sure that people knew that if that time ever came at DreamWorks it would be the absolute last resort. Everyone
ticular project that needs to be done,” explains Satterthwaite. “You can walk around the halls and talk to people who work here and more often than not they are rushed to get something done because there is definitely a sense of urgency there. I don’t think DreamWorks Animation is much different than most other animation studios in that respect. But what we do in addition to that is actually what makes us unique. The breaks that we let people take, the events that we host on campus for employees, the kind of opportunities we offer; those are the kinds of things that I think make DreamWorks a very different, unique environment. Satterthwaite is the first to admit that his earlier career saw him attempting to manage everyone in the same way, which tended to be too closely and caused people to push away. For Satterthwaite, at least, mistakes were there to be learnt from. “The most important thing I’ve learnt over the course of my career,” offers Satterthwaite, “is regardless of the circumstances or what’s going on, treating people with the utmost respect, dignity and
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Which Dreamworks character are you? Do you want a starring role?
no
yes no
How about a sidekick? Do people tend to prejudge you? yes
when the mood takes me
no
You're Puss-in-Boots Creative, resourceful and intellectually quick, you enjoy debating issues, are into "one-upmanship" and get very excited about new ideas and projects.
definitely
Are you good in social situations?
yes
no You're Shrek You are assertive and just a outspoken and little driven to lead. People may have a preconception that you're a tough cookie, but at your heart you value people. Though you do have little patience for inefficiency (Donkey).
You're Donkey People-oriented and fun-loving, you live for the moment and new experiences, but run the risk of irritating people beyond belief.
on occasion
Are you individualistic? yes
no
maybe just a little
no
For GOOD or EVIL? good
Are you a little mischievous? yes
Do you want to rule the World? yes
evil
Penguins
no
Are you in love? yes no
Like to stay home with the kids?
You're Master Shifu from Kung Fu Panda! Logical, original and a creative thinker. Exceptionally capable and driven, you are hard to get to know well.
You are Spirit You are an idealist, extremely loyal and adaptable. Like Spirit, you are highly curious and have a mischievous streak.
no
You are Dr Cockroach You are independent, original, analytical and determined, but very highly held standards of your own performance are likely to drive you a little crazy sometimes!
You're Po from Kung Fu Panda! Enthusiastic, idealistic and creative, while you may be able to do almost anything that interests you, get bored by the details!
yes
You’re Penny the Porcupine from Over the Hedge! Putting the needs of others above your own. Stable and practical in every way.
Do you have a sting in your tail? yes
You're Gloria from Madagascar! Warm-hearted and popular, with a strong sense of responsibility and duty. You serve as the voice of reason for your friends and colleagues.
Would you kiss a Frog?
no You're Z form Antz! You are extremely thorough, responsible and dependable. You can accomplish any task once you've set your mind to it.
You’re Barry from Bee Movie! You are practical, traditional and organised; loyal and hard-working. As a "guardian" you are capable of organising and running activities, value security and peaceful living.
empathy is the single most important thing that any human resources leader can ensure for the people that they’re responsible for. “Without a doubt the thing that is always top of mind for me is really making sure that the compassion for the people and the recognition for the work that they do is there. Treating people with respect and dignity at all costs is without a question one of the most important things that an HR leader can do.” With obvious competition coming in the forms of Pixar, Sony Animation, Blue Sky and Disney, DreamWorks is having to stay on its toes in terms of how it is perceived by both its staff and the industry as a whole. “I think that many employees and artists that work at DreamWorks feel there is a uniqueness to the look and feel of DreamWorks fi lms, TV specials and projects that is very intriguing. Most projects centred around fuzzy animals that talked until Shrek emerged. Fast forward five, 10 years
yes
Like Skipper, Kowalski, Rico and Private, you are adaptable and action-oriented, you're a risk taker in everything you do.
no
You're Angie from Shark Tale! Popular and sensitive, with great skills and a real concern for how others think and feel. You are Queen Lillian from Shrek 2! Quietly forceful, original and sensitive, and are always likely to do the right thing.
from those days and the diversity of characters and environments is extremely high. We’ve got Shrek the Fourth and then Megamind later next year. The diversity of those kinds of fi lms and the number of projects that we have going on is unlike any other studio out there. I don’t necessarily think about it as head to head competition; its move that the kinds of projects that we’re doing and the diversity of those projects is extremely attractive, exciting and inspirational for the people who work here and the people who want to work here. That’s what I think about when I think about competition.” And so it seems that the HR world of animation mirrors its trade in terms of imagination, inspiration and creativity. But for Satterthwaite and others, this world is a fine line between creativity and discipline that must be harnessed at all times if the best possible outcome is to prevail. For the company, the name says it all: the dream really does work.
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INDUSTRY INSIGHT
Online applications welcome Jorrit Blok outlines the case for why an integrated recruitment site is vital due to increased internet use.
P
eople looking for jobs are increasingly making use of Google, LinkedIn and recruitment websites. That fact is evident from a survey conducted by the Intelligence Group and reported in Arbeidsmarkt GedragsOnderzoek (AGO). For the employer, this means that everything stands or falls based on the ability of potential employees to fi nd the company’s job adverts and the applicantfriendly processing of their online applications. By automating their job application procedures with the use of so-called end-toend solutions, companies can now implement systems that can help the HR manager make a real difference. The AGO survey, in which 16,000 people are interviewed every year, reveals that almost 30 percent of job seekers exclusively used the internet for job orientation in 2009. A growing number of job seekers are relying exclusively on the internet in their search for jobs. The complete job application procedure is fraught with dropout moments. The experience that is likely to cause a potential candidate to quit the procedure may include issues such as poor navigation, an unpleasant look and feel, no options available for online application, a bumpy confi rmation process and no application feedback from the company. It is precisely because a growing number of people are looking for jobs online that employers should be paying extra attention to streamlining the online application process. Take, for example, the career site: it is entirely dedicated to displaying job vacancies and current employees explaining what it is like to work for the company. That notwithstanding, there are still many companies that either do not have career sites or that are not spending nearly enough time and attention on this type of employment marketing. Th is could lead to missing out on potentially good candidates
and it means that the company is under-exploiting the available recruitment opportunities. Another problem is that some companies are reluctant to embrace modern developments, such as social media, in their online recruitment endeavours. The truth is that this is something neither employers nor employees can get along without anymore. Employers are therefore compelled to reformulate their objectives based on these developments. In other words, this is all about the optimal use of employment potential. No organisation would want to miss out on good candidates. And no organisation would want to disappoint candidates with a poor digital application pro-
context, means that an action on the recruitment site, such as registering for a vacancy, would immediately become visible in the recruitment system. An additional benefit of this type of integrated solution is that it also tracks the route via which the candidate entered the system; for example, via email or a referral site. Th is enables companies to determine whether their recruitment campaigns are meeting the targets; in other words, the vacancy conversion is actually measurable. And last but not least, social media should also be integrated into the procedure. In other words, enabling someone to apply for a job with a LinkedIn profi le instead of with a CV,
“Employers should be paying extra attention to streamlining the online application process”
cedure that is not an accurate reflection of the organisation as such. Th is is why OTYS is an advocate of the integrated solution.
Integrated solution The advantage of career sites that are integrated into the customer’s main site is that the jobseekers do not immediately notice that they are being redirected from the main website to a recruitment site that is actually run on a separate platform; but with the same look and feel. In addition, the seamless integration of the career site with the back-office system could ensure the streamlined settlement of the application procedure. ‘Seamless’, in this
retweeting job vacancies, and so on. Th is enables an interactive job application experience and offers applicants extra convenience. The integrated approach leads to greater visibility and makes it easier for potential candidates to fi nd job adverts, which means that the process of attracting candidates and communicating with them becomes more effective and therefore companies are ultimately able to manage the recruitment process more successfully. Jorrit Blok is the CEO and founder of OTYS Recruiting Technology. OTYS specialises in recruitment software integrated with career sites. OTYS has built over 700 recruitment and career sites and job boards. Companies already using OTYS to fully utilise their employment potential include Transavia.nl and Grant Thornton. www.otys.nl / www.otys.eu / www.otysusa.com
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HR
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MAKING CONNECTIONS Hans-Jürgen Bill tells CXO about the human implications of turning two companies into one and why job titles just aren’t that important.
W
hen Nokia Networks and Siemens Communications joined together to form Nokia Siemens Networks in 2007 the company instantly became one of the largest communication organisations in the world. Not only that, it also required that two workforces numbering tens of thousands of people in more than a hundred countries had to somehow form a seamless whole. Though some of this work had been done by the time Hans-Jürgen Bill became Head of Human Resources in 2009, there remained plenty of work to do. It’s a task that would have been daunting for even the most seasoned people professional. For Bill, the test was even greater. Despite a long and distinguished career in the communications industry, this is Bill’s first HR role. One of the biggest challenges of this new role is the continuing integration of workforces from two very different organisations, on a worldwide scale. Adrian McLean, a consultant hired by the new company to help facilitate cultural change, likened the merging organisations to a shoal of fish and super tanker. “In Nokia the dominant image was of a shoal of fish,” McLean said. “What this represented was the values-driven, self-organising capacity inside Nokia. A lot of people had a sense of having freedom, but the coordination occurs through adherence to some strongly felt and shared values.” The driving force within Nokia was teamwork, with far less emphasis on the individual. By contrast Siemens, with its more rigid and hierarchical structure, represented the tanker, moving forward with power and momentum and possessed of numerous floors and levels. According to Bill, the new organisation is essentially a blend of its two parents. “It has more flexibility than the super tanker, but a little bit more order than the shoal of fish,” he states. “But we are moving into some new fields. We are developing as a known company, with a heritage of two fine companies. We have our own values and our own company setup and our own company understanding.”
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Merging these two entities into an effective whole was a process that involved a certain amount of pain. Layoffs were unavoidable, with around 10,000 existing staff leaving Nokia Siemens Networks since its 2007 foundation. On the flip side, 15,000 new people have since joined the organisation. Though this process has undoubtedly caused a great deal of upheaval, Bill believes that there have been upsides. “I even think it is rather positive that you have this kind of exchange of people, so that you get new ideas in,” he says. “When you look where we have hired people, specifically in the areas where our markets are still growing, like India, China, the US and some other parts of the world like South America, that has been an advantage. “We also have to change the business, in that we are transforming from more a system and equipment led business, into a software and services led business, which obviously also requires different skill sets and different capabilities and competencies of people.” Nonetheless, for those employees who weren’t new recruits, the obstacles of instilling an entirely new culture remained. Bill seems largely unfazed by what looks like a major challenge, instead viewing it as simply another component of business development. “I believe that cultural change or mindset change is an ongoing task for each and every company, specifically in the fast changing environment that we are in as Nokia Siemens Networks. “Of course, when you do an integration kind of merger there are some specific topics you need to look at. But generally, you need to continue with that. The market is changing. The environment is changing. You need to adapt your capabilities, your competencies, the specific topics you’re looking at in the company, your focus area. From this point of view, transformation is an ongoing topic. I’m quite sure that it never ends. And the environment
we are in today is definitely different from the environment that was there when we made the decision to go into this merger.” Bill identifies the move into this new business environment as a far bigger hurdle than simple cultural alignment. The requirement to effectively balance immediate and future goals is central to being prepared for whatever lies further down the road. “At the end of the day, you need to find the right balance between short-term and long-term measures and short-term and longterm success,” he explains. “Each company needs to survive in the short-term as well, and that is what we are trying to balance out with different incentive systems we have on the shortterm and long-term view. “But what is even more important, from my point of view, is that we’re also balancing the ‘what’ part and the ‘how’ part in our performance evaluation for our leaders within the company. So we have, on one side, a focus on the ‘what’ part. That’s the numbers, the milestones, the revenues, whatever you’re judging there. The ‘how’ part is the behaviour of the leaders. And the behaviour is, of course, something that needs to be very sustainable, at the end of the day. What we’re doing is to balance that out. So that means if somebody is good at the ‘what’ part, but not good at the ‘how’ part, he is not going to be successful within this company in the long-term.”
“You need to find the right balance between short-term and long-term measures and short-term and long-term success”
People power A constant question asked of HR leaders is how much their work truly affects the wider actions of the business. Bill is adamant that he has a major part to play. “I think the human resources department has a huge impact on the overall strategy,” he says. “We are part of the strategy and we are part of
Hans-Jürgen Bill was appointed Head of Human Resources, Nokia Siemens Networks, on 20 April 2009. Prior to this role Bill was Head of West South Europe region for the company. In that role, he led the company’s operations and activities in a diverse market comprising of 30 countries, working with many of the world’s largest global operators. He held this position since the formation of Nokia Siemens Networks in April 2007, building a strong team and organisation for the region. Prior to Nokia Siemens Networks, Bill held a range of diverse roles at Siemens which he joined in 1983. From 1994, he was Head of Siemens Mobile Networks in Indonesia. In 1998, he became Head of Region Central-East and North Europe for Siemens Mobile Networks and then served as Head of Operations and later as Head of Asia Pacific for Siemens Mobile Networks.
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the business. We are supporting the business. With the right talent interaction and retention, with the right values, with the right leadership, I think there is a huge impact on the overall company strategy. That is what we are doing daily. We obviously have kind of a people agenda, which is a base for and also, part of the overall Nokia Siemens Networks strategy. It’s a very important cornerstone.” Bill’s view of business and HR being inextricably linked comes as no surprise. With a degree in telecommunications and economics and numerous previous management roles at NSN and Siemens, he is an HR executive with an unusually strong grounding in the corporate world. “HR should be part of the business and HR should support the business,” says Bill. “One of the preconditions for that is that you understand the business you are in. We think that here, it’s an advantage, that somebody coming from the business and understanding the business is also driving the human resources part of the company, and would contribute more to the success of the company.” But could there be disadvantages to someone without specific people experience being in a role like this? “Somebody not coming from an HR function is not very knowledgable about all the HR processes, all the HR needs,” concedes Bill. “At the beginning, that is something somebody obviously needs to learn. But we have a lot of HR professionals within Nokia Siemens Networks who are definitely covering all these topics as well.” A top priority for Bill’s HR organisation is fostering talent and ensuring that the Nokia Siemens Networks’ internal population mirrors that of the many territories in which the company operates. “One of the major topics is definitely leadership,” he says. “We think that it’s going to change a company, and that it’s definitely needed to transform a company into the new areas where you are active. The second point is talent, which also takes in diversity. We’re investing more in gender diversity. And though we aren’t perfect on national diversity, we are doing quite well in that area. Looking into our executive board, for example, we have six different nationalities within this executive board. We are also investing in youth. So getting new people on board, having close cooperation with universities in different countries of the world. It’s also an investment being active in this. At the end of the day, I think what is necessary is that you have a balanced workforce with experienced people and with younger people who have more drive. And that is what makes a company succesful in the medium and long-term.”
Despite this interest in finding and supporting the next generation of workers, Bill believes that demographic issues are not the most important when it comes to having a cohesive and effective workforce. “From my point of view, it’s very much based on the values we have as a company,” he says. “That is independent of whether somebody has been in the company for a couple of years already, or is just joining new. We feel that people appreciate that this company has values, and that we live the values as much as we can. And it’s also a bit dependent on the growth areas we see in the different regions of the world. That also means that we’re shifting workforce into the areas where we’re doing more business, where there is more growth. Specific to the growing service business is that it’s a very regional, a very local business, so service people need to be close to our customers. I wouldn’t say that it’s really an age issue, in terms of that. It’s rather an issue of where your business is located or where your growth areas are.”
What’s in a name? One of the more unusual features of Nokia Siemens Networks’ organisational structure is the way it has done away with much of the hierarchy of job titles that has come to characterise the corporate environment in so many companies. In its place is a far more streamlined set of roles that apply across the entire business. While this process was largely welcomed, it did run into resistance in certain areas, notably the US where attachment to the tangled network of SVPs, EVPs, Presidents and Chairmen was more profound. “It was an issue,” Bill explains. “If you do such a major cultural change, you will inevitably find some resistance. There were some areas and some regions in the world where people were very much used to these kinds of titles. We had quite a clear line on it at the beginning, though we were also making certain exceptions.” Ultimately though, time was invaluable in people settling into this new structural culture. “Time really helped us very much here,” Bill continues. “People just developed into it. What really counts is the competency of your business partner – and not the title. Our customers got used to it. Our sales – which are equally important – got used to handling this no title policy. There might be still some areas in the world where we have the odd exception. But I think with 90 percent of the company, we are definitely handling that, as it fits to our culture. And at the end of the day, it’s not so important what’s on your business card, but what you can deliver, and what your contribution is to your customers’ success.” n
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SPORTS MANAGEMENT
British tennis has been in the doldrums for decades with no one able to get to the bottom of why there is such a severe dearth of talented players. Charged with solving this conundrum is the Lawn Tennis Association (LTA). We hear from CEO Roger Draper on how he is raising investment in the sport, getting kids to pick up a racket and endeavouring to deliver that elusive British Grand Slam champion. Give us a flavour of what the LTA is doing to nurture and develop new tennis players so that British tennis doesn’t just rely on an Andy [Britain’s top pro] coming along once every decade or so? Roger Draper. Th ree-and-a-half years ago a new team came into the LTA to start a transformation process across British tennis. When leading the sport you’ve obviously got two main aims: to get more people playing, better quality coaching, more competition; and raising the sport’s media profi le. So we put in a big change process across the way the performance side of tennis was run – the national tennis centre, a new sports science team, better strength and conditioning, better sports medicine, sports nutrition and a network of high-performance centres around the country. In the long-term, we have put in place a network of talent scouts around the country so that we have a good tennis programme for players aged six, seven, eight, nine and 10. We are focusing on all ages and levels – from Andy Murray at the top end to ensure he gets all the support he needs, right down the bottom to make sure that in 10 year’s time there’s not one Andy Murray but seven or eight. We are also making sure that the clubs offer a welcoming and more fun environment. The social side’s important, especially for the girls. We are also developing programmes in local schools and parks and clubs that are linked to the health agenda. One of our big programmes is ‘cardio tennis’ – a mix of social tennis, fun, and aero-
“When leading the sport you’ve obviously got two main aims: to get more people playing, better quality coaching, more competition; and raising the sport’s media profile”
The APT World Tour Finals at the O2 Arena is boosting tennis’ profile
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British tennis fans pin their hopes on Andy Murray winning Wimbledon
bic fitness. And that’s certainly helping us in terms of not just getting more girls into the sport but also keeping them in the sport, and we’re doing a lot of work particularly with the Football Foundation, who’ve done a really good job in terms of girls in soccer. The girls’ landscape has changed, it’s not just netball and hockey being played and tennis is well placed to attract and retain more girls in the sport. But you do have to offer bespoke coaching, competitions and structures to keep them in the sport. How have you modernised the LTA to bring the organisation into the 21st century and what needed rectifying when you first arrived? RD. When we launched the blueprint for tennis at the back of 2006 we identified a number of key areas that we needed to change and transform, both at the local level in terms of getting more people playing, and at the top end in terms of performance. But our starting point in terms of modernisation was putting the governing body on a business footing. So the LTA and British tennis changed a lot of the ways it was working. I always say in sport these days it’s a bit like moving it from a kind of old amateur village fete type approach to more like running a FTSE 250 business. Whilst the turnover in the LTA is UK£55 million, the British tennis economy is worth UK£1.37 billion. We brought in some new, independent, non-executive directors, like Val Gooding, who was then Chief Executive of Bupa and on the board at Sainsbury’s. And at all levels of the sport, we’ve brought on people who are not just passionate about sport, but have also got strong commercial and business expertise, and that’s certainly helped myself as Chief Executive and the rest of the executive team drive forward these changes. So getting the business on a proper business footing has been the biggest change because sport today is big business.
Could you then explain about some of the key commercial backing that you secured and how you achieved it? RD. We looked across our sponsorship portfolio and realised that it wasn’t really delivering maximum value for tennis. So we literally spent a year unravelling the existing commercial programmes and contracts that were in place, and started from scratch. And we decided to follow the new pyramid approach, so we went out and looked for a lead partner and four supporting partners. We were delighted because within three months of going back to market, we secured Aegon as the lead partner for British tennis over a five-year period. Aegon has been a tremendous partner because while they get exposure from the top end of the sport, such as the Aegon Championships at Queens and the Aegon International at Eastbourne, they’re also investing in our schools programme, parks programme and team tennis programme as well. Underpinning this, we have also brought on new partners such as Highland Spring, BNP Paribas, Nike and Intercontinental Hotel Group. We’ve had a successful period and I think that’s given everyone real confidence that we’ve got such great partners onboard. What makes the sport attractive for sponsors and potential partners? RD. What was interesting for us when we started the commercial programme was that everyone said it was about sponsoring the big events, the sexy side of the game. But the big appeal for most of our commercial partners is the broad appeal of tennis. We have 27 million people who follow tennis in the UK, which I think is second only behind football, and we reach more women than any other sport. We roughly have a 50/50 male/female split and we have half a million adults playing ever week, a million adults playing every month and four million people playing
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reflection on the state of our sport. And also we have fantastic role models there because men’s tennis in particular is so exciting at the moment. Apart from Andy Murray, there was Roger Federer, Rafael Nadal, Novak Djokovic, Jo-Wilfried Tsonga and Nikolay Davydenko. There’s some real rivalry between the players and people related to that event. We are very pleased that the ATP has decided to bring that event here for another four years – taking us through to 2013. How do you plan to use this event as a springboard for boosting the sport’s popularity? RD. People say sports like football are widely available in schools and tennis isn’t, but this isn’t the case. It is widely available because 79 percent of schools offer tennis at the primary school level. So we are dispelling some of the myths and tackling some of the barriers to entering tennis as well as working closely with our tennis foundation members who are delivering the Aegon schools programme. Th is year alone we’ve delivered 60,000 rackets into primary schools and 120,000 tennis balls. We’re supporting the teachers to deliver tennis in the curriculum and in after school clubs, and making sure there’s a sustainable link with the local clubs as well. And we are keeping those
every year. We also have a top events portfolio including the Barclay’s ATP World Tour Finals at the 02 [Arena], which gave us another hook in the winter and helps us change the perception that tennis is just a summer sport. We sold 270,000 tickets for that event and it was a different crowd from your traditional tennis crowd. So we are broadening the appeal of the sport – not just for the players and the coaches and the people involved in tennis – but more importantly our ‘noncustomers’ and the fans who follow tennis on a regular basis. You mentioned the APT World Tour Finals in London last November. How would you rate this event and what does it mean for tennis in Britain? RD. Like I said, we are changing perceptions that tennis is a summer sport. We are very fortunate in that we’ve got the Wimbledon championships, which is the biggest tennis tournament in the world. But bringing the World Tour Finals to the 02 meant that outside of the [Grand] Slams, we probably have the next biggest tennis event. And it was a very different event. It was more of a sort of ‘cluby’, cool event and we had a very different sort of event crowd to what you would get at some of our traditional events. I think that all the hard work that we’ve been putting in for our schools programme was evident when you looked around the crowd because there were young kids with their mums and dads, which is a good
“This year alone we’ve delivered 60,000 rackets into primary schools and 120,000 tennis balls” kids playing 52 weeks a year and they are beginning to relate to the role models in the sport. Th is is a top-down, bottom-up approach, and we always said the transformation of tennis was a 10-year process – we’re four years in as we speak. It’s a question of long-term thinking and shortterm action because we really believe that we are going be a successful sport and we are going to transform the sport. But, as I say, it all comes down to the way we lead the sport and the way we run the business of sport. And can Andy Murray win Wimbledon this year? RD. Absolutely. He’s been to the fi nal of Roger Draper the US Open, he’s been to the fi nal at the Australia Open, the quarter-fi nals in the French Open and the semi-fi nals of Wimbledon last year. So he’s one of the top players in the world and this is an exciting time for British tennis, with our women players too. However, it’s not just about Andy Murray; its about making sure that we bring the next generation through because we’ve got an exciting crop of young juniors, both male and female.
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IN REVIEW 138
On the shelf From boosting your mojo to handling conflicts and achieving a work/life balance, CXO peruses the best of this quarter’s book releases.
Get a Dog: Don’t Work Like One JJim Banting This 230-page book offers a sense of perspective and practical guidance from the people who know best: senior executives and leaders. It’s about making people more successful and happy, by getting them to think differently. Packed with real-life experiences, case studies, anecdotes and stories, Banting provides 101 pieces of advice and ttips to redesign your time in order to get a life. Themes such as money management, health and reorganising your everyday work activities are all discussed. CXO SAYS: An abundance of practical suggestions are supplemented by an easy-to-read and witty writing style.
H How to Beat Bedlam in the Boardroom and Boredom in the Bedroom By Jane Gunn B G Gunn, described as a mediator, conflict management consultant and speaker, promotes her inaugural book as a ‘‘life-changing guide to happiness at work and at home’. Packed full of interesting case studies, this book looks at how confl ict in one area can have a profound effect on another. “Almost every instance of conflict at work is the h catalyst c for confl ict at home,” writes Gunn. “Any time you’re under stress at home, it puts you under stress at work. And A vice versa.” CXO C SAYS: Th is book has received rave reviews from both critics and leadership gurus. A must-read for those looking l for a good work/life balance.
Mojo: How to Get It, How to Use It, How to Get It Back If You Lose It By Marshall Goldsmith Mojo is the concept of positive momentum: success building upon success. It anchors our self-esteem, shapes our careers and influences those around us. Here, executive coach Marshall Goldsmith explains how we can capture it, keep it and if necessary regain it. Based on years of experience coaching the world’s top CEOs, Goldsmith reveals how to do this through 14 practical tools that will help you achieve happiness and meaning – not only in business, but also in life. CXO SAYS: A great book for business people and leaders who are looking for practical tips on how to succeed. The author has struck gold with this inspiring look at how to become better – and happier – in life.
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Johannesburg Time: +1hr GMT | Currency: Rand | Population: 3.3 million Johannesburg is one of the largest cities in South Africa as well the nation’s beating heart. We delve into this metropolis to bring you the lowdown on what it has to offer. Oh and some football tournament is on its way there apparently.
About Johannesburg, or Jo’burg as it is commonly known, has a sprawling skyline housing a population of 3.3 million. Around half of the inhabitants live in Soweto – townships in the southwest – which means stark inequalities between rich and poor are clearly evident. The eyes of the world will be on Jo’burg in June when the FIFA World Cup, along with 32 teams and their fans, roll into town – the first time the tournament has been staged on the African continent. The weather is classed as excellent, with temperatures topping 35°C in the summer months (December, January and February). Winters are mild.
WARNING It is well documented that Johannesburg suffers from an extremely high crime rate (52 murders every 24 hours just a couple of years ago). However, things are improving and if you take sensible precautions you should have a safe and enjoyable trip. Don’t wear flashy jewellery and only carry a minimum amount of cash when out of your hotel.
Getting around Th is is a city best suited to a car because public transport is lacking, although things will be vastly improved for the World Cup. The best option to explore the city and further afield is to hire a car, otherwise
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See Have we mentioned the World Cup yet? The whole country has caught football fever since South Africa was awarded the 64-match tournament in 2004. The opening game between the hosts South Africa and Mexico kicks off on June 11 and those lucky enough to have tickets will be treated to spectacular opening ceremony, followed by the match itself. Aside from football, Jo’burg houses its fair share of museums and galleries; a special mention has to go to The Apartheid museum for an insight into South Africa’s troubled past. The Market Theatre precinct, Museum of Africa and Newtown (New Town) are particularly vibrant sectors of the city centre. By day, a walk around Newtown (preferably in a small group) will give you a taste for the wide range of traditions and cultures the city plays host to.
Relax
Sleep The Westcliff Situated close to Johannesburg Zoo, The Westcliff offers 117 guestrooms in a three-storey property. Each room has the usual facilities you come to expect from a fivestar hotel while sporty types can chance their arm at ice skating, mountain biking, horse riding and aerobics. The heated infinity pool is a real treat after a day spent trekking around the city. A special mention has to go to the staff who are particularly helpful at recommending restaurants and sights off the beaten track. This hotel is a smoke-free establishment.
African Pride Melrose Arch If you fancy staying away from the hubbub of town, this trendy five-star hotel (10km from the centre) offers 118 large, tastefully decorated rooms and state-of-the-art amenities. African Pride boasts a number of restaurants serving extensive buffets and à la carte dining. Guests can enjoy cocktails at the hotel’s pool bar or colonialstyle library. The hotel itself is surrounded by a host of stylish shops, entertainment centres and restaurants.
large blue buses run up and down the main roads while mini buses can be flagged down on the street. Park Station is the central train station. From here, rail companies Spoomet and MetroRail operate frequent services across the city. Long distance bus services also arrive at Park Station. Taxi drivers are said to collude with one another to keep fares artificially inflated so you will need to haggle because journeys are not usually metered. By far the easiest way to fi nd your bearings in Jo’burg is by looking for the two telecommunications towers on the horizon. The Hillbrow tower is located near the city centre while the Brixton tower (also called the Sentech tower) is located out to the west of the city. Both are easily distinguishable and make excellent landmarks.
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Pull on your comfy shoes and get walking among the city’s abundance of greenery – Jo’burg boasts around six million trees, thought to be the world’s largest man-made urban forest. Alternatively, take a tour of Soweto (short for Southwestern Township), which takes you on a tour of shanty towns including where Nelson Mandela grew up and the home where he lived after his release from prison. Shoppers will be pleased to hear Jo’burg is characterised by an American style mall culture, with huge complexes dotted around the place. If this isn’t your bag, then a half-day drive offers you a chance to get up close and personal with lions, cheetahs, rhino and crocodiles at one of several game reserves and breeding stations.
Eat The Auberge Michel is a chic restaurant that regularly features in the top 10 best restaurants in South Africa – it has attained a premier status and a major slice of its success is due to its top quality service, superb French cuisine and extensive wine cellar. Located in Sandton, one of South Africa’s most prominent business areas, this is one of the finest dining experiences to be had anywhere in Africa – just don’t turn up in jeans, the dress code leans towards smart and is strictly observed. Although there are several branches across South Africa the Moyo at Melrose Arch in Johannesburg is a particularly special place for adventurous gourmets. Far more than simply a fine dining experience, Moyo is a five-floor establishment with winding pathways and spiral staircase as well as a Moroccan tent, which creates the perfect, sultry ambiance in which to savour the fusion of pan-African cuisine. Moyo is also a vibrant venue for entertainment; from traditional storytellers and West African folk musicians, to African influenced Jazz, there’s always something going on.
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Technology for today’s executive <<< Samsung UE467000 Since James Cameron’s Avatar smashed box-office records with its jaw-dropping threedimensional visuals, the whole entertainment industry has gone 3D crazy. With fi lms, video games and sporting events all being given an extra dimension, it didn’t take long for television manufacturers to latch on to its potential for the home. Korean electronics firm Samsung has just released its svelte 46-inch model boasting 3D capabilities, although viewers will still need to don the silly specs (just two pairs are thrown in with this €2000 unit). This is definitely a piece of tech to wow your friends with; however, one huge downside is the lack of 3D content available at the moment; although 3D Blu-ray players and dedicated 3D channels are on their way. Good things come to those who wait.
Desirability rating: aaaaa
>>> HTC Legend Few people may have even heard of HTC but this plucky mobile phone manufacturer has been making ground on that certain Californian electronics giant with fruit for a logo and their ubiquitous smartphone. With a sculpted alloy casing and 3.2-inch high-res LED touch screen, the HTC Legend (a replacement for the Hero) certainly looks and feels the business – but could be prone to scratching. Also, as with the Hero, the curved lip at the base of the handset will divide opinion. Th is feature-packed handset includes a 5MP camera and flash, but let’s hope the poor battery life of previous models has been addressed. The shortage of downloadable apps is a shame. It’s unlikely that Apple fans will convert but the Legend offers a credible alternative for smartphone virgins.
Desirability rating: aaaa
<<< Apple iPad After months of fervent speculation and rumour, Apple has fi nally unveiled its latest piece of shiny new tech – the unimaginatively named iPad. Apple believes its new tablet-style device will occupy a gap in the market between an iPhone and a MacBook. For the critics (of which there are many), therein lies the problem; it’s too big to fit in your pocket and too impractical to replace a laptop. There’s no denying the iPad’s seductive curves and glorious 9.7-inch screen will have Apple fans’ palms perspiring, but its ability to garner mass-market appeal looks unlikely. For starters, it cannot run Flash and it won’t even allow you to multi-task. It also has no USB port, no SD slot, no camera and no GPS. In essence its an iPhone on steroids.
Desirability rating: aa >>> Acer AZ5600 The main selling point of this all-in-one PC from Acer is the fact that its roomy, full 1080p HD, 23inch display is touchscreen. A swish of your finger will effortlessly shoot documents and photos into folders, open web pages and select tracks from your albums. For those too lazy to bother with this, the supplied wireless keyboard and mouse will do the job just as well. Windows 7 is included but it’s a shame Acer haven’t included a TV tuner. The sleek and stylish AZ5600 does however come with a 2.33Ghz Intel Core 2 Quad processor, 4GB of RAM and 1TB of hard drive space. But we weren’t listening to any of the specs; we just love the touchscreen. Sold!
Desirability rating: aaaa
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