SME Advisor Issue 118 by SME Advisor Middle East

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ISSUE 118

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NBADâ&#x20AC;&#x2122;s partnership made our growth possible in the Middle East. John Fanelli CFO, Hill International

Hill International has managed the construction of some of the most complex projects in the world including the Etihad Towers in Abu Dhabi, the reconstruction of the World Trade Center site in New York City and the United Nations Headquarters in Geneva. When Hill made expansion plans in the region, NBAD partnered with them to provide bonding facilities to meet their contractual obligations, and expand their limits, in line with the plan. At NBAD we believe that the true success of a business is partnership. With our regional expertise and global reach across the dynamic West-East trade corridor, you can count on us to partner you to the next level of success.

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Khalifa Fund for Enterprise Development is a government entity that spearheads the support and development of SMEs in the UAE. His role is integral to the strategic planning and management of the organisation in alignment with the Executive Council’s objectives.

EDITORIAL COMMITTEE

His Excellency Abdullah Saeed Al Darmaki CEO, Khalifa Fund for Enterprise Development

SME Advisor is delighted to announce that during 2015 we will be working with some of the leading names in the SME space - key figures who have kindly agreed to take part in our prestigious Editorial Committee. This panel will play a vital role in channeling the feature content of our magazine and ensuring that we are more topical than ever - analyzing and discussing the ‘real world’ issues of tangible value to our readership and bringing industry-leading expertise across the publication and its raft of prestigious related events. We are delighted to introduce the following SME personalities:

Policy makers

Professor Val Lindsay MSc (Otago), MBA (Victoria), PhD (Warwick) As a Professor of Entrepreneurship and Management at the American University of Sharjah (AUS), she has a keen interest in teaching and research in the areas of international strategy, exporting, services internationalization, entrepreneurship, small and medium-sized enterprises, networks and clusters, and economic development.

Thought leaders At the helm of the BPG Group since 1991, he is responsible for consolidating the Group’s interests across advertising, public advocacy, public relations, design, activation, media asset management and digital verticals, in the Middle East and North Africa region.

Entrepreneurs Avi Bhojani CEO, BPG GROUP

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sme advisor ISSUE 118

He is also the Director of the Dubai Chamber initiative, Tejar Dubai. He is a proven UAE leader and business entrepreneur, with the ability to rapidly mobilize teams to achieve organisational change and integration.

With his unique background as an educator, a business strategist, and a researcher, Dr. Abonamah has conducted many strategy and organisational transformation workshops for various SMEs in the Gulf region and has been invited to speak at many national and international conferences, and panel discussions. He has over fifty publications in international journals and conferences and a US patent in reliable computer systems.

Essa Al Zaabi Senior Vice President Support Services, Dubai Chamber of Commerce & Industry

Abdullah Abonamah PROFESSOR OF MANAGEMENT SCIENCES AND CEO, UAE ACADEMY

He is a Board Member of the Advisory Board of Deutsche Auskunftei Service GmbH, Chairman of Business Advisory Council of EFMA, member of ECGI (European Corporate Governance Institute) and Member of the Advisory Board of BAA, the Alumni Association of Bocconi University and SDABocconi.

Roberto Mancone MD, GLOBAL HEAD BUSINESS PRODUCTS, LENDING, DEPOSIT AND PAYMENTS, DEUTSCHE BANK

Paul Kenny PARTNER, EMERGE VENTURES

Laura has been named one of the Best Keynote Speakers by Meetings and Conventions Magazine and is a member of the National Speakers Association. She serves on the boards of the American Heart Association, Clean the World Foundation, Common Threads and Event Solutions Magazine.

Laura Schwartz PROFESSIONAL SPEAKER, AUTHOR AND FORMERLY WHITE HOUSE DIRECTOR OF EVENTS

Paul is one of the most important figures in the Internet space in the MENA region and is an active investor, mentor and advisor to numerous companies around the world. He has made numerous investments into Internet and Technology companies worldwide and sits as an advisor and board member to several companies.

Yogesh Mehta Managing Director, Petrochem Middle East Mohan Valrani Senior Vice Chairman & Managing Director, Al Shirawi Group of Companies Apart, from his business-related ventures, he is also deeply involved in social activities. He is the founder - Chairman of the India Club and on the Board of Trustees of The Indian High School and has been as instrumental in contributing to the success of these institutions.

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Driven by passion and a need to succeed, he established Petrochem Middle East in 1995 with friend and business partner David Lubbock. Petrochem Middle East has since grown from strength-to-strength to become one of the largest independent petrochemical distributors in the Middle East. A self-made billionaire, his greatest attributes are mentoring and leading by example.

Sultan Sobhi Batterjee owner and CEO, IHCC He is a member of several social and economic associations including the Young Arab Leaders Society in Dubai, the young entrepreneurs committee Jeddah Chamber of Commerce and he is also a Board Member of the (EO) Entrepreneursâ&#x20AC;&#x2122; Organisation in the USA.

FROM THE EDITOR MANAGEMENT Dominic De Sousa Chairman Nadeem Hood Group CEO Georgina O’Hara COO - Business and Consumer EDITORIAL Group Director of Editorial Paul Godfrey paul.godfrey@cpimediagroup.com +971 4 440 9105 Editor Rushika Bhatia rushika.bhatia@cpimediagroup.com +971 4 440 9115 ADVERTISING Business Development Executive Adam Barrie Lees adam.lees@cpimediagroup.com +971 4 440 9119 Business Development Executive Mohamed Kerrouchi mohamed.kerrouchi@cpimediagroup.com +971 4 440 9162 Account Executive Freshia Mistry freshia.mistry@cpimediagroup.com +971 4 440 9161 Event Sponsorship Manager Gill Fairclough gill.fairclough@cpimediagroup.com +971 4 440 9120

Time to raise the bar? As we approach December, it’s the perfect time to start planning a year-end performance review - not the kind that assesses your staff and who did (and didn’t) do what, but one that reviews the actual performance of your business. There’s no better time to look at all the key operational and financial areas of the company, evaluating revenue performance, HR, sales, marketing, social media, product development and distribution. In short, asking what went right, what went wrong and how best to build initiatives for renewal and improvement in 2016? Quite apart from giving a crisp snapshot of how these various functions are doing, the year-end performance review has three advantages you might not have regularly considered. Firstly, it’s a good catalyst for assessing what you want to achieve next year, with a fresh, realistic perspective based on how you measured up against the targets you set for this year. It may be the case, for example, that while you wanted to expand into two new markets, you actually realise that those grandiose plans will have to wait until 2017 - settle for expanding into one for now. Conversely, as 2015 progressed, you may have acquired more experience at dealing with a bank or an investor, and now feel armed with the grit and knowledge to get more finance and expand more rapidly than you would ever have imagined only 12 months ago. Secondly, consider whether there are better internal processes you can set up in 2016 - good Corporate Governance isn’t just for dealing with all those fiduciary and legal angles, but will actually help you boost cashlfow and deal more effectively with the whole raft of stakeholders, including creditors, customers and investors. It might also be the case that you are now in a position to ‘speculate to accumulate’. If so, hire an experienced Chartered Accountant as a fullyfledged CFO. Then look at new financial strategies like Asset Refinancing, which leverage your new buying power while supercharging the business with cash. Either move might leave you better-placed to meet those 2016 goals and put you ahead of the business plan. Then - most importantly of all - use the performance snapshot to see what the key trends are in your sector. Is your specialisation going out of style? Are people bored with what you’re doing (and bored with your competitors too?). If so, it’s time to move out and move up: start doing your market research now and identify the trends that captivate the market and the people you want to sell to. Share your research and new aspirations with a Relationship Manager at your bank, and start preparing the ground for funding requests that might fall on very receptive ears… Good planning – and enjoy this issue of SME Advisor!

DESIGN Head of Design Glenn Roxas

Paul Godfrey Senior Editor

Senior Graphic Designer Froilan Cosgafa IV Production Manager James Tharian Data Manager Rajeesh Melath Printed by Al Ghurair Printing & Publishing LLC

Rushika Bhatia Editor Talk to us: E-mail: paul.godfrey@cpimediagroup.com Facebook: www.facebook.com/SMEadvisor

Head Office PO Box 13700, Dubai, UAE Tel: +971 (0) 4 440 9100 Fax: +971 (0) 4 447 2409 © Copyright 2015 CPI. All rights reserved. While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

PRESENTING PARTNER

Twitter: @SMEadvisorME LinkedIn group: www.tinyurl.com/smeadvisorme

STRATEGIC SME PARTNER

OFFICIAL GOVERNMENT PARTNER

Contents

“It’s in the SMEs that you see the potential for critical developments in areas like human resources and innovation in the financial template.”

- Tom Peters p42

Demand dictates which technological innovations succeed and which fail, and this is certainly the case for the Bitcoin currency. p62

ON THE FRONT COVER

06 Editorial Committee SME personalities bringing industry-leading expertise across the publication and its raft of prestigious events. 09 Editor’s Note Paul Godfrey on why it’s time to raise the bar. 12 Data and decision making Our infographic section showcasing key trends shaping the SME marketplace. Ground Level 14 Safety First Health and Safety Management of heavy plant and equipment. 18 Perfect 40 A keypoint checklist for the safety management of heavy plant and equipment. 22 A rewarding stay Loyalty schemes can be a dynamic way for SMEs to break into the powerful Hospitality supply chain – here we look at some of the leading examples.

sme advisor ISSUE 118

Technology 46 Lessons in Disaster Recovery Management Are you prepared for the worst? SME Advisor shares a plan for preparedness.

Legal 50 Biggest cyber threat to your business – your staff! Experts from Clyde & Co. assess the evolving landscape.

Innovation 54 Is 3D printing shaping the future of business? We explore the various facets and provide a detailed analysis. Sector focus 58 GCC Healthcare sector – investments, trends and opportunities A 360 degree view on this prolific sector.

Fast Four 24 The evolving role of family businesses Four compelling excerpts summarise everything you need to know… Insurance 26 Key man insurance – protecting your people assets Don’t suffer the consequences of a critical skills gap; we explain an effective solution. 28 Change is the only constant Are you prepared to cope with change and reap the rewards of proactive planning ? We show you how. Digitally Disruptive 32 GCC Roaming A new service by Etisalat provides an ideal solution for travellers in the GCC region. Movers & Shakers 36 An interview with John Lincoln The Etisalat SMB Champion shares critical insights. 42 It’s a Tom Peters world An exclusive meeting with the guru of change.

Finance 62 The Rebirth of currency – Bitcoin. It is an aspirational tool for SMEs, but what works and what doesn’t? Strategy 66 Are you ready to expand overseas? Casting your net further afield is a classic solution, but it requires meticuloius planning and research. 70 Is your business sustainable or a dangerous polluter? Unless you embrace the sustainability agenda, you could be breaking more laws than you know - and taking on some serious risk… 72 Getting the right finance team Since so many SMEs are in quest of finance, doesn’t it make sense to make finding the right finance team your top priority? Tech Trends 76 Stay protected with these top business security apps.

Data and Decision making

Healthcare sector in MENA Trends, opportunities and challenges

By 2020, MENA would need to add 150,000 physicians, 326,000 dentists and 1.8 million nurses and midwifery personnel

Current trends

The number of physicians per 10,000 people in MENA is below the global average

The MENA healthcare market is forecasted to be worth USD144 billion by 2020

The GCC healthcare market is forecasted to be worth USD69 billion by 2020

The average number of physicians per 10,000 people in the MENA region is 21

It is estimated that MENA would need to add nearly 360,000 beds by 2020

MENA has 18 beds per 10,000 people â&#x20AC;&#x201C; in comparison with the global average of 30 beds

The private sector healthcare market is forecasted to be worth USD61 billion in 2020

Sector overview Sources: Al Masah Capital: MENA Healthcare Sector; Colliers International

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Data and Decision making

Primary challenges facing the sector Challenges facing the global healthcare sector:

COST

Opportunities and advancements MEDICAL TOURISM Medical tourism is expected to cater to over 20 million tourists by 2020 â&#x20AC;&#x201C; with over 160,000 rooms.

The revenue generated from medical tourism was estimated at US$ 177.5 million in 2012, which is expected to grow to US$ 710 million by 2020.

ADAPTING TO MARKET FORCES

REGULATIONS & COMPLIANCE

TRANSFORMATION & DIGITAL INNOVATION

HEALTHCARE INSURANCE The implementation of the healthcare insurance will be as follows: Employers with 1,000 or more employees must comply by October 2014;

Employers with 100-999 employees must comply by July 2015;

Employers with fewer than 100 employees must comply by June 2016.

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GROUND LEVEL

Health & Safety management of heavy plant and equipment 14

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GROUND LEVEL

MORE AND MORE SMEs ARE USING HEAVY MACHINERY, AS THEY GRAVITATE TOWARDS FRESH OPPORTUNITIES IN AREAS SUCH AS ROADS CONSTRUCTION, MANUFACTURING OR MAJOR INFRASTRUCTURE PROJECTS. THESE SECTORS ARE, FOR EXAMPLE, PART OF THE OPPORTUNITIES PRESENTED BY EXPO 2020 AND THE GROWTH OF KEY VERTICALS SUCH AS THE WEALTH OF M.I.C.E.RELATED INITIATIVES. YET HEAVY EQUIPMENT BRINGS UNIQUE RISKS AND THE NEED FOR SPECIAL SAFETY OBSERVANCE - AS SENIOR EDITOR PAUL GODFREY EXPLAINS…

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Next to commercial deep sea fishing, the range of industries using heavy equipment rank among the most dangerous in the world. So it is perhaps surprising that there are no all-encompassing safety standards or international regulations to reduce risks and stipulate safer styles of usage. Rather, there are sets of national regulations which differ significantly from each other and set varying levels of operator protection. In the USA and Singapore, for example, these are connected with long-established bodies of Health & Safety legislation, while in the UK and France, they are part of a larger, comprehensive raft of EU operating standards. Meanwhile, in the UAE, legislation varies between emirates, but generally sets a standard designed to be commensurate with world-class best practice. For example, in Abu Dhabi, new regulations for heavy building machinery and cranes mean all contractors and building companies must acquire a municipality-backed safety certificate before work can begin. The law, already in place, requires building and demolition companies to present technical testing certificates of their equipment provided by thirdparty inspectors before a licence can be issued for the machinery. While in Dubai, the Dubai Municipality Code of Safety Practice follows many of the key criteria established by the EU and is designed to cover a comprehensive range of equipment and usages. Note that in the cases of both Dubai and Abu Dhabi, the weight of responsibility is placed upon the user of the equipment to certify its suitability, safety and competence. This is in line, for example, with EU practice, which states that: ‘To achieve compliance the Responsible Person must undertake a conformity assessment process to meet the Directive’s obligations.’ This emphasis on the company using the machinery has come about because all too many businesses have historically tended to reference the

Every operator should receive sufficient and appropriate training, with full and detailed instruction for safe vehicle operation.

manufacturer as setting the safety benchmark, seeing themselves as a kind of passive ‘inheritor’ of whatever specification or flaws the equipment came with. This very reactive approach is now no longer adequate as a ‘modus operandi’ and will not provide suitable defence in the event of prosecution. The challenges… Working with heavy equipment is no easy task. Whether the operator is a 10-year veteran or a beginner, safety remains a critically important issue. Every operator should receive sufficient and appropriate training, with full and detailed instruction for safe vehicle operation. Safety should be practiced and enforced each and every time the equipment is used. Note the following statistics – • Even in the most evolved markets, such as the USA, more than 10 people die each day in the operation of heavy plant and equipment • Next to warfare and diabetes, accidents involving heavy plant and equipment are globally the leading cause of limb amputation • Accidents involving heavy plant

GROUND LEVEL

and equipment are, worldwide, the second-largest cause of workplace litigation and actually account for more corporate payouts than any other single staffing issue In short, it pays to manage the key Health & Safety issues around heavy plant and equipment. This is especially true in a climate where ‘reputational damage’ can have catastrophic impact on the ability to attract finance, investors and large-scale projects, especially those linked to the public sector. Operator training – the first fundamental Particularly in developing markets, where the majority of plant operators tend to be ‘first time’ users, not seasoned professionals, the greatest risk of accident is caused by lack of training and experience. According to the UK’s Health and Safety Executive, good training can reduce the risk of accident and injury by up to 85 per cent. The reality is that the proper protection of heavy equipment operators (and indeed, those also working adjacent to heavy equipment) depends on good training, delivered in a methodical and relevant way. Training should consist of – • Formal (classroom-type) instruction • Demonstrations by the trainer • Practical exercises performed by the trainee • Evaluation of the operator’s performance in the workplace All training should be logged - either in hard copy or online - whenever there is a new session. In addition, it is imperative to record all accidents (however minor), not simply in order to catalogue staff incidents, but to build up a record from which certain discernible trends may appear - and which can then be tackled proactively and prevented. Safety rules With good training as the overall

context for safer operation, all companies using heavy plant and equipment should also establish a set of safety rules and expectations for operators. The following is a basic list of rules and safe work practices that should be observed by employees. Before operating: • Provide operator manuals (either hard copy or online) for employees to keep, review and learn. • Ensure that all operators wear appropriate clothing and protective equipment (hearing protection, work gloves, sturdy work shirt and trousers or coveralls, safety footwear, reflective vests, hard hat, etc.) • Establish a code of hand signals (if ground workers are present) • Conduct regular vehicle inspections, using a daily sign in/inspection sheet) • Make sure all mobile and driven equipment has a rollover protective structure (ROPS) • Fill tank with fuel when the equipment is cool with the engine off (definitely no smoking!) • Carry out a weekly inspection of steps, handrails, pedals, grab irons, and the cab floor. There should be no defects or deep scarring; and steps and grab rails should never be allowed to work loose or show signs of major corrosion - a special concern in Middle East and Asian applications, working in environments with high humidity. • The HQ cabin adjacent to the work site should have a ‘master’ copy of the safety manual, in hard copy and laminated so as to endure harsh usage, paints, etc. Then there should be a clear set of rules in place during operation. For example – • On mounted and mobile equipment, always wear seatbelts • Check controls for proper operation (including backup alarms) • Check the work area for obstacles, holes, overhead utility lines, etc. • On construction sites, ensure that

the utility service provider identifies underground cables and supply lines before digging • Similarly, in mobile equipment, when working on slopes, operate up and down the face of the slope - never across the face • Never jump off of or onto the equipment • Never exit a running vehicle (turn the vehicle off if the operator must leave the cab) In terms of mobile and driven equipment, the vast majority of injuries involve mounting and dismounting vehicles. The training provided should emphasize what is known as the ‘3-point contact rule’. This means that every operator mounting or dismounting a vehicle should maintain contact with the vehicle using – • Two hands and one foot or • Two feet and one hand until safely in the cab or on the ground Note also the following operating ground rules – • Be sure to park on level ground • Relieve pressure from all hydraulic controls • Wait for all movements to stop, then safely dismount the vehicle using the 3-point contact rule • Remove the key from unattended vehicles Proactive safety is safety first As always, following the model of a ‘stitch in time’ can prevent the trauma resulting from an avoidable catastrophe. A good safeguard here is to create a company safety checklist, highlighting some of the key risks to observe and tackle before they become dangerous threats. For this reason, we have created a useful and portable checklist - see the following pages for your own practical risk template.

For an online version, please visit: http://www.smeadvisor.com/groundlevel/safety-first

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GROUND LEVEL

Perfect 40 can your business tick every box?

A KEYPOINT CHECKLIST FOR THE SAFETY MANAGEMENT OF HEAVY PLANT AND EQUIPMENT

TRAINING

Correct training is the most critical tool for reducing workplace accidents when working with heavy plant and equipment. Has your business done the following? (Tick Yes or No). • Conducted an audit of staff training needs, across each individual? • Ascertained which staff have previously been involved in accidents or safety incidents? • Conducted a cost analysis of training needs and decided whether to train in-house or use the services of a qualified external consultant? • Put in place a roster for formal, classroom-style training? • Put in place a roster for practical trainer demonstrations on each piece of high-risk equipment? • Evaluated each operator’s competence standards and assessed personal training needs? • Created a manual for best practice and made it available online and in hard copy at key workplace hubs? • Created a manual in which all training is logged and noted? (This can be critical evidence in legal disputes) • Built up an awareness of likely accident ‘hotspots’ - where and how they occur and with what frequency? • Instigated a ‘trickle down’ approach to safety management, which involves briefing senior managers and department heads, and establishing the process whereby they then communicate with shop floor managers and operatives?

Yes Yes

No No

Yes Yes Yes Yes

No No No No

Yes

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GROUND LEVEL

The environment

Machinery is designed to work in optimum conditions – leaving debris, blocked work routes and other hazards in the work environment will only compound the degree of risk. Has your business done the following? (Tick Yes or No). • Established a ‘demarcation zone’ around heavy plant and equipment whereby special safety rules and behaviour come into effect? • Put proper and legally-compliant safety signage in place around key work zones? • Created a policy of ‘no hard hat - no job’? • Implemented special standards of daily cleaning around plant and equipment (when indoors) and insisted on proper drainage and land preparation when equipment is used outdoors? • Set up clear guidelines that all equipment must only be used on level surfaces, unless specifically designed for rugged terrain? • Insisted that all areas with heavy plant and equipment are closed to members of the public? • Insisted that all areas with heavy plant and equipment are restricted access to employees? • Created a daily inspection checklist for the operating environment? (is it clean and properlyprepared, etc,) • Appointed a ‘plant manager’ for each heavy-equipment process, who actively monitors the environment and personnel actions within it? • Insisted that all smoking is banned from the adjacent environment, as well as all unnecessary flammable materials?

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Yes Yes Yes

No No No

Yes

Yes Yes Yes

No No No

Yes

GROUND LEVEL

Operating efficiency and fitness-for-task If heavy equipment is old or poorly-maintained, it will not only fail to deliver the results you need, but can seriously endanger operatives. Has your business done the following? (Tick Yes or No). • Followed the manufacturer’s requirements regarding maintenance and servicing for all pieces of heavy plant and equipment? • Used only certified and qualified specialists for key services? • Instigated weekly ‘test-run’ safety checks? • Instigated daily visual inspections? • Appointed a maintenance officer to record and actively manage all safe operating requirements? • Logged any running problems with particular items of equipment? • Kept a log of service intervals and maintenance standards for each item of equipment? • Recorded any historical operating problems? • Ensured that all equipment is regularly cleaned with recommended proprietary agents? • Ensured that faulty equipment is withdrawn from use?

Yes Yes Yes Yes

No No No No

Yes Yes

No No

Yes Yes

No No

Yes Yes

No No

Operator safety rules

Establishing a set of safety rules for equipment operators is the best and most reliable way to reduce accidents and mishaps. This can be done via external consultants, but a good deal of training relates to common sense and putting some relatively simple guidelines in place. Has your business done the following? (Tick Yes or No). • Ensured that staff are aware of basic risks - eg, never filling plant with fuel with engine running, or mounting/dismounting mobile equipment while still moving? • Created an operator manual which is distributed to all staff and available at every major worksite? • Established a workplace safety dress code, denoting appropriate apparel and use of equipment? • Established a system of hand signals in the event of noisy operating conditions? • Fitted seatbelts to all driver-based equipment, however old? • Insisted that all equipment is parked on level ground, and never mounted/ dismounted on uneven earth? • Ensured that all equipment alarms are working? • Initiated a regime of clearing debris from working space as job is in progress (rather than waiting for next shift to commence)? • Ensured that mobile equipment is safely locked away at night, whether in a secure compound, or with chain/steering wheel restraint? • Created a ‘key management’ culture whereby only selected personnel can hold keys to mobile equipment and are required to lodge them securely in a lockable box at end of shift.

CMY

Yes

Yes Yes Yes

No No No

Yes Yes

No No

Yes

For an online version, please visit: http://www.smeadvisor.com/ground-level/perfect-40

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COMPLEXITY

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SIMPLE

KEEPS THEM COMING.

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GROUND LEVEL

A rewarding stay

First it was Green Shield stamps, then Airmiles, and now it seems as if every substantial business worldwide has some form of loyalty scheme designed to attract and retain the business of its customers. Take note of these successful examples - loyalty schemes can be a dynamic way for SMEs to break into the powerful Hospitality supply chain.

Airlines were in the vanguard of this proliferation, and it now seems unusual to board a plane without some form of incentive scheme smoothing your passage. So much so that the main beneficiaries of that global travel market wanted to get on the same bandwagon, and the number of hotel loyalty cards and schemes is almost as large as the number of hotels. The reasons are obvious. Understanding your customer, tracking his or her habits, learning their preferences is at the core of repeat business, and if you can do this over a distributed marketplace, even better. A frequent global traveler who comes to trust your brand relies on you for comfort and familiarity in a new territory, and so hotel loyalty schemes became a fundamental part of the marketing plan. The problem then became, how to differentiate your scheme from the proliferation of others, how to retain the loyalty of that frequent guest in the face of blandishments from so many other competing operators? The aim of a hotel loyalty scheme, naturally enough, is to encourage repeat business from frequent travellers at the expense of competitor hotels. Most schemes typically work on a points-collection basis, offering free hotel stays in return for points that are earned by staying at the hotel - and perhaps also at other hotel chains within the same group. You may also be able

to redeem points for other types of rewards, such as flights. The number of points earned usually varies depending upon the cost and duration of a stay. The number required to qualify for a free hotel stay will also vary on a similar basis. Unlike some other business sectors, hotels enjoy the advantage of extended contact with their guests during the course of a stay. This enables them to offer their loyalty scheme members further benefits, which they hope will further encourage repeat custom. Extra benefits of hotel loyalty schemes may include, for example: • free late check-out; • fast-track / dedicated / in-room checkin and check-out; • free room upgrades; • free newspapers, etc. Membership levels and rewards may also be structured within tiers, offering extra and/or higher levels of benefits to more frequent guests, who are more valuable from a hotel’s perspective than an occasional visitor. Hilton HHonors Hilton HHonors is the only hotel reward scheme to offer members the opportunity to earn both hotel points and airline frequent flyer miles for the same hotel

stays. They even registered a trademark for the term they invented to describe this feature - Double Dipping ®. Hilton HHonors can be earned at over 3,900 hotels world-wide, which form part of the The Hilton Family. In addition, frequent flyer miles can be earned with your choice of over 50 airline partners. Priority Club Credit Card Frequent guests at Holiday Inn and other InterContinental Hotel Group hotels may wish to take advantage of the Priority Club credit card, which offers points based on all spending placed on the card. It offers enough bonus points upon first use of the card for a free night’s stay. Member Benefits There are three levels of membership within the Priority Club Rewards loyalty scheme. All members qualify for a standard range of benefits, which includes: • Points that never expire. • Exclusive offers via emailed member newsletters.

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GROUND LEVEL

• Best rate guarantee plus a further 5% reduction. • Priority booking • Room kept longer in case of late arrival • Personalised welcome • Late check-out • Discounted car hire with Europcar In addition, guests receive Compliments loyalty scheme points on stays at the above hotels plus Club Med. Points levels are based on spend and can be saved towards vouchers for spending at the chain’s hotels. As the card carries an initial charge, you will need to be relatively frequent visitor in order to make savings of more than the cost of your loyalty scheme membership.

• Redeem points instantly for hotel stays. • No blackout dates for free hotel nights. • Free weekday newspapers. • Extended check-out. Gold members receive extra points, priority check-in and a dedicated booking line. Platinum members also receive enhanced points bonuses, guaranteed room availability and free room upgrades at check-in. Redeeming Points for Holiday Inn and Other Hotels Members can redeem Priority Club loyalty scheme points for hundreds of rewards. The main attraction is the opportunity to redeem points for free hotel stays at any of the hotel group’s brands, including Holiday Inn, Holiday Inn Express, Crown Plaza and InterContinental hotels. Other reward options include in-hotel rewards (movies and meals), cases of wine, shopping vouchers (Marks & Spencer) and vouchers for experiences ranging from relaxing aromatherapy massages to champagne tours in France.

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Accor Hotels Compliments from Accor Hotels is a hotel loyalty scheme covering over 2,000 hotels world-wide, with participating brands including Novotel, Sofitel, Mercure, Ibis, Accor Vacances and Suitehotel. Two of Accor’s four hotel loyalty cards are of particular relevance to UK-based travellers (the others are specific to France and Brazil). Accor’s Favorite Guest Card is a subscription-based loyalty card. It offers savings on hotel room rates and services and holders earn Compliments points, which can be redeemed for hotel vouchers. The Sofitel Privilège Card is free and provides exclusive benefits as well as Compliments Points. Accor Favorite Guest In return for an annual fee (€130 at the time of writing), the Accor Favorite Guest Card offers members a range of exclusive services when staying at Sofitel, Novotel, Mecure, Ibis, Suitehotels and Accor Vacances and Thalassa hotels. These loyalty benefits include:

Sofitel Privilège Card Ideal for frequent visitors to Sofitel Hotels, the Privilège Card is a free loyalty card that offers special benefits including: • Welcome drink and gift from the hotel upon arrival. • Double rooms at the price of single rooms. • Late check-in. • Free access to hotel fitness centres. • Exclusive offers for loyalty scheme members by post as well as via the Accor Hotels web site. • Discounted car rental rates with Europcar. Members also receive Compliments loyalty points based on their spend, with points remaining valid for three years. Points can be collected and redeemed for hotel gift vouchers. You can begin earning points with your first stay, using a temporary loyalty programme membership card.

For an online version, please visit: http://www.smeadvisor.com/ground-level/arewarding-stay

fast four

Family businesses will be seen increasingly professionalising themselves, which will enable them to innovate better, diversify more effectively, export more, grow faster, and be more profitable. It will open up new commercial opportunities, and new options for a possible sale in the long term, by making them more attractive prospects for both PE buyers and multinational buyers. But these benefits will only be realised if family businesses have the courage to professionalise the family, as well as the firm. Doing one and not the other will only create tension and possible conflict, especially if outside managers are brought in at executive level. Source: Professionalising the Middle Eastern family firm by PwC

What will change in 2016?

We present to you a compelling new section that explores four different, practical views on one topical SME issue. This month SME Advisor scoured through multiple sources of information and found four excerpts that summarise everything you need to know about the changing role of family businessesâ&#x20AC;Ś

Research suggests that only 15 per cent of family businesses in the region have corporate governance structures in place. This statistic is not surprising given that family-owned businesses are often hesitant to involve external parties in the operation and management of their company. They like to stay private and keep all information within the family. But, the reality is that the majority of family businesses that continue to go from strength to strength have solid governance structures in place. A key lesson to bear in mind is to start early; implementing corporate governance principles from inception makes life much easier.

One topic

Corporate Governance is an emerging challenge

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fast four

top strategic priority moving forward

four expert opinions Women will increasingly be seen at the forefront

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On a strategic front, geographic diversification is a big priority for most family businesses. While most family groups have established some presence outside of their home countries (76 per cent have some activity outside of the GCC), many have yet to make this presence meaningful. Roughly 60 per cent of family businesses still derive more than 75 per cent of their revenues from their home countries. Many, however, have aspirations to expand internationally and establish regionally and globally competitive businesses; this will require family businesses to develop an exportable competitive advantage and an institution that allows them to infuse the familyâ&#x20AC;&#x2122;s DNA in new businesses. Source: McKinsey & Company â&#x20AC;&#x201C; Family Business in the GCC

Hot topic this month: The changing role of family businesses

A recent survey on family businesses by EY reported that 70 per cent are considering a woman for their next CEO. This demonstrates the changing landscape when it comes to women in management roles. Several studies across the world have already made a strong case for women in leadership positions, highlighting their unique capabilities and powerful decisionmaking. For family businesses, this is a huge opportunity that they need to maximise on and not be afraid to pass on the business to female members of the family.

INSURANCE

Key man insurance: protecting your people assets The wellbeing of most SMEs typically hinges on the presence of a cluster of key people – and one of those is likely to be you! If even one of those people was lost as a result of death or chronic ill health, your business might not survive the transition. So it makes sense to invest in a simple, practical insurance solution, which will compensate you if the worst should come to the worst.

Key man (or ‘key person’) insurance makes sure that if a central member of your team suddenly dies, the business will receive a lump sum payment - exactly like a life insurance policy, but one where the beneficiary is the company, not a family member. The payout can not only help you source a top-quality replacement, but provide a comfort-buffer if the lost member of staff was dealing with client and supplier relationships that have now stalled as result of the continuity being broken. The key man cover can apply to a business owner, a founder or a key employee (perhaps two or three principal staff members). Whoever is covered, the point of key man protection is to help the company survive the shock of losing the person who makes the business work. If the loss is too great to survive perhaps in the case of a dynamic CEO or a uniquely-talented science officer - the payout will enable the business to close down in a proper and respectful way, paying severance to employees, taking care of all creditor invoices, and generally ensuring that the directors’

reputation is intact when they resurface to start a fresh enterprise. Note, though, that if you are the sole employee, you don’t need key man cover - a conventional life insurance policy is what’s needed to make recompense to your family and loved ones (key man will only make payments to the business). There are four key areas where key man can be great value to an SME. These are: 1 Losses related to the extended period when a key person is unable to work, to provide temporary personnel and, if necessary to finance the recruitment and training of a replacement. 2 Insurance to protect profits. For example, offsetting lost income from lost sales, losses resulting from the delay or cancellation of any business project that the key person was involved in, loss of opportunity to expand, loss of specialised skills or knowledge. 3 Insurance to protect shareholders or partnership interests. Typically this is insurance to enable shareholdings or partnership interests to be purchased by existing shareholders or partners.

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INSURANCE

4 Insurance for anyone involved in guaranteeing business loans or banking facilities. The value of insurance coverage is arranged to equal the value of the guarantee. Who needs to be covered? What are the key functions in your business and are the people who run them irreplaceable, at least in the short term? Perhaps there is a CFO who was a partner in starting the business, who looks after receivables, books of accounts and special discount lines. Perhaps this person also leads key financial or strategic initiatives in your business, such as M&As and the accountancy protocols in the run-up to an IPO? Or at the very least, runs highly customized software, that other team members aren’t trained to use? If this person was lost, could the business survive? Certainly not at its present level. It’s also vital to think about the people who handle the top sales relationships - your big income generators. If they were gone, would the clients deal with you anymore? Wouldn’t it take the best part of six months to rebuild that lost income

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stream and reaffirm the confidence in your business? You might also use key man cover in relation to ‘succession planning’, eg, perhaps you have someone very much in mind as your successor at the head of the business - so it would make perfect sense to have a ‘Plan B’ if that choice should go horribly wrong and your preferred person simply isn’t available. This is especially the case since you have gone to all the trouble of planning a successor precisely in order to avoid the commercial catastrophes resulting from a lack of continuity at the top of the business. Whoever is insured, note that the policy’s term does not extend beyond the period of the key person’s usefulness to the business. So you might specify a particular age limit, or stipulate that the policy cuts-off if the person changes department, or moves to a less central role. Remember as well that key person insurance does not actually indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy. So it’s vital to ensure that you specify a practical, useful sum from the outset (and of course, the level of this sum will be reflected in your premium). How much cover is enough? The ‘golden rule’ with key man cover is to buy as much as you can afford. It pays to get rates from a variety of brokers and providers - and it’s best to consult those who are known specialists in life cover. Also, be aware that some providers or brokers will try to sell a ‘whole’ or ‘variable life’ policy – but this will cost you significantly more and is, in fact, surplus to requirements. Always ask for a ’term’ policy, since you will only be insuring for the term (ie, the number of years) that the person is of value to the business. Before deciding how much to ensure for, it’s best to do some basic sums of the kind of values that will help the business survive in a time of crisis. The, get quotes on • US$100,000

• US$250,000 • US$500,000 • US$1,000,000 Again, it’s worth buying the best cover sum you can afford – otherwise, when the worst comes to the worst, you may run out of money when you need it most. Does key man only recompense in the case of death? No, you can also get customised versions that will cover the business in the event of chronic illness or incapacity. These will of course require some kind of medical authentication prior to payout, and in the case of the condition already existing when you take out the cover, they will require a significantly higher premium. (Note: policies that relate to ongoing illnesses or conditions will generally have a higher premium than those that are purely death-specific, since they require the insurer to authorise medical checks, and they are also created on a more bespoke basis). There are also a growing number of ‘kidnap cover’ policies on the market, which will pay a ransom should a key executive be kidnapped and held to ransom. These will provide expert negotiation services to help local police deal with the kidnappers, and the payout is of course geared towards meeting the ransom demands. Policies of this kind are extremely useful if senior staff are travelling regularly to sensitive areas of the world, such as north-east or central Africa, Mexico or central America. One final point: key man cover doesn’t (except in exceptional circumstances) pay out in the event of the appointed individual leaving the company or joining a competitor. In these cases, you will simply cancel the policy, although keep in mind there may be a small penalty to pay if you cancel outside the stated policy terms.

For an online version, please visit: http://www.smeadvisor.com/insurance/keyman-insurance

INSURANCE

Change management: the role of insurance For a successful SME, change isn’t simply ‘something that happens’ - it’s a fundamental requirement of the business as it grows and evolves, becoming more sophisticated in terms of both its offer and the raft of internal procedures. The secret is to make the business a ‘change master’, forging ahead with innovation and competitive edge, rather than being left behind by constantlyshifting market trends. SME Advisor explains the role of insurance in underpinning a progressive, proactive approach to change.

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INSURANCE

“The wise man is led by change; the unwise is dragged by it.” – Seneca

Most founders and owners of SMEs are already specialists in change management - after all, didn’t the Business Plan for your venture describe your vision, its growth and the market trends that it would capture and take advantage of? Didn’t it plot a course of change and evolution and allow for factors such as the funding needed for new premises, new car fleets or machinery and plant, and the requirement for a top marketing director as you entered new sectors or thought about the growing impact of social media? If indeed it did all of these things, did you also remember to show it to an insurance broker to get expert input on the ‘hotspots’ that would be likely to challenge your business and make sure that an effective raft of insurance ‘hedging’ was securely in place? Did you identify the risk factors that result both from changes in your business and from shifting market tastes and economics? In other words, did you cost-in the need to purchase insurance for situations such as: • Predicted growth in the size of your car fleet by Q4? • Key man insurance to cover your own involvement and that of your top sellers? • Third party protection for your investors if the loss of a director means the investment can’t be repaid? • Trade Credit Insurance to click in at Q3 to cover cashflow shortfall consequent on late or non-payers?

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• Life insurance and pensions plan incentives for staff on completion of three-months’ probation? If you didn’t, perhaps you need to consider the discipline of change management and what it might be able to achieve for your business and its effective contingency planning. The science of change management Change management is nothing more or less than the science of taking a structured approach to ensure that – 1) Within your business, changes are smoothly and successfully implemented to achieve lasting benefits. 2) You have a predictive ‘buffer’ against external change; it can be absorbed progressively without catastrophic fall-out. It’s a truism that in the external commercial world, organisations face rapid change like never before. Social media and mobile adaptability have revolutionised business and the effect of this is an ever increasing need for change - which of course means there’s a concomitant need for good change management, too. The growth in technology also means an increase in the availability of knowledge, which means your customers are likely to be more aware of their options (and therefore more fickle) than ever before. It goes without saying that the ability to manage and adapt to organisational change is an essential ability required amongst all SME owners today. It’s also the case that the speed with which you can adapt to change is everything. The faster the pace of change, the more the need for insurance because it’s more likely that your SME will be rendered temporarily dysfunctional (if only

INSURANCE

Did you identify the risk factors that result both from changes in your business and from shifting market tastes and economics?

for a short while), getting caught out by a scenario that may have the capacity to derail your plans in a major way.

with change (whether internal or external change) and transferring the risk to an insurer via appropriate cover.

Everyone’s affected! Organisational change directly affects all departments from the entry level employee to senior management. This means that the raft of insurances you plan for with your broker must reflect everyone’s interests, from those of the CEO to the livelihood of the most junior new recruit. A classic example of change management in this context is the imminent arrival of compulsory employee Medical insurance in Dubai, which all employers will have to provide. Have you already budgeted for the impact this will have on your bottom line? It may be too late to absorb the financial impact if you wait until the official implementation deadlines. Moreover, because change impacts everyone, the strategies you have in place for dealing with it will often require everyone to buy-in and pull together. So while you might offer an attractive savings/pensions package to employee remuneration (or a raft of additional life insurance contributions), the deal is that you won’t expect employees to get up and leave the moment they are approached by a competitor. Dealing with change via insurance solutions therefore works as a two-way street.

For each major change initiative, commit your actions in writing in a Change Management Plan. This should be available online for all staff and be as specific as possible, eg, it should list the names of all the insurers you have involved and the relevant policy numbers, etc.

Interpreting and tackling change There are six key stages in the change management process. These are: • Recognising what’s changing in the wider business environment. • Customising a response to meet your company’s particular needs. • Recognising what’s changing in your own business. • Putting adaptive training in place for everyone affected. • Getting everyone on board and winning support. • Understanding the risks to the business’ wellbeing that come

Telling customers and investors The fact that you are proactively preparing for change and have taken the necessary risk transfer measures is good news. So you might want to communicate this with your customers, to assure them that you are ‘ahead of the curve’ and that they will - as a direct result - receive heightened levels of service and can feel secure in a provider relationship that is underwritten by high-quality business protection (in other words, you show them ‘you are not going anywhere’). It’s also vital to communicate your change management initiatives to funding partners and investors: knowing that your business is resilient to change and prepared for it can make a huge difference to the confidence factor with which would-be investors will perceive and evaluate your offer.

For an online version, please visit: http://www.smeadvisor.com/insurance/therole-of-insurance

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//DIGITALLY DISRUPTIVE

GCC roaming now, be connected on every business trip Every mobile service user whoâ&#x20AC;&#x2122;s travelled overseas knows the story only too well - on arrival at the airport, the hunt for a preferred network provider; registration; interrupted services; uncertain costs and connections; then a huge bill. Yet now, a new service from Etisalat makes these issues a thing of the past, with an ideal solution for travellers in the GCC region. The GCC Daily Unlimited Data Pack gives you continuous, unrivalled data services as-you-roam - for only AED35 a day

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//DIGITALLY DISRUPTIVE

With the GCC Daily Unlimited Data Pack you have access to the Internet wherever you are roaming in the GCC.

When it comes to data connectivity, travelling around the GCC has typically meant a lot of pre-planning. You have to fight the constant fear that if you use the services as often as you want, you’re going to end up seriously out of pocket - or with no connectivity at all. That means in effect that you’re not working at peak productivity and you’re constantly taking ‘second best’ shortcuts just to have any kind of service at all. Well, Etisalat thought that it was time to give consumers and SMBs a better deal than that. There’s now a dynamic new way of roaming with a set rate that gives you all the data access you need for only AED35 per day. With the GCC Daily Unlimited Data Pack you have access to the Internet wherever you are roaming in the GCC. Whether you need directions, want to upload pictures, send an e-mail or watch videos, there are no barriers at all. You can roam within the GCC region across any mobile network - there’s no

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//DIGITALLY DISRUPTIVE

Everyone knows that when it comes to doing business, those old capitalintensive models are going out of fashion; it makes sense to pay as you go and only pay for what you need.

longer any hassle over having to choose (and then register with) a preferred partner. This is a genuinely exciting, first-tomarket solution that really transforms business capability and performance on the go. Take control over your business, from anywhere in the GCC Of course, the availability of data whenever you need it means that you’re empowered to manage any of the key business tasks that you’d normally be doing back at base. From working with spreadsheets, researching markets, e-mailing the team, managing accounts, monitoring cash flow and contacting clients - you’re simply not limited by that fear of running up exaggerated bills or losing connectivity altogether. What’s more, you can stay connected with friends and family back home as much as you like. Service on demand Everyone knows that when it comes to doing business, those old capital-intensive models are going out of fashion; it makes sense to pay as you go and only pay for what you need. This is where the GCC Daily Unlimited Data Pack really comes into its own: after subscribing, validity starts from the first time you access the internet, and not from the actual time of subscription - saving you valuable resources! Plus, the pack will be renewed automatically after one day, but only on those days when use your roaming data in the GCC again. You don’t have to pay for any of the ‘downtime’ in between. Problem-free subscription (at last!) One of the challenges of roaming - apart from the cost - has always been the complicated process of subscribing to preferred providers (and then repeating the same process time after time!). But now, the subscription process couldn’t be easier. Note as well that you’ll only need to activate the pack just once, cutting through all the usual roaming complexities and re-subscriptions. Here are the ways you can avail the benefits of the GCC Daily Unlimited Data Pack • SMS “GCC” to 1010 (standard SMS

charges applicable) • Dial *177# (free of charge) • Use the Etisalat UAE app • Use the Roaming Landing Page – and select this pack once you arrive at your destination http://roam.etisalat.ae • Visit the nearest Etisalat Business Centre or outlet Then, once you’re using the service, you can check your pack usage whenever you like by dialing *177# and following the menu, or simply SMS “DATA” to 1010. For the pack fee of AED35 for 24 hours (from your first usage abroad), you’ve got unlimited data allowance in Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. This special initiative can be used by all of Etisalat’s post-paid and pre-paid customers. A first in the UAE Discussing the GCC Daily Unlimited Data Pack, Salvador Anglada, Etisalat’s Chief Business Officer, said: “We are excited to launch this new promotion, giving our customers unlimited data access to enjoy worry-free business or leisure travel to any of the GCC nations. It is a first in the UAE, exclusively for Etisalat’s consumers and business customers. “Our research pointed out that a third of our roaming customers travel within the GCC. Our promotion caters to the demand of this huge segment, which seeks a simple-to-use and affordably priced roaming that helps them stay connected to their work and home while travelling. The combination of an extremely pocketfriendly price, an auto renewal feature and multiple country usage translates into a lot more savings and convenience for our roaming customers.” You can find out more about the GCC Daily Unlimited Data Pack at: Etisalat.ae/ gccroamingpack or email your queries to roamingcare@etisalat.ae Good roaming!

For an online version, please visit: http://www.smeadvisor.com/tech/gccroaming

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MOVERS & shakers

Behind every small business there is a big business John Lincoln, Senior Vice President, SMB Etisalat, brings his blend of unique insights and expertise gained over 30 years of global experience across developed and emerging markets. A published business author and telco expert on delivering and scaling business and driving incremental growth. John and his team now bring new focus to Etisalatâ&#x20AC;&#x2122;s SMB business with a revamped commercial model. He gave the following interview to SME Advisorâ&#x20AC;&#x2122;s Senior Editor Paul Godfrey

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MOVERS & shakers

John Lincoln, Senior Vice President, SMB, Etisalat

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MOVERS & shakers

We put a good deal of effort into ensuring that you get great value and market-leading products as a core part of our offer.

First things first: what’s gone right in your dealings with SMBs since the creation of a dedicated SMB team within Etisalat to serve the needs of SMBs in the UAE?

Firstly, Etisalat is a great brand and we really do have the best network in the region. We also have a tremendous range of partners and we have propositions that meet our customers’ needs head-on. It’s this combination of features that makes for a successful and attractive offer - and I would say that getting this platform in place is our most important achievement to date.

How would you define - in one sentence - Etisalat’s USP when it comes to servicing SMBs?

We meet the needs of our SMB customers without them needing to trade off quality for value. You don’t have to go for a low-cost product and then sacrifice quality - we can give you both in one package. We put a good deal of effort into ensuring that you get great value and market-leading products as a core part of our offer.

One of the key features of the recent Etisalat SMB TV campaign is the availability of a ‘dedicated business manager’. How many other clients will this manager typically be supporting, on average? Is this factor a plus or a minus? If you look at any other part of the world, the economics don’t allow you

to have a dedicated business manager in the SMB space. But we’ve gone down this path because we believe that SMBs should have the style of service that meets their very specialised needs. We work out the responsibilities and role of the business manager according to the size of the business. So if yours is a large business, you’ll be serviced by an account manager looking after perhaps 10 clients. Then there is a second tier, going up to 30 clients. Then another going up to 40. Beyond that, there are account managers who are recruited and trained by our SMB business partners, to be able to meet a level of more general enquiries with considerable expertise.

Your SMB business partners are subject to stringent quality controls: can you tell us a little more about these protocols?

We see our SMB business partners as our strategic assets - without them, we couldn’t have achieved the position we’ve enjoyed so far. So we take the issues of their training very seriously. The first thing is that we need to be convinced whether he or she is dedicated to serving our customers. Most importantly, we set up very stringent guidelines about the people they hire and the level of training they receive. It’s not just about getting the numbers: we want to ensure there is a real quality of service. For example, we have a Governance process in place where there is a very rigid review process. There are reviews on a weekly and monthly basis. We will also put in place a certification process for the partners’ sales teams. This will not only help them be recognised in the market and help their own career paths; it will also decrease any risk of attrition.

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MOVERS & shakers

We are pleased to say we are the first in the region to have a dedicated SMB call centre - no-one else has anything of this kind.

All in all, as you can see, it’s a quality standard that always has effective customer care at its core.

What will be the benefits of Etisalat’s dedicated SMB call centre? How is it resourced so as to deal successfully with a customer base of 300,000?

We are pleased to say we are the first in the region to have a dedicated SMB call centre - noone else has anything of this kind. So often, you’ll find that call centres are working on the back of other responsibilities, are shared with other businesses, with other customer groups, or with Government departments. But we believe that SMBs have very specialist needs and have to be serviced separately. For example, it’s open 24/7, because your business needs it to be. You don’t call at 5:00pm and find that everyone’s gone home! Plus, all the operatives undergo special training on key points of the SMB agenda - so from the moment you connect with them, they understand your needs and can ‘speak your language’.

What level of success are you currently having with the new ‘pay as you go’ service models, offering as they do a variety of equipment for zero down payments and a shift away from the traditional CAPEX model?

There are two aspects here. With the Hello Business programme, for example, the whole offer is

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designed specifically for new businesses coming into the UAE. As you know, this is now a global hub, and we expect 100,000 new businesses to come here in the next three years. We give them the ability to connect with a dedicated business manager and get a special proposition not available to other customers. Even with a soft launch, the programme has been highly successful. Meanwhile, the pay-as-yougo programmes are doing tremendously well. We launched Business QuickStart, part of the Business in a Box proposition and I can confidently tell you we have been blessed with a great many customers and the list is still growing rapidly.

If my SMB is just starting-up in the UAE, what can Etisalat do to help my business get a smoother and faster set-up? Do you provide any facility to help me with the transition?

Our offer is based on three fundamental aspects. Number One is value for money - we recognise that SMBs are on a tight budget. Then Number Two - you don’t need to have a large capital outlay. We give you an exceptional range of devices and equipment (laptops, tablets, printers, and so on) in a way that fits in with your cashflow and lets you expand in line with your business’ growth. This also maximises convenience, because you don’t have to shop around from supplier to supplier. The third area is that we do all the management of the network for you as well - you don’t have to call

MOVERS & shakers

We’re also active in giving SMBs access to networking opportunities with leading businesses, getting handson guidance from the business leaders who know and understand the challenges that SMBs face.

in an external provider, which saves a critical amount of time. I would also add that we’re actively engaged in a number of more intangible activities providing facilities like training, workshops, and so on, which contribute to key skills acquisition for SMB entrepreneurs. For example we have an important alliance with Harvard Business School, bringing the ‘SMB Leadership Circle - The Debate Series’ to SMBs, and outlining key topics like leadership, finance and business growth. We’re also active in giving SMBs access to networking opportunities with leading businesses, getting handson guidance from the business leaders who know and understand the challenges that SMBs face. We want our contribution to be very ‘real’; as a UAE national company we are totally aligned with the Government’s objective of making the UAE the defining hub for SMBs. Since SMBs account for 62 per cent of GDP, what is good for SMBs is going to be good for the economy itself.

You can see that we have an overarching strategy for our engagement with the SMB sector. I want SMBs to understand that whatever the style and level of service they want, we can be there for them with a solution that combines quality, affordability and a good many factors that can add value to their business and its goals. We’re not blind to the challenges that customers face and the message is “we’re here to help”.

For an online version, please visit: http://www.smeadvisor.com/movers-shakers/ interview-with-john-lincoln

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MOVERS & shakers

It’s a Tom Peters world... An exclusive meeting with the Champion of Change

Arguably the most influential business guru of the last 30 years, Tom Peters is quite literally the man who switched the world onto business. The spiritual leader of Reagan-era ‘yuppie’ culture, his books In Search of Excellence, Thriving on Chaos and The Circle of Innovation made business trendy, fun - and raised the bar to the standard that remains today’s sought-after benchmark. When he spoke at the recent Global Strategy Summit in Abu Dhabi, he took time out for a powerful and candid interview with Paul Godfrey and Rushika Bhatia.

You once told Fortune magazine that we have to con ourselves into believing that we can influence the world. But conning aside, you did influence the world; a classic example of which is your bestseller – In Search of Excellence. I’m a true believer of the argument “a pretty good product with perfect timing” is better than a perfect product. I think that was the case with In Search of Excellence. In all humility, it is a pretty good book, but a number external factors contributed to its success including the time that it was released. For instance, the week the book was launched, unemployment had been announced at 10 per cent. Overnight, the cookbooks went to the back of the book stores and the business titles to the front. This of course worked well in my favour. 42

You are the seminal Champion of many causes - Excellence, Innovation, Design, Talent, Leadership. But what is your greatest legacy to date? Well, what I will say is that nobody had ever used the word excellence and business in the same sentence; it was often associated with music, arts, theatre and so on. In Search of Excellence was the first time that the term excellence was attached to business, and that was its biggest selling point. I think excellence is a moving target; it isn’t static and will continue to evolve in the years to come. If I have a legacy, then that seems to be shaping up in that way.

What kind of role do you see SMEs playing in driving global growth?

The SMEs have always been the drivers. Although a lot of management gurus look at the large giants, the reality is that the potential lies with SMEs. Over 90 per cent of jobs are generated within this sector. In fact, we wrote In Search of Excellence as an SME book and almost all of it was focused on empowering small businesses. Back in the day, we released a book called The Professional Service Firm50, which said that the finance departments within businesses would soon be either replaced with automation or outsourced overseas to experts. What we suggested they do is turn their finance departments into profitable, independent SMEs. But not many businesses paid attention to this and it is something that really upsets me till date. And, I still say this today that the departments within your business need to converted into individual SMEs – this is the only way to keep them nimble, growing and profitable.

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MOVERS & shakers

Tom Peters

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MOVERS & shakers

It’s in the SMEs that you see the potential for critical developments in areas like human resources and innovation in the financial template.

We’ve recently seen the world tip on its axis - but to what extent have the super-businesses of South Korea and China adopted some of your key axioms?

The answer is ‘much more so than Japan’. I was writing those early books at a time when Japan was categorically the world’s second economy, always threatening to overtake the United States. Yet the Japanese model was built very much on the premise that certain factors always needed to be in place - there was little scope for ‘Plan B’ and reacting to sudden change. They couldn’t react if things went wrong. So when that did happen, the mechanisms couldn’t really cope. We’ve seen a decline and there is still very little willingness to try new approaches, whatever the lead from government. Whereas in Korea and China we see a good deal more of the agility that was very much a prized commodity in the businesses featured in Thriving on Chaos, for example. On the other hand, I hesitate to draw real comparisons, because both these economies can draw upon mass manpower and command human resources in a way that is very rarely possible in the west, for example.

There is nothing wrong with a business that lasts only two years, you once said, if it fulfilled its stated goals. So, how would you describe ‘failure’?

Some great companies have come and gone, but their actual longevity is really irrelevant when you think of the mark they made. Failure is when you have all the market knowledge of the way the business world is going, 44

but fail to act on it. Look at those household name corporates that used to command the world of photography. They took a call on suppressing the new digital era and it happened anyway. But they could have been champions of the new technology. Not responding is failure.

You once said that you loved the world of business, but to an extent you seem less aligned with the top corporations than you did 25 years ago. Did you fall out of love?

No, but I was the first to realise that the corporates didn’t really have anything fresh to say when we looked at the way business was going. I saw that it was the SMEs who had more and more of the answers - their agility and adaptability is all-important. This is reflected in my more recent books, and I’m often accused of getting remote from what corporates want. To me, that’s great news! I shifted the emphasis to where the interesting things were happening. It’s in the SMEs that you see the potential for critical developments in areas like human resources and innovation in the financial template. That’s going to happen increasingly, especially if we see the low oil price sustained and the corporates coming under more pressure. I’d say that’s a great opportunity for business.

For an online version, please visit: http://www.smeadvisor.com/movers-shakers/ tom-peters

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TECHNOLOGY

Lessons in Disaster Recovery Management

Are you prepared for the worst?

A solid Disaster Recovery Plan can help ease the pressure on your IT team and safeguard your business from unforeseen circumstances. SME Advisor takes a look at the solutions leading the way in providing security, safety and preparednessâ&#x20AC;Ś

In the age of the â&#x20AC;&#x2DC;Always-Onâ&#x20AC;&#x2122; business, companies are facing new demands including 24/7 access to data and applications from end users that have no patience for downtime or data loss, all this while grappling with an exponential data growth of 30-50 per cent per year. To cope with these demands, many companies today are building modern data centres and investing in server virtualisation, modern storage applications and

cloud-based services, in pursuit of higher speeds, more efficient use of existing resources and possible cost savings. While this is definitely a step in the right direction, the irony is that many areas of the data centre still rely on legacy infrastructure and technologies which inhibit the network from functioning at optimal levels and leads to data loss, longer recovery times, unreliable data protection, a

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TECHNOLOGY

IT’s ability to effectively deliver availability. In fact, 82 per cent of CIOs say there is a gap between the level of availability they provide and what end users demand. The key to bridging this availability gap is modernising the data centre, paying special attention to Business Continuity/Disaster Recovery planning (BC/DR) – how to carry on operating even after a disaster. Unfortunately this is an area that is often overlooked in large part because there is the misconception that it can be very expensive – according to the 2014 report on The State of Global Disaster Recovery Preparedness published by the Disaster Recover Preparedness Council, three out of four organisations are at risk of failing to recover from a disaster.

lack of transparency and the inability to analyse IT traffic. According to the Veeam Data Center Availability Report 2014, companies risk losing between $4.4 million and $7.9 million in lost data and applications failures each year; downtime can cost between $1.4 million and $2.3 billion a year in lost revenue, reduced productivity and lost opportunities; the total annual cost of downtime and data loss can reach more than $10 million

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a year. In addition to these financial losses, there is the risk of damage to an organisation’s reputation; something that is very difficult to measure in pure financial terms but can cripple an organisation, setting it back by years and putting it at a decided disadvantage vis-a-vis the competition. There is clearly an availability gap between the requirements of an Always-On infrastructure, and

Understanding the data protection needs of your business The first step in implementing a successful BC/DR plan is evaluation – organisations need to conduct a thorough risk assessment of the entire IT infrastructure and all services that support business critical applications. The next step is to define the Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) for the various business critical applications. For businesses to be considered ‘Always-On’, it is recommended that they target recovery time and point objectives (RTPOs™) of less than 15 minutes for all applications and data. A good business continuity plan should include a ‘runbook’ or script that sets out exactly what needs to be done, by whom and in what order. For example, an Exchange server won’t connect unless Active Directory is running, so the organisation knows that it will need Active Directory before it can get e-mail back. Once the runbook is set up, much of the process can be automated so that key staff don’t have to make important decisions in the heat and pressure of the moment. Organisations will always want to ensure that the actual decision to fail over to the disaster recovery plan is made by an actual human, preferably a C-level executive, because once

TECHNOLOGY

A good business continuity plan should include a ‘runbook’ or script that sets out exactly what needs to be done, by whom and in what order.

Top tip for SMEs!

the decision is made to fail over it’s difficult to rewind. That being said, once the big red button is pushed, automation, except at a few key points, is extremely helpful. The next generation in Disaster Recovery Solutions For comprehensive data protection and recovery, particularly in case of disasters, organisations should follow the 3-2-1 rule; they should have three copies of the data, stored on two different kinds of media – with one of them stored offsite. This means that in addition to the primary data, organisations should have at least two more backups as having more copies of the data reduces risk of losing the data during a disaster. In terms of storing the data, organisations should keep the copies of the data on at least two different storage types (such as internal hard disk drives and removable storage media like tapes, external hard drives, CDs, etc.) or on two internal hard disk drives in different locations. Finally, while storing the data on different media is important and a good start, it really isn’t a good idea to keep the external storage device in the same room as the production storage in case of a catastrophe like a fire. It is prudent to physically separate the copies and keep at least one offsite. Specifically applied to Disaster Recovery as a Service (DRaaS), the offsite workload should be ready to go in a usable form. One way to meet that requirement is with replicated workloads. There are a number of options available to organisations when it comes to deployment of Disaster Recovery systems – organisations can either choose to deploy a secondary physical site (either owned and managed by the organisation or hosted by a service provider) or adopt a DRaaS model. An overwhelming majority of organisations still prefer to

use secondary sites in large part driven by some of the prevailing misconceptions that surround the cloud – lack of control, security and compatibility with existing infrastructure. However, as we continue to debunk the myths around the cloud and organisations begin to understand the value of DRaaS, the adoption levels will only rise. In fact, according to the Disaster Recovery as a Service Market by Solution (Disaster Planning & Testing, RealTime Replication, Backup Solution, Data Security & Compliance), by Service Provider (Disaster Recovery, Cloud, Telecom & Communication) – Global Forecast to 2020 report by MarketsandMarkets, the DRaaS market is expected to grow by a CAGR of 52.9 per cent from $1.42bn in 2015 to $11.92bn in 2020. What makes DRaaS an attractive solution for your business?

Increased flexibility

If an organisation chooses to have a physical secondary site for their Disaster Recovery services, then it is essential that this site be a carbon copy of the primary production site. This can be an extremely daunting task in of itself but even if done properly, there is the burden of having to continuously monitor the systems to ensure that they are synchronised. The advantage of DRaaS is that this synchronisation can be abstracted. Another advantage of DRaaS is that depending on the disaster mode, the organisation can select from a variety of options for how to handle the different business systems. Since most of the processes are automated, opting for a DRaaS solution also frees up IT resources and gives them the flexibility to focus on business critical applications, that can yield tangible business benefits, rather than on support functions.

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TECHNOLOGY

Reduced Costs

Organisations that choose to deploy physical secondary sites to support Disaster Recovery services have to make a significant CapEX outlay associated with the physical infrastructure, hardware and software licenses and regular maintenance. DRaaS, on the other hand, works on a subscription/’pay-as-you-go’ model. Organisations only have to pay for the services they use which works out to be extremely cost effective, particularly for smaller organisations that are cash strapped or for organisations whose Disaster Recovery requirements might frequently scale up or down.

As businesses begin to make the transition to ‘Always-On’, it is paramount that they modernise the data centre and have a robust disaster recovery plan and infrastructure in place. While this is a daunting task for many, the good news is that organisations now have access to comprehensive cloudbased Disaster Recovery solutions designed to empower the AlwaysOn Business and keep critical apps up-and-running, all while ensuring that complete visibility and control remains at IT’s fingertips.

More Robust Testing

Regularly testing the Disaster Recovery system is a key part of any BC/DR strategy. Unfortunately given the synchronisation issues with traditional Disaster Recovery systems, testing is both extremely expensive and time consuming which is why most organisations opt to test their Disaster Recovery systems annually – if at all. DRaaS, on the other, hand gives organisations the luxury of conducting more frequent (be it quarterly or half-yearly) testing which increases the likelihood of efficient and successful recovery in case of a disaster.

Meet the author...

Gregg Petersen has over 16 years executive experience in the IT market. He was personally responsible for the Cloud strategy project for the largest bank in Africa which was used for over 3500 servers and 15 countries. He has since relocated to the Middle East where he has been for over seven years now and worked in various market segments such as Oil and Gas, Finance and Government sectors. He is currently the Regional Director for Middle East and SAARC region for Veeam Software.

Rapid Recovery

As stated earlier, in the era of the ‘Always-On’ business, any downtime, even if it is a result of a natural disaster, can be catastrophic for an organisation. If all the servers are still physical, or if organisations are using data protection tools designed for physical environments, the recovery process is still going to be long and complex (often taking days). With DRaaS on the other hand, organisations can recover data in a matter of hours if not minutes.

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For an online version, please visit: http://www.smeadvisor.com/tech/disasterrecovery

LEGAL

Biggest cyber threat to your business? Your staff Criminals and competitors: you may think they present the greatest threat to your business’ cyber security, but it is in fact your staff. Unsurprisingly, former staff members are your next biggest threat. Gina Wilson – a leading expert from Clyde & Co. – identifies the dangers and offers sound advice...

Relatively few staff members would act with malicious intent to cause a cyber attack. More common is negligence and accidental disclosure leading to secure information falling in to the hands of cyber criminals Maintaining the security of your cyber presence has become a business necessity. I was heartened to read that 45 per cent of board members are (apparently) involved with cyber security strategy.* The information held by your business which could be compromised by a cyber attack includes client lists and contact details, financial details of you and your clients, pricing, product design and manufacturing processes. Mention must be made of the obvious consequential reputational damage which we have seen played out in the media too many times of late. Foreseeable too are financial costs flowing from the cyber attack including the cost of disruption to trading and loss of actual and prospective clients. There is also the integrity of your IT equipment and services which could be compromised and require repair.

Have you identified what financial and information assets are critical to your business which could be compromised by the IT/ cyber usage of your staff presence? 50

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LEGAL

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LEGAL

Are your staff aware of your security processes and do your staff adhere to them? Gina Wilson, Partner at Clyde & Co

With the average cyber security incident costing ÂŁ1.7m, committing resource to mitigating the risk should not be difficult to justify. In terms of the risk presented by your staff to your cyber security, you may wish to reflect in respect of the following: 1. Have you identified what financial and information assets are critical to your business which could be compromised by the IT/cyber usage of your staff presence? This is a moving target so your register of these risks needs to be reviewed and updated in particular as the technology and scams develop. In assessing the risks, this should include consideration about how your information and assets are stored in cyberspace and to whom access is permitted. 2. Do you assess whether your passwords (used by staff, contractors and clients â&#x20AC;&#x201C; to access IT systems which belong to your business, those of your clients and any third parties such as banks and suppliers) are sufficiently unique, strong and regularly changed, and do you enforce a strict password policy? 3. Are your staff aware of your security processes and do your staff adhere to them? Do you monitor your IT systems to detect any unusual and suspicious activity on the part of your staff? Does your IT system permit staff to download any items (e.g. pirate videos) which could contain malware (hostile or intrusive software such as computer viruses, worms, trojan horses, ransomware, spyware, adware, scareware, and other malicious programs). 4. Do you regularly inform your staff of the latest cyber threats in order that they are aware of the dangers to avoid?

5. If your clients demand or expect a particularly strict approach to cyber security, consideration should be given to contractually obliging your employees to adhere to certain security measures. 6. In the event of a cyber attack, are your staff well-trained in the effective and speedy implementation of your cyber recovery plan? In terms of your obligations to your employees, you may wish to consider the cyber threats including whether the personal data about your staff stored and communicated in an encrypted format. The team at Clyde & Co would be pleased to advise should you require employment law advice about implementing a resilient security framework to mitigate the cyber threat posed from inside your business. Further information If you would like further information on any issue raised in this update please contact: Gina Wilson Partner Clyde & Co LLP PO Box 7001 Level 15, Rolex Tower Sheikh Zayed Road Dubai, United Arab Emirates T: +971 4 384 4000 F: +971 4 384 4004 Clyde & Co accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. www.clydeco.com

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INNOVATION

Is 3D printing shaping the future of business? The emergence of 3D printing has marked a major milestone in the evolution of technology and the way we do business. Enterprises worldwide are now starting to explore the vast potential that this trailblazing concept offers. In the following feature, we assess its various facets and present a detailed analysis…

The reality is that 3D printing has been around for over 30 years, but it has only recently gathered momentum as a business proposition due to its increasing efficiency, affordability and practicality. The last few years have seen the introduction of 3D printers that provide a viable solution to businesses – particularly manufacturers, looking to create prototypes and significantly reduce their production times. Let’s take a look at some of the statistics: • A Wohlers Report 2014 forecasted

that the worldwide 3D printing industry is expected to grow to US$12.8B by 2018, and exceed US$21B in worldwide revenue by 2020. • PwC estimated that 67 per cent of manufacturers currently use 3D printing. • Siemens predicted that 3D printing will become 50 per cent cheaper and up to 400 per cent faster in the next five years. So, it’s clear that 3D printing is here to stay and will continue to disrupt

the manufacturing sector, and pave way for further innovations across other sectors as well. Traditional manufacturing vs. 3D printing Manufacturing using historic methods meant doing it the subtractive way i.e. taking a huge piece of material and cutting it down to reach to the final product that needed to be produced. Essentially, it’s reshaping a large chunk of raw material to create a finished output. 3D printing, on the other hand, is

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INNOVATION

Rapid prototyping is perhaps the best way for a medium to enterprise level business to make a start within 3D printing.

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INNOVATION

Primary advantages of 3D printing • Reduces the scope of human error • Increases efficiency and speed • Provides more customisable products • Decreases costs, time and wastage – resulting in better optimisation of resources • Enables use of multiple materials for printing

HOW IT WORKS

Design Glass Metal Nylon Paper Plastic Rubber Upload

Choose

Output

the complete opposite – it is additive manufacturing. “3D printing is the process of building a solid three dimensional object from a digital template or model by adding successive layers of material until the object is complete. It’s very much like 2D printing of text and images on paper that we’re all familiar with. In 3D printing, however, instead of ink being added to paper layer by layer, 3D printing uses the liquid, powder, paper or sheet form of virtually any material (e.g. plastic or metal) and applies layers of the material using several methods,” according to a definition provided by financesonline.com. 3D printing uses one-tenth of the material typically used in bulk and any material that is wasted can easily be reused. An era of disruptive manufacturing Traditionally, a manufacturing company would require its prototyping processes to be outsourced and this would involve a huge addition to costs. However, today manufacturers can be much more independent and flexible, using 3D printing in-house. Manufacturers across industry sectors such as medical, aerospace and automotive are some of the first to adopt 3D printing for day-to-day operations.

A great example is that of the aerospace industry where 3D printing is currently being used to create components that help reduce the weight of aircrafts. Ongoing research suggests that in the near future it is likely that complete aircraft wings would be produced using such printers. An excerpt from techradar.com explains, “In essence 3D printing turns manufacturing on its head. Traditionally products are created using the subtractive method, which includes cutting, gluing, forging and additional assembly to create the product. By contrast, a 3D printer can produce an object in a single operation, layer by layer. The object comes out of the printer fully assembled, including all its moving parts. Subtractive manufacturing isn’t going to die out overnight, as 3D printing has a long way to go before it becomes economical enough to replace traditional manufacturing techniques. However, smaller enterprises that perhaps develop and manufacture specialist products and components can leverage 3D printing technology now to deliver tangible advantages today. And rapid prototyping has shifted to 3D printing to offer a much faster journey to market for a number of products. Here, smaller enterprises that could not afford to prototype some of their product ideas, can suddenly achieve just that with affordable desktop 3D printers.” The opportunities for growthstage businesses Rapid prototyping is perhaps the best way for a medium to enterprise level business to make a start within 3D printing. Of course, you would have to make a sizeable investment by buying a 3D printer (typically look for something that is versatile, has a high output quality and provides good value for money). Whether you are a designer or a manufacturer, you are now able to take a product idea and

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INNOVATION

Critical challenges with 3D printing • Requires huge investment – both in terms of hardware and software • Needs to be managed by skilled workers for smooth operations • Can be limited in terms of the output generated • Lack of widespread awareness get a prototype ready within hours, this is in comparison to months using traditional manufacturing. Moreover, 3D printing proves to be more cost beneficial when businesses are working with short production runs, and this is where such technology is most advantageous to growth-stage companies. For companies will large production runs, traditional manufacturing continues to be a cost-effective solution. So, let’s say for instance, you run a business within the healthcare sector and are looking to a launch a new type of dental implant, but

Prototyping has driven the adoption of 3-D printing so far. Future opportunities include production of final products or components. How is your company currently using 3-D printing technology? Experimenting to determine how we might apply

28.9%

Prototyping only

24.6%

Prototyping and production Building products that cannot be made from traditional methods

9.6% 2.6%

Production of final products/components only

0.9%

Not implementing

33.3%

Source: PwC and ZPryme survey and analysis, conducted in February 2014

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you are uncertain of the demand in the market. Using 3D printing, you are able to create a small batch of prototypes to test the market. That’s not all. You can take it a step further by producing customised sets of implants for individual customers. This is because the technology allows you to vary the density of materials, sizes and so on. Beyond the hype Theoretically speaking, the opportunities that 3D printing offers are infinite. However, it also comes with its fair share of challenges. The obvious one is the cost of the printer, and the subsequent software required to manage it. More than that, the surface quality of the output can be rougher, which might not be acceptable in some cases. A major setback is also that smaller production runs mean businesses can’t benefit from economies of scale. If you ever increase production quantities, it would make sense to switch back to traditional manufacturing and enjoy lower cost per item. Finally, there is lack of regulation within the 3D printing space which means that businesses need to set their own best practices to ensure safety and accuracy of operations. This also means that there are certain legal risks associated with production using 3D printing – for example, if a product turns out to be faulty, who is to be blamed? Therefore, it is necessary that businesses exercise caution when using this disruptive technology. If you are willing to tackle these challenges and explore 3D printing as an option – within the scope of your business’ risk appetite, there is no doubt that you will reap serious rewards!

For an online version, please visit: http://www.smeadvisor.com/ground-level/ industrial-innovation

SECTOR FOCUS

GCC Healthcare sector

investments, trends and opportunities

The healthcare sector will grow 12 percent annually within the GCC countries in the coming years, according to an estimate by the Alpen Capital Investment Bank. The World Health Organisation (WHO) forecasts that the total investments in the GCC healthcare market will reach US$ 69.4 billion US$ in 2018 (2013: 41.6 billion US$). The extremely high demand for healthcare services in the region results from demographic factors such as rapid growth rates of population and ageing societies, increasing per capita income, increased medical demand and a growing urbanisation. The higher demand for healthcare services can be attributed to the common lifestyle diseases such as diabetes, obesity, cardiovascular disease and cancer to name a few. Attractive opportunities The local and national governments are meeting the growing demand with continued high investments in healthcare infrastructure. To further bring down the number of the

patients treated abroad and to attract more medical tourists, new healthcare cities are being built and expanded with renowned international partners. In the 2002 inaugurated Dubai Healthcare City alone, approximately 1.2 million patients were treated in 2014 (an increase of 20 per cent over the previous year), of which 15 per cent were medical tourists. Bahrain has set high targets as well, to attract medical tourists, through its 1.6 billion USD investment in the Dilmunia Health Island project,

which is currently under execution. In addition to the above mentioned projects new clinics and hospitals, health centres, medical research institutes and laboratories are in the pipeline. Regardless of the improved healthcare services in the GCC region as a result of increased government spending and growing private investment in recent years, the sector is still significantly behind international standards. In general, it is on the agenda of the Gulf countries

GCC healthcare market share by country (in %) Country

2014 *)

2016 *)

2018*)

Saudi Arabia

46.3

45.4

UAE

25.5

25.9

26.8

Qatar

12.0

12.6

13.0

Oman

5.6

5.7

5.4

Kuwait

8.6

8.2

7.8

Bahrain

2.0

1.7

1.6

GCC Total

100

* Estimate Source: Alpen Capital, 2014

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SECTOR FOCUS

2014

49,920

2013 55,000

54,340

Health expenditures (in million USD)

50,000 45,000

25,150

35,000 30,000

27,390

40,000

Bahrain

Qatar

Kuwait

* Forecast

The healthcare expenditure of the GCC governments is growing, but is relatively low in terms of the GDP, if compared internationally.

to establish a highly developed and efficient Primary Healthcare Systems (PHC) especially in Saudi Arabia, the UAE and Oman. Saudi Arabia, which is, by far, the most populous country in the GCC, remains the largest healthcare market in the region, followed by the UAE and Qatar. It is forecasted that the value of the healthcare investments in Saudi Arabia will reach US$ 28.7 billion by 2020. Qatar and the UAE are also among the fastest growing markets in the region. The estimated growth rates for the years 2013 to 2018 are 14.4 and 13.1 per cent respectively. The GCC region is an interesting market for medical technology,

Growth factors at a glance High investments in healthcare infrastructure to expand medical tourism among other reasons. An increase in healthcare spending. Introduction of health insurance for the high proportion of foreign workers. Fast growing population and rising life expectancy. Growing income and hence changing lifestyle that lead to obesity, and as a result

increase in diabetic cases.

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11,600 2,310

2,160

5,580

5,030

4,690

1,410

5,000

1,290

15,000 10,000

5,170

20,000

12,480

25,000

Oman

Saudi Arabia

UAE

Total

Source: Business Monitor International

because the demand for medical devices and equipment is mainly covered by imports. Whereas the high imports of pharmaceuticals should be reduced by supporting the local production. Saudi Arabia is the largest market for pharmaceuticals in the Middle East and North Africa. Its market volume reached US$ 7.44 billion in 2014 and the forecast for 2024 is US$ 18.4 billion. Furthermore, high growth potential is seen for exports into the GCC in medical services as well as in components of the HealthcareIT segments. The estimated total value of new technologies such as e-health by Alpen Capital is US$ 551 million for 2015. In addition the demand for project development and construction services for the hospital sector is high (the competition is mainly from USA and India), as well as, for management and operation of hospitals. Development of healthcare expenditure The healthcare expenditure of the GCC governments is growing, but is relatively low in terms of the GDP, if compared internationally. The global GDP share by average was 9.1 per cent in 2011, whereas the GCC countries recorded 2.9 per cent only. The GCC total healthcare expenditures reached a total value of US$ 54.3 billion in

SECTOR FOCUS

More than two-fifths of the population in the GCC region are foreign workers, who usually come into the country as young adults and must leave at the end of their job contract.

2014. This value will double in ten years to reach US$ 111 billion in 2024, according to analysts. The per capita healthcare expenditures will increase from US$ 1,284 in 2014 to reach US$ 2,315 in 2024. Saudi Arabiaâ&#x20AC;&#x2122;s state budget for 2015 includes a spending increase in healthcare and social services by 50 per cent. An increase of expenditure is particularly needed now in this country. In 2014, Saudi Arabia and Oman health expenditures, which together constitute 67 per cent of the GCC population, was less than 55 per cent of the total government expenditure in the GCC region. Despite the increase in healthcare expenditure in the GCC countries, the per capita expenditure is still significantly lower compared to the developed countries. The highest per capita expenditure is in Qatar, which is among the countries with the highest per capita income worldwide, followed by Kuwait and the UAE. Understanding the demographics The population growth in the GCC is among the highest worldwide. According to the World Bank, the GCC population in 2010 amounted to approximately 39 million and will reach 46 million by 2020. By 2040, the population should be around 58 million. The growth is due to a high immigration of workers, a significant reduction in mortality rate and a longer life expectancy. It is estimated

Demographic development (Forecasts 2010 to 2040)* Country

2010

2020

2030

2040

Bahrain

0.8

1.0

1.1

1.2

Kuwait

2.9

3.5

4.0

4.5

Oman

2.9

3.5

4.0

4.5

Qatar

1.5

1.7

2.0

2.2

Saudi Arabia

26.0

31.2

35.9

39.5

UAE

4.7

5.6

6.5

7.4

* Rounded figures Source: World Bank, World Development Indicators

Forecast for the growing number of treatments in the GCC by 2025 * (in %) Cardiovascular disease

419

Diabetes

323

Diseases of the sense organs, especially eyes

293

Muscle disorder diseases

290

Cancer

275

Diseases of the genitourinary system

244

Diseases of the digestive system

233

Skin diseases

231

Nutritional diseases

229

Disorders of the central nervous system

227

Accidental injury

227

Dental / gum diseases

221

Non-infectious respiratory diseases

216

Work-related injuries

210

Maternal and Pre-natal related treatments

205

Hormonal imbalances

185

Genuine anomalies

142

* Based on figures of year 2001 for Kuwait, Saudi Arabia and the UAE, and 2002 for Bahrain, Oman and Qatar Source: McKinsey

that the GCC population of over 65 years of age will grow from 1.2 million in 2015 to reach 14.2 million in 2050. Also, the number of the GCC locals is rising strongly with three or more births per local woman. More than two-fifths of the population in the GCC region are foreign workers, who usually come into the country as young adults and must leave at the end of their job contract. In the UAE and Qatar, foreigners account for even more than four-fifths of the population. The influx of foreign workers depends on the work demand. Types of diseases The greatest risks in the GCC originate from the further rise of cardiovascular diseases, cancer, obesity and diabetes. The WHO predicts that these diseases will account for more than three-fifths

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SECTOR FOCUS

Hospital Bed density in the GCC-Region Country

Number of hospitals and hospital beds 2015 *)

Beds per 10,000 inhabitants (2006 to 2012)

Countries

No. of hospitals

Total no. of beds

Beds in government hospitals

Beds in private hospitals

GCC

GCC total

742

108,638

87,026

21,612

Bahrain

.Saudi-Arabia

465

72,055

57,745

14,310

Qatar

.UAE

132

14,179

9,491

4,688

Kuwait

..Abu Dhabi

6,264

4,483

1,781

Oman

..Dubai

5,074

2,767

2,307

Saudi Arabia

..Northern Emirates *)

2,841

2,241

600

UAE

.Qatar

3,387

3,103

284

.Kuwait

9,545

8,406

1,139

.Oman

6,868

6,188

680

.Bahrain

2,604

2,093

511

For comparison ..Worldwide

..EU

..Germany

Source: WHO, World Health Statistic 2014

of all diseases in this region by 2020. Cardiovascular diseases are already the main cause of death in the GCC countries and worldwide. Obesity is a serious widespread phenomenon in the six members of the GCC: four of these countries are among the top 20 countries in obesity worldwide. These are Bahrain, Kuwait, Saudi Arabia and the UAE. The awareness of a healthy lifestyle in this region is strikingly underdeveloped: lack of exercise and unhealthy diet is prevalent among all age groups. According to WHO, obesity is a significant cause of a wide range of chronic diseases, such as diabetes, hypertension and coronary heart disease. Furthermore, it increases the risk of developing various forms of cancer. Diabetes, combined with skyrocketing costs, has emerged into a serious problem in all of the GCC countries in recent years. The treatment cost of a diabetic patient differs within the GCC countries. Due to the increasing life expectancy, a rise in cancer cases in the region is expected. The International Agency for Research on Cancer expects, for example, in

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*) Planned bed capacity by the end of 2015; due to project delays the planned capacity should be achieved only in 2016 or 2017. Sources: National statistics offices, ministries of health, hospital operators, MEED Projects, Germany Trade & Invest

Oman an increase of new cancer cases from 1,289 in 2011 to 2,451 in 2020 and to 3,792 in 2030. By the year 2030, this disease will be the leading cause of death in the Sultanate, ahead of ischemic heart disease and stroke, according to experts. For medical tourists in the UAE, the demand is particularly high in the sectors of weight reduction, in vitro fertilisation and cosmetic treatments. This demand is consistent with the trends in medical tourism in other countries of the Middle East. For highly specialised treatments, not so many medical tourists come to the GCC region. A higher level of treatments in the field of oncology and cardiovascular treatments is generally desired. Does demand meet supply? Exploring hospital capacitiesâ&#x20AC;Ś The hospital capacity is still insufficient in the GCC region. The steady expansion of hospital capacities has either not yet or only slightly improved the ratio of number of hospital beds to population. This is mainly due to

the high population growth, which is caused by the influx of foreign workers. Based on recent national statistics regarding the completion of newly planned hospitals in the GCC region, an increase in bed capacity of about 105,000 can be expected by the end of 2015. This corresponds to 20 beds per 10,000 inhabitants. As for the entire GCC region, a share of 2.0 per cent is reported. In contrast, the percentage of residents aged 65 plus in the OECD countries was on average 15.9 per cent.

The above article is provided courtesy of Majlis, the official publication of the German Emirati Joint Council for Industry and Commerce (AHK).

For an online version, please visit: http://www.smeadvisor.com/featured/gcchealthcare

FINANCE

THE REBIRTH OF CURRENCY:

Bitcoin

THE BITCOIN IS A HIGH-LIQUIDITY, VIRTUAL CURRENCY THAT HAS BEEN SPECIFICALLY DEVELOPED TO ENABLE EXCEPTIONAL TRANSPARENCY OF DEALINGS AND FULLY ENCRYPTED TRANSFER AND EXCHANGE. YET IT’S CURRENTLY PROVOKING A GOOD DEAL OF CONTROVERSY AND HUGELY MIXED RECEPTION. THE REALITY IS THAT BITCOIN COULD BE A SIGNIFICANT TOOL FOR ASPIRATIONAL SMEs – BUT WHAT WORKS AND WHAT DOESN’T? SME ADVISOR ASSESSES THE EVOLVING LANDSCAPE…

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FINANCE

In a bid to ease financial transactions worldwide, the Bitcoin was introduced in 2009 by Satoshi Nakamoto. This digital, decentralised currency relies on peer-to-peer networking and cryptography to maintain its integrity. It can be purchased in exchange for real money from online traders. Many argue that Bitcoin has many properties that could make it an ideal currency for mainstream consumers and merchants. It has high liquidity which in turn leads to low transaction costs and quick payments across the internet. It’s USP is that it is a cheaper alternative for money transfer as compared to conventional money exchange concepts. Retailers are charged up to three per cent for Bitcoin exchange while money transferors can levy fees as high as nine per cent. Another distinguishing feature is the ease of transactions. You can send Bitcoin from your computer, tablet, smart phone (or any other device) to any part of the world, be it day or night. Bitcoin is based on technology that, by its very nature, is designed to surpass the geographic reach of banks and customers. On the flipside, the speed and anonymity with which transactions can be done could make Bitcoin more susceptible to nefarious activities. It can also increase the occurrence of system crashes leading to defective transactions. The concept still has to catch on in the Gulf region - particularly the UAE. The majority of remitters here are from India, Pakistan and Bangladesh – typically ‘blue collar’ remitters who prefer to send money physically at exchange houses rather than online. This is because they are not adept with the technology of online transactions and the cryptography concept involved. Working with the risks With no banks, cash or cards involved, managing Bitcoin transactions is a personal affair.

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FINANCE

Demand dictates which technological innovations succeed and which fail, and this is certainly the case for the Bitcoin currency.

The transactions are validated through fully transparent accounting ledger software and secured by rigorous computational work by network peers. This means you have complete control over your own Bitcoins without having to undergo transaction processes or incur fees for different services. Likewise, the supply and distribution rate of Bitcoins is predetermined and limited. It is nearly impossible to print fake Bitcoins and place them in circulation as it has a unique encryption code for each user. Bitcoin is also a fully transparent and yet anonymous payment system. Every single transaction from the beginning is publicly available for viewing, with balances of each account. However, you don’t need to associate your name with your Bitcoins the way you do with a bank account or credit card. Now we come to the integral premise: How will the accounting department record this digital

‘avatar’? Ideally, the company’s accounting department would create an internal company coin. This coin would be convertible to Bitcoin or whichever Crypto currency is prevalent, but would only be used internally. They would then distribute this coin according to the annual budget. Once the books are closed for the fiscal year, all coins would have to be converted to Bitcoin to mark to market for the last time, and that coin would be closed. Then the cycle begins again. This method guarantees internal transaction integrity, transparency and accountability. It also leads to less transaction errors, real time financials and a drastically cheaper method of accounting. On the other hand, there are risks and complications associated with this accounting process. Invariably, companies aren’t going to have the technology to create their own coin. They also can’t do their own mining, since this removes the operational credibility. Additionally, this method also leaks information that the company might not want to share. Finally, there’s the sheer complexity of it all. Qualified accountants who are well abreast with the concept of cryptography and digital currency have to be employed for the process. Understanding the challenges The biggest barrier in the use of Bitcoin is the lack of a regulating authority or a governing body to control its operations. Recent scandals and few disruptions in the exchange process have seriously affected its popularity. Under current circumstances, the heavy fluctuation and unstable condition visible now, poses a difficult situation to maintain accounts on digital currency. In its recent guidelines, the IRS has compared the Bitcoin to stock, bond, or piece of real estate whose value fluctuates over time and implied that it should therefore be subject to a capital gains tax when sold. Fortunately, volatility does not

affect the main benefits of Bitcoin as a payment system to transfer money from point A to point B. It is possible for businesses to convert Bitcoin payments to their local currency instantly, allowing them to profit from the advantages of Bitcoin without being subjected to price fluctuations. With such solutions and incentives, it is possible that Bitcoin will mature and develop to a degree where price volatility will become limited. Bitcoin is a quick and secure way of exchanging value between two parties which could survive long into the future. It is secure by itself, but it is currently unregulated - and thus worrying to the investor. The service a Bitcoin provides in terms of ease of transaction and accountability is far greater than the problems surrounding it. As virtual cash, it is a useful and secure system and hopefully in the future it can garner the attention of financial institutions and governments to make it more reliable and safe for every user. Demand dictates which technological innovations succeed and which fail, and this is certainly the case for the Bitcoin currency. There would have to be a secure and stable payment system in place with the Central Bank to enable the Bitcoin system to prevail in the country. As we are witnessing a generation which thrives on every amenity in the digital form, it wouldn’t be long before the Bitcoin becomes part of our daily monetary transaction norms.

For an online version, please visit: http://www.smeadvisor.com/groundlevel/bitcoin

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STRATEGY

Are you ready to expand overseas? By its very nature, transacting business overseas poses an extra dimension of logistical and financial challenge - in other words, risk - which is best tackled with the help of specialist insurance products designed to bridge ‘the culture gap’. Always ensure that your business is covered against the dangers of distance, language and fluctuating exchange rates: it simply doesn’t pay to take a chance. Paul Godfrey explains the options…

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STRATEGY

Whether your business is an import/ export specialist, or has a sprinkling of overseas clients, there is a good deal that insurance can do to make life easier. For example, it can • Hedge against fluctuating exchange rates • Protect you against late payments and unpaid debts • Safeguard goods in transit or held in overseas depots • Protect you against third party litigation if deliveries are late Going the distance: cargo, freight and ‘goods in transit’ insurance One of the potential hazards of doing business overseas is that if you’re involved in managing any kind of delivery, the longer journey time means that there’s more risk of theft or damage due to natural disaster or other unpredictable accidents. Traditionally, these risks are handled by freight or cargo insurance - often as part of a marine or aviation insurance policy. Freight insurance gives the extra coverage against the unpredictable and the unpreventable damages that might occur when freight moves from point A to point B. If you import/export goods, the insurance cost of a freight or cargo policy is usually calculated by the total commercial value of the goods. Note that if you are physically selling the goods, rather than simply transporting them, the sales contract may require that you provide insurance to protect the buyer’s interest or its bank’s interest. So it goes without saying that noncompliance with the contract can result in legal problems if the goods in transit are lost or damaged. Moreover, even if you are not legally obligated to provide insurance, you may want to purchase insurance to protect your

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business if it has a financial interest in the goods. Cargo and freight policies will typically cover: • Loss of damage to cargo during transit • Transport expenses and overhead charges • Expected profit from sale of goods at place of destination • Financial losses attributed to delay in start-up (for project cargo insurance) caused by loss or nondelivery of insured cargo Recently, more sophisticated versions of freight and cargo cover have become available. One example is ‘goods in transit’ (GIT) cover, which is specifically designed to protect you if you carry goods for someone else. This will cover claims relating to loss or damage to those goods while in your care. Having access to a well written, comprehensive GIT policy will often be a standard requirement if your business is pitching for new freight contracts. Goods in transit insurance covers inventory or other merchandise shipped by the seller, but not yet received and accepted by the purchaser. It is intended to protect buyers and sellers who are exposed to financial loss if this property is lost, damaged, or destroyed while off premises and in transit. Typically a goods-in-transit policy will insure: • Your legal liability as a carrier for the physical loss or damage to goods that you’re responsible for • Your legal liability for loss or damage to containers that aren’t yours • Financial liability arising from damage, delay, accidental misdelivery • Legal costs

‘Open cover’ policies A further development of the traditional freight and cargo formula is an ‘Open Cover’ policy. This is designed to provide complete, endto-end protection. For example, it will

cover shipments by any conveyance, ie, by sea, by air, by truck, by rail. Coverage will also typically be worldwide. (It’s important to note, however, that shipments to, from or within countries under UN and/or US sanctions are usually excluded). A great advantage of this type of policy is that it can provide cover for the whole period of transportation ‘from warehouse to warehouse’, including overloading, transshipments and intermediate storage. This means that you will be indemnified against any danger of loss or theft in warehousing facilities, and against delays incurred by any element in the delivery chain. Policies of this kind can also be customised (at extra cost) to meet your exact, bespoke requirements – for example, you may be using an express-transfer provider to switch goods from sea to land in a single-bond port, or need extra protection against potential damage to fragile or heat-sensitive goods.

Choosing the value of the cover Deciding on the amount of insurance is an important first step. Generally, the policy limit should reflect the maximum value being shipped in any one conveyance. When choosing the amount, keep the following in mind: • Cargo policies typically value goods at the invoice cost, plus freight charges, plus an advance of between 10 and 20 percent to cover expenses incurred during shipping that are unknown at the time of shipping. • If you are an exporter, your profit is generally already included in the invoice cost. An importer may want to select an advance valuation that includes a profit margin, and may also want to include coverage for duty and taxes. Some importers and exporters may want to insure their goods based on sale price. The ‘duty of care’ clause Just about every style of freight or goods-in-transit policy will include a ‘duty of care’ section that lays out a

STRATEGY

Every business involved in international trade faces the risks of fluctuation in the exchange rate.

list of reasons why an insurer might reject your claim. Typically these will require that your company: • Employs only competent drivers and agents (you may have to complete a risk checklist to verify this). • Takes all ‘reasonable’ measures to secure the load. • Keeps the load under surveillance 24/7. • Keeps the fleet maintained properly (again, this may need verification). • Has ISM Endorsement for shipments on Ro-Ro passenger ferries. Protection against currency risk One of the most important uses of insurance in international trade is to create a ‘buffer’ against the loss of profits if you’re adversely affected by a changing exchange rate. Every business involved in international trade faces the risks of fluctuation in the exchange rate eroding profits and operating margins. This can have severe consequences if it isn’t managed properly. For example, exchange rates may move by up to 10 per cent within any single year, which can significantly affect a firm’s cash flows, meaning a 10 per cent decline in the value of a receivable or a 10 per cent rise in the value of a payable. This can mean that export profits are negated entirely or import costs could rise substantially.[6] There are generally three main types of foreign exchange risk. These are – • Transaction exposure • Economic exposure • Translation exposure

Each of the above can be mitigated and managed through correctlyplaced insurance, but it’s important to understand exactly how your business may be impacted by these different types of event.

Transaction exposure A business has transaction exposure whenever it has contractual cash flows (receivables and payables) whose values are subject to unexpected, unpredictable changes in exchange rates, due to a contract being denominated in a foreign currency. At some point, the company must exchange foreign currency for domestic currency - and risks facing volatile, disadvantageous changes in the exchange rate. Businesses will inevitably become exposed as a direct result of activities such as importing and exporting or borrowing and investing. Economic exposure Economic exposure (sometimes called operating exposure) is when a business’ market value is influenced by unexpected exchange rate fluctuations. Adjustments of this kind can severely affect the firm’s competitiveness, its present and future cash flow, and ultimately its value. For example, there may be a shift in exchange rates in one of the business’ key operating markets, which dramatically influences (either for good or bad) the demand for a particular product in that country. If your business produces or exports that product, it’s subject to all the economic exposure that a rise or fall in demand can leverage. Translation exposure Translation exposure is when the business’ financial reporting is affected by exchange rate movements. Inevitably, your business will prepare consolidated financial statements for reporting purposes, and the consolidation process means translating foreign assets and liabilities from foreign to domestic currency. While translation exposure

may not affect an SME’s cash flows, it could have a significant impact on a firm’s reported earnings - and therefore its stock price if its publicly listed.]

Managing the risks: traditional strategies and the role of insurance There are basically two different ways of protecting against currency exchange risk: • Insurance. A range of insurance products is available to mitigate the potential damage of currency fluctuation on cash flow and profitability. Policy claims have, for example, traditionally been triggered when exchange fluctuation reaches a particular agreed point. The only downside with using an insurance tool is that of cost, since it is in effect ‘buying’ protection from a scenario that might be handled though other financial instruments. • Foreign exchange ‘hedging’ strategies. Transaction exposure is often managed either with the use of foreign exchange derivatives such as – 1. Forward contracts 2. Futures contracts 3. Options and swaps 4. Currency invoicing 5. Leading and lagging of receipts and payments 6. Exposure netting The drawback of any of these approaches, however, is that they require a high level of financial sophistication and a level of participation in the global money markets that may be quite beyond the usual experience of even the larger SME. So again, a bespoke insurance solution (tied to a particular level of exposure or exchange variation) can be a worthwhile and practical option.

For an online version, please visit: http://www.smeadvisor.com/strategy/ business-overseas

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STRATEGY

Sustainable or plain criminal? All of the GCC nations especially the UAE - have surprisingly tough and welldeveloped legislation in place to deal with businesses found guilty of polluting the environment. It makes good sense to ensure that your SME and the contractors it works with are sensitive to the potential dangers and take proactive steps to work well within the requirements of the law. SME Advisor highlights the dangers…

The majority of SME owners and directors will thoroughly agree with these words. To be fair, it’s likely that your business isn’t a major environmental polluter and you’re certainly not going to be responsible for the next Bhopal or Macondo. Can you guarantee, though, that you won’t be involved in any of the following scenarios? For example: • You change the contractor responsible for clearing the rubble from a demolition site - and they decide to take a short cut and dump a skip-load of masonry next to the beach. • You decide to re-develop a patio area on the first floor of your premises, but while sanding, you realise that it’s actually made from blue asbestos

- and the dust has drifted into the playground of the school next door. • The thermostat on the company incinerator malfunctions and your company is held responsible for belching acrid black smoke into the community for four days. The fact is that any of the above carry major fines; worse, if you’re contaminating an area with poisonous substances (however unintentionally) and people fall seriously ill you could face a substantial prison term. Yet amongst many businesses, there’s a misunderstanding that GCC countries as ‘developing’ nations - will not pursue pollution cases with the same vigour as their European counterparts. The reality is that, as in so many other areas, the communities of the GCC have made dramatic progress: let’s not forget, for example, that the UAE is at the vanguard of developing the ultimate ‘clean’ city. Abu Dhabi is world-famous for its investment in Masdar City, home to renewable energy and environmental cleanliness. It also played host to the World Future Energy Summit. Yet it is not so widely known

that the UAE has a strong set of federal and local laws specifically tackling the threat of company activities damaging the environment. The existing raft of UAE legislation entails penalties that range from a AED10,000 fine through to eight years’ imprisonment. The reality is that businesses must be responsible and clean partners in the region’s economic development. The body of anti-pollution law is relatively extensive and prosecution will follow only quite minor breaches. For example, Federal Law No. (24) of 1999 for the Protection and Development of the Environment (“Law No. 24”) forms the backbone of the Environmental Law within the UAE. It has extremely comprehensive coverage, including • Protection and conservation of the quality and natural balance of the environment. • Control of all forms of pollution and avoidance of any immediate or longterm harmful effects resulting from planning for economic, agricultural or industrial development or other programmes aimed at improving life standards.

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STRATEGY

Then, there is a significant addition: Law No. 24 and the Executive Order published pursuant to Cabinet Resolution No. (37) of 2001 deals comprehensively with all aspects of environmental protection relating to the following – “projects; the marine environment and pollution thereof; liability and compensation for environmental damage; protection of drinking and underground water; air pollution; disposal of hazardous waste; disposal of medical waste, pesticides, agricultural fixers and fertilisers; nature reserves; the protection of wildlife, as well as the penalties imposed for contravention of any provisions of the aforesaid.”

• Co-ordination among the Federal Environment Agency (FEA), competent authorities and parties concerned with the protection of the environment and conservation and consolidation of environmental awareness and principles of pollution control. • Development of natural resources and conservation of biological diversity in the UAE and exploitation of such resources with consideration of present and future generations. • Protection of society, the health of human beings and other living creatures from any activities and acts which are environmentally harmful or impede authorised use of the environmental setting. • Protection of the UAE environment from the harmful effects of activities undertaken outside the region of the UAE. • Compliance with international and regional conventions ratified or approved by the UAE regarding environmental protection, control of pollution and conservation of natural resources.

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Getting specialist cover While it is true that some of the liability issues raised by environmental pollution will be covered under existing insurance policies, this certainly isn’t true for all of them - especially the most severe ones impacting the general community at large. SME Advisor spoke to Anna Nilsson, manager of the environmental impairment liability team at AIG Insurance. “Rather than simply hoping they are covered by existing policies”, says Anna, “boards must take responsibility for understanding those exposures and make informed decisions. They may well conclude they do not need environmental insurance, but stakeholders such as investors, shareholders, clients and staff would take a dim view if it came to light in the aftermath of an environmental incident that such a decision had been taken without due consideration of all the issues. Businesses should ensure they are covered for the whole spectrum of environmental risks, including gradual or sudden damage, any short or long-term costs of remediating a damaged site, loss prevention, mitigation and emergency costs.” (AIG, an international property-casualty and general insurance provider, are one of the companies ‘leading the charge’ in the relatively new area of Environmental Liability Insurance).

The Environmental Impact Assessment (EIA) According to Law No. 24, any business or institution that wishes to undertake a project within the UAE which may have an impact upon the environment must apply to the Federal Environmental Agency (FEA) for a licence. The FEA in co-ordination with the relevant local authority then evaluate the environmental impact of the project in question. In other words, this is a proactive mechanism aimed at minimising the risks before they have a chance to happen. The need to comply with formal procedures and do things ‘properly’ is awakening more businesses to the importance of not leaving environmental exposures to chance. Anna Nilsson explains that: “It has become a rapidly-growing market - at AIG, we have seen our overall book of business grow by more 30 per cent in the last year. Despite this, a degree of confusion remains and gaps in coverage are actually increasing with the changing environmental legislation.” The reality of pollution protection is simple: companies should examine all their likely areas of risk exposure – and perhaps the best way to do this is to ‘walk’ the business, making a list of each and every potential environmental hazard, and preferably in the company of an insurer’s trained risk manager. One of the characteristics of pollution incidents is that they largely result either from operational malfunction or negligence: they are seldom the result of unpredictable encounters with outside events. So the good news is that it’s very much an owner or manager’s decision as to whether the risk should be tackled or not. From both an ethical and financial perspective, the former choice is best.

For an online version, please visit: http://www.smeadvisor.com/strategy/ sustainable-or-plain-criminal?

STRATEGY

Priority No. 1 -

Getting the right finance team WE’VE OFFERED CONTINUAL ADVICE ON HOW TO RAISE INVESTOR INTEREST, EXPLORE THE VARIOUS FUNDING CHANNELS AND ACHIEVE THE ALLIMPORTANT FINANCING FOR YOUR SME. AND, NOW THAT YOU’VE MANAGED TO GET THE FUNDING YOU REQUIRED, IT SEEMS LIKE THE PERFECT ENDING. BUT – IS IT? THE REALITY IS THAT THE OTHER SIDE OF THE STORY IS OFTEN LEFT UNTOLD – WHAT HAPPENS AFTER YOU HAVE ALL THIS MONEY AT YOUR DISPOSAL? DO YOU PUT ON YOUR FINANCIAL CAP AND MANAGE IT YOURSELF? OR, DO YOU HIRE AN EXPERT – WHO IS A FINANCIAL GENIUS BUT REQUIRES A BIG FAT SALARY PACKAGE – TO DO IT FOR YOU?

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STRATEGY

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STRATEGY

Not utilising the money in the right way is as good as not having it in the first place. Actually, it’s worse, because your ability to incur debt has just increased exponentially.

Let’s take the following scenario: Your SME applied for a second-round funding of AED 5,000,000. After going through a lot of ordeal, several sleepless nights and immense stress, you receive the good news that your financial proposal has been approved. Congratulations! But, there’s one small snag – no one in your SME has previous experience in handling such a huge amount before and you have no idea how to move forward. In reality, a lot of SMEs in the region have faced, or are currently facing, a situation similar to the one above. As your business gets ready to move to its next phase of funding, and subsequently growth, it’s necessary to understand the new challenges that come along with it. In the excitement of receiving funding, it’s possible to lose sight of the new daunting task at hand – effectively managing the cash you have just acquired. Not utilising the money in the right way is as good as not having it in the first place. Actually, it’s worse, because your ability to incur debt has just increased exponentially. So, what’s the solution? The simple answer is: having an intelligent and dynamic accounting and financial controls team in place. This is crucial right from the start of the business as it prepares you for any major changes and isn’t just limited to receiving additional funding, as described above, it also applies to situations such as an acquisition or reaching the IPO stage or maybe even international expansion. As an SME owner, it’s quite natural to want to do everything yourself as much as possible. But, when your SME is at these significant junctions of business evolution, it’s probably best to consider filling these three positions in your company:

Bookkeeper

It’s quite obvious that it might not make sense for a business at the startup stage to have a CFO. Hiring a bookkeeper

as the first step sets a strong working foundation for the business and gives room to build as the business grows. A bookkeeper manages the day-to-day paperwork and ensures the accurate recording of invoices, sales transactions and expenses. He or she will also manage any basic accounting and financial software that the business is currently using.

Financial controller

This position is apt when your business is ready to transition from the startup stage to the growth stage. Jill Andresky Fraser describes this position extremely well in his online article Hire Finance on Inc.com: “If significant growth is in your plans, you should hire a controller as quickly as you can afford to. That’s because every growing company, even a young one, requires the skills a controller possesses, and it will grow faster with them. A good controller can do everything a bookkeeper does but also much more--mainly because he or she is trained to have a larger perspective beyond day-to-day numbers. Count on your controller to choose and maintain the right accounting software for your company, to generate timely weekly and monthly financial reports, and, of course, to keep cash flow on track with a well-run payables and receivables operation.”

Chartered Accountant

It’s no secret that having a qualified accountant boosts investor appeal as they see that their money is being properly managed. Furthermore, a Chartered Accountant will be comfortable with managing key business functions such as financial reporting, auditing, forensic accounting, corporate finance, business recovery and insolvency, or accounting systems and processes. Also, he or she will be able to prepare financial statements,

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STRATEGY

It is also expected that the CFO would be working closely with the CEO as an advisor in establishing and executing the company’s strategy as well.

including monthly and annual accounts, as well as financial management reports.

Chief Financial Officer (CFO)

Now, this is perhaps the most complex of all positions in your company. Most people look at the CFO as a ‘money guy’ which is of course partially true, but in reality the right CFO’s responsibility goes further than just managing cash and includes high-end business functions such as tax reporting, implementing cost control measures, keeping the business updated with any new government regulations, initiating capital acquisitions, overseeing the accurate processing of financial data and so on.

Another important aspect is identifying the right time to hire a CFO and there’s really no right answer. This is a grey area that differs from business to business. Companies usually bring a CFO on-board after four to five years of successfully running the business when they have around 30 employees or more and have reached the USD 10 million yearly revenue mark. At this stage, the business can afford to have a CFO as they have a pay of anywhere upwards USD 100,000 as their base salary. So, it’s critical to ensure that you have the right person at the right time. We asked leading expert James Babb, Middle East Clients and Industries Leader at Deloitte to give further advice to SMEs… How to find the right CFO for your SME? What are key qualities to look for in a CFO? “There are a number of key qualities to consider when hiring a new CFO for an SME. The first I would say is very strong cash management and working capital skills as one of the key reasons SMEs do not survive this phase of their life cycle is due to cash mismanagement or lack of funding for their operations.

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“The second would be a strong track record of achievements in an SME environment – SMEs typically have smaller management teams which benefit from people who have a broad skill set “jack of all trades” capability. “Thirdly, the right professional qualifications should never be ignored regardless of the size of the organisation. A CPA, MBA, CFA qualification will demonstrate the person has achieved professional educational standards and also has an appreciation and awareness of best practices for the way business should be conducted. This is very important as the CFO will be greatly impacting the business culture of the organisation at an early stage.” What is the role of a CFO within an SME? What are some of the main functions? “As I mentioned previously, an SME’s CFO would be expected to have a broader role in the organisation as compared to a larger company CFO. Apart from the core finance function, CFOs would either be directly involved or be a strong stakeholder in areas such as Procurement/Supply Chain, Information Technology, Human Resources, Administration and other so called “Back Office” activities. “It is also expected that the CFO would be working closely with the CEO as an advisor in establishing and executing the company’s strategy as well. The risk here for a CFO within an SME is being too broadly stretched to where the core finance function performance would suffer, which is largely the area they will be evaluated on both formally and informally.” So, before your SME reaches the stage of ‘money mayhem’, hiring these key people can help ensure that you are prepared to battle whatever comes your way, or as they say – a fool and his money are soon parted!

For an online version, please visit: http://www.smeadvisor.com/strategy/ finance-team

TECH TRENDS

Stay protected with these top business security apps, Rushika Bhatia s view...

ESET Mobile Security & Antivirus This advanced app offers a scan of all downloaded apps and files, with a detection rate of 100 per cent. In case the app does detect infected items, it quarantines them straightaway so that they donâ&#x20AC;&#x2122;t affect your device any further. Whatâ&#x20AC;&#x2122;s particularly attractive about this app is its anti-theft mechanism which instantly notifies you in case of any suspicious activity. Moreover, you can also ensure full protection using features such as remote lock, remote siren, GPS tracking and so on.

Available on: Android Cost: Basic version is free

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TECH TRENDS

McAfee Mobile Security The app offers a suite of features for anti-theft & security as well as privacy. Moreover, the app provides web protection by warning against unsecure Wi-Fi networks, blocking unsafe sites during web surfing and monitor social networking platforms. It also helps with performance optimisation of the device by tracking data usage, managing battery power and ensuring storage clean-ups.

Available on: iOS and Android Cost: Free

360 Security â&#x20AC;&#x201C; Antivirus Boost This multifunctional app does more than just protect your device from virus and Trojan. It also manages your background apps, frees up memory space, monitors your junk folder and optimises battery power. The app offers heightened privacy with a lock feature that can protect your messages, images and other personal information. In case you lose your phone, 360 Security can help you locate it and remotely wipe the data off. Finally, another useful feature is its SMS and call scanning ability that blocks unwanted calls and messages.

Available on: Android Cost: Free

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TECH TRENDS

Avira Antivirus Security Avira Antivirus Security is a great app that protects your device from viruses and other types of malware. This is supported by other features such as device tracking, anti-theft capabilities and protecting private data on applications. In addition, it also scans e-mails of your contacts and notifies if any of them has been compromised. An appealing feature of this app is its ability to rank how sensitive data is being collected on your apps – something that you wouldn’t typically look into.

Available on: iOS and Android Cost: Free

Wickr With rising security concerns across the cyber world, Wickr introduces a sound solution. This messaging app allows users to encrypt messages that they send out in order to protect confidential information. Only the intended receiver is able to decrypt these messages. Users also have the option of selecting a certain time period during which their message and media will be available – following this all messages will expire and be deleted. Another advanced feature offered by Wickr is the ‘shredder’, which ensures that all the files you’ve deleted from your device are completely erased. The app requires little to no personal information at the time of signing up, which definitely adds to its appeal!

Available on: iOS and Android Cost: Free

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TECH TRENDS

avast! Mobile security With a raft of advanced features, this app is a one-stopsolution for all your security needs. The endless list of user benefits make this app hard to ignore. Download the app to get protection against malware, viruses, phishing and so much more. Some of its notable features include: tracking misplaced mobile devices, filtering calls and SMS, blocking unwanted calls, creating backups and accessing data remotely. Note that some of these features are available on a premium paid version – and are of course totally worth it! If you carry a lot of business information on your phone, this app is ideal to stay secure and protected.

Available on: Android Cost: Free

CM Security Antivirus AppLock This app enables you to lock applications such as Whatsapp and Facebook so that your messages remain private. Moreover, you can also lock your gallery so that images aren’t accessible to outsiders. That’s not all. You can lock apps using the fingerprint feature on selected devices. In case your device is stolen, it immediately captures an image of the person who has entered wrong password twice. Other features include SD Card scanning, Browsing protection and call blocking.

Available on: Android Cost: Free

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TECH TRENDS

oneSafe â&#x20AC;&#x201C; Premium password manager oneSafe helps protect all confidential information on your device including images, payment information, passwords and much more using encryption. It offers additional features such as a password generator, a reminder system to change outdated passwords and auto-lock. Within the safe, you can organise items systematically, which makes it quite simple to use. The beauty of the app lies in its user friendly interface!

Available on: Android and iOS Cost: $4.99

mSecure Password Manager Whatâ&#x20AC;&#x2122;s particularly different about this app is that it generates strong passwords for you. In the instance that a hacker tries to guess your password, the app has a self-destruct functionality. It also helps backup your data and e-mails, as well as gives you regular reminders to renew backups.

Available on: Android and iOS Cost: $9.99

For an online version, please visit: http://www.smeadvisor.com/tech/ top-business-security-apps

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