CXO Europe 16
Companies have a responsibility to engage with all of their employees or run the risk of alienating some members of staff.
IT Google Enterprise’s Adrian Joseph on business innovations www.cxo.eu.com • Q3 2010 CLOUD SPECIAL Discussion, debate and in-depth advice on cloud computing SOCIAL COMMERCE Groupon: The new kid on the social media block Blown over or overblown? Whistleblowers are as much a threat to data security as cybercriminals. Is your company doing enough to keep staff onside? COVER_final.indd 1 18/08/2010 17:03 BLACKBERRY AD.indd 1 17/08/2010 11:28 BLACKBERRY AD.indd 2 17/08/2010 11:28 MERCEDES AD.indd 2 17/08/2010 11:28 MERCEDES AD.indd 3 17/08/2010 11:28 SCHNEIDER AD.indd 1 11/08/2010 15:23 FROM THE EDITOR 5 Are you engaged? Companies have a responsibility to engage with all of their employees or run the risk of alienating some members of staff. T here’s always been a healthy camaraderie between the boss and employees. Hallmark have made a tidy profit on the back of numerous tacky cards, mugs and calendars they tout extolling the ‘tricky’ relationship between the person in charge and the guys who work for them. Much of this banter can, and usually is, taken in jest: each party gets the joke and is aware that the status quo – the hierarchy – works because of this relaxed form of showing, giving and receiving respect. Having a good relationship with your employees is paramount to creating a harmonious and successful business, and there are various means in which to forge good bonds. Whichever way you manage, though, not every employee will respond in the same manner. Some need an arm around the shoulder; some need tough love; others need little management at all. But all need to know that, no matter how untenable they think their work situation becomes, there is always an open and clear channel of communication. There should be no dead ends in business. If an employee feels trapped, voiceless, disengaged or threatened, they – like a cornered animal – will lash out, and often in the most damaging manner possible, as the recent Afghanistan War leak proved. Now, few of us are dealing with thousands of frightened and exhausted soldiers waging a war thousands of miles from home, but some companies are engaged in business practices that may not always sit comfortably with a selection of their employees. In such instances, the threat of a disenfranchised employee becoming a whistleblower increases, and securing against these internal threats is more than just a job for the IT department. Of course, implementing good levels of security, encryption and a watertight perimeter should be the first step, but corporations must also look at their FROM THE EDITOR.indd 5 own social responsibility. Every employee must feel valued, listened to and respected, especially those privy to sensitive data and information. Granted, even the bravest and frankest member of staff is rarely likely to speak to a superior in the same way they would a fellow colleague, but if they know that there exists that means of communicating their worries without fear of comeback or the threat of disciplinary action or worse, then it is surely a better situation for a company to fi nd itself in than on the front pages of a tabloid or haemorrhaging secrets that could damage its competitive edge. The business world is becoming ever clearer on the need for corporate social responsibility, better HR practices and intelligent talent management. Bad bosses say ‘Go!’ while good bosses say ‘Let’s go!’ Respect is a two-way street in business, and the antiquated practices of old are slowly being eroded by a variety of innovative and progressive companies that are forging a fresher, clearer and more communicative way of managing their staff. Companies that do this are going to be the leaders of the future, so it imperative that their very own leaders are capable, willing and able to engage with each and every member of their staff. “I think it takes a brave business indeed to admit that, often, you are just part of somebody’s career journey. At McDonald’s we are clear that for many students, why would we want to keep them beyond the two, two-and-a-half years that they are with us? They are great value for that time and if they are going off to study to be a doctor or a scientist, well, why would I stop them?” Vice President of People for McDonald’s Europe, David Fairhurst (page 118) Ian Clover Editor 18/08/2010 15:46 CONSONA AD.indd 1 11/08/2010 15:14 CONTENTS 7 40 Tour de thought The role of the CIO is ever-evolving, and can no longer rest safely in the camp marked ‘IT only’, says Gary Edwards of Thomas Cook 30 Calling time on whistleblowers As the recent Afghanistan War leak showed, whistleblowers can be highly damaging. What can organisations do to ensure their employees never become so disengaged? 46 Local coup How social commerce can help companies better connect with their customers in a way that adds genuine value to the business and the client. 74 Enterprising ‘App’etites Adrian Joseph, Managing Director for Google Enterprise EMEA, talks to CXO about the challenges of delivering Google’s renowned innovation and expertise into the corporate world CONTENTS_CXO.indd 7 18/08/2010 15:38 VIDERA AD.indd 1 11/08/2010 15:25 CONTENTS 9 106 EXECUTIVE INTERVIEW 93 Andreas Åsander, Clavister 106 Albert Grooten, Draka Communications 116 Mark Lewis, Riverbed Technology 124 Vincent Belliveau, Cornerstone OnDemand ASK THE EXPERT 60 52 Low carb diet Npower’s Head of Business Energy Services, Dave Lewis, talks us through the UK’s Carbon Reduction Commitment Energy Efficiency Scheme (CRC) and explains how companies can benefit 54 What’s in store for data centres? Efficient, cost-effective and secure data storage is an ongoing challenge for banks, says Jim Borendame 60 Clouded judgement William Fellows offers further clarity on cloud computing and outlines why business should adopt a cloudier future 78 Thirsty Work Sabine Everaet of Coca Cola talks to CXO about adding some fi zz into business management 82 Smart company The recent surge in popularity of business intelligence cannot mask the errors many companies make when utilising a BI strategy, says Herman Heyns 44 65 Françoise Soulie Fogelman Adrian Joseph CONTENTS_CXO.indd 9 50 Tim Hines, Consona 57 Paul Tyrer, Schneider Electric 72 Michel Roth, Quest Software 126 Pradeep Upad, Northgate Arinso INDUSTRY INSIGHT 36 Jeff Barto, Thawte 38 Paul Heiden, BHOLD 44 Françoise Soulie Fogelman, KXEN 122 Doug Leeby, Beeline International ROUNDTABLES 65 Cloud computing 96 Videoconferencing 114 WAN, with Nigel Hawthorn PROJECT FOCUS 108 John Stone, PGI NEXT BIG THING 85 Stuart Johnston, Experian QAS 86 Ketan Karia, Ingres TROUBLESHOOTER 58 Prelini Chiechi, Adobe 96 114 116 Clive Sawkins Nigel Hawthorn Mark Lewis 18/08/2010 15:38 JUNIPER AD.indd 1 11/08/2010 15:21 CONTENTS 11 118 88 Calm computing IT innovation is helping the John Lewis Partnership to meet the demands of an increasingly tech-savvy consumer base, John Keeling tells CXO 94 Video killed the waiting lounge star Videoconferencing technology is rapidly reaching the stage where it might well displace business travel altogether 128 134 102 The business of communication Mark Heraghty, Managing Director of Virgin Media Business, on extending his company’s reach across the UK 110 Alpha Mail CIO for A&N Media David Henderson talks to CXO about striking a balance between innovation and tradition 118 More than a McJob The challenges faced by McDonald’s’ HR department are unique and ongoing, explains David Fairhurst, Vice President of People for McDonald’s Europe 128 Print job in progress Josh Feathers of Photizo discusses how managed print services could help benefit your business 134 Converse fortunes Converse nearly went out of business at the turn of the millennium, until a smart investment by Nike helped transform the company’s fortunes CONTENTS_CXO.indd 11 DETAILS 138 Objects of desire 141 Book reviews 142 36 hours in: Seville 144 Last word 18/08/2010 15:38 GOOGLE ADS X4.indd 1 11/08/2010 15:18 CIO Europe Summit 2010 19 - 21 October 2010 InterContinental, Vienna Find Out More Contact CIO +44 (0)29 2072 9300 The CIO Summit is a three-day critical information gathering of the most influential and important CIOs from across Europe. The CIO Summit is an opportunity to debate, benchmark and learn from other industry leaders. A Controlled, Professional and Focused Environment It is a C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer A Proven Format networking and coordinated technology This inspired and professional format meetings. has been used by over 100 executives as a rewarding platform for discussion and learning. Chief Executive Management GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: email@example.com Legal Information The advertising and articles appearing within this publication reﬂect the opinions and attitudes of their respective authors and not necessarily those of the publisher or editors. We are not to be held accountable for unsolicited manuscripts, transparencies or photographs. All material within this magazine is ©2010 GDS Chairman/Publisher Spencer Green Director of Projects Adam Burns Worldwide Sales Director Oliver Smart Editor Ian Clover Managing Editor Ben Thompson “The event was great. An excellent opportunity for networking and getting in touch with other professionals and finding out success stories” Associate Editor Lucy Douglas Contributors Huw Thomas, Marie Shields, Nicholas Pryke, Rebecca Goozee, Julian Rogers, Stacey Sheppard Creative Director Andrew Hobson Design Directors Zöe Brazil, Sarah Wilmott Associate Design Directors Tiffany Farrant, Michael Hall, Crystal Mather, Cliff Christian Stoica, - Emporiki Bank Newman, Catherine Wilson Online Director James West Online Editor Jana Grune Group Director Oliver Stebbings Managing Director Marc Baker Senior Sales Executive Sarah Grimwood Sales Executives Thomas Cooper, Hannah Edmunds, David Cooke , Joe Hunter, Nick York Finance Director Jamie Cantillon Production Director Lauren Heal Production Coordinators Renata Okrajni, Aimee Whitehead Director of Business Development Richard Owen Operations Director Jason Green Operations Manager Ben Kelly Subscription Enquiries +44 117 9214000, www.cxo.eu.com General Enquiries: firstname.lastname@example.org (Please put the magazine name in the subject line) Letters to the Editor: email@example.com CIOEU GDS International GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: firstname.lastname@example.org SUMMIT www.ciosummiteurope.com CREDITS_CXO16_NEW.indd 13 18/08/2010 15:39 14 UPFRONT Monetising the future How predictive analytics, business intelligence and social media studies are beginning to alter the way we think about business. T here’s an interesting moral quandary thrown up in 2002’s dystopian classic Minority Report, which revolves around the issue of free will versus determinism. While the pre-cognitive characters used in the fi lm were firmly entrenched in the realm of science fiction, the police network set up to deal with the future (or pre-) crimes committed via ‘forethought’ was interesting, and a good deal closer to reality than many of us might think. Predictive analytics have been making waves in the world of IT for a few years, and the practice is about to hit the mainstream, threatening to drastically alter the way we view policing, banking, consumer behaviour and energy consumption. “If you work in risk management, policing, marketing, IT or the energy industry, you could quite easily utilise predictive analytics to deploy strategies that can enable you to work more efficiently,” says Colin Shearer, Worldwide Industry Solutions Leader for SBSS, an IBM Company. IBM has invested billions in developing its predictive analytics tool, ensuring it is as useful and reliable as possible. There are already tangible results that show UPFRONT_CXO.indd 14 that the tool works. In Memphis, US, violent crime rates have fallen by 30 percent since the city’s police force fi rst started using IBM’s predictive analytics. “The Criminal Reduction Utilising Statistical History tool, or Blue CRUSH, can work out – with predictive analytics – where crimes are likely to occur,” reveals Shearer. “It came about when we realised that there is a whole movement in many areas of life that recognises that previous decisionmaking has been, to a large extent, based upon people’s experience and previous knowledge. Which all sounds a bit like gut feeling, hunches and so forth. Some of this stuff may be valid, some not, so we were able to develop a system based around evidence-based decision-making, allied with asking the question: ‘What do the hard facts and the data tell us?’ “The Blue CRUSH system uses human knowledge on how criminals operate to try to give police officers and commanders assistance with their operational decisions. With their raw data they would ordinarily base their decisions on, our systems are able to give them quantifiable probabilities based on what has happened in the past, taking into account all sorts of factors, such as particular parts of town; the existing police presence there; the weather and temperature; the time of day; whether there “The thing that has really changed in the past few months and years is that, all of a sudden, organisations have access to so much more data” 18/08/2010 15:44 UPFRONT 15 is a rock concert on in that part of the city; whether it is pay day, and so on. All the while the Blue CRUSH system is looking at this data and working out the probability of a crime occurring. “With this data, the system can advise shift commanders to help them with rostering, telling them where and when to deploy their officers. And then when an incident occurs, the system can rerun these models and update the city’s risk profi le.” The ability to analyse information for use in predicting future results is just one facet of the recent upsurge in collating vast quantities of data and employing new tools to reach a desired decision or result. “The thing that has really changed in the past few months and years is that, all of a sudden, organisations have access to so much more data,” says Laurie Miles, Head of Analytics at SAS. “Traditionally companies have done a pretty good job analysing structured data, but the real thing that has changed is all this unstructured data that is now available on blogs, review sites, Twitter and places like that. Increasingly, organisations are starting to take advantage of that sort of data.” There is no doubt that websites such as TripAdvisor have been shaping the thoughts and consumer habits of millions of hotel-goers for a few years now, but the next step in this evolution is going to be companies using this information to tailor their services and products in a more structured, targeted way. Everybody who is online in the modern age leaves a trace, and it is this trace that companies are now analysing in an effort to better understand their customers, and seeking ways to capitalise on the content people leave as part of their trace. “Companies can and will now analyse not just the types of words people are using on sites such as Twitter, Facebook and TripAdvisor,” says Miles, “but also what time of day they are posting, how frequently they are posting and the ways they are interacting with their peers. This information is proving to be a goldmine for proactive businesses.” It cannot be long before analysed data begins to alter the very way in which we consume. Loyalty card schemes based around information companies hold on shoppers are already shaping buying habits in some supermarkets, while telecommunication companies have a wealth of information on their customers’ preferences, developing packages to provide better service and further monetise their consumer base. Th row in predictive spending and consumption habits, allied with better business intelligence feedback and smarter analytical tools, and you are faced with a future where every action of every consumer can be analysed, fed back into the business and worked with to create profit and more streamlined service. Exciting times lie ahead. UPFRONT_CXO.indd 15 News in pictures British supermodel Naomi Campbell is seen giving evidence at the Sierra Leone war crimes trial at the Hague via a videoscreen in the press room at a UN-backed special court in Leidschendam, The Netherlands. Flood victims in Pakistan’s Khyber-Pakhtunkhwa province await their turn to cross a dangerously swollen river by cable car as the ﬂood-damaged bridge severed this Chakdara region in half. A Freedom of Information request has revealed that the BBC lost mobiles and laptops worth £240,000 (€290,000) over the past two years, which is the equivalent of 1656 TV licence fees. 18/08/2010 15:44 16 UPFRONT LinkedIn looms large P Android phone sales soar While Apple might grab the lion’s share of the global tech sector andhas seen record proﬁts, Google’s Android mobiles have been quietly performing more robustly than many in the industry would have expected. In fact, statistics from research ﬁrm Canalys suggest that the ﬁrm is doing extremely well, with shipments reportedly increasing 886 percent year-on-year from the second quarter of 2009. This is even bigger than Apple who, while second in smartphone growth, only saw a 61 percent increase in the same period. However, the smartphone sector has been steadily increasing with Q2 sales rising by 64 percent. While Apple may have dominated headlines due to its brand images, Canalys’ Pete Cunningham said that Android’s success was due to the release of “highly compelling” phones. “We’re really seeing major vendors getting behind the platform,” he said, citing large manufacturers such as HTC, Samsung and Sony Ericsson, who all use the platform and have helped drive shipments. Due to the diverse brands, Android has been able to get a higher market share over Apple. Despite this, the most popular platform is still Symbian, most commonly found on Nokia and certain Sony Ericsson phones. Symbian has grown in popularity since the Symbian Foundation made its code open source, meaning that any organisation or individual can use and modify the platform’s underlying source code. However, Apple’s popularity in the media and its brand awareness has meant that the iPhone’s operating system has always overshadowed it. Nokia is the most popular phone maker in the world and the operating system it opts to use in the future could determine a clear market leader. While it is a ‘mass market’ for operating systems, Nokia is reportedly seeking to switch to another platform in order to compete with other brands. Nokia recently launched Meego with Intel to compete, but few in the industry are sure what Nokia could do in the future. In comparison, media-darling Apple saw the iPhone achieve the second largest growth during the period, despite highproﬁle issues with the iPhone 4G. UPFRONT_CXO.indd 16 rofessional networking site LinkedIn celebrated the second quarter of 2010 by announcing that it has passed the four million-members mark in the UK, now boasting more than 15 million European members and 70 million worldwide. Such growth mirrors the phenomenal rise of social networking site Facebook, with a LinkedIn member joining every second worldwide and more than one third of UK professionals now a member. “UK professionals from all industries are adopting LinkedIn with accelerating speed,” said Managing Director at LinkedIn Europe, Kevin Eyres. “Driving this growth is the increasing realisation that an online professional profi le is the best way to present yourself publicly because of the opportunities that come your way. In our working lives, the internet is now often our fi rst destination when we’re looking for advice or expertise; it makes sense to have your skills and experience available and up to date so you can be discovered by your next opportunity.” Additional figures released by LinkedIn revealed that 50 percent of Fortune 100 companies have hired through LinkedIn and one million professionals are joining the site every 12 days. Fast fact Smartphones will acquire 25% of the global mobile phone market by 2013 (Source: ABI Research) 18/08/2010 15:44 UPFRONT 17 North-south divide A UK-wide study by Virgin Media Business has uncovered a national north-south divide in the way companies and their customers communicate. Of the 5000 businesses polled, results show that workers in the north are keen to engender a more personal way of business, conducting more face-to-face meetings and making more telephone calls than their southern counterparts, who are more inclined to embrace the communication technologies at their disposal. London, in particular, was a digital frontrunner, with the use of social networking sites commonplace throughout the capital as a means of keeping in touch with colleagues and customers (London is, after all, the top Twitter city in the world). In Northern Ireland, demand for digital interaction was the lowest, with just six percent of businesses relying on social networking or instant messaging to stay in touch. Despite the proliferation and evolution of greater means of communication in recent years, the humble telephone remains the north’s most used comms tool, with 71 percent of businesses considering it a ‘critical’ instrument. After that, faceto-face meetings are considered the next most important communication method, with two-thirds of northern companies believing that human contact matters more than any other. Just 23 percent of polled businesses saw mail as vital. London-based businesses, unsurprisingly, were the least enamoured with ‘snail mail’ – just 11 percent saw it as important to their operations, while Yorkshire businesses were the most traditional: 37 percent deemed daily delivery of mail essential. “The way in which we all communicate has changed beyond recognition over the last few years,” said Virgin Media Business Commercial Director, Andrew McGrath. “We now send dozens of emails and text messages, post on Facebook walls, and tweet on a daily basis. In fact, many younger workers have never known a time when the rush to collect and send off the post was a daily ritual. “This transformation is particularly pronounced in the south, where many businesses are now almost entirely dependent on mobile phones and email, helping staff to keep in touch while on the go, enabling workers to respond to colleagues and customers a lot faster. As more and more businesses realise the beneﬁts that this digital dialogue has to offer, I would not be surprised if this number increases rapidly. “That said, it is vital that organisations do not completely dismiss traditional communication channels in favour of trendy online tools. Companies must take a multi-channel approach to their communications, as this will allow them to build strong relationships through human contact, while beneﬁting from the mobility that modern tools allow.” Wait in gold British banks take an average of 74 seconds to answer calls from individual consumers, while business customer calls are answered after just 61 seconds The best performing banks answer calls after just 34 seconds on average The worst bank took five minutes and 33 seconds to pick up a call Britain’s high street banks are being tweeted about 180 times a day on average 55% of social media users expect a response from their bank to an online complaint within 24 hours (Figures from Virgin Media Business’ Customer Service Study) UPFRONT_CXO.indd 17 18/08/2010 15:44 18 UPFRONT InfoWatch Trafﬁc Monitor Enterprise protects corporate data InfoWatch, one of the European leaders in the ﬁeld of conﬁdential data control, has recently announced a new release of its ﬂagship enterprise data protection solution, InfoWatch Trafﬁc Monitor Enterprise. The new version facilitates implementation and signiﬁcantly saves integration expenses, which is extremely important in today’s ﬁnancial situation. InfoWatch Trafﬁc Monitor Enterprise is a comprehensive modular solution to protect information against various internal threats by controlling different data transfer channels. The solution includes a gateway protection module to safeguard the corporate network perimeter (controls information transmitted via web mail, blogs, forums, corporate email system, instant messengers and network printing), an end-point protection module (controls local printers, portable devices, removable media and communication ports) and a forensic storage to archive all the info for further investigation. Minimisation of a solution’s inﬂuence on corporate infrastructure and business processes is one of the main customer requirements during implementation. Striving to better serve customer needs, InfoWatch has introduced a new product release that features ICAP (internet content adaptation protocol) support, thus minimising the product interference with the existing ITinfrastructure. InfoWatch Trafﬁc Monitor Enterprise provides companies with visibility into their information ﬂow thanks to a user-friendly reporting system. Graphical reports clearly show the data sender, recipient, time, category and the channel through which the data left the corporate network. More than 60 report types are available to better monitor user employee current activity or conduct an investigation. Still, corporate security ofﬁcer can create their own handy report-types with one click of the mouse. Natalya Kaspersky, InfoWatch CEO, says: “Most companies now live in a tough budget saving mode, including expenses for IT security. In these circumstances I’m pleased to offer the product version that meets our customers’ needs and substantially reduces integration costs. I’m sure the customers will appreciate our efforts.” For more information, please visit www.infowatch.com Social satisfaction O ne in five employees globally would turn down a job if they were forbidden from accessing social networking sites while at work, a survey from soft ware specialists Clearswift has revealed. The survey also claimed that eight out of 10 workers believe trust in how they manage their own time on the internet is more important than pay. “Th is is quite shocking, especially when you consider the recent fi nancial meltdown and the fact that unemployment is still so high,” said Andrew Wyatt, Clearswift’s Chief Operating Officer. Th is trend was most evident in the 25- to 35-year-old generation, a group that, according to Wyatt, has grown up in a world of online connectivity. “They’re completely connected through things such as email access and mobile phones, and it’s built into their psyche in the way they work; it’s how they expect things to be. Removing access to social media websites in the workplace would be like cutting off their right arms.” However, the survey also showed that employees were not neglecting their work commitments, with two-thirds admitting to working later or through lunch in order to make up for time lost spent undertaking personal tasks and errands online while in the office. “Employees are used to being constantly connected, and progressive businesses have seen that they can leverage that,” said Wyatt. UPFRONT_CXO.indd 18 “Eight out of 10 workers believe trust in how they manage their own time on the internet is more important than pay” More than 1600 employees and managers in the UK, Germany, Australia and the US were surveyed in the study, with 48 percent of men admitting to using social networking sites at work compared to 36 percent of women. Men are also more likely to check their personal emails at work (69 percent compared to 54 percent of women), and – perhaps the most surprising statistic – shop online (34 percent to 20 percent). 18/08/2010 15:44 InfoWatch Traffic Monitor Enterprise controls corporate information flow to protect enterprise data against internal threats. www • Protect sensitive corporate data and manage various risks • Improve employee efficiency and corporate culture • Ensure compliance with regulative requirements Start protecting your data today InfoWatch Traffic Monitor Enterprise is available for immediate licensing. Address your technical and business questions to email@example.com www.infowatch.com | e-mail: firstname.lastname@example.org INFOWATCH.indd 1 11/08/2010 15:20 20 UPFRONT INTERNATIONAL NEWS ➊ UAE BlackBerry owners in the United Arab Emirates have been banned from using the smartphone’s email, instant-messaging and web-browsing capabilities as UAE authorities have clamped down on the device due to encryption concerns that makes it difﬁcult for the government to monitor them. Due to the way in which the BlackBerry network is set up to function, data is exported offshore and so the UAE authorities are unable to regulate the information coming in and out of the country. The service is to be suspended on October 11 following a three-year campaign to make BlackBerry toe the line with the UAE telecoms regulations. ➋ 1 Sweden S weden is set to post the most robust economic rebound in the European Union after 80 percent of the country’s largest companies posted earnings that far exceeded the estimates given by analysts for the last quarter. The OMX Stockholm 30 index featured 25 Sweden-based companies, of which 20 surpassed the average second-quarter profit estimates given by analysts, outstripping Germany, where only 65 percent of companies came up healthier than analysts had predicted. Sweden’s largest exporters – which include Volvo AB and Svenska Cellulosa AB – have been propelling the recovery, which is expected to continue into the third and fi nal quarters of the year. ➌ 2 Russia The devastating heatwave that has left Moscow sweltering over the past few weeks is set to have a dramatically deleterious effect upon Russia’s economy. More than 15,000 deaths have already been attributed to the heatwave – close to 7000 of them in the smog-blanketed capital Moscow – and it is estimated that the forest ﬁres and droughts could cost the country €11.4 billion. The heatwave, an almost-unprecedented event in the history of the country, is expected to hit Russia’s US$1.5 trillion annual economy, because agricultural and industrial output will be severely disrupted. The country is likely to harvest only a third of the grain it did last year because of the drought, said Prime Minister Vladimir Putin. UPFRONT_CXO.indd 20 3 18/08/2010 15:44 UPFRONT 21 ➍ China T he month of July saw the Chinese economy slow down as the country began to get to grips with tackling its increasingly inflated housing market and addressing the need for its population to begin consuming less energy: twin problems that face the country as it slowly transforms from a third world into a fi rst-world nation. Increases in industrial output, retail sales and fi xed asset investment also slowed in July, as did new bank loans. Infl ation did increase, by a margin of 3.3 percent, which was higher than government estimates. Economists agree that China is now experiencing a controlled slowdown from the effects of its economy overheating in 2009. “The key data point to a moderate slowdown rather than a sharp downturn,” Brian Jackson of the Royal Bank of Canada told the Financial Times. 4 ➎ 5 South Africa The ruling African National Congress (ANC) has declared that it wishes for ‘greater state intervention’ in South Africa’s mining industry, stating that it worries the sector has little divergence. The ANC has made no secret that it wants to create a stateowned mining company in order to develop a new mining strategy that will bring better regulation to the industry. “There is broad support for greater state involvement in the mining sector,” said Deputy Chairman of the NEC sub-committee on economic policy, Enoch Godongwana. The ANC is seeking new ways to recoup tax on the speculative capital inﬂuxes that have enabled the rand to strengthen by 21 percent against the dollar since 2008, and sees state ownership of mining assets as the best way to maintain levels of foreign investment in South Africa. ➏ United States T 6 UPFRONT_CXO.indd 21 he jobless rate for American teenagers aged between 16 to 19 stands at 26.1 percent, prompting fears that this ‘teenage wasteland’ is raising a generation with no hope, few qualifications and little chance of gaining work experience in the near future. Before the recession this jobless figure would ordinarily hover around the 15 percent mark. Nationwide, the official unemployment rate for all ages stands at 9.5 percent, yet the government’s broader gauge – which includes those that are underemployed – puts the figure at 16.5 percent. In 2009, the hourly minimum wage was increased from US$5.15 to US$7.25, a factor, argue some economists, that has exacerbated the unemployment problem for thousands of teens, with many businesses unwilling to pay such wages. However, the poor economy has had a negative impact too, with millions of federally funded summer jobs cut by the government as it tightens its own belt. 18/08/2010 15:44 22 UPFRONT Apple exec quits If the apple doesn’t fall far from the tree, then what of Apple employees? The Apple executive in charge of development for the iPhone 4, Mark Papermaster, has left the company following months of haranguing at the hands of irate Apple customers who found a design fault with their shiny new iPhone 4s. Left-handed users, or those who simply liked to hold their phone in a certain way, began reporting poor signal and dropped calls – problems widely believed to have been linked to the phone’s antenna. Hard evidence was soon uncovered by the inﬂuential Consumer Reports organisation that proved that the phone’s signal strength weakened when held in a certain manner, a problem particularly exacerbated by left-handed users. Apple was quick to smother the issue but was forced to respond to the continuing commotion by offering free cases to those affected, because the signal problem was identiﬁed in the iPhone 4’s use of metal casing to bridge the short gap between two antennae in the lower-left side of the phone. Papermaster was head of Apple’s iPhone and iPod hardware department, a role he assumed in 2009 when he joined the company from IBM. It is not clear whether Papermaster was ﬁred or he resigned, but reports have suggested that his departure is inextricably linked to the iPhone 4’s problems. Demand IT IT fact D emand and supply levels for IT and ICT professionals in the UK have increased for another quarter, according to a report published by the Recruitment & Employment Confederation (REC) Technology Sector Group. The published report shows an increase of four percent for demand in ICT labour, and a 10 percent increase in demand for ICT skills. Latest figures point to 60,000 unemployed IT professionals and 68,000 employed jobseekers competing for a total of 86,000 IT jobs. Th is is a ratio between demand and supply of 1.5 potential applicants for each job. However, in some areas of the industry there is a shortfall in expertise, with the report highlighting that qualified systems developers, architects of .NET and SQL SVR are coming up short. “These results show that the demand within the sector continues to grow and return to good health,” said Chair of REC Technology, Jeff Brooks. “At ground level, members say that things have improved markedly from the low points of late 2008 and early 2009. IT systems are clearly seen as tools that can help drive growth and help reduce cost across the enterprise and we expect to see this growth maintained. “I would also reiterate our message to the coalition government [of the UK] that IT can help reduce costs within the public sector and continued investment in technology is vital if government is to both improve services and reduce budgets.” Global IT spend is set to reach €1.2 trillion by the end of the year Source: International Data Corporation UPFRONT_CXO.indd 22 18/08/2010 15:44 UPFRONT 23 Working hours increasing after recession trough F igures published by the Working Hours in the Recession audit by the Chartered Institute of Personnel and Development (CIPD) have revealed that demand for labour in the UK has picked up for the fi rst time since mid-2009. After the recession fi rst bit, the UK job market suffered one million fulltime job losses and a shift to more flexible and fewer working hours among a workforce that was eager to do all it could to hold on to employment. As a result of this shift in working patterns, there was a 10 percent fall in the number of employees working more than 45 hours a week. Full time employment fell by 4.1 percent at a time when part-time employment grew by 4.4 percent as a result of workers agreeing to cut their hours in attempts to stave off redundancies and help see their employers through the recession. Overall, 32.7 million fewer hours were worked each week in the UK since the start of the recession and the publication of these figures by the CIPD. By the second quarter of 2010, 440,000 fewer employees worked more than 45 hours a week compared to two years prior, with male employees accounting for the bulk of the recession casualties. The audit report also reveals that, by spring 2010, there were just as many UK employees working between 16 and 30 hours a week as there were working 45 hours or more, suggesting the country has come to fully adopt a ‘mixed-hours’ culture. As a result of this shift , there are only four EU countries that have a shorter average working week than the UK – Sweden, Ireland, Denmark and The Netherlands. “A marked shift to shorter working hours has been one of the key characteristics of the recession,” said Chief Economic Advisor at the CIPD, Dr. John Philpott. “But signs of an increase in long-hours working since the trough in hours in summer 2009 suggests that the fall in working time during the jobs downturn was a forced detox for Britain’s workaholics, most of whom will be eager to start putting in the hours again once the economic recovery gathers steam.” Marketing behemoth Publicis Groupe SA have predicted that global advertising spend will grow by 3.5% by the end of 2010, to a total of US$447.5 billion (€338 billion) This marks the ﬁrm’s third continuous upward revision of ad spend after six consecutive downgrades during the recession Ad spend on the up Internet ad spend is projected to increase the most, up a total of 13% to US$61.3 billion (€46.2 billion) Television will attract the largest share of ad expenditure – US$177.7 billion (€134 billion) in total Newspaper and radio ad spend is down by 3% and 1.4% respectively Across Europe, only Greece (13.9%) and Spain (0.7%) will experience a decrease in ad expenditure UPFRONT_CXO.indd 23 18/08/2010 15:44 24 UPFRONT Top 10: Most common iPhone claims Ensured but not insured 1. Cracked screen 2. Stolen while texting A 3. Dropping calls 4. Left on car roof and so fell off while driving 5. Damaged by pet dog 6. Stolen from handbag 7. Internet no longer connects 8. Battery no longer charges 9. Dropped in toilet/bath 10. Screen has frozen UPFRONT_CXO.indd 24 (Source: protectyourbubble.com) n Abbey Legal Protection (ALP) Protection Gap survey has discovered that a quarter of CEOs do not know what claims or eventualities their commercial insurance policies cover their business for. When surveyed about whether a variety of potential claims would be covered within their workplaces, 21 percent of CEOs and 18 percent of senior management admitted that they had no idea what eventualities would be insured, and what would not. The top occurrences where senior management thought their company’s standard commercial insurance policy would have covered them but, in fact, does not, were personal injury (57 percent of those surveyed thought personal injury claims would be covered), damage to company property (55 percent), employment law claims (42 percent) and disputes over employment contracts (33 percent). Thankfully, only two percent of those surveyed believed their pets would be insured while on company premises, and just nine percent thought likewise while their car was parked in the company car park. “It is concerning that in tough economic circumstances when legal disputes are more likely and more costly, such a significant proportion of senior managers do not know what they are covered for, and almost certainly do not know the terms and conditions that apply,” said Richard Candy, Underwriting Director for Abbey Legal Protection. “Most insurers impose terms and conditions to achieve a speedy and economical solution of the insured problem to the benefit of the insured and the insurer. If you do not know what those terms and conditions are you are likely to lose those benefits and may even lose the insurance cover entirely. “There is a gap in management understanding of what is covered and how to use the cover that is there.” So dust off that insurance policy and figure out exactly what your company insurance covers before inviting Fido in for a dog-day at work… 18/08/2010 15:44 GEODIS WILSON AD.indd 1 11/08/2010 15:18 26 UPFRONT Eurozone’s wave of conﬁdence A report by the European Commission has indicated that conﬁdence in the 16nation Eurozone has signiﬁcantly increased from minus 17.3 in June to minus 14.1 in July. The ﬁgures, based on the consumer conﬁdence indicator, reﬂect a growing ease with the euro since the European debt crisis began to settle down. The Commission’s Economic Sentiment Indicator (ESI) for the Eurozone has also increased to 98.7 since June, just a few points behind the general EU ESI rating of 100.1. Nationally, the UK experienced the largest drop in ESI at minus three points, while Spain experienced the largest increase, of 2.3, possibly on the back of their country’s successful World Cup campaign and July marking the high point of the proﬁtable holiday season. EU population surpasses 500 million T he population of the European Union has now reached half-a-billion thanks to net increases in immigration pushing the population higher than ever, according to figures published by Eurostat, the EU’s statistics agency. As of January 2010, the official population of the EU was 501.1 million, a 1.4 million increase on the same time in 2009. It is estimated that 900,000 of the additional heads came from immigration. There was a population increase in 19 of the 27 member states, and a decrease in the eight others, with Luxembourg posting the largest increase in its population (up 17.2 per 1000 inhabitants) and Lithuania experiencing the largest decrease in its population, losing 6.2 people per 1000 inhabitants. The issue in numbers A 52-year jail term could be awaiting the US Army whistleblower who brought about the Afghanistan War Leak (p30) Thomas Coo k services 2 2 million customers a nnually (p40 ) 80% of Groupon subscribers are female (p46) MCDONALDS HAS A GLOBAL WORKFORCE OF 2,000,000 (P118) 750 MILLION PAIRS OF CONVERSE ALL STARS HAVE BEEN SOLD WORLDWIDE (P134) Don’t miss… • There were 5.2 million newborns in the EU in 2009, with Ireland reporting the highest birth rate (16.8 per 1000 inhabitants), followed by the UK (12.8) and France (12.7). • 10 member states experienced negative natural growth, led by Bulgaria, Latvia, Hungary then Germany. • Ireland, following a boom decade of economic immigration, has returned once more to being a nation of emigrants, with the country recording the highest net outflow of inhabitants. 82 SMART COMPANY (P82) Business intelligence might sound a straightforward proposition, but many companies still get their BI strategies drastically wrong, says Herman Heyns. MORE THAN A MCJOB (P118) An intriguing insight into the internal Mc-inations of HR talent management at one of the world’s largest and most recognisable companies. CONVERSE FORTUNES (P134) CXO looks at how one of the most famous sports shoe names in the world was rescued from the brink of oblivion to become a market leader once more. UPFRONT_CXO.indd 26 18/08/2010 15:44 SCHNEIDER AD.indd 2 11/08/2010 15:23 28 UPFRONT Safeguarding credit card transactions With credit card security breaches costing stakeholders millions in revenue, businesses and consumers are concerned about the same challenges. Who is legally using credit card information? How can businesses maintain the conﬁdentiality of credit card information and meet security standards and regulations for credit card transactions? Tectia Corporation, formerly SSH Communications Security Corp, recently highlighted the challenges of protecting customer credit card data. Tectia President and CEO Jari Mielonen noted that information security issues should no longer be the sole domain of technology ofﬁcers. Mielonen has remarked that requirements for compliance with payment card industry security standards have made credit card security part of companies’ risk management portfolios. “Information security should belong to every board agenda starting from today,” he declared. Tectia helps businesses to secure the transmission of sensitive consumer data across all networks, thus protecting customers and complying with PCI DSS requirements. Customers lose no time in ensuring that their card payment systems comply with the rigorous information security standards of the PCI-DSS, and more importantly, that customers and overall business processes suffer no disruptions. Furthermore, Tectia solutions are quickly deployed, easy to conﬁgure and work in complex networks, giving security and visibility to application trafﬁc without modiﬁcation to existing applications or their conﬁgurations. Tectia solutions for PCI DSS compliance help companies to reduce the risk of ﬁnancial fraud; increase customer conﬁdence by providing higher levels of security; maintain customer trust; protect corporate brand and reputation; protect the organisation against ﬁnancial losses and compensation claims due to security breaches, and provide methods for benchmarking and assessing card payment security systems. “Information security should belong to every board agenda starting from today” For more information, visit www.tectia.com Credit card fraud • Card fraud losses in the UK totalled €534.7m in 2009 • Fraud on lost and stolen cards totalled €58m • Card ID theft amounted to €46m • Counterfeit card fraud equalled €98m, down from €206m in 2008 • All the ﬁgures were down from previous years Company index Q3 2010 Companies in this issue are indexed to the ﬁrst page of the article in which each is mentioned. A&N Media 110 Adobe 58, 59 BCS Global 96, 100 Beeline International 122, 123 BHOLD 38, 39 Blackberry IFC Blue Coat 114 Clavister 80, 93 Coca Cola 78 Consona 6, 50, 51, IBC Converse 134 Cornerstone OnDemand 124, 125 Draka Communications 104, 106, 107 Expand Networks 114, 115 Experian QAS 85 GE Capital 94 Geodis Wilson 25 Google 12, 64, 65, 74, 132, OBC UPFRONT_CXO.indd 28 Groupon 46 InfoWatch 18, 19 Ingres 86, 87 IQPC 139 John Lewis Partnership 88 Juniper 10, 65, 67 KPMG 82 KXEN 44, 45 LifeSize 96, 98 McDonald’s 118 Meet the Boss 69 Mercedes 2 Nike 134 Npower 52 Northgate Arinso 126, 127 PGI 108, 109 Photizo 131 Psytechnics 96 Quest Soft ware 72, 73 Ricoh Europe 30 Riverbed Technology 116, 117, 140 Schneider Electric 4, 27, 55, 57 Tectia 28, 29 Thawte 36, 37 Thomas Cook 40 Videra 8, 96 Virgin Media Business 102 Wipro 65, 71 Wells Fargo 54 451 Group 60 18/08/2010 15:44 TECTIA AD.indd 1 12/08/2010 11:42 30 COVER STORY CALLING TIME ON WHISTLEBLO COVER STORY ED P30-35.indd 30 18/08/2010 15:44 COVER STORY 31 As the Afghanistan War leak proved, no organisation’s security perimeter is ever completely safe from breach. Ian Clover discovers how adopting more progressive strategies can help dilute your employees’ desire to leak information. S WERS COVER STORY ED P30-35.indd 31 porting the online moniker ‘Bradass87’ and offering bold, boastful claims of access to the most top-secret data within the US army, Bradley Manning – a US Army Intelligence Analyst – hardly came across as the most trustworthy surreptitious source to ever leak from the largest military power the world has known. The internet is, after all, awash with the disillusioned, the disenfranchised, the disappointed and the downright deluded. At fi rst glance, Manning belonged in this bracket: his deep throat-esque instant message conversations to a hitherto-unknown Californian computer hacker; the almost insatiable desire to relay ‘sensitive’ information that, if false, could get him into serious trouble and, if true, could land him with a heft y prison sentence if ever caught; the sensational language he used when talking about ‘incredible, awful things’ that ‘belong in the public domain and not on some server stored in a dark room in Washington DC’ – it all pointed to yet another online crackpot looking to spout whatever had ailed him to anyone who would listen. The problem for the US authorities though, was that the information Manning was all too eager to offload about the Afghan War was, in fact, true. Manning’s job within the US Army afforded him privileged access to two secret networks: the Joint Worldwide Intelligence Communications System, and the Secret Internet Protocol Router Network (SIPRNET), both of which carried material that was classified as ‘Top Secret’. Unrestricted access to this type of information led Manning into the realm of temptation. The sensitivity of the data and the shocking truths that it covered up (the shelling of unarmed Afghan civilians by a US helicopter in 2007 being the most damning) compelled Manning to seek to release the information into the public domain: compressing, encrypting and uploading the juiciest details to Julian Assange, founder of the Wikileaks website. Manning would even take blank CDs labelled ‘Lady Gaga’ with him to work at the Operation Hammer base camp some 60 kilometres east of Baghdad in Iraq, insert them into his high-security laptop and even lip-synch along to nonexistent music so as not to arouse suspicion while he was downloading the explosive information. 18/08/2010 15:45 32 COVER STORY Out of the mouth of Manning… Choice excerpts of Bradley Manning’s conversation with Adrian Lamo, the Californian hacker he contacted. ”…everywhere there’s a US post, there’s a diplomatic scandal that will be revealed…” ”…at first glance it was just a bunch of guys getting shot up by a helicopter…no big deal…about two dozen more where that came from right…but something struck me as odd with the van thing…and also the fact it was being stored in a JAG officer’s directory…so I looked into it… eventually tracked down the date and then the exact GPS co-ord…and I was like…OK, so that’s what happened…” Such a news story raises various questions. Rumours have abounded for years about the less-than salubrious practices of the US and Allied forces in Afghanistan. But that is all they ever were before – rumours. Th is Wikileak uncovers the non-PR version of events in Afghanistan, and they threaten to be far more damaging for the American authorities than anything that has gone before, the Pentagon Papers during the Vietnam War included. And if a body as powerful as the US Army can fi nd its security perimeter breached by an employee on a mission, then how do mere corporations protect their sensitive data from internal threats and external malice? Is it a matter for IT departments to implement better security technology, or do companies have a duty to engender better channels of communication for employees who could become potentially disgruntled? Do corporations have a social responsibility to treat the threat of whistleblowers more seriously? The challenge for most companies lies somewhere between the two stools – better technology can certainly help to secure a company’s perimeter, but failure to engage with employees, or indeed teach them the value of following secure practices, can be just as harmful for your business. “Highly visible leaks such as the Afghanistan Wikileak should encourage all businesses to recognise how close risk is and give them impetus to document governance and process review,” says Ian Winham, Chief Technology Officer for Ricoh Europe. “Th is story highlights just how important it is for companies to review internal security processes to ensure information is protected and access to sensitive information is restricted, but also to engage the IT community and the HR community to make sure that your company is addressing communication with your staff.” Failure to engage Manning was arrested by the US Army Criminal Investigation Command in May this year and, in July, was charged on two counts of ‘transfer- COVER STORY ED P30-35.indd 32 ”…documents that expose the almost criminal political backdealings that show how the first world exploits the third, in detail, from an internal perspective…” ring classified data on to his personal computer and adding unauthorised soft ware to a classified computer system’. He could be looking at a jail term of 52 years, which he would have known before acting in such a manner. His defenders have been calling him a whistleblower for free speech; others think him foolish. But the question is – what compelled Manning to act in such a manner? Did he simply want the fame, or did he feel so disengaged from his superiors, and frustrated with what he saw, that he felt he had no choice but to act as he did? Such questions are equally valid in the corporate world. Employees with access to sensitive data need to act responsibly of course, but is there a duty for the employer to ensure that its staff are made to feel valued and respected? “The armed forces can be, without wishing to say anything too detrimental, extremely negative about any form of information or feedback that is, in itself, negative,” says Grahame Waite, Information Security Officer and Data Protection Officer for Fife Constabulary, who spent 25 years in the armed forces. “The rank structure is designed to be rigid. You are expected to do what you’re told. Then again, every serviceman that I have ever known has absolute dedication to the armed forces and it takes something really extreme to tip somebody to the point where they think, ‘You know what? I have to do something about this.’ It really must be something extreme.” And it was. Thankfully, most companies are not waging wars in foreign lands, or being forced to act in a manner that has the potential to take lives. But what is classed as damaging information differs from company to company and organisation to organisation, and so does the type of data and structure that could lead to employees feeling aggrieved. “Whistleblowers are always a bit of a contentious issue because it all depends on which side of the fence you are on,” says Waite. “They can prove really beneficial if, for instance, they go to their own executive and tell them that there is a real issue that they would like to address. Th is sort 18/08/2010 15:45 COVER STORY 33 ”…I took some information to an officer to explain what was going on. He didn’t want to hear any of it. He told me to shut up…” ”…lets just say *someone* I know well has been penetrating US classified networks, mining data like the ones described...and been transferring that data from the classified networks over the air gap on to a commercial network computer... sorting the data, compressing it, encrypting it…” ”…If you had free rein over classified networks for long periods of time… say, 8-9 months, and you saw incredible things, awful things that belonged in the public domain and not on some server stored in a dark room in Washington DC, what would you do?…” of culture should be encouraged. But if somebody is doing it for fl agrant self-aggrandisement or malevolence, then it becomes a different matter.” Data and information security can be guarded right from the off if every employee feels that they have the relevant facility and chain of command in place that enables them to report something that they feel is wrong within an organisation. “You have to accept that technology can only deliver part of the solution,” says Andy Kellett, Senior Analyst at OVUM Research. “Technology itself can be part of the problem, as we have seen with the Afghan War leaks. So if you can put a formal and secure communications channel in place that offers an outlet to people who feel that things are not going their way and need to express their concerns about something that their company is doing, that has to be advantageous. The approach could involve the use of an independent mediator to whom employees can pass information without feeling that their own position is threatened. If you can do this while making staff feel valued, it can be an important addition to your corporate structure. “The fact is, most people become whistleblowers because they are either scared that their concerns will be ignored or know for a fact that they won’t be taken seriously. Rightly or wrongly they believe that unless the information they hold goes public, nothing will be done and that they will suffer as a consequence if they make their views public.” Educating your workforce is of paramount importance. If they are fully aware of their responsibilities within your organisation, then that is half of the security battle won. “The issue really boils down to the use of good technology controls alongside user education,” says Kellett. “At the same time it is imperative that an organisation maintains proper relationships between itself and everyone who works for it.” But there are also responsibilities on the employee to act maturely and responsibly, too. “We all go through stages where we are less happy than we could be,” adds Kellett. “But the responsibility of the end-user doesn’t disappear just because they are discontented.” COVER STORY ED P30-35.indd 33 18/08/2010 15:45 34 COVER STORY Identifying weaknesses Every company and organisation has its vulnerabilities. The US Army, for all its might, technological power and ability to lean heavily on important decision-makers to get the outcome its country seeks, is vulnerable from within: from disillusioned soldiers who, ordinarily, pledge blind loyalty to the cause. Conversely, corporate enterprises may be extremely effective at combating internal leaks and exposures but fi nd that they are susceptible to third-party interference. “What organisations need to do is undertake upfront risk assessments to understand and identify what and where their real vulnerabilities are,” says Kellett. “For example, if you are in the retail or the fi nancial services sector, you obviously need to protect credit card data. You need to ensure that customer information is protected and doesn’t end up on external devices without being properly encrypted. Th is issue of getting your company’s priorities right, of understanding the things that are really going to cause your organisation problems, is highly important.” As is applying techniques and strategies to ensure that data loss prevention and security breaches are rare occurrences. “If yours is an organisation where everything stays on central servers, then you can start to address those issues by understanding where your most sensitive data is,” continues Kellett. “Very few organisations like that exist today. Realistically you are looking at business operations that support the free flow of information and, therefore, there is a need to make use of technology that can deal with things that attack your organisation but also address the issues of accidental misuse. Because it is not always a case of malicious attacks and people stealing information; the loss of fi les, laptops and data is often down to human error; it’s stuff that people just do.” COVER STORY ED P30-35.indd 34 Th is is where security technology can work collaboratively with better corporate responsibility to both educate employees and arm them with their own sense of responsibility and technologies that will come to shape their behaviour for the better. “Working in the police force means there is that responsible mentality already built in that our information is exceptionally sensitive,” says Waite, “but in the corporate world intellectual property can be just as valuable and sensitive, so you do not want this sort of data leaking from your company.” Having an increased awareness of the need to maintain strict security measures is just one part of the perennial battle companies are engaged in as they fight off the threat of data breaches and security lapses. “Awareness and activity are always two things that actually are difficult to pull together,” admits Winham. “There are plenty of organisations that have implemented good security policies that they are very clear about, but what they tend to overlook is the process of flowing these practices and policies throughout the entire organisation; there is often a lack of governance, sometimes confusion, and sometimes something as simple as oversight.” Technological help Simply training your staff to follow stricter security protocols is only half of the battle; staff members need to be armed with a suitable security infrastructure too. Prison officers, for example, would quickly be overwhelmed if all they had at their disposal were batons, intense training and an intimidating collection of bushy moustaches and shouty voices – they need the bars, walls, razor-wire and fences to help them secure their perimeter. Likewise, a prison with no intelligent guard presence would quickly be breached. And so it is for company security. Collaboration 18/08/2010 15:45 COVER STORY 35 through governance and utilisation of the appropriate technology is the most effective method. “Sometimes there is a failure to engage by senior executives who perhaps view their data security procedures as a cost rather than an investment,” says Waite. “Of course, in this day and age the plus and minus columns of balance sheets are more important than ever. But data security is an investment because it gives you and your organisation that peace of mind, and it highlights to your partners that you see security as an important issue and that you are willing to take the appropriate measures to protect the sensitive data of your organisation.” ganisations need to have visibility of your data and you need to control that One such measure advocated by Waite and employed by every police access – what they can do and see etc. – the boundaries that exist in normal force throughout the UK is solid encryption of data. “If you have a suitable business relationships no longer apply. Technology allows information to level of encryption on a laptop, then who cares whether you lose it? All you move around very easily, and the amount of information that we make have lost is a piece of plastic. However, if it’s not encrypted or it has only a available is expanding all the time. Next generation technologies will open very low level of encryption, what you might lose in terms of the value of things up even more and make it even easier for information to be moved data on there can be immeasurable. I would much rather lose a piece of around, which poses a serious set of security questions for the future.” plastic having paid a little bit more money for a good level of encryption Central data and data on the move both need to be protected and than face the embarrassment, the inconvenience, and the possible legislasecurely encrypted so that any attempt to remove this information from tion and job loss that could follow if sensitive data was lost.” within the perimeter to beyond it is flagged and of little use to the malevoEmploying a professional team to ensure the implementation of aplents. “Most organisations don’t know when somebody sticks a USB drive propriate data encryption soft ware is equally imperative as having the into the back of a machine and makes a copy of a fi le,” says Kellett. forethought to undertake such a strategy, as is educating every member of There are other dangers too. The printing off of sensitive information the workforce who works in each department about the potential dangers may seem charmingly old-world, but it remains a very real threat for of data leakage. “It is relatively straightforward to introduce a companies that do not implement appropriate document security. secure email service system that sends all outgoing mail via “While a business may never experience such a high profi le an encrypted route to secure addresses,” says Waite. “Th is is leak as the one suffered by the US Army, it is important to Nothing one technique that actively forces employees to take deciacknowledge the quieter risks within an organisation,” replaces a sions on the value of the information they are trying to explains Winham. “Business plans, product road maps or correctly send, prohibiting them from sending emails to unsecured budget data that are easily printed can get into the hands of educated recipients. But there are programs that will allow inforcompetitors and bring competitive disadvantage. In many mation to be sent to insecure addresses, and it is in these cases a business will not even be aware that such an inciworkforce instances that employees have to act responsibly.” dent has taken place, so to help control security breaches, Policies, education, auditing and technology can all be businesses need to take greater control on who is able to print combined to minimise the threat of potential leaks and breaches. their information, and what information they are able to print.” Determined whistleblowers may always attract some attention, As the world becomes more and more digitalised, the but if they are unable to back up their claims with hard eviissue of securing actual physical documents is being overdence, they will not be taken as seriously. Security officers looked by many of the larger companies prone to security Physical must not lose sight of employee management; it is partly breaches. “A lot of security comes through the IT funcsecurity their responsibility to ensure that staff members feel tion, whereas a lot of document governance sits outside risks need valued, rewarded, listened to and empowered to speak of the IT function and is located in a wide range of areas to remain a their mind if they at all feel that the company they work within a company,” says Winham. “Th is is where things priority for is engaged in some activity or practice that concerns such as innocent mistakes can happen, where documents them. These channels of communication need to be kept are not being controlled as tightly as they could be. End-ofclear and open, or independent mediators should be employed life employees (those coming to the end of their contract) pose to, perhaps not encourage a culture of looking for problems and flaga threat too, but if you know your security environment and there ging them, at least engender an atmosphere whereby members of staff at is an executive looking after the issue of document governance – whether all levels are afforded the time and respect to make their concerns heard. this falls to the IT department or not – such threats can be minimised.” In the wake of the Afghan War leak, the end-to-end processes of data security should be given even greater attention than previously. TechnolProtecting the perimeter Mobile workforces are posing even greater challenges as companies’ ogy can only help so far; employees need to take the responsibility afforded security perimeters grow ever larger, and potentially more porous than to them by their employers to work in a reliable and transparent manner, tighter-knit ones. Smartphones and laptops are great drivers for business, engaging with their superiors on matters that are giving them cause for but bring with them their own sets of security concerns and challenges. concern, without feeling the need to resort to extreme whistleblower “There are few organisations out there with common risk boundaries, so tactics to get their message across. Equally, corporations have a duty to there is no single strategy for dealing with the security concerns of mobile provide not just secure working environments but access to clear channels workforces,” says Kellett. “For example, a company that has a need to share of communication throughout the entire structure of their organisations. its information with a third party – on supply chain relationships for inWithout this complete end-to-end security process, leaks like the one sufstance – needs to have in place federated access controls. Where other orfered by the US Army will continue to happen. “Security officers must not lose sight of employee management; it is partly their responsibility to ensure that staff members feel valued" COVER STORY ED P30-35.indd 35 18/08/2010 15:45 INDUSTRY INSIGHT 36 SSL security brings doctors and patients together Owned and operated by Gateway File Systems Inc., a leading Canadian healthcare information systems company, Health nexxus is one of the world’s ﬁrst web-based healthcare information portals. By making online security its top priority, Health nexxus is revolutionising the way healthcare providers and patients communicate, says Jeff Barto. W ith more than 25 years of experience developing systems to manage electronic medical records (EMRs), Gateway File Systems founder Brian Harper understands the power of improving access to healthcare information. “With electronic records, doctors can get a comprehensive view of their patients’ health and provide better care,” he says. In 2004, Harper and his team decided to push the boundaries of traditional EMR systems by offering online access to medical records to both providers and patients. The result was Health nexxus, a pioneering online healthcare information portal. “We knew that giving patients access to their health information online would empower them to be more involved in their own care,” Harper says. Since personal health information is extremely sensitive, Harper also knew that Health nexxus had to be highly secure. “If doctors and patients didn’t trust the Health nexxus system, then no one would feel comfortable using it,” he says. “With Thawte SSL security, we can help ensure that the entry point to health information, the browser, is secure. That is absolutely essential to our business” Initially, Health nexxus used a proprietary security framework to protect patient records, but as use of the system grew, Harper decided to switch to SSL security. “We explored several SSL providers, but selected Thawte because the company has a long history of providing strong, reliable security,” says Harper. “Thawte is also widely recognised around the world, making it an ideal choice to establish trust with our international providers and patients.” Thawte.indd 36 Harper also wanted a clear, unmistakable sign that the portal was protected, so he opted for SSL with Extended Validation (EV), an advanced technology that makes the address bar in compatible web browsers turn green. “We tested EV with some of our doctors and we got excellent feedback. They said, ‘yes, the green bar makes a lot of sense. I’m going to look for that on every site from now on.’ It’s been a great choice for our business,” he says. Harper and his team also discovered that Thawte SSL certificates are easy to roll out, giving Health nexxus the flexibility to scale to meet changing business needs. “In my experience, many enterprise technology solutions can be hard to deploy, but Thawte SSL certificates are easy to implement,” says Harper. “We’re currently focusing on small practices and individual practitioners, but it’s reassuring to know that we can easily accommodate an enterprise deployment if we decide to go in that direction.” By changing the security technology behind its EMR system, Health nexxus has been able to give patients and providers safe and convenient web-based access to health information, increasing patient engagement and improving care. “We want our users to feel like they can depend on the Health nexxus portal, and Thawte SSL certificates are crucial to providing the security and reliability that they have come to expect,” says Harper. With Thawte EV SSL certificates, Health nexxus has also been able to comply with key government security requirements, underscoring the company’s commitment to protecting patient data. “One of the biggest issues with EMR systems is who has access to medical records, especially in the United States where complying with HIPAA – the Health Insurance Portability and Accountability Act – is critical,” Harper says. “With Thawte SSL security, we can help ensure that the entry point to health information, the browser, is secure. That is absolutely essential to our business.” For more information, please visit: www.healthnexxus.com. Jeff Barto is the Senior Product Marketing Manager at Thawte. 18/08/2010 15:43 THAWTE AD.indd 1 11/08/2010 15:24 38 INDUSTRY INSIGHT Access control – a serious priority Paul Heiden outlines exactly why businesses urgently need to control access to information. I magine this scenario - the brakes on a series of new cars fail and the car manufacturer responds with the comment, “Modern cars are so complex these days that it’s not surprising when something goes wrong in production.” People would be up in arms! But believe it or not, certain banks have tried to blame the complexity of their IT systems and processes when unauthorised transactions have caused huge losses. Governments have also used the same excuse when private data is made public. Whilst an organisation’s systems may be very complex, not even the most desperate lawyer would try to absolve blame on that argument alone. These days IT systems are considered a production asset – just like the machines used in a production line at a car plant. IT systems are a key production asset for banks and governments. Logically, like any other production asset, management has to be responsible for the deployment, control and management of their IT systems. An organisation’s user access processes determine how employees use the company’s IT systems – what they should and can do within each system. These processes are increasingly referred to as access governance (AG). AG is not to be confused with identity and access management (IAM), which allows IT managers to ensure that all systems act in accordance with user access settings as prescribed by AG. IAM belongs to the realm of the plant manager, AG to the business. The problem is, all too often the link between AG and IAM is broken. The way many companies grant access to information can be likened to requesting a light to be switched on by sending a postcard to the power supplier. Steps between decision and execution are numerous and lack transparency. What’s more, the outcome is uncertain. You may or may not be granted light at the end of the process. Should organisations give priority to mending the link between AG and IAM? Absolutely, because without it you’re making an expensive production asset wait. That asset might be your employee, a recently hired consultant, a business partner or even a valued customer. Doesn’t it make sense to give the person who notices it is getting dark permission to switch the light on without further interference? If you need another reason for improving control over your IT systems, then compliance and liability should be reason enough. If your processes are broken BHOLD ED P38.indd 38 or inefﬁcient, they undermine control, and control is needed for compliance. These days, your management team must be able to prove it is in control of its production assets. Lack of control not only results in noncompliance and audit issues, but it can lead to liabilities. It doesn’t matter whether the production asset is a machine or a bank’s trading system, if you can’t prove it has been properly managed you invoke liability. So, for reasons of control and efﬁciency, businesses must manage access to their information systems. Luckily it is an investment that you’ll see an immediate return on. Control is the stepping stone towards efﬁciency. Control means certainty that the right users get access to the right information; that the people who are able to submit expenses cannot approve them. With control you have reliable processes with predictable outcomes. Access governance prevents people from waiting, it ensures control, it proves compliance, it enables an organisation to respond to restructures or new business models. It is the conditio sine qua non – to be able to rely on IT services like you rely on power. What is required are easy to use, accessible products that help organisations to establish control and shift the management of their systems from the IT department over to the business. What organisations need is a true management console to manage access to information regardless of where that information sits. You can’t even begin to consider cloud or collaborative business unless you control access. Paul Heiden is BHOLD’s founder. Heiden started his career as an ofﬁcer of the Royal Netherlands Marine Corps. Having obtained a master is degree in business and Roman law, he became legal counsel and frequently encountered the problem of controlling access to conﬁdential information. In this period he developed the ideas on business-driven access control that became the foundation for BHOLD in 1997 and developed into BHOLD’s leading business applications for access management today. 18/08/2010 15:43 BHOLD AD.indd 1 11/08/2010 14:58 40 IT INTELLIGENCE Tour de thought Thomas cook.indd 40 18/08/2010 15:43 IT INTELLIGENCE 41 As the business world continues to diversify in the wake of the recession and advancing technology, CIOs can no longer hide behind an ‘IT only’ remit. CXO chats with Thomas Cook Group CIO Gary Edwards to discover his thoughts on the CIO’s ever-evolving role. O f the many departments that make Thomas Cook as successful as it is, the work done by the IT staff is something that stays fi rmly behind closed doors. While innovative advertising slogans and whimsical TV campaigns are drawing in dreamy punters, or glossy brochures are being fl ipped through on rain-sodden buses or on lunch breaks in strip-lit offices throughout the world; and while the instantly-recognisable cool-blue tailfi ns of the Thomas Cook planes are descending into view at airports all over Europe at the end of yet another successful holiday… as all this is going on, Thomas Cook’s dedicated team of IT professionals are working diligently away in the background. Such legwork may go unheralded by the consumer, but from within the Thomas Cook Group there is a grateful understanding of the continuous challenges the IT sector of a company with the scope and scale of Thomas Cook must face and overcome on a daily basis. Gary Edwards is Group CIO for Thomas Cook, and when he takes a minute from his busy schedule to cast some thought over the business, he sees an IT landscape ripe for simplification and standardisation. “I am the fi rst Group CIO for the Thomas Cook business. We currently have a decentralised business model where we have 20 CIOs across the group that, over the years, have obviously driven various solutions into the group. So I think the main challenge facing me as Group CIO is to put a group strategy in place. Th is would be achieved by simplifying our IT landscape in order to make it more reliable, drive more efficiencies and fi nd ways to exploit our technology landscape to make us more competitive in our industry sector.” Edwards has only been at the helm since September 2009 and has already undertaken some research that has enabled him to paint a clearer picture about exactly where Thomas cook.indd 41 the Thomas Cook Group can begin streamlining its IT processes. “With some of the statistics and figures I have been able to ascertain while I have been at Thomas Cook, the strategy becomes self-defi ning. What I mean by that is if we look at our application architecture across the group, we have 1200 business applications – far too many for any Fortune 100 company.” Hence, Edwards sees it as a no-brainer that Thomas Cook must seek to simplify its application landscape. “If I look at our infrastructure,” he says, “we have multiple commercial models and multiple solutions in the provision of workplace environments for desktops and laptops, networking arrangements, and most importantly our data centres. So there is an opportunity to standardise and rationalise our infrastructure from desktop through to data centres across the Thomas Cook Group.” Despite a number of inherent good practices already incumbent at Thomas Cook, Edwards is adamant that more can be done to bring tighter standards across the department, and whether that means adopting cloud computing, opting for virtualisation or utilising a utility on demand managed service, he is keen to ensure that the group has a streamlined and standardised approach to its IT services. “There is an opportunity for us to have an IT sourcing strategy that will allow us to align with strategic partners and have true strategic management in place that will be aligned to a group architecture and technology roadmap,” says Edwards. “Th is is a great opportunity to have much more fulfi lling relationships with some key IT partners, but at the same time we can look at our project effectiveness and the way we manage our portfolios. There is always room for improvement, especially when looking at the level of investment we are making and driving the right agendas for the group as we are for the individual markets.” 18/08/2010 15:43 42 IT INTELLIGENCE CIO role Mobilising for growth As Group CIO, and the first one the Thomas Cook Group has employed, Edwards is acutely aware that his role must be clearly defined and accountable, working alongside the CIOs in place in the various countries in which Thomas Cook operates. “My vision here is to move to a classic demand management and supply management model, so I envision my country CIOs reporting into the business. They will be accountable for their local IT strategies, demand management and prioritisation of what they need to do on behalf of the business,” says Edwards. “I also see them being accountable for innovation in the way we use technology in the local markets for portfolio management and for solution management. So they are really shaping what we need to do on behalf of the business.” With Thomas Cook’s CIOs delivering projects, quality of operational services and financial transparency, the Group CIO, believes Edwards, must then be responsible for implementing change, restructuring and growth. “I see the group CIO function as a driver for the right policies, the right standards on a group strategy and on an architectural roadmap, so that helps give us some control frameworks along with the right processes of governance, but then fundamentally we are managing the supply side. In quite simple terms it is a soft ware factory. So creating the soft ware factories and infrastructure, service providers should be managed by the group as a supply chain into the demand being articulated by the country’s CIOs. This gives us better economy to scale.” With clearer management, superior results and performances will occur, but it is not all about the delivery ability of the staff, says Edwards. “It will come via our testing environments, our landing slots for moving things into production environments, which will allow us all to be moving in a similar direction when it comes to the solutions, the applications, or the infrastructure to serve our different local markets. That’s the vision. That’s the challenge. Many CIOs have gone on this journey and have been successful; many have failed.” During the early part of 2010, The Thomas Cook Group – on Edwards’ insistence – focused on prioritising quick wins, putting in processes and governance around the issue of demand and supply and designing how their IT model will work in the new demand-supply model. The next step is understanding the impact that these designs have had on the business and, in 2011, to begin implementation. “Other things we still need to do this year is issue RFPs to a number of the usual suspects that can play in the infrastructure space, desktop networks and data centres,” says Edwards. “Because what I am looking for are global providers. Thomas Cook is a very ambitious business. It has grown considerably over recent years through natural growth and acquisition. We currently are looking at other emerging markets in Russia, China and elsewhere in Asia. We have a good footprint in Canada and North America, and we want to grow that. We are very dominant in the UK and Europe and we want to protect that and do other things in terms of our multi-channel strategy.” Thomas Cook is already in 22 countries and hope to diversify into regions that will pose a different set of challenges. “Such growth,” explains Edwards, “affects our infrastructure provision. We may be going into even more diverse countries than those in the European market, and this calls for more knowledge of data centre provision, data centre strategies, network provision, the future of cloud computing, virtualisation and workplace environments, whether that be desktop, laptops, terminal services or BlackBerries. This entire strategy needs locking down and we need to pick the right partners we are going to work with, which may be some of the people we work with today, or it may be new players.” The effects of the recession hit the travel and tourist industry particularly hard, both in a commercial and an operational capacity. “The recession has had an impact on our ambitions,” says Edwards. “From a strategic point of view we must ensure we retain market share in our traditional business, which is tour operating prepackaged holidays for our customers, of which we have 22 million. Also, more of our consumers are moving towards what we call dynamic packaging where, whether they do this online or go into one of our retail stores or call the contact centre, they want to be able to say: ‘Well actually I want to fly on this day to that destination, and then I want to move on to this destination and I want these hotels because I have already decided where I want to stay.’ So the consumer pre-packages their holiday, which is becoming more prevalent in the industry. Of course, what you have now is companies like Expedia and LastMinute.com that really are technology companies that are selling holidays rather than a holiday company like ourselves that uses technology.” As part of a strategy to manage margins and keep the Thomas Cook Group operating at the sharp end of the sector, Edwards is adamant that growth must be managed and strategised in a more structured manner. “I am looking at our independent businesses as a second gang plank to the strategy, which is where the growth story is, and the growth “The CIOs that are going to make a difference today and in the future are the ones that can bring ideas to the table “ The Thomas Cook Group Thomas Cook Group plc is one of the world’s leading leisure travel groups with sales of around £9 billion (€12 billion), 22.3 million customers, 31,000 employees, a ﬂeet of 93 aircraft and a network of over 3400 owned and franchised travel stores, with interests in 86 hotels and resort properties. It operates under ﬁve segments: UK & Ireland; Continental Europe (Germany, Austria, Belgium, France, the Netherlands, Poland, Hungary, Slovenia and Slovakia); Northern Europe (Sweden, Norway, Denmark, Finland), North America (Canada and USA); and German airlines operating under the Condor brand. The Group operates in 21 countries including India and Egypt. Thomas cook.indd 42 18/08/2010 15:43 IT INTELLIGENCE 43 Delivering change Thomas Cook is in 22 countries 22 million passengers are served annually Thomas cook.indd 43 story is very much about how you use your multi-channels, and particularly how you leverage e-commerce or the echannel for both the B2C model and the B2B model. “I think the third gang plank is many consumers look to us for financial services, whether it’s travel insurance or currency exchange, and there is more we can do in that space of opportunities. Fourthly, we have a lot of acquisitions over recent years in different countries and the opportunity around acquisitions remains. Playing this against the economic backdrop, we need to continue to manage costs because margins in this industry are very, very aggressive: they can range from between two to eight percent, so cost leadership is a key discipline within Thomas Cook.” Using IT to drive more value for money is something that Edwards is adamant Thomas Cook can achieve. “We can cut our current expenditure on IT,” he says. “When you have 1200 IT suppliers you are not getting an economy of scale debate in your commercial model, and so there are definite opportunities to realign that supply chain and to optimise it and to reduce the number of physical suppliers.” From within, the Thomas Cook IT department is keen and eager to implement change throughout the group. And not just in matters of IT, but in cross-channel areas that can help the business to better achieve its objectives. How this will be done remains a constant challenge, but Edwards has identified a couple of areas where the IT department and its CIOs can begin realigning themselves in order to assist the business. “The phrase ‘CIO’ is bandied around too loosely, and when you look at the different individuals that claim the CIO job title, what they actually do varies considerably, and Thomas Cook is no different,” says Edwards. “We have 21 CIOs including myself, and some of the individuals are excellent operational service managers. Some are great at delivering change. Some are good at technology architectures and roadmaps; but they all call themselves CIOs. My personal view is that a true CIO must work very closely with the business, must understand the industry sector, must understand the business strategies, and must be commercially astute and bring to the table how we might exploit technology to leverage things in the business. “An example: It is very easy for the business to turn around and say to a CIO, ‘can you take 10 percent out of the cost?’ and many CIOs will achieve that one way or another. Ten percent out of any cost basis is always a welcome benefit, but if I take Thomas Cook as an example, 10 percent of our IT cost is a drop in the ocean compared to if I can help them innovate their sales process. So if I can take one percent out of that because we re-engineered processes or we stopped duplication in business processes across the countries, if we can exploit the technology to help the group do something in a different way, then the prize there is far greater than me just saving 10 percent of my budget.” This is an area where the CIO community can add real value to an organisation. CIOs and their IT departments have had an increasingly difficult task in recent years, and the struggles of the recession have brought home just how important it is for every sector of the business to not only prove its value and fight for its existence, but also to augment its skills sets in order to bring more profitability to the business. “A CEO merely keeping the lights on or having a strategy that helps simplify IT is the bread and butter part of the job. The CIOs that are going to make a difference today and in the future are the ones that can bring ideas to the table with the business about how to actually transform the business and exploit technology to help them do that. I think the trick is recognising that the technology industry is about to hit another wave of change. Whether we wrap that up around cloud computing, around the convergence of the workplace environment, or whether we look at the power of the bandwith that is available through networks that could change the business operating model with home workers. In IT we have these periods when there is a new wave that really opens up the way we do business, and I think we are just about to embark on the next one, but it is something that needs to reach a bit more maturity yet.” 18/08/2010 16:25 44 INDUSTRY INSIGHT Social network analysis – a new weapon in the ﬁght against credit card fraud Analysing and bringing together readily available information from social networks can help to combat credit card fraud, says Françoise Soulie Fogelman. W Françoise Soulie Fogelman is VP Strategic Business Development, KXEN and has 30+ years experience in data mining and CRM, ﬁrst as a professor directing research into neural networks. She then co-founded an OCR business, started the Data Mining and CRM group at Atos Origin then - before KXEN - ran a business intelligence and CRM company. KXEN.indd 44 hen police raided 84 separate addresses across Europe, the US and Australia one day in June and arrested 178 individuals, it was the conclusion of a two-year investigation into credit card fraud and related crimes that had netted more than €18.5 million. But when taken against a card fraud total of €5.3 billion in 2009 according to the Nilson Report, the gang’s efforts were just a drop in the ocean. And as over-the-counter transactions involving credit cards get progressively more secure, the focus of criminals is increasingly the online world. Yet current detection and prevention mechanisms tend to be too slow to effectively fight this kind of fraud, often not highlighting problems until a bad card has been used several times. For a long time credit card fraud detection has been rooted in data analysis techniques first developed in the 1980s, mostly with systems built around neural networks and decision trees. While these can work adequately for cardholder present transactions where volumes are relatively low, they have not translated well into the online world where transaction volumes are much higher and speed of authorisation is everything. Nor do they spot the links between frauds that give away organised crime. But now a new analytical technique, social network analysis, has entered the war against credit card fraud. Augmenting the already established detection methods, it promises to help lower significantly the risk of card fraud. Instead of mining historical transaction to detect fraud, social network analysis instead maps the complex networks of relationships that exist between frauds, cards, cardholders, transactions, merchants, industry sectors, phone numbers etc. If two or more of these network nodes share something in common – for example the same card used at two different merchants – then a connection exists. Add many thousands of nodes, plot all the connections between them, and soon patterns emerge that can help reveal fraud. For example, two cases of fraud may involve different cards and cardholders but the same telephone number or email address may have been used to make the fraudulent purchases. Further investigation may reveal other common factors with other cards (nodes) in the network and previously isolated groups – or islands – of fraud suddenly come together and start to make sense. It is being able to visualise these networks with hundreds or even thousands of nodes that is crucial to fraud detection. When multiple node types enter the equation – for example cards and merchants – there are potentially many millions of nodes in the network. The task of mapping then becomes massively more difficult, as does navigating around them. The use of highly automated soft ware tools can greatly ease the process and make results available in the minimum possible time. Leading the field in social network analysis is the data mining automation vendor KXEN. Its social network analysis soft ware module, KSN, is well proven with international telecommunications operators in combating customer churn. Now the technology is behind an initiative to fight online credit card fraud with a major European financial consortium. Early results show great promise and single figure percentage reductions in fraud are already being projected. With the scale of the crime as large as it is, even a small reduction can add up to tens or hundreds of millions of Euros saved. Better still, the results of social network analysis can be used to augment the findings of the traditional analytical techniques used in detecting fraud. This can add significantly to the efficiency of an existing predictive model in determining which transactions are likely to be fraudulent. As it is now acknowledged that the large majority of credit card fraud is committed by organised gangs – something which social network analysis is most effective at detecting – the case for social network analysis becomes all the more compelling. 18/08/2010 15:41 KNEX AD.indd 1 11/08/2010 15:21 46 CUSTOMER RELATIONSHIP MANAGEMENT LOCAL COUP Ian Clover discovers how businesses are using a new social media tool to attract customers in their own neighbourhoods. GROUPON ED P46-49indd.indd 46 18/08/2010 16:07 CUSTOMER RELATIONSHIP MANAGEMENT 47 L ying crumpled on coffee tables, stuffed into pockets, slid absentmindedly into wallets and overlooked in the classified sections of local newspapers, coupons have had a hard time of it in the 21st century. Ostensibly a great money-saving device for consumers and a handy commercial tool for small businesses, in reality the coupon has suffered from something of an image problem for decades. Coupons are not cool. They are hardly complementary to the lifestyles led by those consumer groups that most media target. Pensioners and the poor know their true worth and will use them whenever possible, but social climbers, the hip iPhone owners and pretty much any group with a discernible disposable income will be averse to cutting out coupons, collecting stamps or deviating from routine in order to take advantage of certain offers. There are exceptions to this rule of course. Supermarket ‘buy one, get one free’ deals and bars offering 2-4-1 cocktails fi nd that this approach to discounting goods certainly works, but only because purchases are made on impulse; there is no (or little) forethought involved – acting on a whim and ‘getting a good deal’ are acceptable social actions for even the most ABC1 consumer groups. Going local Loyalty and genuine value are invaluable commodities for companies of all sizes, and something coupons were originally designed to engender. But today’s fast-paced, hyper-connected world had left the coupon behind, until late in 2008 when Andrew Mason, founder and CEO of Groupon, hit upon a novel idea. Channelling the twin energies of group buying power and local knowledge, Mason developed his Groupon idea (the etymology is, quite obviously, derived from ‘group’ and ‘coupon’) as a deal-of-theday website, where local companies could offer their services or products at vastly reduced rates, provided enough people signed up to the deal. If the predetermined minimum was not met, then the deal no longer stood, thereby reducing risk for retailers. Soon enough, word spread throughout the cafes, restaurants and side streets of Chicago about Groupon’s value as a sales tool for local businesses and a real-time, easy-to-use discount platform for consumers. Almost 80% “If you look at commerce on the Internet of Groupon over the last decade, there haven’t been too subscribers are many amazing breakthroughs other than the female shopping cart and the innovative marketplace that eBay created,” says Rob Solomon, President and COO of Groupon, and Andrew Mason’s right-hand man. “But we have seen that the web has now evolved into this sort of social vein, and Groupon is one of the fi rst apThey are plications that not only deals with traditional primarily in commerce, but social commerce and, more the 18-34 age interestingly, local commerce, which is what bracket first got me excited.” Groupon’s impact has been immediate. The Internet has long been used as a place for commerce, but Groupon was the fi rst site to tie together the large-scale buying potential that the Internet possesses with local products and services. In other words, it meant that consumers could seek out deals and discounts online that were redeemable around the corner, down the road, or across the street. “E-commerce is a gigantic category, but it is very small compared to the overall commerce category,” says Solomon. “What Groupon does is allow people to buy products and services from local merchants GROUPON ED P46-49indd.indd 47 for the fi rst time in large scale, and that’s very intriguing – the combination of local, social and real-time ability to buy things.” Local businesses were quick to see the value in Groupon. They saw a real-time website that offered them the opportunity of global exposure for 24 hours, with no upfront advertising costs and the chance to entice many hundreds of customers with a predetermined deal. “The Groupon model has solved two major problems for local businesses,” reveals Solomon. “Firstly, for merchants in the physical world, they were never really able to leverage the Internet in a big way, even if they were using Google or something like that – they would only attract a small number of customers. But with Groupon, a restaurant or an activity or a health club can run an offer and we can literally send them anywhere from a few hundred to 20,000 new customers, all within a one-day send. “For most of the local businesses, the traditional methods they have used, like Yellow Pages directories and local newspaper advertising, just don’t work anymore. And any great Internet solutions that worked for Internet sites and e-commerce companies similarly do not work for local How does Groupon work? Rob Solomon and Daniel Glasner explain how the Groupon model works. “O nce a business has agreed to sign up, we work on creating an offer. Our sales people put together a deal that is compelling, creative and interesting. We take care of everything from a marketing perspective – writing descriptions of a service and even taking professional photos if need be. We word the offer in complete concert with the merchant, and we handle the transaction. All the business has to do at this stage is wait for the customers to come through their doors and redeem their Groupons. The business tells us how many customers they would like to acquire and we work on that. The ‘Tipping Point’ is the stage where enough people have bought the deal for it to go through. If not enough people buy, then the deal doesn’t happen – credit card payments are only taken once the deal is conﬁrmed. Our sales team work with the merchant to set the ‘Tipping Point’, and so the more creative or compelling the offer, the better it usually does. Aside from this sales conversation, we provide them with everything, so the upfront work a merchant has to put in is minimal. A merchant gets a full 24 hours of exposure on the website, and 97 percent of these want to run again after their promotion ends, so there’s a big pipeline backlog. From a customer perspective, they register online, tell us what city they are in and they will then receive a daily email alert telling them the deal of the day. The great thing is, customers can simply keep an eye on that day’s deal and, if they are interested, buy a Groupon. If not, they can simply wait to see what tomorrow’s deal has in store for them. Once purchased, the Groupon has a shelf life of approximately two months, so you don’t even need to redeem it on the day of purchase, which means that you can stockpile great deals in advance of birthdays, stag weekends and other special occasions. ” 18/08/2010 16:04 48 CUSTOMER RELATIONSHIP MANAGEMENT businesses. So it solves a major problem for a local merchant. If a restaurant gets 10 or 15 new customers a day over a one-year period, that changes the profitability and dynamics of their business, and this is exactly what we are doing for these merchants. We’re helping them acquire new customers in the most cost-effective way possible.” Customer relationships The Groupon model is perfectly placed between these two stools of retention and attraction, making it an attractive tool for all types of SMEs. “Groupon presents a pretty risk-free proposition,” admits Solomon. “With most advertising you have to pay up front, but with our model you pay nothing up front and you only pay for a delivered customer, meaning we consummate the transaction on our platform. So any time somebody buys a Groupon for, say, a cupcake bakery or a Pilates studio, we are actually delivering real customers that have already paid for the service. “So for a merchant, there has never been an advertising model where you only pay when you actually receive a customer, and a paying customer at that – not just somebody who walks through your door, but somebody who has already bought something. Th is is a paradigm-shift ing advertising model, and I think that is the main reason why we are achieving such stratospheric growth.” Solomon is not wrong – Groupon is growing quicker than both Amazon and eBay did. Having started life in November 2008, the company is now estimated to be worth US$1 billion (€770 million), and in April this year attracted a US$135 million investment from Battery Ventures and DST, an Internet investment group with a large stake in Facebook. There are more than six million Groupon subscribers worldwide (up from just 400 in November 2008) and more than 5.5 million Groupons have been sold, saving a total of $230 million. “In North America, Groupon is in about 60 cities, and in Europe we are in approximately 80 cities. We’re in just about every major country in Europe, and our next challenge is to get even more hyper-local,” says Solomon. “We’re in the major metropolitan areas right now, but suburban areas and smaller towns have a need for this service as well, so I think that we are going to focus more and more on going hyper local.” Ahead of the curve The danger with innovation is that there is quickly a gaggle of ‘metoo’ websites springing up looking for their share of the market. Groupon and MyCityDeal were able to collaborate rather than compete because they catered for two very different markets, but there have been a number of websites emerge looking to hitch an easy ride on the back of Groupon’s success. “A lot of people discount this but there’s a huge advantage to being the first mover,” says Solomon. “You are the site that everybody recognises within the category. Back in 2004 when YouTube was launched there were literally 125 video companies running around Silicon Valley trying to get funding. I think the reality is we’ve defi ned this category, we’re the leader in the space, we have massive scale on the consumer and merchant side, and we’ll continue to dramatically grow that scale. A lot of the social features and merchant tools that we are building will create consumer lock-in – other clones that come into the market will be called ‘Groupon-this’ or ‘Groupon-that’, which means that in real time we are becoming the verb, the brand that’s defi ning the space. “ After such exponential growth, Groupon is now tasked with taking the market further. The company has managed to achieve such growth without yet really embracing the full potential of the smartphone market, which is European expansion In Europe, Groupon acquired MyCityDeal, a Berlin-based startup that followed a similar model to Groupon and made its fi rst deal in January of this year. “After our fi rst deal in Berlin, we started building out to other cities in Germany, then into additional countries in Europe, starting with the UK and France,” says Daniel Glasner, MyCityDeal co-founder and Groupon Managing Director for Germany. “It soon became obvious that it would be a match made in heaven to have the US market leader and the European market leader collaborate. So we started discussions with Groupon and immediately realised that there is a perfect match in terms of culture, understanding and vision. Our view on customer relationship and partners was the same and, given that, it became quite obvious for both sides that it would be a perfect match. “We had been growing quite fast before getting together with Groupon, but clearly with them on board we can now service our customers, partners and merchants better and acquire new markets.” Solomon agrees. “The founders of MyCityDeal are amazing entrepreneurs and were the best team that we saw in terms of execution. We could have entered the European market and competed with them, but we thought joining forces and becoming the undisputed market leader made sense. The logic behind us acquiring MyCityDeal meant that we could be in 18 European countries very quickly.” GROUPON ED P46-49indd.indd 48 18/08/2010 16:04 CUSTOMER RELATIONSHIP MANAGEMENT 49 an area in which Groupon is eager to make its mark in the very near future. “Social media is a very important part of our business, and it clearly allows us and our offers to be spread very quickly,” says Glasner. “The deals are live for a very short period of time – just 24 hours – and one important part of our model is knowing that our customers like the deal and send it around to their friends via social media forums. Andrew Mason calls it ‘social commerce’, because it’s all about group buying: bringing friends together in order to get a good deal and then spending a day out together in that restaurant, or that spa, or even rafting together.” Solomon is equally excited by the potential that the smartphone market and social media can bring to the business. “We already have iPhone and Android apps, but this is just a small part of our business right now. In the future, I imagine that they will become a huge part of our business. Our growth has been down to the socialisation of the Web, and by that I mean the Facebook and Twitter phenomenons, which assists collective buying and is a huge driver for our success and growth.” Facebook tells us who you are. Twitter tells us what you are doing. The ‘next big thing’ focuses solely on the next obvious evolution of social media – where you are – and has already happened. “We know the Foursquare guys well,” says Solomon. “We have had conversations with them Less than 1/3 of Groupon subscribers are married GROUPON ED P46-49indd.indd 49 80% of Groupon subscribers possess bachelor’s or graduate degrees and hope to be partners over the coming months and years, because I think Groupon will be one of the main monetisation platforms for businesses like Foursquare: they focus on location-based checking in, we focus on local selling, and so it’s a perfect marriage.” Other features in the pipeline for Groupon include mobile payments and receipts (showing your coupon on your mobile phone rather Fast Facts: Groupon than a printed-out version) and a richer social conversation online. • More than 6 million “There are a lot of reviews already subscribers today, up from written about the deals we run,” says 400 in November 2008 Solomon. “And we have introduced a really interesting feature called • 70 North American markets Two-Way Ratings. Traditionally, including Chicago, New consumers have been able to rate York, Boston, Los Angeles, businesses, but with our model busiWashington, DC, Atlanta, nesses know who the consumers San Francisco and Toronto are, so we’ve done a fantastic job of closing the loop from advertisement • 16 countries among North to transaction, and now merchants America and Europe via can rate consumers. They can sing acquisition of CityDeal in the praises of a fantastic customer, May 2010 and that’s really interesting and potentially rewarding. There will be a • 900 employees, up from 7 in lot of features coming on board that November 2008 will allow and encourage more social feedback, but if I told you about these • Most Groupons sold: US$12 then I’d have to kill you!” for 75-Minute Chicago While local businesses will Architectural Boat Tour, continue to reap the benefits of the 19,894 sold Groupon model, Glasner does not rule out the possibility of collaborating with multinational companies at some point. “I can imagine working with big brands because they usually have very high demands in terms of target groups, and so that could be a specific way in for Groupon – to identify and determine their customers in a more local, regional or demographic way. Having said that, we are in the local Internet business, and our core is clearly helping local businesses.” Besides, being local does not necessarily mean being small-scale. “I see us growing from a few hundred cities to probably thousands of cities over the next five years,” concludes Solomon. “Currently we have more than six million subscribers; by the end of the year we’ll probably have 16 million, and double that by the end of next year… this creates amazing reach for our merchant audience.” The Groupon business model is, much like every successful business innovation of the past few decades, devilishly simple. Consumers love it and merchants love it; they both win out, as does Groupon, which takes a cut of every deal done. Businesses receive increased revenue, increased exposure and increased footfall as word spreads; they can then receive and offer feedback, and follow up their initial deals with other, more targeted and specific offers for a local and connected consumer base. This is the future of customer relationship building, and it’s only just begun. 18/08/2010 16:04 50 ASK THE EXPERT Making support social Corporate participation in social media has been largely driven by the marketing department. Tim Hines, Vice President of Product Management at Consona CRM, believes that service and support has an even more important role to play. M ost Internet users aren’t just passively consuming content; they’re creating it: rating, commenting, blogging, tweeting and collaborating. As a result, social media is fundamentally changing how businesses and their customers interact. Naturally, marketing wants to get in on the phenomenon, and so they should. But nowhere will the impact of the social web be stronger, or more beneficial, than in service and support. It is true that marketing is pioneering the enterprise’s involvement with the social web. But for them, it is a double-edged sword. Brands are no longer in the control of advertisers or the PR department, but in the words, messages and even videos of consumers. Th ings are different for Service and Support – customers have always helped each other, and social technologies give them new, more scalable platforms for helping even more. Service and support owns the ‘use’ part of the customer experience, while social media amplifies the voice of the customer, providing new ways to listen and learn from customers. Social isn’t a threat for service and support – it’s a force multiplier. There is a proliferation of social technologies, but a small number of integrated features can help make support social. Support forums are the most popular social technology for service and support, but most communities are not well integrated into other pieces of the service website. As a result, they are used less than they should be. Knowledge inside the communities should be harvested for the knowledge base as support professionals use it to solve customer problems. And enterprise employees should have a light- Consona.indd 50 weight, respectful, but visible presence in the community: letting customers shine, never being defensive, but adding their voice to the conversation when it can bring clarity or closure to topics. Blogs are another easy way for service and support to deliver information while building relationships. Most support content is impersonal: knowledgebase articles, FAQs and documentation have a deliberately corporate feel. Blogs, on the other hand, reflect the voice and style of an individual, generally an executive or subject matter expert. As such, blogs humanise the service experience, making support less transactional and more conversational. Blogs are also great for addressing high-priority emerging issues. Postings can be easily shared so others can spread the word on their own blogs, status updates or forum postings. Popular blogs score high in search engine results, giving them more prominence than a knowledgebase article. Status feeds integrated into knowledge and incident management applications can turbo charge productivity. Sure, it’s nice to hear from your friend on Facebook that ‘Snuffles had a great day at the dog park,’ but wouldn’t it be better if a colleague’s status is ‘I just figured out how to work around the data dump bug in version 3.3?’ No offense to Snuffles, but we think the answer is an unequivocal ‘yes.’ People are people first, employees second. The integration of social networking into enterprise applications – ‘social in the workflow’ – provides an informal communication channel that is crucial to real team building. Th is is especially true with global teams and work from home staff –social in the workflow is replacing the disappearing water cooler. Finally, most knowledge management teams we talk with would like to create multimedia such as how-to videos. But budget pressures and a lack of appropriate skills often make it hard for them to do as much as they would like. Th is is where customers can jump in. Support organisations should make it easy for customers to contribute tips and tricks, knowledge articles, code samples, and multimedia how-to’s and training. There can be as much or more knowledge outside of service and support than inside. By embracing a suite of social capabilities integrated with each other, with knowledge management and with incident management, enterprises can channel the passion of customers to drive greater customer satisfaction and success. Tim Hines is Vice President of Product Management at Consona CRM. Hines began his career as an AOL tech support representative and soon moved into management. He then worked in Andersen Consulting’s CRM internal practice. After leading implementation efforts in marketing automation, he joined Consona (then Onyx) in 2002. Hines guides the product roadmap and functionality across Consona’s CRM product lines. 18/08/2010 15:37 CONSONA AD.indd 1 11/08/2010 15:14 52 CARBON MANAGEMENT LOW CARB DIET On April 1st 2010, the Carbon Reduction Commitment Energy Efﬁciency Scheme (CRC) went live in the UK amid not a little confusion as to how the scheme works. CXO spoke with Npower’s Head of Business Energy Services, Dave Lewis. The CRC is a recent scheme that is highly incentivised, so could you tell us how businesses are responding to it so far? Dave Lewis. Well I have to say it is difficult to assess at this early stage, although we do know that only quite a low proportion of companies have registered so far. Registration opened on April 1st and will run up until the end of September, but the registration level is currently running at between five to 10 percent, which is approximately 5000 companies that are impacted by the scheme, a figure that is surprisingly low. I must admit, some of the more high-profi le names I thought would have pushed for a fast registration have failed to do so, so it does seem that there is still quite a bit of work left to do for a lot of companies. It also suggests that there is maybe still some concern about what is required of these companies, such as how to gather and manage all the information that is required because it is a very bureaucratic process. In summary, I think that companies are struggling a little bit with the new legislation – we have had conversations with companies that initially thought they had it all under control, only to then turn to us to do it for them because they realised that it was far more complicated than they maybe appreciated. GREEN IT ED P52,53.indd 52 If a company has not registered in time for the September cut off point, are they then penalised? DL. Absolutely. The environment agency has a very clear view of whom they expect to be impacted by this, so they have a good idea of all the sites that should be registered, which is any company that has a half-hourly electricity meter. At best guess this is about 20,000 organisations. The benchmark is as follows: if a company, through their half-hourly electricity meters, consumed more than 6GW hours of electricity in 2008, then they are a full participant of the scheme and therefore have to register and manage their carbon under the CRC process. How are these 20,000 companies being contacted to ensure they are aware of their obligations? DL. They have been contacted by us. Npower has been asked by the environment agency to mail out to all of the sites that have these halfhourly electricity meters to inform them that they are impacted. But, with all the best will in the world, this has proven a sizeable task. Our information is sent to billing addresses, so the guidelines are often reaching no farther than the accounts team, not energy managers or fi nance directors – the guys who are really impacted by all this. Our requirement from the government has been to get these declarations signed off by a board member of a sufficient level that the environment agency is satisfied with. There are thousands of companies out there that are in the sights of the environment agency, and they need to know it. In response to the introduction of the scheme, you set up a CRC Assist programme. How can this scheme help businesses to get on board and better manage their carbon output and energy use? DL. CRC Assist is a very specific product. We are agents under CRC, so we can represent organisations as part of the CRC scheme, and we are also registered agents with the environment agency, so we can effectively manage the whole process for an organisation. In this instance, we will tell them what to do, we will source the data for them; we will run the data management process for them. Everything that they need to do to comply can be done via our CRC Assist scheme, which covers the basic steps. There are other things that we can assist with in order to make a company’s registration process successful. In the early days of the scheme, having smart metering installed in your portfolio earns you extra credit as an early action, which then builds to extra, subsequent credit depending on how much smart metering you have in your portfolio. Also, being accredited to the Carbon Trust Standard shows that your company has an energy management scheme in place, which can also earn more credit. 18/08/2010 15:46 CARBON MANAGEMENT 53 There are many equivalents to the Carbon Trust Standard too, so we can work toward getting companies accredited under those standards as well. Our aim is to ensure companies understand how to run their energy management programmes and reduce their energy consumption because, ultimately, CRC was started as simply the Carbon Reduction Commitment, and I think companies have become confused, asking ‘is it carbon trading?’ or ‘Is it the EU Emissions Trading System?’ It is neither. Th is is about energy reduction, using less energy. The scheme does support, however, a Carbon Allowance Purchasing Scheme. How does this work and how have companies responded to it so far? DL. In the early part of the scheme, which is called the introductory phase and is three years long, a company can buy allowances for whatever is required; it is at a fi xed price, so a company has to calculate its carbon allowances and its carbon footprint, purchasing allowances for what it thinks its footprint will be in the following year. So a company covers its future year’s allowances. For example, in April a company can buy allowances to cover its future year consumption and, at the end of the year, it can surrender them. The idea is to buy enough to cover allowances, which means a company has to understand exactly what its footprint is and also anticipate any changes to its footprint throughout the year. So it might be that a company is expanding and acquiring sites and so has to buy more carbon, or a company might need less carbon allowance because, fundamentally, it is becoming more efficient. Therefore, a complete understanding of a company’s carbon footprint is important because allowances are purchased for a full footprint, irrespective of what gets recycled back to the company. Th is is quite a large cash flow requirement, particularly if a company purchases every ton of CO2 in its portfolio – carbon is priced at £12 per ton (€16) which, if you are dealing in electricity only, will add £6 (€8) a megawatt hour to a company’s electricity bill. Despite the cost, is it easier for companies to simply buy more carbon allowances rather than follow the course of long-term investments in energy-efﬁcient techniques to ultimately lower their carbon footprint? DL. Well this is why the scheme is structured in the way that it is because, ultimately, a company gets a recycle payment, and in the fi rst year they get a minimum of 90 percent of that cost back because the penalty band is plus or minus 10 percent. However, in order to purchase a full allowance, there is quite a big cost involved, which is what will discourage companies from significantly overburdening just to be safe because too much carbon allowance purchases becomes quite a burden in itself. Companies could play it safe, sure, but then they would have to manage the cost impact of that on their business. So the government’s aim is to instigate a change from the bottom up – do companies grasp this? DL. They do, yes. In addition to the Carbon Allowance Purchasing Scheme, the environment agency is also publishing a lead table. At the end of every year of the scheme, each of the registered organisations will be ranked according to their performance under CRC. How it gets measured will change a little bit throughout the scheme, and that bit is quite complicated, which is why we have products to help organisations perform better in terms of their energy management and so rank higher up on the lead table. This has two impacts: reputation and fi nancial – the better you do, the more industry respect and money back you receive. GREEN IT ED P52,53.indd 53 Green IT facts Datacentres produce approx 0.3 percent of the world’s CO2 emissions. The airline industry produces 0.6 percent, and the steel industry produces 1.0 percent. A PC with a screensaver going can use well over 100W of power, compared with only about 10W in sleep mode. That's why powering down PCs in the ofﬁce saves both cost and carbon. The money that the scheme raises is recycled fully back into it, but how do the companies beneﬁt from this? DL. There are no stipulations attached to the money that gets recycled back: a company pays it in and, six months later it all comes back out again to the participant. Ultimately, though, the ones that really benefit are those at the top of the lead table – leaders are rewarded with a bonus, while those at the bottom get a penalty. Over time, this risk band increases. In the fi rst year it is plus or minus 10 percent, rising to 20 percent next year and so on, up to 50 percent after five years. In the economic downturn, companies will obviously focus on cutting costs rather than carbon, so what would you say to the decision makers of companies who are reluctant to cut carbon right now? DL. I think you do both. Energy is no longer a cheap commodity. It varies in price, quite significantly, and the market has moved a lot in the last couple of years. By banking carbon savings you are banking the value of that carbon, and so you are banking good energy savings. Th is potentially incentivises a company to do more rather than less because it makes the paybacks more attractive. Hence, I would suggest that those issues that were borderline before are now more attractive because there is that potential of fi nancial gain, coupled with mitigating risk under the lead table and moving up it. 18/08/2010 15:46 DATA STORAGE 54 What’s in store for data centres? Jim Borendame speaks to CXO about the various strategies ﬁnancial institutions face when meeting the challenge of storing data efﬁciently, securely and cost-effectively. T wentieth century British politician Herbert Samuel once remarked that ‘a library is thought in cold storage’, which is a phrase that succinctly encapsulates the challenge of organising, compartmentalising and enabling easy access to a vast wealth of information. Here in the 21st century, the challenges of delivering accessible storage to data have evolved in line with the explosion of technological advances and customer-driven demand for information, service and speed. There are vast quantities of data that carry an ever-growing weight of importance and sensitivity, particularly in the fi nancial sector. The problems associated with storing such a wealth of information are manifold, not least the issue of cost and energy efficiency. “Managing data centres for energy efficiency is one of the key efforts in helping Wells Fargo obtain its greenhouse gas emission reduction goal and operating efficiency requirements,” says Jim Borendame, Wells Fargo’s Executive VP of Enterprise Hosting Services. Wells Fargo has a goal to reduce its US-based greenhouse gas emissions by 20 percent below 2008 levels for 2018, and has looked at a variety of ways in which to do so, starting with its data storage strategies. “To drive efficiencies in our data centre, we take the approach to stabilise, standardise and optimise. “We’ve successfully employed standardised service offerings and accomplished strides in server, storage and network virtualisation, with over 10,000 virtual devices currently in place,” says Borendame. A more efficient and optimised approach to data storage has proven beneficial Date centre 54 on many levels, not least cost. “The benefits from these efficiencies are remarkable, including decreasing costs – up to $250 million in avoidance by negating the need to create a new data centre alone – while increasing computer power and reducing energy consumption.” Longer storage life "Managing data centres for energy efficiency is one of the key efforts in helping Wells Fargo obtain its greenhouse gas emission reduction goal" Although cost is often seen as the key driver for optimising data storage, there are a number of secondary benefits that result from reducing energy output and streamlining the data server environment. “We try to manage and extend the life of our data centres by increasing energy efficiency through our Service Life Extension Programs, ‘right tiering’ applications, consolidating and retiring less efficient or secure facilities, benchmarking data centre operation and design to industry standards and continuing to optimise data centre use and operations,” says Borendame. A service life extension programme focuses on renewing and renovating existing data space in order to update and modernise pre-existing centres along the lines of current design techniques while simultaneously harvesting and recycling sections of the previous data centre with newer technology. Wells Fargo is committed to maximising the life cycle of its data centres as part of its future growth plans. “By leveraging size and scale, eliminating redundancy and inefficient processes in our data centres and focusing on standardisation,” says Borendame, “the infrastructure will be strategically positioned for a continual increase in transaction volume.” 18/08/2010 16:01 SCHNEIDER AD.indd 3 11/08/2010 15:23 DATA STORAGE 56 Such streamlining is just one aspect of the innovation that has helped create a whole new way of thinking when it comes to data storage. Culturally, attitudes have shifted dramatically as technological storage needs have increased, accelerated by mobile computing, to levels never seen before. “By installing energy-efficient and virtualised servers we are combating the issue of under-utilisation, which reduces energy consumption by as much as ten to one,” says Borendame. “Th rough server virtualisation we enjoy a simpler operating environment, which in turn reduces our power, support and maintenance costs. “During this time of integration we are also making many optimisation choices between our investments and the need to stay nimble and flexible – customising where it counts, standardising whenever possible. Our infrastructure is on the front line of the customer’s experience and we continue to stay focused on the end-to-end picture, utilising technologies that provide robust benefits of availability, time to market and energy efficiency.” 64% of Americans now pay bills online Not all virtual Lean and green There are also green concerns too, which can have a huge impact on how customers view their bank. “Green technology is a factor in data storage and all of our IT initiatives,” continues Borendame, “because it supports our customer experience and efficiency requirements. Green IT allows us to deliver better availability, simplify our environments and help us make the right investments, which is crucial as we execute on one of the largest fi nancial mergers and technology integrations in fi nancial services history.” Wells Fargo and Wachovia merged in late 2008 and were immediately faced with the challenge of ensuring that their data centre power and space would be of sufficient standard, size and cost-efficiency in order to not become a drain on the new partnership’s overall objectives and goals. Allied to Wells Fargo’s pre-existing commitments to energy reduction and a greener future, a sizeable challenge now faces the bank, not least in terms of changing the culture of the IT department. “Wells Fargo’s GHG reduction goal drove the need to increase server virtualisation,” explains Borendame. “One of the challenges we faced in fi rst beginning this effort was addressing the change in culture that virtualisation would bring. We had to alleviate any fears or doubts that our business partner had by eliminating exclusion reasons for virtualisation. “We have shown virtualisation’s positive impact on the infrastructure through our aggressive efforts in 2009. Last year, 70 percent of our servers used standardised shared service offerings with 41 percent leveraging virtualisation. Today, we currently have in excess of 10,000 virtualised machines consuming less than six percent of the space and power of a physical server, allowing us to stretch the life of that data centre and add capacity while reducing our resource strain.” Such impressive figures surely point the way to a virtualised future, yet Borendame is reluctant to countenance a complete shift to virtualisation. “With more than 50,000 servers in production, we won’t ever be 100 percent virtu- Date centre 56 alised,” he admits, “nor should that necessarily be the goal. However, our physical-to-virtual efforts will be an ongoing discipline and we’ll continue to expand its footprint into other areas, to an extent whereby virtualisation is seen as one of our standard approaches.” One such approach toward virtualisation is the cloud, which is being leveraged by Wells Fargo on an internal basis in order to raise the bank’s efficiency and agility, particularly when faced with the proliferation of mobile computing. “We see increased storage demand from customer web access for electronic records, such as check images, statements and the like,” says Borendame. 58% of Americans now receive paperless statements As the need for greater capacity continues at such an impressive pace, Wells Fargo’s efficiency, cost-effectiveness and environmental footprint will all come under greater pressure to perform satisfactorily. Borendame is aware of the challenges that lie ahead and is convinced that the protocols, procedures and plans that he has put in place will set the bank in good stead for the foreseeable future. “We will continue to focus on increasing our hardware efficiency, which includes our virtualisation and storage density efforts, refreshing technology and next-generation mainframes. “We are also seriously assessing product engineering in our energy labs, with power consumption and space as key design criteria in all products. Additional objectives include our commitment to continue to increase energy efficiency through thin-client provisioning, ATM enhancements, recycling and telecommunication.” In Minneapolis, Wells Fargo’s water-side date centre has been well-received; viewed as an efficient, sustainable and effective means for data storage, this is one arm of the organisation that is most defi nitely non-virtual, but important and innovative all the same. “For five months or more each year,” explains Borendame, “the free cooling for our air conditioning system provides water that is chilled sufficiently by outside air to directly feed the data centre with cold air. Th is has resulted in a 15 percent energy-use reduction and a half-million cost saving annually.” While this water side economising is nothing new, it has rarely been embraced by IT departments for the specific purpose of data center storage. “For Wells Fargo there were very few implementation hurdles because our engineering and operating teams had experience with free cooling,” says Borendame. “Our primary focus has been to fi ne-tune the system with the cooling towers for use during extremely cold weather, although there is no particular technology out there that is enough to determine where we located our data centres; we consider many factors when making this decision.” A multi-faceted, long-term and carefully considered approach to data storage can not only help manage costs, but is also the ideal strategy to adopt when dealing with exponential growth, environmental concerns and energy efficiency – all factors that need to be addressed as the financial world continues to evolve. 18/08/2010 16:01 ASK THE EXPERT 57 Non-stop business Paul Tyrer outlines and emphasises how important an uninterruptible power supply can be to your company’s IT department. I Paul Tyrer is Vice President, UK, Ireland, Nordics & Baltics, APC by Schneider Electric. He joined APC in 1994 and has held various management roles as his career has developed. In 2002 he became Director of Channels & Partners, EMEA to develop business for InfraStruXure, APC’s solution for on-demand data centres. He has served the company as country VP since its purchase in 2007 by Schneider Electric. Schneider electric.indd 57 t is difficult to envisage any business that could function effectively without IT in this day and age. In fact, anecdotal evidence suggests that even when businesses are failing or unprofitable, they continue to invest in information technology. In recent years, this increasing dependency has been fuelled by great leaps forward in technology and a buyers’ market. Today, most would agree that the best place to house new generations of compact and powerful IT servers is in dedicated computer rooms and data centres. Irrespective of whether you choose to build your own facilities, outsource your IT infrastructure or elect to have your IT supplied as a service, a key objective will be to ensure continuity of services. Until recently, IT availability has been pursued at almost any cost, with highly resilient infrastructure designs the order of the day to ensure power and cooling for IT, irrespective of the mains power supply condition. But escalating energy costs coupled with concerns about the environmental impact of increasing numbers of data centres has stimulated action from the EU in the form of the Code of Practice for Data Centre Efficiency. As a result, the consultants responsible for data centre design and build and the manufacturers that supply the plant to power and cool these facilities have started to give primacy to the need to ensure energy efficiency. Th is has led to a number of changes to the uninterruptible power supply (UPS), the piece of equipment that protects IT equipment against the loss of the mains supply. In the first instance, designers have sought to more closely size the UPS exactly to the load being protected. Oversizing of the UPS not only has consequences for capital costs, but also drives up operating expenses such as energy and service costs. The introduction of scalable data centre physical infrastructure is therefore a key enabling technology for reduced total cost of ownership. By taking a building block approach to UPS protection, modular architecture enables additional power modules and battery cabinets to be deployed as a ‘pay-as-you-grow’ solution for growing IT estates. The system can be scaled back too: virtualisation enables organisations to reduce the number of physical servers it requires to run many of the applications required for day-to-day activities. Scaling down physical infrastructure at the same time affords the opportunity to maximise potential energy savings and, therefore, cost and environmental impact. At the same time, modularity brings benefits by enabling service parts to be kept on site and by reducing the complexity of maintenance. Mean time to repair (MTTR), together with mean time between failure (MTBF) are the measure of availability. By making important components such as power modules user replaceable, time to repair can be decreased, thereby improving the availability of the power protection plant. A major cause of UPS failures is as a result of service visits, and simplifying maintenance routines plays an important part in reducing this hazard. The data centre sector is in the process of adopting the power usage effectiveness (PUE) metric as a gauge of electrical efficiency. The measure is based on the proportion of facility energy that is used to power the IT equipment hosted in the data centre. Ensuring that electrical infrastructure is scaled according to IT requirements is key to achieving lowered PUE; evidence of a well managed data centre. The introduction of UPS which are both high efficiency and which achieve high levels of efficiency at low IT load conditions can be an aid to improving PUE by increasing the amount of energy available for powering IT. High efficiency UPS can also provide some overhead for growth without the user being penalised through heavy operating costs. UPS vendors are taking a technological approach to solving the problems caused by the proliferation of technology. Current generation UPS provide a range of topologies to ensure availability and while the static UPS remains the staple for modern data centre designs, the benefits of modularity, scalability and serviceability are helping ensure the fitness of the facilities that are at the heart of today’s IT services. 18/08/2010 15:43 58 TROUBLESHOOTER Pioneering Samsung project proves e-Invoicing is a winner in more ways than one As a growing number of governments mandate that organisations minimise their environmental footprint – and businesses everywhere look to improve operations and reduce costs – the adoption of electronic invoicing (e-Invoicing) solutions is on the rise. Samsung in Europe is making the move, realising signiﬁcant beneﬁts in the process. I f anyone was still in doubt as to the potential value of e-Invoicing, they need only look at what has been happening at Samsung SDS Europe (SDSE) – the IT service and e-Business provider to Samsung Electronics and other businesses across the European region. Since developing and implementing an e-Invoicing service based on Adobe solutions, Samsung has seen the cost of processing inbound and outbound invoices drop significantly. The number of Days Sales Outstanding (DSO) has also been reduced, while invoice dispute resolution time has fallen sharply. Th is return on investment has also been quick. Samsung SDSE Business Development Director Paul Le Messurier says the gains are set to keep on coming, “In less than two years, e-Invoicing will account for a multi-million euro reduction in invoice-related costs,” he explains. Just how have such gains been made possible in such a short space of time? To understand, it is instructive to look at what the situation was like before. As with many multinational companies, Samsung used paper-based invoicing processes – and partial electronic methods – that were inefficient and costly. A large amount of employee resources were also necessary to handle inbound and outbound invoicing, at times taking months from outset to completion of each transaction. Inefficiencies also caused delays in receiving or issuing payments, with manual invoicing processes affecting the company’s operations. At the same time, if payment disputes did arise, paper-based processes made it challenging to reconcile payments against inventory shipped, and received, on an everyday basis. “Since developing and implementing an e-Invoicing service based on Adobe solutions, Samsung has seen the cost of processing inbound and outbound invoices drop significantly” ners can log into a rich Internet application to manage and reconcile invoices and can also use the online system to easily determine the value of outstanding orders. Another important benefit of the system is the ability to easily track and store electronic invoices, addressing regulatory requirements to manage invoices and archive them for the required period. “Adobe LiveCycle ES makes it easy for us to generate accounting reports for government regulators,” adds Le Messurier. Significantly, the e-Invoicing service will also help Samsung meet its wider corporate responsibility targets and green initiatives. “There is no doubt that e-Invoicing is also reducing our corporate carbon footprint,” says Le Messurier. “By automating the invoicing process, we are showing how e-Invoicing improves efficiency and reduces costs, meets government regulations and significantly contributes to more sustainable operations.” Introducing e-Invoicing To overcome these inefficiencies, Samsung SDSE selected Adobe LiveCycle ES modules to develop and deploy a scalable, intuitive e-Invoicing service that bridges internal and external business processes for both accounts payable and accounts receivable, while also helping to guarantee authenticity of the electronic documents. “Inbound vendor invoices can be received electronically in a number of formats and interfaced automatically into Samsung’s accounting system,” says Le Messurier. “For outbound invoices, when we receive an order and ship the product to a customer, an invoice is electronically generated and transmitted to the customer”. Trading part- Adobe Troubleshooter.indd 58 e-Invoicing – delivered by Samsung SDS Europe as a service The Samsung e-Invoicing solution built on Adobe LiveCycle ES has realised so many business benefits for the organisation that it received a ‘Best Practice’ award at Samsung’s 2010 global accounting symposium. Building on this success, Samsung SDS Europe is now offering the service to other, non-Samsung businesses across the EMEA region. To learn more about the e-Invoicing solution used by Samsung, how Adobe LiveCycle ES can help your organisation or to request a whitepaper, contact Prelini Udayan Chiechi, Senior Manager, Enterprise Marketing at Adobe Systems Europe Ltd: email@example.com 18/08/2010 15:33 ADOBE AD.indd 1 11/08/2010 14:54 60 CLOUD COMPUTING Clouded judgement CLOUD COMPUTING ED P60-63.indd 60 18/08/2010 15:44 CLOUD COMPUTING 61 Cloud computing: a hot topic and a buzz phrase, but what exactly is it, and how can your business beneﬁt? William Fellows speaks to CXO to cast clear blue skies through the cloud of confusion. T 72% of federal CISOs are still not using the cloud because of security concerns CLOUD COMPUTING ED P60-63.indd 61 he term ‘cloud computing’ is purposefully arcane. It denotes an intangible; something that people can visualise but not grasp, comprehend but rarely fully understand. ‘The cloud’ in a computing sense is just like the clouds of the geophysical world – real and noticeable, but physically impossible to pin down. And while planes surge through real cloud cover with the minimum of fuss, so too do smart companies traverse the cloud computing landscape with the greatest of ease, reaping the benefits that this service brings to their organisation. The cloud delivers agility and flexibility to a company, while also helping to cut costs and environmental impact. A company with a rigid server may be paying for storage costs that it doesn’t need and, conversely, if they experience a sudden spike in business, their server capacity may be inadequately able to cope with the increase in demand, harming their business growth. On one level, a public cloud virtual server is the ideal solution here – it can be incorporated to respond to a single company’s storage and hosting requirements, either in times of growth or contraction. A private cloud can be used within an organisation’s firewall and security infrastructure to help enable the business to better manage its data storage needs, the only difference being that no external sources or data are stored on these particular servers. But understanding what the cloud is and how it could work for your company is a perennially challenging task. There are just so many parameters to work within, so many strategies to follow, and so many questions to ask. “I guess many businesses see the cloud as the next great white hope,” says William Fellows, Principal Analyst for The 451 Group. “There is a convergence in the industries of telcos, service providers and IT vendors and integration players who are all competing for this next cycle of spending opportunity, with the majority of them forecasting that servers are going to be increasingly in hosted environments rather than in on-premise deployments. While there is still some way to go before managed hosts are able to reach the gold standard of someone like Amazon, there are plenty of companies out there that are getting close.” “For most large enterprises, the majority of their IT spend is still going on premise equipment rather than third-party services” With data storage capacity needs growing exponentially at a rate never before seen, companies are falling over themselves to align their business with a suitable cloud strategy. “Companies are now looking at the cloud as something that can manage their increased workloads,” says Fellows. “For most large enterprises, the majority of their IT spend is still going on premise equipment rather than third-party services, and it is probably about 75/25 throughout most industries. If an end user is comfortable putting 25 percent of their data into the public cloud that is fi ne, but that might mean there is still 75 percent worth of data that remains in-house, so the issue of the private cloud becomes more pressing.” Private cloud Such virtualisation of data is nothing new for most larger corporations, but the benefits that the public cloud bring are starting to be transferred into the private space, such as flexibility and scalability. “Most organisations have virtualised some, or all, of their data, but the prevailing thought process is if they had some of the other features of the public cloud at their disposal they could enjoy greater benefits. So they are doing a couple of things. Firstly, some progressive companies are looking to emulate, replicate or imitate what the public cloud delivers, and they are looking at their IT infrastructure and assessing what the total costs and ROI is for hosting and running their own workloads.” The issue of cost-effectiveness is a hot topic in these times of tight liquidity and negative growth. The private cloud is seen as a potentially cost-efficient implementation that many businesses can no longer afford to ignore. “Is it more cost-effective to host and store data internally than on a public cloud?”, asks Fellows. “Th is is something that a lot of companies are looking into, whether these end-users of cloud computing are better off investing in their own ‘best execution venues’; and by that I mean the purchasing of hosting capabilities that are suitable for their business in terms of price, performance and capacity.” 18/08/2010 15:44 62 CLOUD COMPUTING Companies unsure of exactly where to start as they take their first tentative steps into the world of cloud computing should, says Fellows, follow a couple of practical steps in order to first assess their requirements. “The fi rst step I would advise is for companies to simply create a service catalogue in order to at least understand what services are available to end users in their organisation. The next step is to look at the cost of provisioning and deploying to those end users. Just this very action of fi nding out cost allocation is proving an enormous driver because end users are discovering the range of services that are available to them, and figuring out the specific cost to their business.” Using the public cloud as a means of measuring the potential costs and scalabilities of an organisation’s internal IT is, believes Fellows, a smart move. Public clouds have already begun to replace internal IT infrastructures in many enterprises, so it would be foolish for a company to not at least investigate how cloud-based services could benefit their business. Hybrid hints All this points to the adoption of the hybrid cloud, which is a managed cloud computing environment where some services are managed in house, and others services are provided externally. The hybrid cloud, when implemented correctly, enables businesses to enjoy the best of both worlds: the security and control of internal IT mainframes, and the flexible scalability and cost-effectiveness of the public cloud. “Clouds are the ring fence that is under the control of a private cloud owner, but they run at a third party,” says Fellows. “With the hybrid cloud there are any number of combinations that can be applied. There will be vertically integrated Clouds of IT systems in B2B chains where partners and customers will be able to access elements and process their supplies and data on the cloud, but it is going to take longer for the more horizontally federated cloud to come into wider usage because the interoperability of different cloud providers is quite difficult at the moment. It’s not impossible to move workloads between different clouds, but there is a whole bunch of maturing the industry needs to go through before we arrive at that stage.” The ability to easily and safely transfer data across different cloud providers will mark a watershed moment for a number of companies who still harbour reservations about this, and other issues, of cloud computing. Fellows believes we are three years away from achieving complete interoperability; the desire and innovative thought processes are in place already. What is currently lacking is the technology to make it happen. Trust and security Security concerns abound in the world of cloud computing. Companies threat over access to the data, control of their data and loss of their data. But the cloud is as much about security as it is about trust: two concerns that can easily be overcome with time, education and improved technological advances. “We’ve been surveying end users of CLOUD COMPUTING ED P60-63.indd 62 “It’s not impossible to move workloads between different clouds, but there is a whole bunch of maturing the industry needs to go through before we arrive at that stage” cloud computing for just over a couple of years now,” reveals Fellows. “We have conducted some quantitative surveys of a broad end user base and undertaken a more qualitative assessment of smaller groups of end users, and what we have found is that there is a pretty consistent level of concern regarding the issue of trust, control and security. “It is important to distinguish between security and trust. IT security – the security of your actual systems – is obviously a concern, but more important are the regulatory and compliance requirements, and basic protection. These issues are quite distinct and separate, but rolled up and bundled together. The major concern for a great number of companies is overall control and trust. And within that there are data management concerns, auditing, interoperability and so on.” 18/08/2010 15:44 CLOUD COMPUTING 63 people in big organisations who are already using cloud computing to some degree, whether they know it or not. So over time what we have found is cost reduction has become one of the main drivers to adoption of cloud computing; sorting out that bottom line. Cost of ownership is seen as just as important, if not more so, than flexibility and agility. But the two issues are connected, because the ability to move tasks and workloads flexibly both internally and into the cloud is really the thing that has proved to be the key attraction adopter, because efficiency helps lower costs.” Cloud evolution Fellows’ research identified a grouping of inhibitors to adoption of the cloud, with control and trust what he referred to as ‘the first set of inhibitors’, and cultural concerns the second set. “Often reluctance to embrace cloud computing has little to do with technology,” says Fellows. “Snagging points revolve around issues of internal resistance to change. Whenever the issue of power, trust and control come up, there are a whole bunch of organisational factors that have to mature or change in order for new practices to be accommodated, new working environments to be embraced and new technologies to be implemented. The cloud brings all three of these inhibitors to change to the very door of the executive decision makers, so this hesitation is often understandable.” Overcoming these hesitations and inhibitors is a challenge that the cloud computing industry must focus on if it is to promote an atmosphere of wider acceptance. Greater adoption of cloud computing will happen regardless though, thinks Fellows, as more and more companies begin to trust their instincts and take advantage of the wealth of services out there. “Wider use of cloud computing is happening kind of by default because there tend to be lots of CLOUD COMPUTING ED P60-63.indd 63 As cloud computing has steadily emerged from the backrooms of IT offices into the consciousness of every committed businessperson around the world, its focus has been mainly on infrastructure service: how it runs and works, security concerns and hosting. Fellows believes that the sector’s evolution will move away from initial questions about understanding and penetration, to more software-type concerns. “The next big step for cloud computing will be concerned with platforms of service, whereby you basically have one type of environment, you show the code and it gets run. “I think what we are seeing is the control of the platform as a collaborative tool to be used inside organisations. So where, for example, Spring Source is a collaboration between VM Ware, Force.com and Google, we are now seeing Microsoft working with Azure. The developed world is divided into three camps, basically. Java, dot-net and open source (Python, Ruby, etc.), and systems staff are looking to create big developer environments and communities and to take advantage of their platforms that support the execution of those code bases. And this again rides on top-off infrastructures of service because you need this kind of flexible infrastructure behind it to create that platform service.” Recognising where the cloud is drift ing to and ensuring your business is best placed to take advantage of the ever-evolving service it offers is another challenge that lies not too far over the horizon. “You can identify the cloud computing model when you see IT organisations afforded the ability to provide some automated governments in a way that they haven’t been able to before,” says Fellows. “It is not so much a case of exerting control, but by offering, for example, the developer a black box that they can develop against without having to be concerned with what happens in getting the tasks done. Th is is manifest in the trend we are seeing for developer and IT operations functions coming together in what we call the ‘devox’.” These changes will inevitably lead to widespread restructuring of IT departments, but are most organisations ready for these various stages of upheaval? “To date it has mostly been champions for the cloud pushing through change by utilising end examples to show their bosses,” says Fellows. “But I think going forward, the greater their peer experiences, the better the collective understanding about the benefit of the cloud. And as more and more competitors adopt and reap the rewards of the cloud, more and more in your organisation will begin asking questions, and will want to enjoy the same benefits too.” 18/08/2010 15:44 GOOGLE ADS X4.indd 2 11/08/2010 15:18 ROUNDTABLE 65 Cloud and clear CXO speaks to three industry experts about the pressing questions posed by cloud computing. Many large companies will have a number of concerns with cloud computing, the primary one being that of security. How does your business ensure that the cloud is secure? Adrian Joseph. Security is at the heart of every Google application from its very conception, and Google Apps has been built with security in mind from day one. What’s more, the scale of our operations means that our investment in security can be much greater than that of an average business. That’s why, with the technology and processes we have in place, as well as over 100 security staff, including some of the world’s CLOUD RT P65,66,68,70.indd 65 foremost security experts working around the clock, we believe that the cloud might actually offer better security than many traditional IT infrastructures. There are some specific challenges each CIO needs to consider. Firstly, a cloud-based solution reduces the chance of data loss. Staff are less likely to have confidential fi les stored on their laptops or USB sticks, and are less likely to email documents to their personal email addresses if they want to continue to work on them at home – both common causes of the breach of confidential information. Secondly, in terms of physical security and availability, we replicate users’ data to multiple servers across multiple data centres and locations. If a disaster strikes in a particular region, the data remains secure and available. Th irdly, there is the patching problem – while traditional systems may take up to 60 or even 90 days to patch for vulnerabilities, the homogeneous nature of cloud solutions such as Google Apps allows for instant patching of the entire infrastructure. In addition, external auditors perform regular detailed security reviews of our processes 18/08/2010 15:44 66 ROUNDTABLE and Google Apps is SAS 70 level II and FISMA certified. Trevor Dearing. The cloud changes the game completely for security as we move to a world where users are mobile and resources virtual – the old concept of providing a physical boundary will disappear. We have to abandon the previous idea of security being like a castle with all the applications on the inside and all the users on the outside. Instead we must think about a model that is more like a hotel where a user is given a pass key based on their identity and this gives them access to certain resources within various rooms. Juniper Networks has developed security solutions that deliver security as a service for a virtual network. Th is approach is based on identity management, application identification and automated management. We have developed a series of open platforms that allow third parties to develop specialist applications to further secure the network. Sanjay Gupta. Data security is the top-most concern among enterprises adopting cloud services. Wipro offers most stringent security measures in its data centres and applications within the cloud. A robust design, best of breed technologies and practices based on ISO20000 ITIL standards lend consistency to the cloud solution monitored on a 24/7, 365 days a year basis. Multiple layers of physical security controls are in place in the data centre – 24/7 security allowed using SSL-VPN. Servers facing internet are protected by a minimum one layer of fi rewall, and backend database servers are protected with two layers of fi rewall. Wipro advises enterprises to link cloud security with their organisational security policy. In the case of very high company sensitive data, enterprises are advised to retain the setup within their data centres on dedicated setup. However, for less critical data, they can look at cloud after doing a detailed risk/control assessment of the service provider. Leading companies face increased hardware and storage costs, but they also have an understandably greater desire to maintain full control of their servers. How would you address these concerns? AJ. What we hear from our customers is that, faced with the ever increasing pressures to make their business more competitive and more efficient, they prefer to focus on projects that add real business value rather than purely supporting their IT infrastructure. They tell us that, since deploying Google Apps, their IT teams spend less time managing email systems and more time looking at ways to use technology to transform their companies. Cloud computing offers an opportunity to make immediate cost savings on hardware, storage and other resources, but more importantly offers a new way of working. For example, one of our customers is providing a communication and collaboration environment to over 35,000 ‘“Private cloud’ is not much more than dedicated hosting. The need to manage the physical hardware is removed, but you don’t get any of the economies of scale that you get with a ‘public’ cloud” - Adrian Joseph guards, access control systems. The data centre is divided into multiple security zones and access control policies are enforced to ensure restricted and authorised access to sensitive areas. Wipro has implemented a robust intrusion prevention system for networks carrying highly sensitive information. To protect storage, Wipro has defi ned zoning and LUN masking only for pre-defi ned authorised hosts. OS hardening is performed on a regular basis. A separate VLAN and virtual firewall for each customer is offered to protect the network layer. URL fi ltering is available and can be configured upon customer requirement through a robust firewall mechanism. Secure access is CLOUD RT P65,66,68,70.indd 66 staff, including 10,000 mobile workers who have never had access to any IT tools in the past. In another example, account managers at a global ad agency share calendars with their business partners, enabling them to coordinate groups of people a lot faster than before. They also use video chat to review campaign ideas by bringing together experts in multiple countries, enabling them to tap into their global workforce. TD. Th is obviously depends on the services being offered by the provider. The technology is available to extend a customer’s virtual network into the cloud and right into the data centre. Th is means that the resources in the cloud can Adrian Joseph is Managing Director of Google Enterprise, EMEA. Joseph joined Google over three years ago with 15 years of blue chip sales, marketing and supply chain experience. Prior to Google, he spent six years at Ford Motor Company, and was the main Board Director for Trafﬁcmaster, where he was responsible for sales and marketing. He holds an Economics degree and an MBA from Manchester Business School. be part of the customer’s infrastructure as long as the network can support it. It does become important that the network being used can support the new techniques required to manage the cloud environment and that any potential savings and improvements are not negated by a slow old network. SG. Leading companies do analyse their IT and IS landscape and categorise their applications into business-critical and context applications. They take a two-step approach. First, transitioning few of the context applications on cloud or alternative shared services environment. These applications would have light SLA requirements and the non-availability in some situations would not impact the business severely. Th is route is adopted to reduce the increasing costs and, at the same time, evaluate the performance, availability and security aspects of cloud computing to begin with. For business critical applications, they continue to host them at their primary in-house datacentres, which they perceive to be giving them higher control over their IT assets and confidence of recovering from any breakdown situation through personnel attention at the site. Wipro supports the above approach by helping clients analyse their business applications landscape, categorising them in terms of business criticality, evaluating interdependencies and suggesting a roadmap to a cloud-based approach. 18/08/2010 15:44 JUNIPER AD.indd 1 11/08/2010 15:21 68 ROUNDTABLE Sanjay Gupta leads the Productised Solutions Group of Wipro Technologies. He has been with Wipro since 1988 and has held responsibilities across sales, post-sales support and key account management in India and the US. Gupta is an electronics engineer, holding a MBA from Indian Institute of Management Ahmedabad. The greater scale offered by virtual cloud computing is obvious, but how easy is it for an IT manager to support and transfer data across multiple clouds? AJ. Interoperability is a key component for the simplicity of data transfer. Right now it’s down to each vendor to make it easier to transfer data in and out of their cloud-based systems. I think there is still a lot of work for the industry to do in terms of standardising that. At Google, we feel very strongly that the customer owns the data and we would like it to be as easy as possible to move data in and out of Google products. We have already done a lot of work on the consumer front with the launch of our data liberation initiative (www.dataliberation.org) and we would individually support a customer wishing to transfer to another solution. “The challenges are not only around technology but also around managing mindset change” - Sanjay Gupta CLOUD RT P65,66,68,70.indd 68 TD. Once again this is a network issue and depends on the services being used. If it is pure application as a service then it can be easily accessed by traditional IP networks. However, if you are taking any platform services – and especially cloud bursting type services – then potentially everything will need to be in the same layer-two domain. Many service providers are now offering virtual LAN or line services based on VPLS, which do allow the extension of an existing customer network across a service provider infrastructure. SG. Th is is one of the biggest challenges for IT operations staff and in a way limits their ability to migrate types of workloads across mul- 18/08/2010 15:44 MEET THE BOSS AD P69_14june 17/08/2010 15:15 Page 1 MeetTheBoss TV is incredible access to the world’s business leaders – so you can learn their winning strategies and attitudes first hand REGISTER NOW the corporate ladder with exceptional executive learning: anytime, anywhere Find out more at www.MeetTheBoss.tv Where Future Leaders Learn 70 ROUNDTABLE tiple clouds. The challenges are not only around technology but also around managing mindset change. Another aspect that comes into play is the bandwidth requirements that data will impose on networks. Innovative solutions have been deployed but these add to the latency and hence, again, become a limiting factor. However, given the fact that compute, storage and bandwidth follow Moore’s law, it is possible that technological challenges will be overcome. Vendors are working on securing data-in-fl ight as well. The most important aspect that will still remain is the mindset change, which requires a touchand-feel approach. What are the greater beneﬁts of the public and private cloud, and how can the hybrid cloud enable greater control without compromising on storage costs and capacity? AJ. ‘Private cloud’ is not much more than dedicated hosting. The need to manage the physical hardware is removed, but you don’t get any of the economies of scale that you get with a ‘public’ cloud. To give you an idea of the immense scale that the Google cloud handles, over one billion searches happen on Google.com every day. Every minute, 24 hours of video is uploaded to YouTube. We have over 3.5 million servers distributed across our global data centres. Google Apps runs on this same platform, enabling our developers to create applications quickly, without needing to know where the code executes, how it scales, how it gets backed up or how to build in fault tolerance. I’ve talked about the “We have to abandon the previous idea of security being like a castle with all the applications on the inside and all the users on the outside” - Trevor Dearing number of security experts that Google employs – this is another example of the scale that a true cloud offering brings – it would be a very costly exercise for our customers to do that individually. You just don’t get the same scale or cost benefits with a ‘private’ cloud. As for ‘hybrid cloud’, we defi nitely see it as a matter of course that our customers integrate their existing on-premise solutions with our cloud offerings, and that continues to be an important part of our enterprise computing strategy. Trevor Dearing has been part of the networking and security industry for nearly 30 years. He has been involved in initial implementations of many of the new innovations that have taken place, including ethernet, PCs, IP telephony and virtualisation. He currently works as Director of Enterprise Marketing for EMEA at Juniper and managed the launch of Juniper’s switching portfolio. CLOUD RT P65,66,68,70.indd 70 TD. The hybrid cloud appears to be the solution that is becoming most popular. The virtualisation technologies adopted in the public cloud can have some real benefits in the enterprise network, so giving rise to the private cloud. The cost savings of being able to outsource non-critical services are very attractive but many organisations are not comfortable in giving away the core of their business. The hybrid cloud offers the best of both worlds but does create some new challenges around management, especially with an environment with a multitude of different management systems. It is important, therefore, that the management of the network and security is integrated with the management of the applications, storage and servers. Th is can only be achieved by the adoption of open standards and products with published APIs. It is important as we move into the cloud world that adoption of these types of products becomes routine. SG. The benefits of private cloud are full control on data and servers, increased resource utilisation and sharing across enterprise. The benefits of public cloud are reduced CAPEX, infi nitely scalable in compute and storage requirements and more focus on core business processes and innovation by releasing unused resources. Hybrid clouds enable greater control as the most critical workloads reside on private cloud and less critical applications move to public cloud. By leveraging public cloud, enterprises pay on usage basis, save on storage cost and provision for extended capacity as per business needs. 18/08/2010 15:44 WIPRO AD.indd 1 11/08/2010 15:25 72 ASK THE EXPERT How smart desktop virtualisation enables success Desktop virtualisation is one of the biggest revolutions in IT since the introduction of the PC, offering tremendous beneﬁts to enterprises of all sizes. By making the most of desktop virtualisation’s many capabilities and features, you can quickly realise these beneﬁts, says Michel Roth. I n today’s economic climate, enterprises are faced with the difficult task of delivering a rich IT offering while at the same time minimising IT spend. Enterprises demand a richer IT experience with a lower TCO, a faster ROI and a more secure environment. Desktop virtualisation promises to enable enterprises to achieve these loft y objectives, which is why Gartner predicted that desktop virtualisation revenue will grow to $65.7 billion (€49.9 billion) in 2013 . To ensure your success with desktop virtualisation, it is imperative that you fully understand the technology. You first need to know that desktop virtualisation is not the same as VDI. Rather, desktop virtualisation is a collection of technologies that includes terminal server (or ‘remote desktop session host’) as well as VDI. It is the combination of these technologies that gives desktop virtualisation the power to enrich the user experience and simultaneously reduce IT costs and better secure the desktop environment. Turning desktop virtualisation’s promise into reality is all about applying the right technology to the right usage or roles. Employees with the same role often perform the same set of tasks. One example of such a role might be an “Turning desktop virtualisation’s promise into reality is all about applying the right technology to the right usage” inside sales representative who typically performs the same tasks using the same basic set of applications every single day. Th is role is ideally suited for terminal server, which typically provides the lowest cost-per-workspace. Another role: a marketing developer might require more than the basic set of applications and also need to make more changes to his virtual desktop, such as installing applications or connecting new peripheral devices. For this type of role, VDI is the best choice. While VDI has a higher cost-perworkspace when compared to terminal server, VDI does allow for personalisation and a high degree of device and application compatibility. When using VDI, you will need to choose which virtualisation platform (hypervisor) to use to host the virtual desktops. Th is choice is very important because it will impact the desktop virtualisation deployment throughout Quest.indd 72 its lifespan. Making the wrong choice will severely impact the TCO and ROI. Unfortunately, there is not one right choice. Hypervisor A could have a feature set that would perfectly suffice for enterprise A at a cost of A while enterprise B might need hypervisor functionality that is only available in hypervisor B at a cost of B. Unfortunately, the hypervisor market is very complex and dynamic; today’s market leader could be tomorrow’s loser. The good news is that third-party tools exist to help you broker and manage your virtualised environment, regardless of which hypervisor you choose. These tools can also blend multiple hypervisor platforms under one management umbrella. The key to the success of a desktop virtualisation project is to use a product that efficiently maximises the capabilities and features of your environment. Quest vWorkspace is the only comprehensive management framework that is built to harness the full power of all types of desktop virtualisation. Quest vWorkspace is hypervisor-agnostic, resulting in the lowest average cost per workspace for enterprises of any size. Th is innovative technology enables you to easily manage and provision your environment from a single pane of glass and a single license. Quest vWorkspace is the smartest path to simplified desktop virtualisation management, and can ensure a successful virtualised environment to both large and small enterprises. Michel Roth has over 10 years of experience working with application and desktop delivery technologies. He currently fulﬁlls the role of Principal Product Architect in the Desktop Virtualisation Group of Quest Software. Roth’s specialisation is in desktop virtualisation. He has spoken at many industry conferences, including Microsoft TechEd, BriForum and Pubforum, and is a frequent author for sites such as MSTerminalServices. org and BrianMadden.com. In his spare time he maintains the website Thincomputing.net. 18/08/2010 15:42 QUEST.indd 1 12/08/2010 11:35 74 BIG INTERVIEW Google’s global dominance has come about via a combination of hard work, innovation and the ability to respond to consumer needs. These attributes are now transferring well to the corporate world, according to Managing Director for Google Enterprise EMEA Adrian Joseph. “The shared component is very important, because that enables us to drive continuous innovation” Adrian Joseph Adrian joseph_google.indd 74 As Managing Director for Google Enterprise EMEA, what are the main strategies for business that you are currently implementing? Adrian Joseph. At Google Enterprise, we are a business that essentially covers four product groups. So, the fi rst is search – taking our search technology that most people are familiar with – and putting it into businesses. Th is could be helping them to fi nd stuff within their own businesses a lot easier, or helping their customers to fi nd stuff on their websites more easily. Search is one of our core elements, and that’s where we started the Enterprise business. The second product is geo – so taking Google Earth and Google Maps and opening up APIs to allow businesses to use our technology to overlay stuff that they fi nd interesting or their customers fi nd interesting. The third part is Postini, which was implemented about two and half years ago. It’s anti-virus, security managing and an archiving and discovery tool. And then the fourth one is Google Apps, which is essentially a suite of components, which include Gmail. But not what I call traditional email, so within the email suite, for example, you can instant message, you can do it in 47 languages instantaneously. And you can do things like video chat, for example. The next part of Google Apps is Docs. These are spreadsheets, presentation packages, word processing packages, etc., but the key to its success is its real-time collaboration. In the existing traditional model, what people tend to do is to work on a spreadsheet email it out to five or six or however many different people, and everybody makes a change and sends it back. Well, our app is quite different. What we do is to create this central space, and then invite people to collaborate, and we can all be working on the same documents simultaneously. Th is sort of technology – bringing our experience of the consumer side to our business and delivering enterprise-ready features like those – is what Google Enterprise does. Can you explain how the technology Google Enterprise is introducing enables better business collaboration and access to information? AJ. One example would be websites: the ability to create internets within your own business, and being able to do so without having to go to the IT department. Users can set this stuff up themselves. They can invite people in to interact because such collaboration is built into sites. There is also video for the business, such as our YouTube technology and bringing it into the enterprise. We try to imagine a world where users within businesses can access their stuff at any time, and can become what I like to describe as ‘super-productive nomads’. These nomads can access information when they are out and about, and can collaborate in real time. At the same time as delivering empowerment to users and making them these super-productive nomads, we’re also driving innovation within businesses. We demonstrate a very strong link between collaboration and innovation – a correlation of 0.81, which is pretty phenomenal. So we are driving innovation but doing that as well at much lower cost. Th is obviously brings me on to my view of cloud computing at a macro level – it’s about super-productive nomads. It’s about continuous innovation. And it’s about real empowerment of the users. 18/08/2010 15:34 BIG INTERVIEW 75 Only 12% of employees are happy with the technology available in the ofﬁce Adrian joseph_google.indd 75 Cloud computing has been touted as the best option for business to cut costs and carbon footprints, but there are still numerous concerns about data security. What do you say to those who still harbour worry? AJ. I think it’s a very important question, and one that we feel very strongly about. The cloud absolutely delivers many of these benefits that I have spoken, about. Not all clouds are equal. Maybe you just have to describe at a more technical level a defi nition of clouds. There are three core components to that. One is that it’s hosted, so it is run by a third party outside of that business. What that means is we can bring real economies of skill. Two, it is on shared infrastructure, and for us that means a true, multi-talent environment where we take our data and distribute it across a number of data centres, but we guard that – encrypt is not quite the right word – but we do something similar to encryption. It is almost like if you gave me a letter, and what I did was to encrypt it, and then put it through a shredder, and take all those little pieces and distribute them across a number of centres. That is what we do. The shared component is very important, because that enables us to drive continuous innovation. It gives us huge economy of skill. The third component of cloud, for us, is in the browser; it is internet based, and Google Apps is entirely in the browser as an icon upon your desktop – there are no other installations on your desktop, or on servers, or any other complexity around that. Those are some of the components that are important to understand about our defi nition of cloud. 18/08/2010 15:34 76 BIG INTERVIEW Just to your question about security, actually the right question to be asking – I think there are three components from a Google perspective that are important to understand. The fi rst is about control. What we do is to give the administrators of our Google Apps system the ability to give different permissions for usage of the different parts of Google Apps. They can look at usage data and so on, so control is an important element of that. The second part is trust, because I think trust is at the heart of the question, as is providing confidence. Google is SASS 70 Type II certified. That means that every year, external auditors come in. They look at our systems, our processes, and so forth, and if we are up to scratch then we get that certification – which we’ve got. The other part of confidence that is important to bring out is Safe Harbour: we meet US and EU Safe Harbour requirements. Under Safe Harbour there are seven different components – things like access, storage, and so forth – that you have to meet standards by which, again, is something that we do. And the third point is giving people choice. With our data liberation movement what we try to do is make it easy for people to move into Google Apps and transfer their data in, but we also try to make it easy for them to take their data back out. Those three points of control, confidence, and choice are critical to understanding the context of trusting Google Enterprise. How else is Google Enterprise working toward making Google technology more readily available and easy to use for businesses? AJ. At the heart of our DNA we obsess over our users and we obsess over innovation. We have taken our experience and reach – we now have over 300 million users of Google Apps – to do something quite different. At Google, our model of innovation is quite different. It is not the very traditional, soft ware level of spending a few years designing and a couple of years doing build, then a couple more years trying to convince the businesses to adopt the latest version. Our innovation cycle is every one to two weeks, where we are uploading new or improved features within Google Apps, and we are doing that seamlessly. If you think about the experience of users when they go home, they have access to things like Facebook, to Google Search, to LinkedIn. Those users have got accustomed to continuous innovation being delivered to them in a way that doesn’t disrupt their lives. And so we take that experience. We can expose a slice of that massive base to our new innovation. We see how they react to it and then we make it available to wider enterprise business. But before we get to that stage we do something that we call ‘dog fooding’, which is to expose our own employees to these innovations. We have some very experienced users, some critical users. So we test it on ourselves and a portion of the consumer database, and then we open it up to the enterprise. Adrian joseph_google.indd 76 “The reason that we got behind Android is because we wanted to ensure openness” How has the Android platform helped Google to deliver its aims and strategies? AJ. The reason that we got behind Android is because we wanted to ensure openness, which is one of the key characteristic of what I’ve described as Google’s DNA. Previously it was really hard for developers to create a great application and expose that to a large community of users. The reason for that is that you have to create apps that were specific either to handset manufacturers or a carrier. And so Android was developed to enable much large distribution and openness of the web in a mobile platform. The same is true of some of the work that we are doing with Chrome OS, the Chrome operating system. Th is is really transformative in the sense that our belief is that we can deliver applications, and we can deliver an operating Google Enterprise core applications Enterprise Search Search tool for website or intranet designed to maximise website ROI and internal productivity Consists of Google Search Appliance (administrative customisation options and the ability to scale across all content), Google Commerce Search (retail-centric features designed speciﬁcally for online merchants), Google Site Search (search results for websites) and Google Mini (for small businesses or intranets). Postini Services Email security, archiving and encryption, powered by Postini and complementing Microsoft Exchange, Lotus Notes and other solutions. Comprises Google Messasge Security, Google Message Discovery, Google Web Security and Google Message Encryption. Earth & Maps Designed to help businesses view, understand and make decisions about location-based information. Allows the incorporation of company’s data into Google Maps and Google Earth to be shared with colleagues and clients. Comprises Google Maps API Premier, Google Earth Pro and Google Earth Enterprise. Google Apps Suite of web-based tools for businesses, including Gmail, Google Calendar and Google Docs. Among the promises Google Apps makes to its customers are cost savings thanks to its web-based applications requiring no hardware or software; mobile email and calendar sync; 99.9 percent uptime reliability guarantee; 50X more storage than industry average; data security and trust; and 24/7 customer support. 18/08/2010 15:34 BIG INTERVIEW 77 There are now over 300 million users of Google Apps Over 50% of KLM cabin crew are already using Google Apps system that is entirely based in the web. So take it out of the desktop, make sure that it is really secure and safe. For instance, imagine opening up a notebook in four or five seconds from cold start and having access to all of your stuff. And imagine it not mattering if you’d lost that notebook because all of your stuff would be based in the cloud, in a secure way. You could just go back into the IT department or to the shop and get another one, and you would have all of your stuff ready and available. These are some of the core benefits that we see of cloud computing. And one of the questions we get asked is, ‘How secure is the cloud?’ But one of the questions that I’m increasingly seeing big businesses asking themselves is, ‘How secure is my existing infrastructure and IT applications?’ Quite a lot of them are fi nding that in moving to the Google cloud, it is many times more secure than their existing systems. How is online collaboration affecting innovation and idea generation in the workplace? AJ. If you think back over time, one of the limitations of innovation has been geography. If we were able, centuries ago, to connect some of the great thinkers to one another, the sharing of ideas might have flourished and been disseminated much more rapidly. And that is the power of the technology that we bring in terms of real-time collaboration. The research that we did recently with The Future Foundation showed this almost perfect line between collaboration and innovation. I don’t think there is a business that I have come across that isn’t interested in driving innovation within their businesses. We know that there are some barriers to making that happen now, some of which are around cost. But some other barriers are around vision, the management having the vision and experience to give empowerment to their teams. Do you ﬁnd that access to such easy collaboration helps to create a different corporate structure by breaking down entrenched hierarchies? AJ. I think what it does is enable everybody to have a voice and to be able to articulate that. We know that employees, if they were incentivised in the right sort of ways, then more than half of them say they would come up with even more creative ideas. Th is is all about recognition and reward, and our collaboration tools help to enable that. Businesses are missing out on a huge opportunity to tap into the internal wisdom that exists across their businesses, irrespective of hierarchical structure. What advice would you offer to IT directors and CIOs in relation to the types of technologies they should be implementing for their business? AJ. One of the things I would note is that if you look at some of the research, only 12 percent of employees are happy with the technology that is available to them in the office. There is this huge disconnect, this dissonance between our experience in the home and our experience in the office. I don’t think this dissonance is sustainable for Adrian joseph_google.indd 77 much longer. One piece of advice I would offer is to think through how businesses can tap into the technologies that people are using in their homes and bring those into their businesses in a safe, secure way, to drive innovation and to reduce cost. Companies like Jaguar, Land Rover, Rentokill, Valero and Motorola have all gone Google for these reasons. Also, if you think through the relationship between IT and HR as well, our hypothesis is that there are opportunities for those departments to work more closely to drive innovation, recognise it, and reward it. But they need to work in unison to make that happen. Those would be some of the things that I would be saying to IT directors. I would encourage them to realise that not all clouds are equal. Google was born in a cloud, this is where we started up. All of the Google Apps Suite sits in the same infrastructure that we run Google Search and Google Maps on, so if Google Apps fails for us then we have a much more serious problem than in running and managing our own business. So, I would say be clear about the cloud and what that really means. Experiment with it, try it, test it. Speak to others who have gone down that route and see what their experiences have been. Do not underestimate the cultural aspects of this change. It is not just a technology change, so it is important to ensure that there is a strong management communication plan around any sort of innovative implementation. KLM, for example, adopted Google Apps a few months ago, and the most interesting thing they told us from their experience was the feedback they received from their cabin crew. They discovered that most of their cabin crew, over 50 percent, were already using Gmail for their own personal use. Th is is that user experience I mentioned; this dissonance between our home experiences and our work experiences cannot be sustained. How far is Google from bridging this dissonance, in both a cultural and a technical sense? AJ.The challenge is not a technology challenge any longer. I don’t think it has been for some time now. An author called Nicolas Clark wrote a number of articles, and in one of them he made the comparison to electricity. If you think back many years ago, companies were generating their own electricity. They had their own generators on site. It is a business critical resource, and obviously over time that has been outsourced – we trust the electricity companies to consistently deliver what we need. So it is this paradigm shift in the way that we think about technology, and cloud computing in particular, that is the major blocker, not the technology itself. A lot of the investment in IT at the moment is about keeping the lights on. It is about doing maintenance. It is about patching. It is upgrades and stuff. I think the power of cloud is that it frees up IT resources by outsourcing to a trusted, reliable, low-cost provider, enabling seamless innovation in a way that then frees up resources for them to do more value-added activities to really drive their business forward. 18/08/2010 15:34 78 SPECIAL FEATURE For a company as ubiquitous as drinks manufacturer The Coca-Cola Company, its bottler, customer and consumer-facing IT are a crucial cog in global operations spanning over 200 countries. For Sabine Everaet, Europe Group CIO, it’s all about seeing the opportunities of how technology can transform and grow the business, she tells Julian Rogers. Before being handed the CIO role 18 months ago you worked in a variety of positions and departments throughout your 15-year career at Coca-Cola. How has this experience stood you in a good position to take the beverage company’s top IT job in Europe? Sabine Everaet. Before I joined Coca-Cola I was working as a consultant for KPMG and PriceWaterhouseCoopers mainly on change management and organisational design initiatives. Th is gave me a business background, and also, I had the opportunity to get experience in different types of industries. After four years in consulting, I started with Coke – the concentrate, marketing and innovation business – as a business analyst / project manager. My fi rst big achievement was the implementation of an ERP system for the juice business in Europe that gave me more of the logistics experience. Then, I moved on to different IT Account Management roles where I learned to engage properly with internal and external customers trying to understand local business needs and cover them as much as possible with European solutions, a big challenge, that required a lot of influencing. Sabine Everaet.indd 78 18/08/2010 15:47 SPECIAL FEATURE 79 I became the lead of the European application development and support team, and installed a PMO to introduce a formalised tollgate process for development and deployment of any IT solution. Establishing formal processes always requires change management. Associates typically question the need for more formalised deliverables, but need to understand that this is to support the thinking process, allowing for calculated risk management instead of forcing deliverables for the sake of it. Just before I was appointed Europe Group CIO, I was Deployment Services Director for two years on a worldwide bottling programme. Th is was critical for me to gain bottler experience which I did not have so far. I have travelled around the world – Australia, China, the Philippines and South Africa – to drive process, data and system standards in a culturally diverse environment. That was truly positively impacting my skills and experience to grow into my current role. I have always been a passionate and energetic person, typically satisfied when truly achieving something that drives the business forward. I would strongly encourage people that want to grow to focus on company interest versus personal interest – do the right things for the company and you will be rewarded – and, step out of your comfort zone to experience something totally new which is enriching and preparing you for the next step. Never be happy with what you have achieved, raise the bar for yourself and the people around you on a continuous basis. Th is is critical. What were your priorities when you became CIO last year? SE. IT globally was in the midst of a transformation when I started, and Europe had to contribute US$1.9 million savings – a key driver of this was the renegotiation of our technology and end user computing outsourcing contract. It included moving our outsourced IT service desk from Toronto to Manila and at the same time reducing the number of languages from six to one – English only. Also, our outsource provider moved the back office monitoring activities mostly from Brussels to Voronezh in Russia. For the local presence in the 28 European locations to deal with end user computing incidents, we moved from a staff augmentation to service based contract. That all resulted in achieving the required savings. At the same time, big transformation programmes were run in Finance and HR that needed much of IT’s attention. Our team stepped up and started playing an ‘integrated planning’ role, not just planning IT but all business activities across the different functions. Th is effort was, and is, still highly appreciated by our clients as it allows us to oversee the full impact of the transformation and to manage the risks. In parallel, we need to prepare the team and its skills for moving from back office IT support to enabling the business to grow through IT enabled innovation in the areas of consumers, customers and bottlers. Another key focus was to build a strong relationship with senior management in Europe and be included in their routines. It is important to be able to listen to our internal clients when they discuss their specific business challenges. From these discussions, I picked three areas for us to drive innovative change as to how IT can contribute to business growth including driving and executing a far advanced collaboration strategy. At the same time, we had to uplift the credibility of IT as an organisation. Due to restructurings, outsourcing and off-shoring, headcount was reduced by 80 percent over the past 10 years, the operating expenditure by 60 percent. I have made that picture clear to our management team and obtained the ‘go’ for increasing the investment in IT for the first time in 10 years. Here at Coca-Cola we have a global IT environment. I had to learn to balance the global needs of globalising IT and fi nding synergy and cost savings with the local requirements of the business. It’s about managing Sabine Everaet.indd 79 18/08/2010 15:47 CLAVISTER AD_25 June 11/08/2010 15:55 Page 1 Clavister’s Virtual Security Gateway optimizes trafﬁc in VMWare environments, securing the virtual network and the environment Clavister AB Klarabergsviadukten 70, B4 SE-111 64 STOCKHOLM Phone: +46 (0)8 545 298 00 Internet: www.clavister.com Email: firstname.lastname@example.org WE ARE NETWORK SECURITY SPECIAL FEATURE 81 expectations for both the business here in Europe and our IT counterparts in Atlanta [the company’s headquarters]. How has the recession affected Coca-Cola Europe? Have budgets been cut and are you being expected to do more with less? SE. Even before the recession hit us, we had a mandate from our CEO to save US$500 million by different functions over three years – 2009 through to 2011. Therefore, we had initiated the transformation initiatives in IT, Finance and HR, as I mentioned before. Yes, on one hand we are doing more with less, we saved 40 percent on our technology and end user computing outsourcing contract. But as of 2010, I’m convincing the business in Europe and Global IT management to reinvest in IT, less into the back-office part but more to drive front office programmes and reinforce the business partnership. Do you think this tough period has given you the opportunity to be more innovative? SE. Yes, absolutely. There are different dimensions to innovation. On one hand, we look at it from an IT operating model perspective. Th is is about the way we operate internally, but also how we execute our outsourcing contracts in a smarter and more efficient way. We started collaborating with our strategic partners to drive this type of innovation. The challenge is going to be adapting the contract before its expiry date. We are also looking at innovating IT in order to drive personal and team efficiency and effectiveness. We are in the process of building a cohesive collaboration strategy. Th is includes unified communications to have our colleagues and partners be only one click away and be reached at the device they want. We are ready to launch a wiki-platform to interact around services and programmes, internally in IT but also with our clients. We have just launched an internal Facebook, and are evaluating a YouTube type of tool. The third innovation area is the most important one and is related to understanding how IT enabled innovation drives either cost reduction or extra revenue and growth for the business. With Finance and HR we are looking at transforming and standardising the processes supported by new systems. At the same time we are working on two, still confidential, innovation projects with the business in the customer and consumer space. The challenge, as for many companies, I suppose, is to fi nd bandwidth in the team to execute the plan and at the same time drive innovation. The art is to bring this continuous innovation mindset to your teams. You mentioned your internal versions of Facebook and YouTube. Why you are implementing these social tools? SE. We need to be ready as an organisation to have Generation Y onboard, and have them be productive. People compare their home computing environment with the enterprise one, and start interacting with colleagues just as with their friends and family. We have just launched the internal Facebook to encourage Sabine Everaet.indd 81 informal interactions and support an organisation that is becoming more and more network based. It also enables us to fi nd expertise throughout the world. Th is encourages replication of best practices, instead of re-inventing the wheel, and not wisely investing our marketing funds. We are currently testing desktop videoconferencing, etc. We are typically limited by security and network bandwidth. We need to learn to work around these constraints and provide effective and efficient solutions for our end-users. We have a long way to go. How is cloud computing impacting the way the business operates? SE. At Coca-Cola, we are not yet taking advantage of Sabine Everaet the cloud computing possibilities. As we are shift ing towards a truly service-oriented organisation, we are assessing options to shift applications to the cloud. The main reasons are cost – you pay per consumption unit – flexibility, ease of support, etetera. We hear a lot of talk about how the CIO role is going to transform in the next 10 years. What’s your 2020 vision? SE. I do not believe there is a single answer to this question. There are a lot of different opportunities for CIOs but how you shape the role is based on your own experience, interest, potential and drive to influence the business to consolidate different responsibilities. I see the role evolving into a business transformation role which could be either truly transformational in terms of innovation and drastically changing the business operating model within the company and with its partners, or, leading business process management type of work and shared services. When recruiting, do you look for IT professionals with a good level of business acumen as well as a technology head on their shoulders? SE. Defi nitely. Understanding the business is both about the nitty-gritty details of business processes and the short term and strategic direction of the business. On top of that, I would be looking for people with very strong client engagement skills, a lot of creativity that helps them to see the opportunities, pro-activity to carve out the work when the opportunity arises, and reap plenty of drive and passion for learning and execution. Given the fact we work with a lot of outsource providers as well as internal service providers in Atlanta, it is less important to be truly technical experts. Although, our experience in the team is that a minimum level of technical expertise is required to fi rst and foremost understand the potential of IT, but also to validate solutions delivered by our partners. Working with outside partners on the other hand requires strategic vendor management skills, as opposed to the typical people leadership skills to manage internal teams. Working with in-house service providers requires a high desire to collaborate with other teams and the perseverance to influence the strategy and quality of the deliverables. People need to see how global solutions can cover local needs, but more importantly learn to drive the global agenda and strategy from the field. 18/08/2010 15:47 82 BUSINESS INTELLIGENCE SMART COMPANY Bus intel lead.indd 82 18/08/2010 15:45 BUSINESS INTELLIGENCE 83 Utilising business intelligence to achieve better performance is nothing new, but are organisations getting the basics wrong? CXO spoke with KPMG’s Herman Heyns to ﬁnd out how organisations should be using BI more intelligently. T o shamelessly borrow a catchphrase from a well-known woodstain manufacturer, business intelligence ‘does exactly what it says on the tin’ – it provides intelligent solutions and strategies for your business, implemented via a series of tools, systems, processes and planning. Adopting a strategy that can work for your particular business can be tricky; there are so many variables, techniques and approaches that can be employed to help your business better understand its productivity, efficiency and data. But the end-goal is always the same – to add to the bottom line and grow your business. Th is is always the danger with broad and sweeping industries such as business intelligence. It sounds a captivating proposal – to employ intelligent business strategies to produce better performance results, but there are dangers in trying to tackle something so potentially sensitive without a clear approach strategy in mind. As the fi nancial constraints of the recession leave ever-diminishing room for error, more and more companies are looking to business intelligence to help identify areas of weakness or inefficiency within, so it is little wonder that interest in this sector is currently greater than it has been for many years. “The big organisations spend upwards of €40 billion a year on business intelligence and, in terms of their total expenditure, it is quite a significant chunk of money of these organisations’ overall spend, but the majority of executives feel that they are not getting massive value or competitive advantage over the intelligence they already have about their business,” says Herman Heyns, Partner of Business Intelligence at KPMG. “Conversely, there are a small percentage of companies that actually use business intelligence smartly, gaining a competitive advantage. The companies that do this well tend to do some really basic things that are executed well. Th is is the context – what do they do differently that proves so successful that other business fail to grasp?” Retrieving something quantifiable, usable and tangible from the masses of data and information a company works with on a daily basis is the Holy Grail for most businesses, and the purpose driver behind the employment of business intelligence techniques and processes. Actually obtaining satisfactory results, though, has often proved elusive for even the most sophisticated of enterprises. “What our research has found is that the real leaders in this space understand the value of information in terms of making better decisions that drive value for the organisation,” explains Heyns. “On the other hand, the losers in this field spend vast amounts on solutions, often technology solutions, without actually knowing where Bus intel lead.indd 83 they want to go with this. So what we see are vast sums spent on producing more reports, putting in new data warehouses, putting in new analytical tools etc., and you can fast-forward five or seven years later and you can bet that they have no better insight into the decisions they need to make. “So the challenge for many companies is breaking that habit of applying the same recipe over and again and expecting different results. Companies with a vague idea of what they need to achieve from a business perspective spend time and money in all the wrong places.” It was not until the late 1990s that the term ‘business intelligence’ was widely used Business inhibitors Spending large sums of money on business intelligence is no guarantee for success, and is often seen as one of its main inhibitors – if higher spend does not yield better results, then what is the point of business intelligence? “There are two things that really limit the success of some companies’ business intelligence strategies,” says Heyns. “The fi rst one is not being clear about what information you need in order to make the business successful. So many organisations that try to get better business information say ‘what can we get easily? Well that’s what we’ll invest in,’ rather than identifying what is most valuable to their business. Most companies would love to get into the minds of their customers to really understand what services would make them even more valuable, but actually most business intelligence projects try to tackle things like how much of a particular stock they have, which is a completely different theme and not actually that valuable.” Companies that are unclear about what parts of their organisation are the most valuable often fi nd that their business intelligence strategies prove unfruitful, and this, argues Heyns, stems from a lack of clear understanding at executive level about exactly what business intelligence is and how it can be most effectively applied to their company. “Certain organisational structures are not aligned in a way that is conducive to getting the information they seek,” says Heyns. “A typical organisation will have a CEO, then the CFO and COO, plus an operations director and marketing director. They all have specific roles, but the information that is valuable to them actually cuts across all silos and sectors, and so the governing structure in organisations such as these doesn’t allow people to execute decisions in that lateral way. The problem is that somebody in an organisation is going to take the responsibility for executing a business intelligence project and it is going to sit within one of those silos, and that person is not going to challenge the silo that they are sitting in.” Rational organisational heads would obviously be 18/08/2010 15:45 84 BUSINESS INTELLIGENCE able to identify if and when these structural inhibitors were affecting the company’s ability to glean better results from its business intelligence approach, but often the value in the information they require is not so clear-cut. “If the value in the information is clear enough, then it’s at least a rational decision that the organisation can take to say that it is worth changing structures to deliver results,” says Heyns. “But most organisations don’t actually take this step because they don’t understand the value that they are leaving on the table. And for that reason, they are often not even willing to contemplate changing the organisational structure.” Understanding information Failure to grasp the value of the information at a business’ disposal is more commonplace than one might think. It is often not an easy task to identify where a company can streamline, cut costs, invest or provide better service: institutionalised business methods, rigid structures and general misunderstanding of where to look combine to produce inefficiencies in a number of companies. “Mobile phone companies are a good example here,” says Heyns. “These companies see themselves as sellers of airtime and data, and they are in a commodity space where they compete fiercely with other providers without ever realising how to offer true value. But if they really understood what it costs them to deliver a package of data, voice service, and really understood what their customers valued – whether they use the phone as a web-browsing device for example – they are then able to price accordingly. So they can approach certain customers with a package that might be more expensive for them, but completely meets their needs. It’s simple, but most mobile phone companies are so focused on trying to compete that they don’t actually know the real value of their service, and so they might well be making losses without knowing why. “Th is approach leaves significant value on the table, often as much as 30 percent of margin with every contract they issue. But the key thing is, if an organisation doesn’t even know that it is leaving this money on the table, they are not going to make any changes.” Companies that are looking to implement better business intelligence have, therefore, to understand the value of better decision-making and understanding of the information at their disposal. When they are able to do this, then business intelligence will show its true worth. “If a company can grasp the fundamentals of its business,” says Heyns, “then it can begin working out how its structure might be inhibiting their delivery targets. Th is is supersimple stuff – having something more than a vague idea of what they want can make all the difference. At senior level in many organisations I speak to, most guys get it. But if you talk at a mid-management level, you fi nd that many managers don’t actually realise the context in which they are trying to solve the problem is, in fact, already part of the problem. The fact that they are sitting in an organisation such as fi nance or marketing or production is the reason why they cannot see the real problem.” Bus intel lead.indd 84 The evolution of BI The inherent vagueness in and around the world of business intelligence stems from the fact that experts within its ﬁeld – the analysts, researchers, strategists and technicians – are constantly able to redeﬁne what the category actually is. To the layman, business intelligence is converting vast quantities of data into something that is visually useful, such as ﬂowcharts, graphs and statistics, but it is more openended than that. Business intelligence is nothing new, but always reappears as a new industry exciter because of its ﬂuidity and ability to adapt to ever-changing markets. BI is, though, whatever works for your business: it can be something as simple as a bakery wafting aromas on to the street so more passers-by are enticed inside, to a large multinational analysing millions of streams of data in order to better maximise proﬁt on a particular service or product. Some companies are better than others at seeking to understand what their customers value and then actually producing products that possess the key attributes identified in their business intelligence feedback. Positive outcomes such as this confi rm to business leaders the value in business intelligence, and it has become increasingly clear that information is now one of the most important assets for any organisation, if not the most. “I think there is a change happening where people are starting to realise that technology has not delivered on its own,” says Heyns. “It is a management issue that dictates how information is stored and analysed, and some businesses are so fragmented that they are unable to provide a singular view of their products or their customers. Companies have become unable to predictably get an insight around the core elements of their business because their information is stored in disparate silos scattered all across the organisation. “And this is where the real issue is for many organisations – they cannot get insight into the stuff that they should, ideally, have complete control over.” “Some companies are better than others at seeking to understand what their customers value” 18/08/2010 15:45 NEXT BIG THING 85 Verify to identify Identity management should underpin your organisation’s customer experience and acquisition strategy, states Stuart Johnston, Managing Director of Experian QAS. I n a perfect world, businesses should be able to operate in an environment of transparency, certainty and trust. Unfortunately, the cost of doing business today often means factoring in the bad guys, i.e. the fraudsters. But, identify who your customers are before you engage with them and you’re a step closer to that perfect world. An analysis of fraud trends during the first half of this year revealed an alarming and continuing surge in identity fraud. CIFAS, the UK's Fraud Prevention Service, reported a 22 percent increase in the number of victims of impersonation compared with the same period in 2009. The reality is that businesses are faced with the major challenge of determining whether a customer is actually who they claim to be, while attempting to get more customers through the door. So herein lies a critical challenge. How do you protect your genuine customers from the ill effects of identity fraud without making the authentication process too onerous? After all, the process should be about creating a positive customer experience for the majority of your customers that you do want to do business with, as well as being able to identify the few that are fraudulent. Identity verification could be one of the answers. Authenticating customers quickly and easily upfront before you do any form of exchange will keep the customer experience positive and straightforward, weeding out potential customers you don’t want; making life easy for the ones you do. There is no silver bullet remedy to increasing the acquisition of genuine customers whilst totally eliminating identity fraud, but you can ensure a fast and efficient customer authentication process incorporating stringent verification, balancing risk and return. Improved acquisition processes can work alongside risk reduction procedures through using new and innovative methods of identity verification. Experian has a new string to its authentication bow. In addition to more traditional means of verifying identity through authentication, organisations can now interact with applicants to confi rm and verify identity. Electronic authentication offers the ability to seamlessly verify an identity using various data sources. And remember that where there isn’t much data held on an individual, it doesn’t always mean they aren’t the genuine person. Often, the answer is to ask the individual. If you need to prove that Bob is really Bob then why not ask him? Who is better qualified to know? Experian’s interactive EXPERIAN ED P85.indd 85 questioning service uses the same vast data resources as electronic authentication to create a set of unique questions which only the genuine applicant will know the answer to. For the customer, it provides a straightforward, simple process; for the identity fraudster it creates a significant barrier as they will not have access to the kind of day-today information being asked. Interactive questioning is complimentary to other authentication methods, providing additional confidence and another approach to identifying genuine customers. Having greater confidence in the identity of your customers will enable you to improve how you engage with them from start to end and increase your ability in providing them with high value products and services. Genuine customers should not have to battle with endless form fi lling and memorising passwords, when the verification process can just as easily be done through answering a set of simple but unique questions. As companies emerge from the recession, improving customer acquisition, operating safely and securely, and tightening the belt are at the top of their survival checklist. Acquiring more genuine customers fi rst time, while making life as difficult as possible for those customers who are not, is part of the process. Stuart Johnston has worked in the data industry for over a decade. He has supported hundreds of organisations with their contact data management strategies and still retains an active role with several of Experian QAS’s major customers. For more information about electronic identity veriﬁcation, visit www.qas.co.uk/identityveriﬁcation 18/08/2010 16:48 86 NEXT BIG THING The end of the hourglass Innovations in data analytics will improve accuracy and accelerate business decision-making, says Ketan Karia. T he promise of data delivered at the speed of thought has been voiced by many soft ware vendors in the past. However, the fact is the industry still hasn’t delivered data analytics that would completely eliminate the time delay (as represented by the ‘hourglass’ which often appears on Windows-based machines) between data queries and output and allow businesses to base their decision-making on real-time data. Optimisation of business based on real-time data will have an immense impact on overall business performance. There will be no need or, effectively, place for long-term business plans as companies will be able to adjust their operations and interactions with customers and partners instantly, responding to their needs as they appear based on the next generation of data analytics. Th is of course leads to an immediate impact on the bottom line, with large companies becoming much more nimble and sensitive to the trends in their environments. For example, a fi nancial services organisation can make investment or business decisions based on huge data sets without the traditional time-lag associated with large-scale analytics, giving them competitive edge. An e-commerce company can cut the time of business intelligence engagements with its customers whilst IT service providers can lower their costs with better performing analytics. How is the soft ware industry currently responding to the need for real-time data? Moore’s Law claims that transistor density on integrated circuits doubles about every two years. This means that the ever-increasing capabilities of the hardware lower the costs of processing and storage and in turn enable the development of powerful soft ware. We have seen tremendous developments in hardware over the past few years. However, soft ware has not been keeping up with this rapid pace of development. Even more, businesses are struggling to keep pace with the explosive growth of data or the powerful capabilities of modern chips. One of the solutions to this issue has proved to be data processing at the chip level, which unlocks the raw power of today’s chip technology. Ingres has been developing such technology with CWI Institute in Amsterdam for a couple of years now and in June 2010 we fi nally announced the general availability of Ingres VectorWise. Intel has been a key partner in bringing Ingres VectorWise Analytic Database technology to market and was an active participant in the project announcement in July 2009. Ingres VectorWise extends Moore’s Law to business applications for the fi rst time. For businesses this provides the ability to manipu- INGRES ED P86.indd 86 late huge amounts of data and increased speed, even on the move, effectively giving the ability to process complex business queries at the speed of thought. Our VectorWise beta customers report that answers to business queries that previously took several minutes are now available in seconds, whilst partners report the amount of time that big analytical or business intelligence projects usually take is being cut in half. Most of all, we are very pleased to hear from customers how Ingres VectorWise has helped them remove former data analysis obstacles and accelerate business decisions. It has been particularly welcomed by the financial services community, where realtime data can lead to immediate business impact. Ingres VectorWise also gives rise to other important business benefits such as greater performance with small servers and radical reductions in disk storage, which significantly lowers power and air conditioning requirements, and the carbon footprint of a company. Reduced hardware cost of course also leads to lower total cost of ownership. Does Ingres VectorWise mean the end of the ‘hourglass’? It certainly represents a very important step towards decision-making based on real-time data and in turn enables companies to always have access to up-to-date information about customers, partners and market trends. Does it also mean the end of the long-term business plan? I think so. The new fast analytics will change the way businessmaking is done, enabling companies to be more responsive and flexible as well as to make informed decisions faster than ever before. Ketan Karia is CMO and Senior Vice President of Marketing at Ingres. He is responsible for all aspects of marketing and services, working closely with the sales and marketing teams worldwide. He is also responsible for the marketing of global partnerships. For more information, visit www. ingres.com/performance 18/08/2010 15:46 INGRES AD.indd 1 12/08/2010 11:13 88 INNOVATION JOHN KEELING ED P88-92.indd 88 18/08/2010 15:47 INNOVATION 89 John Keeling, Head of IT for the John Lewis Partnership, tells Ian Clover how the business calls upon IT innovation to meet the constant demands of an increasingly tech-savvy consumer. L ondon’s Victoria train station is remarkably busy and bustling at any time and on any day of the year. As one of the main transport hubs in and out of the largest city in Europe, this is understandable. But visit in the middle of a weekday at the height of summer – do not let England’s perennially grey outlook fool you; London in late June can be stifl ing – and you’ll soon fi nd yourself embroiled in a battle against the elements, the traffic, the noise and the army of commuters and tourists fighting their way to their destination. Hardened Londoners have developed an effective shield against such an onslaught. They stare blankly ahead, fanning their faces with rolled-up copies of the city’s Evening Standard dominates one section of the famous Victoria Street. Here, in the heart of London, you would expect the headquarters of one of the nation’s best-loved high street names to be equally hectic, but once through the glass doors and into the foyer, the traffic horns, pneumatic drills and sound of the street melts away. Calm envelopes you as the organisation’s smooth professionalism takes over. High up on the tenth floor is where John Keeling and his team work. Panoramic views towards Buckingham Palace and Hyde Park in the distance immediately draw the eye, but what is most striking is just how peaceful and relaxed the office is. In a way, it is hard to believe that this is the IT hub of an organisation that has experienced healthy growth in the last quarter, driven in part by strategies developed in the IT “Over many years now we have actually got to a point where our customers expect high standards of reliability and service from our technologies” - John Keeling (pictured) newspaper, jostling and rushing with or against the madding tide of people; expertly straddling the narrow path that separates rude from hurried. Respite is hard to come by. Pubs adorned with colourful hanging baskets of flowers look charming and inviting from the outside, but are often oppressively heaving within. Cold blasts of air conditioning as you enter shopping centres tempt you to linger under their chilled breeze awhile; sharp elbows to your ribcage quickly tell you that that’s not such a good idea. Amid such organised chaos stands the John Lewis Partnership’s HQ. Tall and bulky, the partnership’s relatively nondescript building JOHN KEELING ED P88-92.indd 89 departments that were designed to help the partnership gain a better insight into the shopping trends and habits of its loyal customers. John Lewis, as well as Waitrose, are muchloved high street names throughout the UK. John Keeling, as an IT Director for the partnership, is tasked with the challenge of helping drive the company to greater heights through the implementation of better, bolder and more inventive IT strategies. As he relaxes into his seat – eyes sparkling and a contented air settled assuredly on to his shoulders – it is hard to imagine how a man laden with such responsibility can appear to take it all so easily in his stride. 18/08/2010 15:47 90 INNOVATION How does the John Lewis Partnership utilise technology to help improve its customers’ experience? John Keeling. The John Lewis Partnership doesn’t just use technology to become more efficient, which means better supply chains, more efficient administration procedures, things like that. We also use technology to create differentiation; particularly around the way we conduct customer service, and the way we provide a different experience to our customer. So it’s more of a strategic thing; if you go into a John Lewis store today you see the John Lewis Gift List system, which used to be the old wedding list system. Customers can go in, they take a scanner and walk around the shop, scanning items they’d like to put on their list, and then that list can be put online for people to view and purchase from. That system was, and still is, a market leading product that uses technology to actually provide a real different kind of service. And if you go into our Waitrose supermarkets you will see many with our self-scan hand scanners, designed for quick scans that can also drive increased footfall to our stores. These types of technologies make a difference for us. So from this point of view, technology provides improved customer service, which enhances our reputation of delivering great customer service and great value. Can you describe how these technological decisions are communicated through to the business management? JK. We’re business-driven; we work very closely with the business and system teams and the underlying technology these departments use. Th is is a very close relationship that enables us to look at not only new technologies that we are from our technologies, and this information is fed back up to myself and the systems team. There is an expectation that people want instant service now; they are not going to wait around, because they will go off somewhere else very quickly if your systems are not reliable and fast. What green initiatives and environmental responsibilities is the John Lewis Partnership adopting over the next few years? JK. Like any other retailer we need to take these issues seriously, and I think we have taken quite a lead in green IT and a number of other initiatives. There are two ways of looking at what we’ve done. Firstly, there is the greening of IT, which is making IT as ‘green’ as you can. But it’s also about how IT can be used to make your business green. We created awareness fi rst, which is an important and effective step to take, and then the next step we took was developing a system that automatically turned systems off where before they would have been left on. Th is was a simple technological change that has had a notable environmental impact. Secondly, we have made quite a big move recently toward what we call our second data centre, where we have worked very closely with BT to make a centre that is very, very green. The sort of things you put in there is virtualisation, which means that we are using smaller power units but producing more computer power. The whole way that we drive performance through them takes a lot of effort and time, but it has been worth it – we now have a very high green rating. The IBM mainframe that we use is one of the greenest platforms in the business, but they can only become green if you can actually get the most out of it, so it is really important that you have on board the people who can make this “That is where some of the issues of the cloud lie: is it secure? Where’s my data? Because there are certain rules and legislations that apply to that data, so I can’t just have it floating around anywhere” implementing, but also identify how reliant we are on our technology. So whether this is the point of sale system or customer systems that we rely on – and we do – they have got to be resilient; they have got to be robust; they have got to be available. And over many years now we have actually got to a point where our customers expect high standards of reliability and service JOHN KEELING ED P88-92.indd 90 happen, skilled partners who can affect change. We also manage the temperatures of our data centres too. By allowing them to run a few degrees hotter than you might otherwise, you can significantly reduce fuel bills, so quite often our green initiatives have been able to save us money too. Managing the data centre so that it is efficient is absolutely key to becoming greener. How does the John Lewis Partnership view the current trend for cloud computing? JK. I sit on a number of advisory boards that consider the cloud, and the point I always like to raise is – what is it? What is the cloud? In my view, there is nothing new here. People talk about things like soft ware as a service, or they used to talk about time-sharing back in the 60s and 70s, where you used to buy computertime from a company who ran a big data centre somewhere. These were early forerunners to the cloud. What the cloud of today is really about is buying service: whether it be storage; whether it be CPU mixes or CPU processing power; whether it be a piece of soft ware that you buy that runs somewhere in this cloud, whatever it might be. An example is Google mail – where you’re buying a service rather than running it yourself, so you’re buying where that service sits. I see the cloud as an alternative delivery model, where you don’t have to do all the work yourself. The difference between private and public clouds is a very interesting one. Because we run our own data centre, a virtualised data centre, it has storage area networks – a shared storage platform, which runs an IBM mainframe, which is again a shared platform where you’ve got networks that are actually shared. In some respects, our internal customers, our internal trading divisions, are buying from us processing power. In some ways this could be classed as the cloud. However, I think there are a number of steps that need to mature before this could be considered a full private cloud. Externally, in the public sphere, it is the same thing. We could just be buying processing power that we use, and it could be anywhere in the world. And I guess that is where some of the issues of the cloud lie: is it secure? Where’s my data? Because there are certain rules and legislations that apply to that data, so I can’t just have it floating around anywhere, in many cases (but not all) we need to actually know where it is. These are the issues that are the main inhibitors for public clouds. When you are a business of our scale, you can quite economically create your own private cloud, so any organisation that has this capability can get the benefit of both. So, you could create a great private cloud for all the sensitive data and manage that yourself, and then there are other areas of the business that perhaps make more sense to put out into the public cloud. So in terms of ‘the cloud’, I think it is really about different delivery models, shared delivery models, and there are various challenges about using it: commercial challenges, security challenges 18/08/2010 15:47 INNOVATION 91 and economical challenges, and you’ve got to make sure that it is right for your business. Do you think the public cloud will reach a point of maturation whereby you would be comfortable putting more data out there? JK. I do. I think so, over time. It still has a way to go but eventually there will be an even greater commoditisation of IT where, just like electricity, we’ll just plug into the national grid and away we go. We have got some way to go until we get to that point, but we are talking about an industry that does mature things, so it takes a while for that mature state to be realised. So I think that the John Lewis Partnership will continue to work toward a plan where we continually mature what we already have and create a private cloud. However, we will be looking for opportunities to use the private cloud particular for suitable point solutions. JOHN KEELING ED P88-92.indd 91 How do you align business acumen with IT expertise in order to ensure that the IT department is seen as more than just a cost centre? JK. I think we have a great advantage here at the John Lewis Partnership in that we are coowners in the business. The Partners in our IT departments take a huge interest in not just their own functions in the business but also in the company as a whole. As a result of that, we have developed a working culture that allows us to become natural collaborators with the business. One of our principles is for us to work together. Our IT departments work very well with our business, which is a really big plus, helped by being co-owners of the business; there’s a common goal and common interest there that makes a big difference. But to be taken seriously and to be trusted by fellow business partners, you’ve got to be able to deliver the basics. Once you start doing that then there are more opportunities to develop thought leadership. Th is has become more difficult in recent years because technology in general has started to get closer to the customer, which presents a whole new set of challenges. People in general – not just the IT community – show more of an interest in technology today, which is one of our main challenges. The Internet has made people more technically savvy, which leads to increased security risks, added expense, different types of training and recruitment – all sorts of challenges are evolving for the IT department. So I think it is important for the IT community here to be a trusted partner. When you are, people will come to you for solutions, and that is one of our challenges – to make sure that we can be seen to be responding to requests for assistance in a positive way. There are three things I look back on over the last 15-20 years that have had large impacts on how we work. The fi rst was the PC, people having their own desktops at home. Then there was email communication; people creating documents, sending them, becoming more technically savvy, linked up to an online community, things like that. The Internet created so many commerce opportunities, but also instant access to information and increased security threats. I think we’re faced with a new wave now, which is the mobility and connectivity offered by smartphones. Over the next few years we expect to see enormous growth in this area, where the ‘phone’ element is secondary and people use it for Facebook, Twitter, GPS, geo-location, games, TV etc. I see huge potential here, and huge challenges too. I see a changing face in the way our customers, and indeed society, will behave and shop. Even today people can walk into one of our stores armed with an iPhone app that scans prices and it gives them the three best prices on the market. Or you can download vouchers on to your phone and then a store knows where you are and offers you a real-time deal. The expectations on service this brings is completely different to what we know. Technology is forming new habits, and we have to react to that. From an IT perspective, how do you ensure the John Lewis Partnership is ready for the evolution the smartphone market is driving? JK. I think we have to recognise that there is a lot of innovation going on out there. Companies like Apple and Google, as well as Microsoft , are changing the landscape, which is something we’ve got to be mindful of. In this aspect, it is 18/08/2010 15:47 92 INNOVATION the mobility issue that is most challenging; people now have increased access to the Internet through mobile devices, and the way they are communicating with one another through Twitter and what not, will change the face of commerce. We are faced with a generation that is constantly online, so the trick is how to manage that rather than fight it. We are constantly monitoring the marketplace for new social media tools that may have some impact upon the business. The implications at the moment are that if people are Twittering away about the Partnership then we’d like to know what they are saying. Th is is something we need to begin to consider. It’s like having an ongoing real time customer survey! So as smartphone users become more and more able to go into our stores and scan our goods in order to fi nd the best price, we need to be there, reacting to this change in consumer behaviour but, not only that, maintaining what our customers expect from us, which is good customer service, good quality in all we do. The challenge is not just ‘getting it’, but doing it well, too. “I think our modern and agile infrastructure is extremely capable and a big plus for the John Lewis Partnership” any place, anywhere. One of the largest investments we have made in the IT department is in ensuring our data centres can provide real agility. We host a lot of websites, and we have the capability to do this because our data is virtualised, it is green, it is efficient – we have really underpinned our technology, which is something I’m extremely pleased about. We also have a communication network that has converged data and voice. By implementing this, we have created a digital landscape that enables us to do quite a lot things, such as putting out our own Wi-Fi to link into our networks. There are many more digital infrastructures that we are looking at that we are not doing yet, but are now in a good position to do so. We have made big investments in technology in order to be ready to face the challenges of a digital, tech-savvy world. This commercial consumerisation of IT that is starting to appear is one of the main challenges, and I think our modern and agile infrastructure is extremely capable and a big plus for the John Lewis Partnership. Our fit and ready IT department is constantly evolving to meet the challenges posed by the consumers and support the needs of the business. How do you think consumer technology will alter the way that the John Lewis Partnership, and all major commerce outlets, conduct their business? JK. Our business is becoming a multi-channel business, and we will continue to refi ne that so that it is a more seamless experience for the customer. We are what you would call ‘clicks and mortar’, in that, whether it is a click of a mouse, a swipe of an iPad or an actual physical shop, we can deliver what our customers want. As a business we are looking at different ways of engaging customers, so we have large stores, smaller format convenience stores [Waitrose], catalogues, the Internet, some franchises in the Middle East, smartphone access; basically everywhere the modern consumer expects us to be, we’re there. The IT department has had to learn to adapt to this change. We need to know what our customers are connecting to, for example. Are they connected via 3G? What system are they coming through to? How can we identify this customer? Challenges like this are forever coming at us, so we have to understand our customers, understand availability, which links to the core traditional systems a normal retailer has to know, just on a larger, slicker and real-time basis. So this leads to challenges around the types of systems and architecture that is required because in the end, IT is about data, and how you deliver it. It is no use if you cannot deliver it and understand it. It has to be available for any time, JOHN KEELING ED P88-92.indd 92 18/08/2010 15:47 EXECUTIVE INTERVIEW 93 A virtual security gateway opens up to the cloud With many companies taking their IT towards the cloud, Andreas Åsander reveals a new security gateway that protects from the inside out. Andreas Åsander is Vice President, Product Management at Clavister. Åsander joined the company in 1997, supporting key Clavister customers such as FMV, Bofors and SAF. How does a virtual security gateway solution differ from traditional IT security solutions? Andreas Åsander. First of all, the virtual security gateway is different from the traditional IT metric security solutions in the sense that they are running inside the virtual environment, rather than on the outside protecting whatever goes to the virtual infrastructure. The major difference is that there are a lot of things going on inside a virtual infrastructure, especially since VMware released the vCloud-based hypervisors. The value we bring is that we’re able to create virtual security on the inside, which means that you don’t have to build isolated islands of multiple virtual infrastructure. So, traffic doesn’t need to leave the virtual infrastructure to go out to an external, traditionalised security and then come back in. All of these security inspections can take place on the inside. What advantages does this offer to companies that have migrated their IT services to the cloud? AA. The major advantage is that you’re able to protect your cloud-located applications and resources using the same methods and protection mechanisms as you would if you were doing it in a traditional physical environment. Th at means that you get the same level of control of what’s happening in the cloud as you would do if you were “The value we bring is that we’re able to create virtual security on the inside” having that host in a normal in-house data centre. In the end, I think that’s what customers are looking for. They want to feel the same level of control independently of it being cloud-based or traditional-based. How scalable are virtual security solutions? Can they be adapted to the needs of large corporations and SMEs alike? AA. Absolutely. In the case of Clavister, we have a unique licensing system. First of all, regardless of whether you’re using a high-end, small or virtual solution – all of them use the exact same piece of soft ware, but it’s regulated and licensed depending on how much capacity or how many CLAVISTER ED P93.indd 93 connections you want. We are able to fi ne-tune licenses that fit the SMEs and the large corporations alike, or even at telecom equipment manufacturers; they’re all able to utilise the same features, but they’re packaged and priced differently, depending on their needs. What is unique about the solutions that Clavister offer compared to others that are on the market? AA. I believe there’s a five-pillar structure to what’s unique about Clavister compared to other virtual security gateway vendors. Number one is that we have proved to be trusted and have been around since 1997, delivering more than 150,000 products and licenses worldwide, so we’re not new to the game in terms of virtual infrastructures and security solutions. Second is that we are complete and scalable. Our offerings include the complete unified management feature set; having worked for this long with this many customers, it drives us to have a very complete security solution. The third is that we have flexible licensing, meaning we can tailor a license that fits your need today. So, you don’t need to over-invest today to be secure for tomorrow. At the same time, you’re able to meet the exact business needs you have today without being locked in on a scenario where we have to do a big rip-and-replace activity to adapt to unique conditions. Number four: I’d say that we have a supreme technology. We have the Clavister CorePlus, which is the fi rmware that’s running. We don’t rely on any underlying operating system, which is rather unique in our industry. Finally, we have a unified set management approach, which means that if you have an infrastructure with Clavister security, you can manage your virtual security gateways, taking care of the cloud using the same tools that you’re using when you’re administrating your physical traditional security gateways, or even your soft ware base that might be running on your other hardware, like a Dell, HP or IBM server. Independently on each one, you are able to administrate all of them using the same management and the interface looks exactly the same, no matter what the platforms. It’s also designed to manage up to tens of thousands of gateways, so your entire enterprise infrastructure can be managed from one console, allowing you to work up to hundreds of simultaneous administrators. Just as easily, it can be one gateway of one administrator – allowing for unified management. 18/08/2010 15:43 94 VIDEO CONFERENCING Hotels and airlines might not like it, but advancements in videoconferencing technology are making endless business travel increasingly obsolete, as CXO discovers. VIDEO KILLED THE WAITING LOUNGE STAR Video Conferencing 94 18/08/2010 15:48 VIDEO CONFERENCING 95 T V and movie producers have long had a soft spot for video conferencing. Its pseudo-futuristic functionality enabled and perhaps even encouraged shoddy dialogue to make it past the cutting room floor as viewers were dazzled by the ability of two people to interact via screens rather than focusing on actual plot development. In the real world, video conferencing had been eliciting similar yelps of awe for decades. Despite it being an ostensibly simple and effective means of conducting meetings and collaboration, most users were overawed by the technology, which has been stymied at various stages of its evolution by poor connectivity, unreliability, low defi nition and sound delays. Costs, too, have been prohibitive in the past, as demand has lagged behind the imperceptible technological advances that have been occurring regardless of adoption rates. In the past few years, however, the industry has matured and evolved to such a point where most users are no longer put off by the potential complexity of the systems. Today’s video conferencing interfaces are much more user-friendly, enabling even the most technophobe of executives to get on with business without having to call upon the IT work experience kid to bail them out. Costs have also fallen to a point where reliable, good quality kit is a cost-effective proposition when the alternative is endless and expensive travel and hotel costs in order to conduct face-to-face meetings. Earlier this year, the travel chaos caused by April’s volcanic ash cloud brought the efficacy of videoconferencing into sharper focus as grounded businessmen and women were forced to seek alternative means of conducting their duties. “Wherever possible we use different means of communications to stay in touch with our customers, our vendors, our partners and our employees,” says Kevin Griffi n, CIO EMEA for GE Capital Bank. “We have video conferencing capability in-house so where travel has proved unavoidable, as it was in April with the ash cloud problem, we looked to get them connected via the best means possible. “At the time of the ash cloud, we had leadership team members right out across Europe, Asia and the USA, so in some cases there were guys who were nowhere near a GE site and they had no option but to audio in. But where people were close to GE sites we were able to connect with them via videoconferencing technology and found that we could still work very effectively.” Cost reduction Although videoconferencing technology is occasionally used to conduct business between partners, vendors and competitors, its primary use for the moment is as a means for communicating and collaborating between various offices within one corporation. John Keeling, Head of IT for the John Lewis Partnership, has been impressed by the ability of technology to make internal collaboration easier. “The way we collaborate can actually make a big difference to a business like ours,” he says. “We’ve got a mobile workforce, which is only possible thanks to the various tools at our disposal, such as smartphones, laptops and now video conferencing. We have this capability up in our offices in Scotland so that they can conduct face-to-face style business with our London-based office. Th is shows that technology capability is becoming an even bigger driver for business.” Technology in all forms is becoming cheaper and more consumerfriendly. The new iPhone 4 has videocall capability, and it cannot be long before the idea of sitting down to a high-speed, high-resolution videoconference becomes second nature across the globe. Th is proliferation of the technology has come on the back of its perceived cost-effectiveness. If the alternative is time-consuming and expensive air travel, then reliable and relatively inexpensive videoconferencing will win every time. “Like a lot of other companies, we were focused on cost reduction and certainly the Video Conferencing 95 last couple of years has driven us to get even more cost conscious,” says Griffi n. “We see video technology playing a role in that. So one of the costs that we are trying to control is travel and living/accommodation, and that objective is driven by video technology as a way of mitigating the impact of us asking the organisation to travel less.” Like the internet, email and smartphones before it, wider adoption of videoconferencing technology will come to reshape and redefine the way we do business, bringing together formerly disconnected countries and companies in a way that was always thought possible (thanks again, Hollywood), but always seemed just slightly out of reach for the average corporation. “Videoconferencing will eventually result in faster decision-making and shorter time to market, which are key competitive advantages for us and, I suspect, for every other company” “Videoconferencing is going to allow for more effective management of geographic location, because for businesses like ourselves,” continues Griffi n, “videoconferencing that is life size, high defi nition quality video and wideband audio provides a life-like experience to users. We have got executives that have very high expectations like every other company, and we are fi nding that those expectations are being met and they love using videoconferencing. The adoption rate among the executive population is very, very high.” Longer-term, videoconferencing will, believes Griffin, enable greater collaboration that will prove extremely beneficial to those businesses that decide to adopt the technology fully. “The long-term effect is you drive more cohesiveness because you are having more frequent meetings as people’s work-life balance is not disrupted as much. So videoconferencing will eventually result in faster decision-making and shorter time to market, which are key competitive advantages for us and, I suspect, for every other company.” Future tech To the uninitiated, videoconferencing remains a wildly exotic technological innovation that can appear rather daunting to use. Overcoming this cultural aversion to both the technology and the initially unusual task of talking to a screen and seeing your own image beamed back at you in the corner of the monitor will take some time, but widespread adoption will come sooner rather than later. “Our executives have shown no reluctance to embrace videoconferencing technology,” says Griffi n. “We found that the high defi nition nature of the technology that we use has allowed us to really allow remote locations to stay in touch, and that virtual face-to-face contact is something that our executives have really taken to – meetings that they would otherwise not have travelled for they are now participating in.” Once the value of videoconference technology has been realised, overcoming minor technicality concerns becomes an easy task. “The key thing for us has been ease of use,” continues Griffi n. “Technology can be an inhibitor sometimes if it is difficult to use. So the key thing about this high defi nition video conferencing is its ease of use. It needs to be easily scheduled and it needs to be easy to operate. Our technology telepresence is a one-touch system whereby the executive walks into the room, presses a button and they are online.” No fiddling with cables or peering behind monitors, then – simplicity is paramount, and modern video conferencing technology is not only simple to use and increasingly cost-effective, but is becoming more commonplace throughout various sectors of the business world. 18/08/2010 15:48 96 ROUNDTABLE Place-to-face Evolving technology and the recent Icelandic ash cloud disrupting travel has brought the issue of videoconferencing into sharper focus. CXO hears four industry experts discuss the business beneﬁts offered by videoconferencing technology. Clive Sawkins brings a wealth of experience to BCS Global as CEO and Senior Vice President, Global Sales and Marketing. Sawkins’ previous position was at Cisco Communications, where he was responsible for the Uniﬁed Communications and Telepresence Video Collaboration business across Europe. He has also held senior positions at Avaya, where he was Vice President, and at Nortel Networks. VID CONF RT P96,97,99,101.indd 96 How can today’s videoconferencing technology enable companies to save travel and communication costs? Clive Sawkins. As the environment for collaboration is changing, the ‘tried and true’ collaboration method of face-to-face meetings has become too costly and has a huge impact on employee productivity. Companies now need collaboration technologies that allow anyone, anywhere, anytime and on any connected device to work together. With the potential for significant reduction in travel expenses and the ability to conduct productive meetings leading to efficient and effective decision-making, videoconferencing is fast emerging as one of the most feasible enterprise collaboration technologies. Today’s videoconferencing and telepresence solutions enable companies to have an immersive experience that is very close to a face-to-face meeting experience. While face-to-face meetings require customers or employees of a company to travel, arrange for hotels and transport – in addition to the productivity loss and stress resulting from airport security and delays, traffic, spending hours just to get to a business meeting lasting an hour or two – a video conference meeting can be conducted with greater ease without leaving the comfort of one’s office. In addition to this, if a company has implemented the right video infrastructure and has also engaged with a managed service provider to manage their day-to-day visual collaboration needs, the managed service provider “Today’s videoconferencing and telepresence solutions enable companies to have an immersive experience that is very close to a face-to-face meeting experience” - Clive Sawkins can provide the company with videoconferencing services that are easy to use by their employees at all levels, irrespective of their technical knowledge, resulting in enhanced employee productivity, improved collaboration, and reduced business costs. Anthony Finbow. Globally active and distributed businesses are increasingly turning to IP-based videoconferencing – a key pillar of the new enterprise communications architecture – as a mechanism to significantly reduce travel costs and achieve working productivity gains. There is a clear business case for various industry verticals from manufacturing, where globally distributed design teams are able to collaborate more effectively in real time using the medium, to legal services where witnesses may be required to testify remotely, before a jury, over videoconferencing 18/08/2010 16:44 ROUNDTABLE 97 link. The rapid evolution of Sales 2.0 methodologies, where the use of videoconferencing is supplanting traditional face-to-face meetings for many customer interactions, is also an area of significant growth for the technology. Despite some scepticism, the evidence shows that sales yields are maintained and cost of sale significantly reduced through the use of the medium, which enables many more interactions with customers, or potential customers, than might otherwise be possible. A further efficiency can come through the delivery of video communications as yet another application over a common IP network infrastructure. Th is holds the promise of significant cost savings but to realise such savings requires that both real time voice and video communications be managed as a distinct class of applications. In all cases user experience and, therefore, quality of experience-based service management is key. The challenge of the IT manager is to deliver the required experience without consuming all available network bandwidth, thereby compromising the delivery of other applications over the infrastructure, eradicating the envisaged cost savings and potentially damaging the business. Janne Lauanne. Much more important than merely saving travel costs is the significant and comprehensive benefit that companies gain by deploying distance working technology on a large scale and introducing a new virtual way of working. This new way of working will very positively affect utilisation of different resources and increase productivity. We are no longer talking about saving travel costs, but managing the company’s resources and operations in such a way that facilitate the organisation to do three times more with the same knowledge-worker headcount than they managed to do before introducing the new virtual way of working. A virtual way of working means being able to take the needed meetings anytime and anywhere. Instead of booking meetings weeks ahead it usually is possible to take a virtual meeting during the next few days, maybe even the same day. It’s just so much easier to book one hour in your colleagues’ calendars than to try to book an entire day for the meeting. Jonathan Tracey. Videoconferencing technology has been an unrealised goal for many companies for a long time as technology has always failed to deliver on the expectations of an in-person meeting. Business travel has been seen as the only choice. In 2005, LifeSize offered a viable alternative to business travel by bringing to the market the world’s fi rst high defi nition (HD) video communications technology. With the wide adoption of HD technology, businesses are able to have face-to-face meetings that are close to a real meeting experience, reducing the need for time-consuming and costly travel. Now that the technology gap is closing, the process of educating users to consider using video must begin, and VID CONF RT P96,97,99,101.indd 97 simple to use systems are a must: if it’s too complicated to use, people will not take the time to learn. As the cost of systems comes down and the quality of the experience rises, a simple return on investment calculation can show systems paying for themselves in a few short weeks. In addition, systems that are easier to use encourage more widespread usage across organisations, which not only further reduces travel expenditures, but can also boost employee morale and productivity. These factors, coupled with improvements in the reliability of the technology, have allowed businesses to change the way they work and become significantly more effective without incurring the costs of long distance travel. Concerns about the impersonal nature of virtual meetings and about privacy prevents some companies from partaking in videoconferencing. How would you allay these fears? CS. Though the concerns around the impersonal nature of using virtual collaboration as a business tool are pretty mixed depending on the type and size of a company or the applications it is used for, these tend to nearly disappear as usage within an enterprise increases and the business begins to see the value and benefits that visual collaboration technologies like videoconferencing and telepresence can provide. Anthony Finbow is CEO at Psytechnics Ltd, a leading provider of voice and video communications performance management solutions. Prior to joining Psytechnics he was Managing Director at MetaSolv Software Inc, which was acquired by Oracle. Previously he was CEO at Orchestream plc. AF. HD video and wideband – or HD – voice are quickly becoming the standard for all but desktop videoconferencing. Further advances in camera technology and placement and the effective design of the videoconferencing space make it possible to conduct even the most demanding of meetings using this medium. Telepresence, by definition, aims to replicate the face-to-face meeting as much as is possible. Privacy is also an important issue but the application of the technology to such fields as telemedicine, for instance, is a testament to how far the industry has come in addressing the issues. The video conference will not replace the face-to-face meeting for all important interactions, but it enables many more interactions than might otherwise be possible, and it provides a richer communications experience than a pure voicecall. JL. Impersonal could also be applied to audio conferencing. Having to conduct a longer conference call with say six or more people and listening to the bad quality audio is not something you want to do too often. On the other hand, there is nothing impersonal about having high defi nition video meetings where you feel like you are in the same meeting room with the other participants. Th is level can be reached by utilising the latest high defi nition videoconferencing systems, certainly immersive telepresence studios and even the latest high defi nition desktop solutions, all of which Videra’s Virtual Office service offers. Those who doubt this should take a demo on the latest solutions. For those who are worried about the privacy: taking part in a video call is as private as taking part in a face-to- “The delivery of voice and video communications applications requires a different approach to management” - Anthony Finbow 18/08/2010 16:44 LIFESIZE AD.indd 1 12/08/2010 11:17 ROUNDTABLE 99 face meeting where people are physically present, with the bonus of having the possibility to mute your microphone and steer the camera so that you can’t be seen by the other participants. JT. With the advent of HD, the video meeting experience is as close to being in the room with someone as it is possible to achieve. HD video allows you to see every movement and every gesture. The easy-to-use, intuitive interface invites interaction and encourages continued use. Dramatically increased usage means enhanced communication and greater productivity. To ensure confidentiality, modern cryptographic technology allows real-time encryption of sensitive meetings over any network to help allay any privacy fears. Th is technology is seamless, so from the user’s perspective it all happens in the background. How can companies be sure that technology blips will not interfere in the videoconferencing experience? CS. For companies that want to implement an effective videoconferencing or telepresence solution, there are five key points to understand. The first is to defi ne the enterprise visual collaboration strategy: develop a comprehensive enterprise visual collaboration strategy with an emphasis on making videoconferencing or telepresence a mainstream collaboration tool within the enterprise. Secondly, defi ne the enterprise inter-company B2B visual collaboration strategy: in addition to having a strategy for intra-company visual collaboration, it is of vital importance to defi ne the corporate goals, policies and strategy for enabling intercompany B2B visual communications with customers, suppliers and partners. The third thing is to select the right network: determine a network that is right for the enterprise in terms of technology, network availability at desired locations, bandwidth required, and costs based on usage. Fourthly, selecting the right video equipment will help greatly: determine the video equipment that is required to make it all work, including selecting the right vendor, the right video infrastructure, the right boardroom system, the right desktop system etc. Lastly, employ the services of a managed service provider (MSP): An MSP can be a key enabler in providing the company with a high-quality, reliable and consistent service. In addition to this, the advantages of engaging an MSP can result in improved effective and efficient operations, including: managing the service on a day-to-day basis thus reducing the burden on in-house resources, making the service easy-to-use resulting in increased video usage adoption and providing value-added video concierge services that enhance the videoconferencing meeting experience – in addition to converting all CAPEX to OPEX over a period of time. AF. The delivery of voice and video communications applications requires a different approach to management. It is not sufficient to manage network performance using traditional IP QoS tools and just expect user experience VID CONF RT P96,97,99,101.indd 99 to be satisfactory. Service management based on users’ quality of experience is now broadly accepted across the industry as the way to ensure optimum performance and enable effective troubleshooting in the event of service issues. Without the right tools, the cost savings and productivity enhancements – which drive the business case for adoption of videoconferencing solutions – are compromised, with potentially damaging consequences for a business. The emergence of ‘the new enterprise communications architecture’, incorporating IP telephony, voice and video softclient architectures, unified communications, desktop and boardroom video collaboration elements, all required to interoperate effectively, is driving businesses to adopt to solutions to enable this approach to service management. “Taking part in a video call is as private as taking part in a face-to-face meeting where people are physically present” - Janne Lauanne JL. Technology blips have been one of the major hurdles for the industry and to prevent the ‘technology factor’ from hindering the adoption of remote meetings and the new virtual way of working, companies are changing their purchase behaviour and demanding services instead of hardware. Videoconferencing in many organisations has already reached a business-critical role that is underlying this trend. Companies want to work with a service provider rather than with a hardware reseller as services offer SLAs, availability guarantees and sanctions if the service levels are not met. In general, technology is continuously developing, which also makes video more dependable. While video quality today is full high defi nition, the bandwidth consumed is the same as what a few years ago was needed for standard defi nition video with a fraction of the amount of pixels used today. Still, it is just technology that someone needs to make work. JT. People expect technology to work – every time. Pick up a phone anywhere in the world, dial and connect instantly without a thought to the technical feats behind it. There is no thought about scheduling the call, or the amount of network traffic. You want to communicate when the time is right for you. LifeSize brings to the table a unique collection of technologies that help disguise common issues found on many networks to ensure a seamless video meeting experience. These include packet loss concealment algorithms, automatic bandwidth control and other technologies that help deliver an uninterrupted meeting experience. Because technology blips can be one of the biggest hurdles to adoption of this technology, LifeSize focuses on ensuring the user has the best experience on any network. Janne Lauanne is a director at Videra, responsible for videoconferencing business globally. Lauanne has been working in the industry for 10 years and has transformed Videra’s business from manufacturing and reselling videoconference hardware to customer-oriented service businesses through the Virtual Ofﬁce service concept. Lauanne has opened multiple international markets for Videra and seen the company grow exponentially. 18/08/2010 16:44 VIDEOCONFERENCING MADE EASY MANAGED VIDEOCONFERENCING AND TELEPRESENCE SOLUTIONS FOR TODAY’S BUSINESS …ANYWHERE, ANYTIME, ANY NETWORK, ANY DEVICE HIGH-QUALITY, RELIABLE, CONSISTENT AND EASY-TO-USE VIDEOCONFERENCING SERVICE THAT “WORKS” AT ALL TIMES FLAT-RATE PRICING MODEL SUPPORT FOR TELEPRESENCE, ROOM AND DESKTOP SYSTEMS “INTER-COMPANY” B2B VIDEO CONFERENCING MULTIPLE SERVICE DEPLOYMENT OPTIONS: CUSTOMERHOSTED, BCS-HOSTED, OR HYBRID GLOBAL VIDEO EXCHANGE WITH POPS IN LONDON, TORONTO, NEW YORK, HONG KONG AND SHANGHAI 24 X 7 X 365 GLOBAL HELP DESK NORTH AMERICA EMEA APAC Tel: +1-866-897-2503 Email: email@example.com Tel: +44 (0)1753-705-400 Email: firstname.lastname@example.org Tel: +852-3679-3698 Email: email@example.com www.bcsglobal.com BCS_AD2.indd 130 12/08/2010 10:54 ROUNDTABLE 101 If the user has a good experience with the technology, he or she is more likely to choose a video call over business travel. In what ways do you see videoconferencing technology evolving in the future? CS. As videoconferencing becomes more prevalent within an enterprise as an intra-company collaboration tool, there will be a high demand for inter-company B2B visual collaboration arising from the need for enterprises to collaborate externally with their customers, suppliers and partners the same way they communicate with their peers within the enterprise. As the industry sees more advancements in technology, video endpoints will become cheaper, more feature-rich, more compatible and interoperable, and will have more value-added applications developed specifically for video collaboration. The video collaboration industry will see a surge in high-end telepresence systems slowly replacing a majority of room-based systems in larger enterprises, while roombased systems will record a high growth in the small and medium-sized enterprises. Also, desktop videoconferencing will see a huge growth trend, mainly due to increased enterprise-wide adoption, emergence of unified communications and the need to be connected at all times. AF. The migration of videoconferencing from dedicated telepresence suites and dedicated in-room hardware through to the desktop is happening now. Technology is available to enable the seamless upgrade from instant messaging through voice call to videoconferencing, mid- and the like. Th is adds presence awareness features and increased ease of booking meetings to videoconferencing solutions. In addition to the trend of more and more companies subscribing to services instead of buying hardware, this UC trend will shape the industry. Standards will continue to develop and we will see even greater resolutions and better frame rates in the future. No matter how videoconferencing technology evolves, Videra will always be utilising the leading technologies from all leading vendors in the virtual office service concept and always bring the new opportunities to its customers. JT. Video communications technology will continue to evolve, delivering ever higher quality experiences without the need for massive investment in networks and infrastructure. As the technology becomes more advanced, it is important to keep a focus on the user and ensure that the system is simple to use with features such as one button calling and recording and simple layout controls. Bringing down the cost and complexity of video will enable LifeSize, together with its parent company Logitech, to deliver on a vision of video for any business, anywhere – not just in the board room for a select few, but in any meeting room on the office desktop, while telecommuting from home, and on the road. LifeSize will continue to deliver HD video systems that blend high-quality experience, superior flexibility and lowest total cost of ownership. Jonathan Tracey has over 20 years’ experience in complex networking technologies. As Sales Engineering Director for EMEA, Tracey is responsible for driving adoption of LifeSize technology in customer environments, and enabling users to get maximum beneﬁts from their investments. Previously he worked for UUNET Technologies and also served in the British Army for 11 years. “With the wide adoption of HD technology, businesses are able to have face-to-face meetings that are close to a real meeting experience” - Jonathan Tracey session, to deliver the richest collaboration experience possible based on hardware and user preferences. The emergence of mass consumer videoconferencing in the mobile domain is now being heralded by the offerings of Fring and Apple with Facetime. We will see the convergence of consumer telepresence with IPTV at the home hub and the embedding of video communications into business applications, for instance, to enable point of sale interaction with customers, so called ‘communications enabled business process’. JL. To some extent already and even more in the very near future, videoconferencing will be viewed as an integral part of the unified communications (UC) space and will be integrated with UC platforms such as Microsoft Office Communications Server, Active Directory, Exchange VID CONF RT P96,97,99,101.indd 101 18/08/2010 16:44 102 TELECOMS The business of communication Despite its services reaching over 50 percent of the UK population, Mark Heraghty, MD of Virgin Media Business, says the company is keen to keep building its customer base. He lets Diana Milne in on some of the telco giantâ€™s plans. VIRGIN ED P102,103,105.indd 102 18/08/2010 16:04 TELECOMS 103 How much demand are you currently seeing from business customers – particularly in view of the UK’s economic situation? Mark Heraghty. The demands are ever increasing. We’re in the fortunate position of being in an industry where there’s still extremely strong demand so we’re not seeing any drop off in demand in spite of the recession. The majority of the products we sell are to support data services and that can be everything from simple internet access for small businesses to complex hosted IP telephony and data wide area networking for very large customers. For example we work with Northcliffe Media and with hospitals and police forces across the country. So we work with a lot of very large customers who need a resilient data networking solution to support their operations. Our ethernet network is one of the few that has been accredited for Cisco’s telepresence solution. We use it internally between some of our offices and it requires an extremely good network to give you the picture quality that you need. How do the demands of business customers differ from those of consumers? MH. Consumers generally live in one house and use relatively few services – usually TV, broadband, mobile and telephony. The obvious difference with businesses is that most have many sides. If you take a hospital or a healthcare trust, for example, they will have a community of interest around them. So they will have doctor’s surgeries and consultants working from home as well as on the main hospital sites and they will have a requirement for voice and a range of data services. I guess the key difference is that whilst a failure with your home is extremely irritating, for a hospital it could be catastrophic. So their requirement for resiliency is for fast fi xes when problems do occur and for diversity to prevent any single failure bringing them down. Their expectations are very high. It’s a much more demanding and complex customer set but a still a very viable and interesting set of customers to address. “The key difference is that whilst a failure with your home is extremely irritating, for a hospital it could be catastrophic. So their requirement for resiliency is for fast fixes when problems do occur” us to put in all the equipment. And it’s something that I monitor on a weekly basis. There was also a steering group, which we called every week to review progress. It’s going very well and it (Hampshire CC) is an extremely happy customer so far. How competitive is the UK telecoms market and in what way does it have the edge over its rivals? MH. The key differentiator for us is our network. About £13 billion was spent in the UK by cable TV companies digging up the streets during the 1990s. The legacy of that is that we’ve got a deeper and more modern next generation network, which is made up of 186,000 kilometres of fibre and duct around the UK. So that gives us real presence in most of the UK to a far greater extent than anybody else other than BT. And in fact the network is significantly ahead of BT’s from a technology standpoint. So we’ve got a depth of access and a next generation network that nobody else in the country has. We cover more than 50 percent of the UK population and I believe our network is within economic distance of 72 percent of all UK businesses. Mark Heraghty Can you please give an example of an organisation you have worked with recently to set up a new communications network? MH. The most recent one is Hampshire County Council (CC). We’re working in partnership with them to roll out what’s called HSPN2 which is a complete refresh of Hampshire’s WAN. And it’s a contract that is worth approximately UK£90 million to us over the next few years. It interconnects not just all the offices of Hampshire CC but it connects up potentially every school, hospital, surgery and all the employees that work from home. It gives them a reliable network platform, which allows Hampshire to start to redesign the way in which it serves its customers. Would you describe it as a particularly challenging project? MH. With any major project as this is, we enter into a partnership not only with the customer, in this case Hampshire CC, but also with the vendors that are helping VIRGIN ED P102,103,105.indd 103 18/08/2010 16:04 DRAKA ADS X2.indd 1 11/08/2010 15:15 TELECOMS 105 In the beginning… Mark Heraghty explains how Virgin Media Business was formed. If you go back through the history of the UK cable industry, at one point there were around 26 different franchises all over the country. Over the years they came together into two companies, one was ntl and the other was Telewest. They combined in late 2006 as one company together with Virgin Mobile. The company’s name changed into Virgin Media and everything apart from the business division was rebranded as Virgin Media. The business division was left with the NTL:Telewest brand. So it was always a 100 percent owned subsidiary of Virgin Media but it was still called NTL:Telewest, which didn’t have the best brand value and image that one could have. That continued for about three years. I joined in June last year and not long after I joined I got everything in place so that we could change the name to Virgin Media Business, which we’ve now done, bringing the original ntl and Telewest customer base with us. How many customers do you have and what sort of customers are you currently targeting? MH. We’ve got about 65,000 customers. Now for us it’s less about the number of customers we get and more about the revenue. The majority of those customers are SMBs, which have been strong customers of the cable TV industry in the UK. Now, particularly with the Virgin Media Business rebrand, we have an opportunity to sell into larger corporate and public sector customers. I would be keener to focus on a smaller number of additional customers. Obviously I want the total to increase but I want those customers to be larger and I want them to be a mixture of public and private sector. Your company has specialised in serving the public sector. How important an area is this for you? MH. We’ve traditionally been very strong in local government but haven’t penetrated central government significantly to date. We are the clear number two in serving the public sector, at least the local authorities. So for example, we serve about 60 percent of the UK’s health and emergency services already, and about 35 percent of all of the UK police forces. So we’ve traditionally been very strong in that area and one of the reasons for that is the legacy of our franchise past. We have not just sales teams in 40 offices around the country, we have technical teams, and we have service management in Glasgow, Birmingham, Belfast and so on. When you’re dealing with local organisations it is very important to have a local presence. That’s an important differentiator for us and gives us the edge over and above some of our other competitors that are more South East/ UK focussed and less present in Newcastle and Preston and places like that where we still have real strength. You’re aiming for double digit growth in next three years. Will that be hampered by the economic climate? MH. Double digit growth on our data products is something that we’ve been delivering for the last few years and it is something that I’d like to see continue and, if possible, VIRGIN ED P102,103,105.indd 105 accelerate. I don’t see any slowdown in our growth rate and I think the re-brand and other investments we’re making in the network will accelerate that. The slowdown in the UK economy, if anything, could benefit us because organisations are looking to re-engineer the way they provide services to their customers, and that’s a very IT-centric change. Whenever there’s a big IT refresh that brings with it a lot of networking requirements that we’re ideally placed to provide. It could be, in fact, that a recessionary time is an ideal time for us to grow. What would you say are the biggest potential challenges that you face in the year ahead? MH. At the moment the biggest challenge we have is keeping up with demand. We’re growing strongly and I think the re-brand will give us a major boost because NTL:Telewest was one of the best kept secrets in the UK. With the rebrand we will get more business. A major challenge is going to be dealing with the demand that we can already see. It does bring with it increased expectations. If you look at the value of the Virgin brand, excellent customer service is right at the core of that. Whilst I’m delighted to have it, I’m mindful of the fact that existing and new customers will have increased expectations around the level of customer service they can expect from us, and that will keep us very much on our toes. Two become one Virgin Media recently made headlines when its subscription television channels were bought by BSkyB for UK£160 million. The deal had been under negotiation for a year and reﬂects Virgin Media’s wish to shift away from producing content to focus on its network. Under the terms of the deal Virgin will gain access to 17 new HD Sky channels. Speaking after the deal was announced Neil Berkett, CEO of Virgin Media, said: “The sale of our channels business has generated substantial value. The deal will allow us to focus more closely on our strategy of exploiting Virgin Media’s super-fast connectivity to offer our customers a range of the very best content through a highly versatile next generation entertainment application.” 18/08/2010 16:04 106 EXECUTIVE INTERVIEW Building a business value case for FTTH Albert Grooten outlines some of the practical arguments why ﬁbre to the home (FTTH) has a solid business case to reassure investors and stakeholders alike. Can you explain why you feel there is the need to make the business case for ﬁbre to the home? Albert Grooten. Over the last few years next generation access services have continued to be made available to more end users as next generation networks of all dimensions are being planned, begin and continue their rollouts. Over the last two years, FTTH subscribers grew by 29 per cent in 2008 to reach 33.6 million subscribers, while in 2009 a further 5.5 million subscribers were added (FTTH Council figures). Today, FTTH is being deployed by a greater diversity of organisations. Not only the incumbents but also alternative operators, governments and local authorities, real estate developers, residential associations, utility companies and municipalities. Despite the global downturn of 2009, this growth shows little sign of slowing down, but there is an understandable necessity to explain the business value of FTTH in more detail, especially in these uncertain economic times. How do you explain in simple terms the FTTH business model? AG. The FTTH business model is quite straightforward. First you have to put in place a fibre optic infrastructure at a sensible cost, then lease out the fibre to service providers, or take on the responsibility and added complexity of providing your own services. Exactly the same as in real estate, where a long-term approach is needed. Although the concept appears simple, the detail and execution can be full of surprises. As many of the organisations now planning or building FTTH networks do not have traditional telecoms backgrounds, this could result in an expensive learning curve. and to learn from the experience of real-world fibre installations. Albert Grooten is Director of Technology FTTH for the Amsterdam-based optical ﬁbre technology and network solutions specialist Draka Communications. Albert worked for Draka in R&D and was subsequently International Product Manager for Optical Fibre Cables. What experience have you accumulated in Draka over the time that you have been reﬁning your ﬁbre infrastructure business, and has this given a broader perspective? AG. We do indeed have a much broader perspective driven by the current evolution of FTTH networks. Business value and cost of ownership are drivers. As well as telecoms companies, we have to address a broader range of investors and stakeholders in future FTTH networks to reply to some of the issues. We are drawing upon the practical experience accrued from large scale projects such as CityNet in Amsterdam with 40,000 FTTH subscribers, to smaller scale community networks such as of Berkel and Rodenrijs, a small town in the Netherlands. Th is suburb of Rotterdam completed a successful fibre rollout to 6000 homes. We also have the experience of green field fibre projects, as we are doing for Energy City Qatar in the Middle East. Essential during this learning phase are the lessons learnt from such a diversity of FTTH projects and the factors that contribute to success. Our road-show around small communities in the United Kingdom has generated considerable interest for our business value approach. So how do you convince a potential investor that there is a strong business case for FTTH? AG. Of course, as for any business opportunity, it is possible to build a strong business value case for FTTH. But there are specific fundamentals about fibre networks that are not applicable to other business environments. Putting together a successful FTTH project requires many different inputs. Each individual project has a uniqueness, depending on geography, the history of the market, national and local regulation and a multitude of other factors. Many of the variables involved are interconnected; improve one variable and you must compromise on another. The main point is to have an awareness of some of these situations, have an in-depth understanding of the key considerations DRAKA ED P106.indd 106 18/08/2010 15:45 DRAKA ADS X2.indd 2 11/08/2010 15:16 108 PROJECT FOCUS Virtual meetings = business as usual CXO talks to John Stone, Executive Vice President of PGi EMEA, India and Canada about the importance of communication contingency planning in the modern world and the growing reliance on audio and web conferencing to maintain effective communication and business continuity in an unstable global environment. M eetings are core to the success of a business. Whether meeting clients, prospective customers, board members or staff, people meet every day and organisations build from the meeting upwards. Today, we operate in an international marketplace where organisations deal more and more on a global scale. Globalisation has changed who, where and why we do business, thus resulting in an increasing need to connect and communicate globally. What, therefore, would happen if businesses could not communicate or meet? A lack of communication can lead to costly mistakes or delays, loss of productivity and a drop in revenue, ultimately leading to possible failure. If communication is so important, then why do businesses all too often fail to protect it? The recent eruption of the Icelandic volcano, Eyjafjallajokull, brought the realisation of these risks crashing down on the business world. For almost a week, European airspace was practically shut when thick plumes of volcanic ash spewed from the Icelandic volcano and tumbled across European skies, grounding almost all fl ights in Europe. The whole event opened up the business world’s eyes to the fact that many of those companies affected by the travel disruptions did not have a contingency plan in place to deal with such an outcome. PGi, an industry leading provider of audio and web conferencing solutions, saw usage of its conferencing services shoot through the roof during the volcanic fl ight ban. John Stone, Executive Vice President EMEA, India and Canada at PGi describes how the business landscape dramatically changed during the ash cloud disruption and how PGi responded: “In a global business environment fraught with dynamic change, natural disasters, pandemics, civil unrest and strikes, planning for unforeseen events and developing a contingency plan must be considered a key element of strategic management. During the disruptions, our PGi customer care team provided clients with on-demand, instant access to meetings offering free web services to those who couldn’t travel, enabling our clients to interact and communicate just like a traditional meeting and report business as usual.” Stone stresses the importance of contingency planning, stating that “no matter how carefully a fi rm formulates, executes or evaluates its strategies, unforeseen events can make a planned strategy obsolete in no time. With an unstable economic environment and the ever increasing PGI ED P108.indd 108 need to communicate globally, virtual meetings are a crucial part of risk management as business critical meetings cannot be cancelled without there being some impact to business productivity.” He also highlights that not only is business continuity planning essential to maintaining efficiency and workflow but “added to increasing cost pressures and an onus on businesses to demonstrate corporate social responsibility, organisations need to also now look at more cost-effective, productive and environmentally friendly ways of communicating and doing business.” Stone concludes with some hard facts emphasising how the benefits of switching to virtual meetings are now difficult for modern day organisations to ignore. “By reducing travel and converting to virtual meetings, organisations can save dramatically on the cost of fl ights, accommodation, transfers, travel expenses and employee downtime whilst also reducing carbon emissions and by switching to a virtual meeting strategy one of our existing customers reported savings of 86 percent.” As the ash cloud disperses, the risk of travel disruption fades temporarily. What this incident has taught us is that future events cannot be predicted and the business world ultimately is at the mercy of an uncontrollable and unpredictable environment. The only way that an organisation can control and lessen the risk and impact to business is by contingency planning: creating alternative strategies that allow businesses to maintain ‘business as usual’ like so many that have already done so with PGi. John Stone is the Executive Vice President of PGi EMEA, India and Canada. PGi is a leading global provider of conferencing collaboration solutions. “A lack of communication can lead to costly mistakes or delays, loss of productivity and a drop in revenue, ultimately leading to possible failure” 18/08/2010 15:47 PGI AD.indd 1 12/08/2010 11:31 110 MEDIA With renowned titles such as the Daily Mail and the Metro under its stewardship, A&N Media boasts a wide reach throughout the UK. CXO asks its CIO David Henderson how he helps to drive the company’s innovation and growth while retaining its core identity. T he Daily Mail is one of the UK’s most influential newspapers and the flagship title for A&N Media. Second only to The Sun in terms of readership, the Daily Mail’s renowned conservative stance attracts derision and admiration in equal measures. It targets and attracts, predominately female readership, firmly entrenching itself in the heart of the middle-class sensibilities of Middle England. It is fair to say that no other newspaper is so easily typecast as the Daily Mail; which is not necessarily a bad thing for its owners, its journalists, or its staff, who know their audience and readership better than most. For a newspaper that ostensibly toes the conservative line, the Daily Mail has actually been rather progressive in embracing the shift to digitalisation that has occurred throughout much of the printed media over the past decade, while also retaining its core sensibilities of delivering hardhitting news, opinion, sport, lifestyle and fashion in printed format. While the title’s readership has remained unchanged for decades, the various David Henderson.indd 110 18/08/2010 15:41 Quote Quote Quote MEDIA 111 “There is a belief among the staff at A&N Media that the next three decades for the printed newspaper market will be stable” mediums on which news is now delivered have been transformed in recent years by various technological advances, posing a series of challenges and opportunities for A&N Media’s CIO, David Henderson. “There is now an additional culture here at A&N Media that has existed for about a decade where all the content we write is initially tagged for upload on to our websites,” says Henderson. “Our technically savvy workforce understands that the real culture debate is around the longevity of our existing printed products versus the longevity of the commercial website and the growth and collaboration of both.” As A&N Media’s staff has become more technically savvy, so has its readership, who are growing increasingly comfortable in searching for and consuming content online, via a variety of different mediums. “Our workforce constantly flow content through to the very end stage, which is now the printed medium because we find that the majority of our readers want to read our content on a website, an iPad or a BlackBerry,” says Henderson, who does not believe that such a shift in attitudes necessarily sounds the death knell for the printed media. “There is a belief among the staff at A&N Media that the next three decades for the printed newspaper market will be stable. Increased market share and revenue growth isn’t just about digitalisation; it’s about the commercial objectives and consumer understanding of our products, which will go through its own cultural change.” Other media outlets are actively trying to affect the pace of this cultural change, nowhere more so than at News Corporation, nowh own owner of The Times Newspaper, which has recently introduced a paywall for its online rece A&N Media in numbers The Daily Mail has a circulation of close to two million copies a day The Mail on Sunday was launched in 1982 and sells 2.2 million copies every week The Metro was launched in 1999 and is distributed free in 14 UK cities. It was designed to be read in 20 minutes – the time of an average commuter journey. Main websites include the Mail Online, Metro.co.uk and Thisismoney. David Henderson.indd 111 content. “Within A&N Media, we are on record as saying that we will not be implementing a paywall,” says Henderson. “Over the past 12 months we have posted impressive growth, and the Mail Online has just become the UK’s largest website throughout the world. So we’re fairly comfortable with our own model of complimentary content allied to our printed output, and are actively now in competition with the BBC and other online sources that have free content. This is where we see the future for A&N Media.” Clouds and costs The growth that A&N Media has experienced in the past few years has had a direct impact upon the back-end IT infrastructure the company employs in order to stay at the cutting edge of news and media throughout the world. Older IT systems and practices have been phased out and replaced with newer technologies, newer strategies and a more flexible, selective approach to managing the company’s IT needs. “One of the luxuries A&N Media has is the ability to merge all of the technician crews from the various titles together so that we have plenty of supplies, knowledge and applications to choose from,” says Henderson. “So it has been less a case of a complete overhaul and more a selecting the best of breed from each of a different supplier or different operating system.” During the updating process, Henderson gave careful consideration to the value of cloud computing, and reached the following conclusions. “Suffice to say most of the clouds we’ve looked at are not robust enough, mature enough or cost-effective enough to actually deploy,” he reveals. “We’ve selected a sales force on the CRM side that is cloudbased. We’ve put all of our e-commerce platform into the cloud. So I suppose you could say that we are adopting it when it’s robust enough, when it’s mature enough, when it’s cost-effective – then we’ll defi nitely go more cloud-based.” Th is steady approach to modernising and virtualising the company’s IT infrastructure has proved rather beneficial for A&N Media: they have experienced healthy growth over the past few years to reach a point where their entire output reaches 41 percent of the adult population of the UK, and has extended to 1.5 million copies of 50 or so titles throughout Europe. “On the operations side of things we have been fairly successful in running things better, faster and cheaper,” says Henderson. “It’s about really employing leading manufacturing techniques and just basic stuff around continuous fault-fi nding improvement, such as receiving feedback from users. As a result, we have taken out approximately 20 percent of the costs of last year.” Remaining cost-effective is a continuous slog for IT departments in every industry, and A&N Media is no different. “It is a constant battle and a constant challenge to ensure that we are not viewed as a cost centre from within the business,” says Henderson. “What we have is what I call a ‘run and change’ concept. So the running of the business – the base operations – is seen as a cost. And then there is the change function that was all about innovation and business change. We try to share those costs, and I would 18/08/2010 15:41 112 MEDIA advise other IT heads to embrace benchmarking and not be defensive about saying that in a sector where there is a high change and there is a higher item of cost for other functions, IT is actually all about cost savings. We have seen over the last few years that 15 percent of our cost base has gone toward IT systems and self-service, and that has been an inevitable cost. Th ings like storage growth and network growth – all of these things cost, so it’s useful to be engaged in the discussion about costs, not to be defensive and explain how these initial costs are actually longer term investments.” Growing challenges A&N Media’s newspapers include the Daily Mail and Mail on Sunday, the Metro, the Evening Standard and 105 additional local papers throughout the UK, with a large presence in Hungary (their Kisalfšld title is the largest regional newspaper in the country), Romania, Bulgaria, Croatia and Slovakia. The company also has a wide web presence that extends to some 47 percent of the UK online population. Such a large and diverse level of operations obviously brings vast challenges for Henderson and his team. “The greatest challenge is managing the needs of different parties of different businesses that we see and they see as being the most important; trying to just manage and prioritise each of the various titles is perhaps the biggest challenge we face. “So the macro context is the bigger challenge. In this industry, you learn to work concurrently with different channels, different models and different ways of working. It’s often about what works today versus what works in the future. I guess the biggest challenge is wearing many hats for operations that get papers out on a daily versus the longer-term consummational change that takes two years to implement.” The various titles that A&N Media – as the consumer publishing business of DMGT plc – own cover pretty much every demographic in the UK. The Daily Mail, as mentioned, is the newspaper of choice for Midbritons – a diverse, brand-aware and influential consumer group that is responsible for 51 percent of all consumer spend in the country. They are predominately female, middle-class and middle-aged; a demographic that largely applies to the Mail on Sunday too. The Metro and the Evening Standard, on the other hand, are titles consumed by working urbanites aged between 18 and 44. Naturally this latter group is going to be more technically-savvy than the former, so how has Henderson set about capturing the former demographic online? “We don’t try to. There are a few complementary products that naturally cross over from the printed product to online. Our recent TV marketing campaign for the Daily Mail was the only newspaper advert that didn’t display its web address; it was pretty much targeted at our loyal print customers, which I think is important because we don’t want to give the impression that we are trying to have our readers stop buying papers and simply going online for their content.” David Henderson.indd 112 David Henderson is the CIO for A&N Media, the consumer publishing business within DMGT plc. A&N Media has revenues of €1.8bn per annum and provides technology for newspapers including Daily Mail, Metro, Evening Standard, The Independent and over 100 local newspapers and magazines within Northcliffe Media. Henderson’s sharp business sense and clear view of how he wishes the IT department of A&N Media to be run ensures that his relationship with the CEO and other C-level executives in the country is healthy, with all departments pulling together to ensure the company remains a market leader. “It is important to be open with fellow executives,” admits Henderson. “We have discussions on things like costs and operations, and often others in the business have been asked to pick out cost areas and have come up with more lateral solutions than the ones you yourself identified, which is useful. One of the biggest lessons I have learnt is that you build up a credibility in the business by knowing your stuff well. I know I can deliver projects at a cost saving, and that raises the whole credibility cycle so next time around there is greater expectation, but greater trust.” The future of the media industry is a cause for eternal debate. Various schools of thought exist on the best way to monetise content and continue to be profitable, be it the introduction of paywalls online, the continuation of completely free web content, free newspapers or a combination of these approaches. There is no single right way of doing things, but Henderson certainly has his own ideas. “One of the key innovations that we are looking at is the issue of mobility, having journalists in the field and the office. We have looked at an inventory management system using radio frequency and mobile technology that will enable the company to have a much more mobile workforce in the future. This is the biggest and most exciting initiative we are working on right now.” 18/08/2010 15:41 EXPAND AD.indd 1 11/08/2010 15:17 ROUNDTABLE 114 ANY WAN WILL DO? Optimised wide area networks (WAN) are altering the very landscape of business communication. CXO invites two industry experts to give their thoughts on the future of WAN technology. What is driving investment in WAN optimisation technology by organisations today? Nigel Hawthorn. A number of strategic and tactical activities in corporate networks are driving the need for WAN optimisation. Firstly, many organisations are consolidating servers into the centre of their network to reduce costs and ensure better management, such as backups. Secondly, the rollout of ever more sophisticated (often web-based) applications continues. Th irdly, the increase in video streaming for training and meetings to deliver more effective communications. Fourthly, the need to allow users to access internal services whenever and wherever they may be, as users increasingly work remotely from HQ. Fift hly, the general increase in bandwidth needs, to both internal and external content. All five of these trends increase the amount of traffic on the wide area network and the importance that this data gets to the users fast to improve their productivity. It is a mixture of these trends or all of them together that mean CIOs are looking to WAN optimisation to accelerate data delivery and reduce WAN bandwidth usage. Adam Davison. WAN optimisation has evolved from a tactical ‘nice to have’ to a key enabling technology for many strategic IT initiatives such as server consolidation, virtualisation, server based computing and virtual desktop infrastructure (VDI). In fact, an effective WAN optimisation solution is critical to the overall success of these projects, including the ROI or TCO. Add to this the move to centralised, lean IT, distributed enterprise operations and a disparate workforce and you create what we describe as the ‘proximity gap’, whereby applications and WAN.indd 114 services become further and further distanced from the user. Then there’s the growth in realtime traffic, web-based applications, on demand services and a growing collaborative culture. Suddenly the WAN has become the umbilical cord between corporate applications, data and services and the business user. How can this technology enable them to reduce their communication and bandwidth costs? NH. WAN optimisation uses a number of techniques to reduce inefficiencies in data transfer, thereby reducing the amount of bandwidth used for each request. Remote caching of data requests mean that a repeated request can be served locally and the data doesn’t have to be sent across the network. Saving repeated strings (called byte caching) reduces further the data requirements when a request is made for similar, but not exactly the same, data. Protocol optimisation can send large amounts of data in parallel – reducing the inefficiencies of protocols originally written for local area networks – reducing the delay multiplier that results from serial requests and responses. Compression of data before sending and decompression at the other end on the fly can ensure that the data that does need to be sent is as small as possible. These four techniques, working together on the data transfers, can reduce traffic needs – thus saving the constant up rating of WAN connections and ensuring that users furthest away from the data and on the weakest WAN links can still have an effective delivery of shared information. AD. Optimising bandwidth usage is the foundation building block of WAN optimisation. By optimising the traffic flowing over the WAN you are able to send more data, resulting in more efficient use of available bandwidth, which could lead to bandwidth consolidation and reducing a company’s overall bandwidth requirements and costs. Th is becomes key when faced with upgrading bandwidth to cope with increased traffic demands. Optimising the WAN and achieving greater throughput can therefore negate the need for these costly bandwidth upgrades. Nigel Hawthorn has more than 25 years’ experience of computers, security and networking technologies. He writes articles, has presented at security, e-commerce and networking forums in over 50 countries and contributed to a number of computing books on protocols and security. He has worked for Blue Coat Systems for more than 10 years. In what ways can improved WAN optimisation boost productivity within organisations, particularly when it comes to better communication with clients, business partners and customers? NH. Often, the major benefit of WAN optimisation is in user response-time improvements. How many times have you been held on the phone while the operator says, “I’m just looking up your record, sorry to keep you waiting, the network’s slow today”? The organisation that can access the customer’s data the fastest will win the most business. 18/08/2010 15:48 ROUNDTABLE 115 With WAN optimisation in place, users can work efficiently further away from the data while still providing fast response times to their customers. Higher-quality (therefore networkdemanding) applications can be rolled out, and it brings a global organisation together. Without WAN optimisation, remote users tend not to attend global streamed training and senior management meetings – therefore missing out on the latest information. The ultimate goal should be that every user receives instant responses to every question, wherever they are located in the world. AD. The ‘proximity gap’ created by centralised IT and distributed operations can potentially be counterproductive. Any cost savings achieved through IT consolidation can be eroded by lost user productivity and efficiency. This is where WAN optimisation becomes a critical enabler in assuring the business performance is not adversely affected. Collaboration with partners and suppliers is key in achieving competitive advantage. The ability for customers to communicate with an organisation via multiple channels, using webbased services and applications, is paramount. Expand’s visibility and control capabilities combined with advanced WAN optimisation techniques allow IT to identify, monitor and accelerate the performance of business-critical applications across the WAN, ensuring that the user experience is productive and efficient and that effective communication with customers, partners and other stakeholders is assured. How does WAN optimisation support the virtual ofﬁce concept, which allows workers far greater ﬂexibility in terms of where they work? NH. You could claim that the main beneficiaries of WAN optimisation are those users furthest away from HQ, with the worst WAN links – especially if working over a public Wi-Fi link that isn’t even under the control of the IT department. WAN optimisation vendors have client soft ware for laptops and other platforms that implement some of the WAN optimisation technologies, so that people can work from home and when travelling, and still benefit from better data delivery. In addition, the virtual appliances available from some WAN optimisation vendors allow a remote office deployment to be of low cost, if it can run on industry-standard hardware. Often a remote office will have a server that is underutilised – by deploying a WAN optimisation virtual appliance, the users in that office can benefit WAN.indd 115 from optimisation previously available only to larger offices. In addition, data routing is often through corporate connections, so any WAN optimisation along the path of the data will benefit the user wherever they may be. AD. There is a saying that ‘work is what you do, not where you go’. WAN optimisation enables disparate employees to create ‘virtual office’ environments by delivering the corporate applications and services needed – virtually anywhere. We call this ‘virtual proximity’ – putting the user in virtual proximity of business applications and services. Supporting a ‘virtual office’ requires a mix of both physical and virtual solutions. At the central site and remote offices, a physical device may be deployed, as there is adequate space and facilities to house the appliance. However, when it comes to the remote user who may be working from home, a serviced office or on the road, deploying a physical device is often not possible. To overcome this, a virtual WAN optimisation offering is needed. Expand’s Mobile Accelerator (MACC) addresses this issue and makes the virtual office a reality as opposed to a concept. In this competitive market, what gives your product the edge? NH. Some WAN optimisation vendors have focused their efforts on delivering optimisation for high-bandwidth backup systems and have difficulty scaling down to small offices and remote users. As I said earlier, it is the users in the smallest offices and when travelling that have the greatest need and I’m pleased that Blue Coat is driving down the costs to the most remote users, with entry-level prices sometimes less than half our competitors, free client soft ware, and virtual appliance soft ware that can run on existing standard servers. Other WAN optimisation vendors only support a small sub-set of data formats and protocols in their solutions – some haven’t moved from supporting Microsoft fi le sharing (CIFS) and email (MAPI). But today’s networks are full of HTTP, HTTPS and various streaming applications. Blue Coat’s support for stream caching (for on-demand streams) and splitting (for live streaming) – even for Adobe Flash (nowadays the most common streaming technology) and optimisation of SaaS HTTPS content – ensures that the fastest growing technologies are also being optimised. Blue Coat’s 12-year history of flexible policies means that IT management can decide which content is optimised, not just by protocol but by user or content type – as IT management doesn’t usually want to spend network resources optimising non-business critical applications. Adam Davison is Corporate VP Sales and Marketing for Expand Networks and is responsible for implementing sales processes across the regions, coordinating and initiating global efforts and alliances to enhance Expand’s worldwide presence. Davison has over 16 years’ experience in sales, management and business development. We are increasingly seeing customers who want to consolidate the number of network devices in their network, so Blue Coat’s optional security soft ware (that runs on the same hardware) allows customers to deploy WAN optimisation and web security at the same time. There’s no point in accelerating malware and nonbusiness traffic that might later be thrown away by a security device – so Blue Coat can decide to accelerate the good traffic and block the bad. AD. Expand has been a pioneer and innovator in WAN optimisation for over a decade and today is recognised as a market leader by many analyst organisations. We continue to innovate and have achieved a number of market fi rsts, especially in the area of virtualisation, where Expand is unique in its ability to be both deployed as a virtual solution as well as being able to optimise and accelerate virtualised traffic flows. And being a true virtualised offering, we enable IT to leverage their existing virtual infrastructure of choice as opposed to having to use the proprietary hardware that is dictated by other vendors. Our Layer 7 QoS capabilities mean that we can gain visibility and control of over 400 business applications, ensuring prioritisation and assuring all TCP and UDP traffic, including real-time applications such as video and VoIP. Our virtual and physical offering means we have the most flexible deployment options of any company in the market. Furthermore, our breadth of portfolio means that we can span the entire enterprise IT infrastructure, from the data centre, to the branch office, to the remote site, to the mobile worker. Add to this the ability for all devices to be centrally managed, monitored and controlled via our management platform ExpandView and we believe we have the most comprehensive, technically advanced and cost-effective WAN optimisation solution on the market today. 18/08/2010 15:48 116 EXECUTIVE INTERVIEW Removing inefﬁciency in your wide area network Mark Lewis outlines why WAN optimisation can be important to the success of your business. What is WAN optimisation? Mark Lewis. WAN optimisation helps companies overcome the issues of poor performance when accessing data and fi les over the wide area network (WAN). In a nutshell, Riverbed technology makes the WAN perform like a local area network (LAN). In our experience, organisations with distributed IT network architectures oft en encounter performance issues over the WAN due to latency – or the amount of time it takes traffic to move across the WAN – and application protocol inefficiencies, which is also known as chattiness. These two factors can cause bottlenecks on the WAN that can cripple traffic moving between sites, killing productivity along the way. Because of this, no matter how much bandwidth is purchased, until the issues involving latency and application inefficiencies have been addressed, performance will not be materially improved. Riverbed solutions address each of these issues by optimising application protocols to mitigate the effects of chattiness and accelerating traffic across the WAN, which reduces the impact of latency. Riverbed also uses caching and deduplication technologies to reduce the amount of traffic across the WAN, giving organisations the ability to better use the bandwidth they already have. As a result, Riverbed customers see significant performance improvement in application speeds over the WAN. Why is WAN optimisation important and who beneﬁts from a WAN optimisation solution? ML. Any distributed organisation can benefit from a Riverbed WAN optimisation solution. Because we overcome the issues of latency and poor application performance over the WAN, we’ve enabled companies to take advantage of their existing network infrastructure and applications in ways that they had never imagined possible. Riverbed solutions have enabled companies to reduce their bandwidth utilisation by between 65 percent to 95 percent, allowing them to avoid costly bandwidth upgrades. Riverbed’s application-specific optimisations also improve application performance across the network, resulting in performance improvements of five to 50 times, and in some cases up to 100 times. With these dramatic results, our customers have been able to reduce costs, consolidate their IT infrastructures, deploy private cloud environments and accelerate disaster recovery (DR) traffic. That’s why many of our customers consider WAN optimisation to be a critical component of their IT infrastructure. RIVERBED EX INT P116.indd 116 We’ve enabled companies to take advantage of their existing network infrastructure and applications in ways that they had never imagined possible” Mark Lewis is Senior Director of Marketing & Alliances for EMEA at Riverbed Technology. He is responsible for business development, developing the brand and raising awareness of WAN optimisation across the region. Mark has over 20 years’ industry experience in a variety of roles covering engineering, sales and marketing. What are some of the challenges you think this technology can help organisations overcome? ML. Our customers have turned to Riverbed to overcome a range of issues from poor application performance in distributed environments to challenges with slow remote data backup and replication. The Riverbed range of solutions have enabled companies to overcome insufficient, expensive or congested network bandwidth into remote offices, implement consolidation and private cloud environments and enable a mobile workforce to access applications from the data centre at LAN-like speeds. Riverbed also offers customers the Riverbed Services Platform (RSP), a virtualised partition on our Steelhead appliances that enables customers to deploy up to five edge services such as print, DHCP, fi rewall and video. Th is gives customers the ability to consolidate WAN optimisation and edge services onto a single appliance. Additionally, Riverbed’s Cascade products provide network and application monitoring and management, which enables companies to have true visibility and insight into how their networks are running. What impact does virtualisation and cloud computing have for WAN optimisation solutions? ML. The more pertinent question is how WAN optimisation benefits virtualisation and cloud computing projects. When organisations start to move local services to a centralised location, whether it be virtualised or a private or public cloud environment, users are no longer accessing applications over a LAN. As a result, they’re now relying on the WAN, which brings us back to the challenge of poor application performance. A WAN optimisation solution will help organisations looking to deploy both private and public clouds, to overcome the performance hurdles of latency and poor application performance and allow organisations and employees to take full advantage of the benefits that virtualisation and cloud computing environments bring. 18/08/2010 15:47 RIVERBED AD.indd 1 11/08/2010 15:23 118 HR MANAGEMENT MORE THAN A MCJOB As one of the most recognisable brands in the world, McDonald’s’ HR challenges are different from any other. Victoria Newing spoke with Vice President of People for McDonald’s Europe, David Fairhurst, to discover how the company attracts, retains and motivates its staff. T he now-ubiquitous ‘I’m Lovin It’ catchphrase that accompanies all of McDonald’s’ advertising and branded packaging (indeed, it has become so commonplace and entrenched into Europe’s collective subconscious that the words are often no longer required; only the jingle remains, and yet we all still hum along submissively) is generally regarded as a nod towards its consumers’ enjoyment of the McDonald’s experience. Happy, relaxed, attractive and ethnically diverse pals are shown enjoying the food, the fun and the frolics that McDonald’s delivers, carefree and inexpensive, in a scene played out in restaurants across the continent at breakfast, lunch, dinner and at all other times in between. Few would have ever thought, though, that the slogan could equally be applied to McDonald’s staff. After all, what could there possibly be to love about fl ipping burgers and shaking fries in the hot kitchens, or offering customers the chance to ‘supersize’ their meal for a tiny extra cost as queues snaked out of the door? There was a time when McDonald’s was seen as nothing more than an unhealthy burger chain; progressive and careful marketing and the introduction of a welter of new products has changed all that. But the perception of the company as a bad place to work still lingers in the air like a greasy aroma, although it is a perception that, much like McDonald’s’ antiquated image of purveyors of nothing more than fatty fast foods, belongs in the past. “McDonald’s is probably a brand that people anywhere in the world would recognise; it is easier for me to list the countries and locations where we’re not rather than where we are,” says David Fairhurst, Vice President of People for McDonald’s Europe. “We have two million employees around the world, and 87,000 in the UK, which is my main market. The majority of our people obviously work in the stores, perhaps 86,000 comprising David Fairhurst.indd 118 18/08/2010 15:40 HR MANAGEMENT 119 store managers, support managers, trainers and crew. Then we have a small support office of about 600-700 people with a whole range of corporate functions such as sales, marketing, HR and supply chains.” As the European executive in charge of McDonald’s’ HR department, Fairhurst is clear that his most important and valuable business metrics are the people themselves. “I’m a big believer in insight,” he says. “Not just metrics, but actually driving metrics to insight. HR is a function that has been devoid of metrics for many years, and that’s because we haven’t grown people with analytical skills, with statisticians and those sorts of things. It’s harder to correlate people metrics in many cases, but it is not impossible. Many HR functions have given up on the journey of trying to get insight from data – they find it too difficult or are perhaps not interested in that side of things, treating the function almost like an art, when it is my belief that it needs to be both an art and a science. “ Extracting tangible value from these people metrics is, explains Fairhurst, achievable provided the right type of investigation is undertaken. “I have used relationships with universities, with statisticians and the clever people who can do numbers far better than I can to actually look at correlations of data. And in fact, very recently I took the 167 operational metrics of a single store across 200 stores and correlated them with all the people metrics and found some pretty impressive insights from that. But in order to do that, you do need some clever analytical support people, and we haven’t groomed those sorts of HR people, which is why it is important that we figure out ways of getting more science into the human resource function.” Fast food passion Nurturing an agreeable working environment in somewhere as fast-paced and transient as a typical McDonald’s restaurant might seem, to the uninitiated at least, a thankless task. The long hours, initial low pay and repetitive nature of some tasks might appear to be inhibitors to employee satisfaction, but Fairhurst is of the opinion that attracting good talent and motivating your workers stems from the attitude and ability of some of the most important people in the entire McDonald’s hierarchy – the store managers. “The star in most retail businesses is the store manager, who has a massive impact on morale, engagements and the metrics of a particular store,” says Fairhurst. “There was some research done by Bristol University a couple of years ago that looked at the difference on two similar Tesco stores made by changing store managers, and found that the sales impact of a good store manager could lead to a 20 percent increase in sales. “The shadow of the leader that is created by that phenomenal role in retail is critically important. So for most of my change programmes when we are looking at culture and we are looking at change and we are looking at engagement, the fi rst person to be engaged in a retail organisation is the store manager. If you capture their heads and their hearts and their guts and get them completely onside and David Fairhurst.indd 119 David Fairhurst aligned with where you want to go, then that impact casts a shadow right over the organisation, and suddenly 80,000 people are with you and giving you the discretionary effort that you need in order for your business to be successful. “So that is where my start point would be for a successful retailer – employ, identify and engage with a good store manager.” Identifying and managing talent is a constant cycle of challenge and opportunity for a company like McDonald’s. Their turnover of staff would frighten many organisations, but it is this freshness of talent, this wheel of workforce, that enables the company to continually deliver at the very fiercest end of the market. “When you think of talent management and succession as a discipline, it is a decade behind most other HR disciplines,” says Fairhurst. “The reason for this is, I think, because rather than get the behaviours and the dialogue right in organisations around talent, many companies have jumped to technology which has slowed down the entire process of progress around talent. “I still fi nd it incredibly surprising that chief executives cannot have, on one piece of paper, what their talent profi le is for the organisation. So the fi rst fundamental point is about the basics, the dialogue. It’s not about clever technology – technology is the transportation of that progress. It can accelerate, it can make things easier, but actually it is the dialogue that is important. And when you have used this dialogue to identify the people you need, you need to be courageous. You cannot hesitate, you do not have time to. You identify, motivate and give them a chance. “So these are all the things in the bad times that I am hoping will transpose into the good times because these are the behaviours that are being forced on many organisations, which are about dialogue and how you are developing your people.” “The star in most retail businesses is the store manager, who has a massive impact on morale, engagements and the metrics of a particular store” Better connections Fairhurst believes that a more fluid corporate infrastructure can help the HR functionality by delivering better 18/08/2010 15:40 120 HR MANAGEMENT connections between organisations, allowing for a greater understanding of the culture of a business, which leads to better and easier talent management. “The number one thing that is stopping organisations progressing is silo mentality, where people operate in pockets of activity and do not connect,” says Fairhurst. “One thing about the next generation of talent coming into the workplace is that they connect. It is all about connectivity and co-creation. And not only do these guys connect with each other, but they connect with the outside world. So you’re faced with all these connections and yet businesses still operate with structures and cultures that are very much linear, where most of the challenges in organisations are lateral, running horizontally across silos. “McDonald’s operates in the most siloless manner I have ever worked in,” he says. “It is this structure that I would advocate for any other organisation I would go to, too.” In order to achieve this more malleable and inter-connected working structure, Fairhurst advocates a radical shift in the way we think about our jobs. “Job descriptions are the things that get in the way of progress. While people need to be clear on journey, vision and what their role is, we need to make sure that the collaboration in the organisations is there. So when it comes down to HR, I considered my team who worked for me in HR, probably the most award-winning HR team in Britain, to be ones that changed or evolved their jobs every 12 to 18 months. “If you look at my own role, for example, I sit as one of four senior executive running Northern Europe. And we have an interest in everything. I sign off commercials; I’m interested in the supply chain; I taste the products… all this while having my own specialist portfolio covering environment, CSR, HR, customer service. The expectation of the organisation is that I have an interest in everything. “At the other end, if you look at the education sector and how degrees are evolving, you see the sector almost getting ahead of business because they are starting to offer degrees where marketing is mixed with HR, and HR is mixed with CSR. I love the phrase ‘CSR without HR is PR’. It’s a classic line that shows you can no longer operate in a rigid way. Gone are the days when HR can sit in a box and behave like a precious separate silo.” Empower and engage Implementing more flexible working structures and open-ended job descriptions will certainly help to empower employees to strive for a better performance in their daily duties, in much the same way that incentivisation does. There is though, warns Fairclough, a need to understand how best to reward and engage your staff in a manner that is conducive to producing better performance and a happier work ethic. “The interesting thing about incentivisation and rewards and benefits is that most are often not rewarding for the individual,” says Fairclough. “It is important that the recipient of the reward finds it, well, rewarding. Compensation and benefits of all the different pockets of HR have been one of the least flexible, least dynamic and least progressive of the areas that we can consider. David Fairhurst.indd 120 “The interesting thing about incentivisation and rewards and benefits is that most are often not rewarding for the individual” “So they really need to wake up to what it is that the next generation coming into the workforce are going to be demanding. And assessing the intergenerational dynamics of the workforce too, because with the economic downturn we are seeing a lot of older workers returning to the workplace, so how does this affect what type of reward is going to appeal?” Simply put, HR departments have a duty to identify what engages their staff and then implement strategies to get them onside and make them feel happy in the workplace. “People want to feel as though they are making a difference,” says Fairhurst. “People want to be communicated to and recognised, and by recognition I’m talking about a ‘well done, that was brilliant’; not in some pre-set appraisal, but there and then – instantly recognisable recognition from your boss that you are doing a good job. So this is one of the things that I would encourage executives or HR people to think about: how ongoing and prevalent are the recognition mechanisms on a daily basis that cost probably nothing for the organisation? “I use an acronym called CHARM: Committing to Help, Attract, Retain and Motivate, to help line managers think about what they are doing to attract people to the business and then motivate them. When I used to work for SmithKline Beecham we would spend a lot of time doing exit interviews, which is actually leaving it too late [to get feedback]. So we created stay meetings rather than exit meetings. 18/08/2010 15:40 HR MANAGEMENT 121 Once a year your boss would sit down with you outside of your appraisal and ask how you were doing, what more they could do to help, were there any additional tools that could make the job easier, were objectives clear etc., and it was amazing the impact it had.” Retaining good staff has always been one of the main focus points for an HR department. Why would a progressive and intelligent company wish to ever let good staff go? Fairhurst, however, believes that there always comes a point where attraction of new staff is more important than retention of existing staff. “In business there is too much focus on retention. What you do by focusing on retention is you create prisons. If you keep staff there for life, you don’t get any fresh new ideas. It’s a lifer concept where you have created a prison when actually what you want to do is create a more dynamic workplace where people are engaged and they stay engaged. “It takes a brave business indeed to admit that, often, you are just part of somebody’s career journey. At McDonald’s we are clearly that for many students, why would we want to keep them beyond the two, two and a half years that they are with us? They are great value for that time and if they are going off to study to be a doctor or a scientist, well, why would I stop them? Why not create them as a brand ambassador leaving with a great experience so they continue to be a customer, tell their friends about their experience, the training, the education they received while working with us? “So for the first time a few years ago we said that we are not necessarily a destination employer. We are for some. A lot of staff come to us because they think we’re flexible, for student pocket money and what not, but a lot of them stay McDonald’s has 2 million employees around the world, and 87,000 in the UK The sales impact of a good store manager could lead to a 20 percent increase in sales because they like what they have seen. But you shouldn’t pretend that you are all things for all people. And I still think there is a certain mentality with some employers which is to try to keep you for life irrespective of whether the employee has got better things to go to, or other things to fulfi l in their life. That is the wrong strategy, and I think HR directors should stop thinking about retention and start thinking about engagement.” Future stars ‘The youth of today’ is a phrase bandied about without due care and forethought by any generation over the age of 25. The ‘youth of today’ always appears more detached, less motivated, lacking in experience and work ethic, often poorly educated. The truth, though, is that every generation coming through has its stars and its slackers. The difficulty comes in finding the talent, and Fairhurst is of the opinion that a number of larger organisations make it extremely difficult, both for themselves in actually uncovering good people, and for the youngsters who just want to get their foot in the door. “I’m terribly frustrated by the way in which employers treat work experience,” says Fairhurst. “A vast proportion in a recent survey I did of 2000 young people with Populus, the research company, found that 67 percent of them turned up at a workplace and were not expected to work; 21 percent of them said that they were there to just make tea – a problem that is particularly prevalent in the media and creative industries. “This is an absolutely unacceptable situation. Employers need to be structured, they need to work with the education system because you’re bringing people into the world of work, and that’s the first thing they remember. So my call to arms for those who are influencing connections with education and work experiences is please focus on providing opportunities for young people into your industry and sector to enrich them with the knowledge of what the world of work has in store for them, which is more than just making tea.” Fairhurst’s evident frustration at the current state of the UK’s job market is indicative of the pride he takes in knowing that people are being given a chance, whatever industry they may be working in. Despite the current economic downturn, Fairhurst believes that employers cannot use this as an excuse for reverting to bad practices or restricting access to the job market. “There are a lot of good practices evolving through adversity, and there are a lot of HR people thinking smarter, thinking differently, thinking with less budget, thinking more creatively, thinking about taking more challenging and courageous steps with their people. “The strategies and processes that we have learnt during these bad times can be applied to the good, and we must not lose sight of them. So when budgets come back and staff training picks up, and redundancies stop and we start hiring again, I would urge HR leaders to remember the lessons from the bad times and become better, slicker and more agile in the future.” David Fairhurst was speaking to Victoria Newig for MeetTheBoss.tv David Fairhurst.indd 121 18/08/2010 15:40 122 INDUSTRY INSIGHT The vendor neutral managed service programme Doug Leeby tells us how innovations in talent management programmes are meeting the increasingly challenging manpower needs of business. W ith European fi rms spending an annual sum of approximately €130 billion on temporary labour, organisations are scrutinising their current models of managing temporaries and contractors to fi nd greater efficiencies wherever possible. Rightly so; there’s certainly no shortage of providers in the market willing to offer ‘model solutions’ for more cost-effective outsourced labour programmes. Though traditional models have offered value, they have not been without fault. However, as these models have evolved, they have yielded much greater results. In fact, it seems that the newest methodology in contractor management – the vendor neutral managed service provider model – is gaining widespread adoption for good reason: the proven success organisations are having with it. They say necessity is the mother of innovation. Th is was certainly true in the case of the fi rst formal managed staffi ng model. Clients, feeling fi nancial constraints, asked their staffi ng suppliers to deliver qualified labour for less. Smart suppliers countered with what appeared to be a winwin solution. They offered to guarantee a specific mark-up along with onsite personnel in exchange for an opportunity to fulfi l all requisitions. Thus, the vendor on premise (VOP) or master vendor programme (MVP) was born. Th is model prevailed for many years and still exists in certain pockets even today. Over time, however, the inherent problems with this model became evident. For large and complex staffi ng programmes that have a high number of labour categories (professional services, admin/clerical, light industrial, etc.) across various geographies, the master vendor or vendor on premise model is destined to be problematic. The underlying premise of the master vendor programme is that one staffi ng company can provide all of the required contingent talent. Of BEELINE ED P122.indd 122 Doug Leeby serves as President at Beeline. Leeby oversees business development, marketing, and the talent management business unit. He has been with Beeline for seven years. Prior to joining Beeline, Leeby spent 10 years in the consumer products industry serving in various sales, marketing and strategic planning roles. Leeby attended Vanderbilt University where he received a Masters in Human Resources and a Bachelor of Arts degree. course, that is a highly suspect assertion in most cases. When these companies can’t fi ll all of the requisitions, they often subcontract to other staffi ng companies to increase their sourcing depth. Invariably, this leads to disgruntled feelings from competing staffi ng firms, as the only opportunities they get to work on are the difficult ones that the master vendor can’t fi ll. In 2001, when the internet bubble burst and the economy slumped, a game changer arrived on the scene. A challenging economic climate acted as the impetus to a wholly new and innovative model. The advent of VMS (vendor management soft ware) brought an entirely new, yet highly effective vendor management model – the vendor neutral managed service programme (MSP). Eager to reduce costs, drive process efficiency and gain visibility into contract labour spend and supplier performance, organisations adopted MSP/ VMS solutions. Today in Europe, the vendor neutral MSP is gaining significant traction. Early adopters of these programmes are reaping the benefits of significant cost savings and robust management information available at the touch of a button. Sound MSP (VMS driven) providers are able to offer each client a tailored approach specific to their organisational goals and needs. Backed by localised operational and product support teams, the web-based solution is highly configurable to client’s workflow and business processes. The vendor neutral MSP model has gained in popularity because all three constituents – the organisation, the MSP and the vendor – all benefit. The client is the prime beneficiary because they are able to outsource non-core duties to experts who maintain a fair and competitive environment. This ‘level playing field’ environment fostered by the vendor neutral MSP means hiring managers have access to an appropriate supply base, which increases quality and reduces costs. The staffing firms win because they are judged strictly on their performance and their ability to provide quality at a fair price. The vendor, of course, benefits from the revenue derived from providing its service. For once, all three constituents can rest assured they are operating in a performance-based arena. The model is sound. Whichever model you chose, be sure that you spend as much time in your due diligence process looking at the companies, not just their solutions. Ensuring that you fi nd a partner with a respectable balance sheet, similar values and a vision that aligns with your long term goals will position you well in managing such an important component of your labour force. 18/08/2010 15:43 BEELINE AD.indd 1 12/08/2010 11:10 124 EXECUTIVE INTERVIEW Talent comes from learning Vincent Belliveau explains why many leading organisations are turning to talent management solutions to gain competitive advantage. There is a lot of buzz around the term ‘talent management’ – but what does it actually mean? Vincent Belliveau. In human resource management, the term talent management originally meant identifying and grooming potential high-flyers in management roles and identifying successors for senior management. HR Directors came to realise that such a narrow focus failed to ensure that the right people with the right skills were deployed in the right roles – which is absolutely critical in delivering competitive advantage and achieving business objectives. However, it was impossible to roll out organisation-wide talent management until the introduction of talent management systems. These systems include functionality to track each individual’s performance against pre-agreed goals, record their career aspirations and development, equip managers with actionable information about their teams, and help executives manage talent planning by building a pool of suitable candidates for mission critical job roles. for any given role within the organisation. An embedded learning management system can automatically provide links to relevant learning opportunities and record learning completions, enabling managers to instantly identify who is ready for promotion or a sideways career move and bridge skills gaps. Th is system can also be used to automate the learning programme for new starters, so each individual receives an email with portal access to their own personalised induction plan. Th is may include generic courses to introduce the company, its structures and practices, job specific training, and links to social learning opportunities that will help to speed the integration of the new employee into the organisation and reduce their time to productivity in their new role. A talent management system without learning in essence only works at a tactical level – you can identify talent, but then what? The combination of talent and learning makes it a strategic solution that delivers real benefits to the organisation. Perhaps most importantly, talent that is able to grow within an organisation is less likely to leave. Training and talent management is a cost to the organisation – why should it be prioritised? VB. There are clear fi nancial reasons for implementing a talent management strategy at any point in the economic cycle. According to research from Bersin & Associates, companies with intermediate to advanced levels of talent management performed better fi nancially during the recession and generated higher revenue per employee. They also benefitted from a lower level of voluntary turnover, avoiding the costs and productivity gaps associated with recruiting new employees. “There are clear financial reasons for implementing a talent management strategy at any point in the economic cycle” How can organisations get the best return on investment from their talent management strategies and systems? VB. To get the best return on investment, executives need to adopt a holistic approach and link talent management and organisational learning at the strategic, planning, process and system levels. Th is was borne out by research that found that organisations with combined talent management and learning management systems experienced the strongest revenue growth. For example, it is more cost-effective to develop talent internally rather than recruit new employees. A combined system enables executives and managers to identify people with potential and then map out and track the learning and development plans that will make them suitable candidates Is there any way to achieve these beneﬁts without incurring a massive increase in costs? VB. It is surprisingly affordable to roll out a talent management strategy – particularly when compared to the potential fi nancial benefits. Soft ware as a service (SaaS) solutions can be implemented rapidly and cost effectively with no up-front hardware costs, and with the peace of mind that the same infrastructure is being used successfully by other organisations. Also, executives need to remember that employees are developed most effectively through a combination of formal and informal learning. Learning does not have to mean expensive training courses, when e-learning, social learning, coaching and mentoring can all deliver excellent results. Cornerstone.indd 124 Vincent Belliveau is Cornerstone OnDemand’s General Manager of Europe, Middle East and Africa (EMEA). Prior to joining Cornerstone OnDemand, Belliveau served as the North East Europe Director of IBM’s Master Data Management (MDM) and Information Integration Solutions. Belliveau was also a consultant with McKinsey & Company earlier in his career. 18/08/2010 15:39 CORNERSTONE AD.indd 1 11/08/2010 15:14 126 ASK THE EXPERT HCM Analytics: uncovering the real value of your employees Pradeep Upad tells CXO how Human Capital Management Analytics can be used to unearth the true value of your workforce. T o effectively drive an organisation’s workforce, provide accurate and timely guidance on corporate strategic initiatives in support of business growth and even to justify the value of the team’s very existence, HR must have a solid handle on its knowledge capital (i.e., data). It is imperative for HR professionals to think strategically, input the right value-add information and use the results as effectively as possible. What can HR do to become a true business partner? The answer is Human Capital Management Analytics. There are several factors impacting the need for better accountability with HR data. For many HR directors, discussions around HR’s presence at the executive table are nothing new. However, in light of the recent recession, this debate is relevant once again. The recession has increased scrutiny on all activities and decisions related to human capital. During times of restructuring, an organisation’s talent is the most affected. Th is means the team in charge of people management should be reporting in at the highest levels of the company. A good HR data management process has become essential to be a true business partner. Capturing employee and talent data can be difficult. In order to be effective, HR professionals must fully acknowledge the data, identify KPI’s and settle on the technology approach. A staged approach is often the most appropriate. The first step is to put in place a consolidated technology platform to capture your HR related data. Th is is a very important step as your outcome is based on the quality of the input. To increase the data quality and to make sure it is kept up-to-date, companies need to have self-service tools in place to enable the workforce to manage their personal situation. By installing good data entry procedures, HR can easily monitor the changes to your database. After all, HR needs to remain in charge of the HR data, but it involves commitment from the whole workforce. This stage can be considered as fundamental in building good reporting. Next, HR and their business partners should determine meaningful metrics to be tracked and recorded. HR can then adopt more sophisticated technology for analytics. In this step, business intelligence solutions offer valuable information for business decision makers and can help the HR department make better fact- and data-based decisions. Putting your data to work Data management is only a means to an end. You can let your teams get bogged down in all the reporting and NORTHGATE ED P126.indd 126 analysis in the world, but it’s what you do with the results that makes the difference to your organisation. When HR uses data to make policy and organisational changes, measure the success of these changes and report back to the executive team, the department will fi nally get the recognition it deserves. Th rough clear reporting and easy-to-use dashboards, the HR director can show how a review of benefits offered to employees has improved, for example, absence levels, which has a very clear impact on the bottom line. Alternatively, identifying a positive trend in employee retention will help demonstrate what you’ve saved the business on the cost of recruiting new starters. In hard economic times, cost is everything and having the right data on hand at short notice can mean justifying HR’s existence at the highest levels of the company. Even more important than reporting on what has happened is the HR director’s responsibility to look forward, identify potential problems and create solutions in advance. HR directors are now starting to use the process of data mining to predict what’s going to happen. If HR professionals have the right information at their fi ngertips, they can report clearly and succinctly, which in turn translates into the concrete data proving the positive difference HR contributes to the company. Pradeep Upad is the VP of consulting at NorthgateArinso US He has 20 years’ experience in planning, delivery and management of complex business programmes. His expertise includes systems and process integration, HR BPO solutions, ERP packages, supply chain solutions, custom application development, technical architectures, operations, sales support, contracting and outsourcing. He holds a master’s degree in computer science from New York Institute of Technology and a bachelor’s degree in physical science from Osmania University, India. 18/08/2010 15:47 NORTHGATE AD.indd 1 11/08/2010 15:21 128 MANAGED PRINT SERVICES Josh Feathers outlines how managed print services can prove extremely beneďŹ cial for you and your business. To print or not to print, is that the question Photizo 128 18/08/2010 15:47 MANAGED PRINT SERVICES 129 T he benefits of managed print services (MPS) are remarkable – a 30 percent average reduction in imaging costs, a 60 percent reduction of hardcopy fleet carbon emissions and increased worker productivity. However, when it comes to reducing print expenses, an extensive MPS programme focusing on optimising the environment, ensuring best-in-class equipment and reducing the overall service disruptions can only take a business so far. Without a well-informed and accountable associate population it may be a significant challenge to realise the full potential of MPS. When considering how to influence employee behaviours there are varying cultures to account for within an organisation. Some organisations place a high emphasis on speed and delivery over processes and methodologies. In other organisations, employee stress may come from the high risk of a fast-moving landscape, or stress just from their internal bureaucracy and politics. Anyone who had a job during high school can tell you that their employer then had expectations that are most likely different than that of their current employer, whether that is a fi nancial institution, a manufacturing company or the military. The point being: you will need to consider and adjust your print reduction plans around your organisational culture to get the most out of your MPS program. Most employees, even the ones who unknowingly copy and print indiscriminately, want to be good fi nancial stewards. They want to take an active part in helping their company meet whatever needs, expectations, missions or visions promised to customers. However, they need the direction, information and tools to take the cost of printing into their own hands. The big question To print or not to print, is that the question? At the very least, that is the question employees should start asking more. Within our organisation, we have recently begun marketing our best practices, and the documents begin with this question. If your associate base can remember to ask this simple question prior to clicking print, you are on the right path for having your associates make the impact in print for you. Finding alternatives to printing is the quickest and easiest way to reduce a company’s carbon footprint, decrease costs and incorporate more efficient process workflows. However, simply asking employees to stop printing is not likely to work any better than asking your children to do, well…. anything. You will need to get them interested, and understanding what is in it for them. And depending on the organisational culture, the information and tools required may vary widely. There is no doubt that a college student will be motivated differently than a bank manager, for example. Below are a few examples of different methods of empowering employees to make the right decisions regarding print. Informed costs and accountability Employees may not know what the cost of print is. Give them this information at the most granular level possible. Print costs at a high level mean little to an individual. Departmental overviews are great for selling a new workflow solution, or retiring a legacy print screen process. However, print scorecards with drill-downs to an individual level are an excellent tool for a supervisor to take initiative and reduce printing for their department. When you begin to share individual costs, volumes and usage history is when people start becoming accountable for their print activity. Simply put, an employee who knows this type of information is available will mitigate most print misuse and abuse, even if the information is never queried from the database. As an example, our organisation provides training prior to any managed print solution rollout. Within the training, we provide a slide that presents a screenshot of our internal budgeting system. The employee’s name is shown, with the cost of their printing in the next column. Since we started providing this information in our training sessions, we have seen a reduction in overall print volume after MPS implementations. Our associates think twice about clicking print, regardless of whether it is used for auditing compliance. Emotions and eco-friendly print Employees may care more about the environmental impact of their printing than the cost to your organisation. Currently, environmental aspects have a broader appeal and an emotional likeability that may engage associates in a different way. If this is the case with your employees, as it was in my organisation, you will need to take a different angle to market the idea of print Photizo 129 18/08/2010 15:47 130 MANAGED PRINT SERVICES reduction. Marketing MPS as a tree-hugging service may help. Try converting your managed print solutions into a green initiative, with the reduction of waste, CO2 emissions, and energy reduction as your selling points. Develop documents that outline ‘green printing tips’ and get that in front of your staff. Get people thinking about how changes they make to their printing habits may have a positive influence on the environment, and applaud those already doing their part to make it happen. Remember, there is still a lot of criticism and speculation on whether or not you can actually make an environmental impact by reducing your print volume. In contrast to what some believe, trees are a renewable resource. Many corporations buy paper from companies that are in some way initiated with sustainable forestry already. However, I can tell you fi rst hand, sharing ‘print impact data’ can have a big impact on your end-users. Telling Julie (name changed to protect the innocent) in Subrogation (department not changed; everyone knows Subrogation prints the most) that she used 76 trees in paper proved to have a meaningful effect on her printing behaviour, even after the costs of printing didn’t faze her. Printing smart You can also realise a large amount of savings by getting your associates into the habit of carefully considering and taking the time to review their document settings before Currently, Josh Feathers is leading the implementation of a managed print support infrastructure throughout Nationwide Insurance, supporting 30,000 associates and 3000 network printing and imaging devices, along with the respective infrastructure in 50+ regional locations. Feathers is also promoting, advocating, and educating to the end-user segment of the managed print community as a board member for the Managed Print Services Association (www.yourmpsa.org). His goal is ensuring that delivery of the association objectives are done with the best interest of end-users, and feels their involvement is crucial to its success. printing. My team did a study into historical print usages in regards to the impact of certain defaults, settings and managing the change of behaviour; the latter being the goal state. The simple stuff includes setting default duplex at the server level, and utilising job storage features. More invasive and lengthy is getting end-users to print only the pages they need, or to actually use that button labelled ‘print preview’. As an example, the aforementioned study found that 2.4 percent of all print jobs are printed twice due to mistakes made the first time printing. That does not include the page reduction of a job that a print preview can detect. If associates take the time to select the correct features the first time and verify the print job looks good, the savings will add up. If they have the foresight to preview the document, end-users will see the Excel spreadsheet is going to print portrait when it should be landscape. Oh, and it is going to print 32 pages of blank data with a footer as well. Remember, your company will reach the fullest savings potential from its managed print service when you have associates who are knowledgeable, responsible and accountable for their print activity. To retain that competitive advantage you feel you have with your managed print service, you will need your employees’ help. Don’t be afraid to ask them for it. If you are like our organisation, your employees are highly engaged, honest and are seeking ways to actively take a part in the success of your business. All you need to do is get them the information they care about. FAST FACT: Photizo Group found that the average cost of a hardcopy ﬂeet for a ﬁrm with 750 employees is over US$700,000 (€540,000) per year. The ﬂeet will use over 33,000 kWh of electricity and generate over 80 tons of carbon (CO2) emissions (equivalent to the total CO2 output for 16 cars – for an entire year). Photizo 130 18/08/2010 15:47 PHOTIZO AD.indd 1 11/08/2010 15:22 GOOGLE ADS X4.indd 3 11/08/2010 15:19 Objects of desire A peek at what’s hot and what’s not in the world of technology P138 Books The quarter’s best page-turners go under the microscope P141 City guide CXO takes a stroll through Seville P142 Last word Do civil servants’ salaries come down to money or trust? P144 Details. 144 134 142 Back section cover.indd 133 18/08/2010 15:34 134 DETAILS BRANDING FORTUNES The ubiquitous Converse brand was almost dead and buried at the turn of the millennium. Ian Clover uncovers how the sneakers were not only saved but reinvigorated to become a market leader once more. T he fi ling cabinet in North Andover, Massachusetts, heaved with legal documents calling for payment. Sales figures had plunged through the floor. Market share had been ripped from its grasp. The contract for official shoe supplier to the NBA had been relinquished many years prior, but the fi nal nail in the coffi n for the company came in January 2001 when the last United States factory closed down. Bankruptcy was inevitable. Converse, the counter-culture sneaker of many a generation, had had its day. From its early innovations on the basketball court through Chuck Taylor’s ringing endorsement to the sneakers’ adoption by The Ramones and other 70s punk bands, right up until Kurt Cobain’s navel gazing turned into a nationwide lank-haired teen homage to Converse All Stars – or ‘Chucks’ – the shoe company was an ever-present in the Converse_back.indd 134 popular culture of the United States and, to a lesser extent, Europe. Where the jocks and the cool kids wore Nike or Adidas, the more indie kids wore Converse. They were the global brand it was okay to like, even love. They were American yet everyman, affordable yet durable, stylish yet never fashionable. In short, they had a solid consumer base and a clearly defined place in the market, so what went wrong? “Converse had several athletic contracts that played themselves out all at the same time,” says Matt Powell, a research analyst for SportsOneSource. “Th is created some fi nancial difficulty for them. Prior to that, the Chuck Taylor shoe would go through a very cyclical sales loop. You would see two or three years of really terrific sales, and then a couple of years when the shoe was on the backburner, then yet more years where sales would pick up again. They also persisted with domestic manufacturing for far too long [producing the shoes exclusively in the USA], which proved very expensive. The company also owned some factories, which caused cash flow issues as well. They were, essentially, undercapitalised for such a competitive market.” “The problems Converse had were completely operational,” agrees Stephen Cheliotis, Chairman of the UK Superbrands Group. “Their size and synergies were out of kilter; it certainly wasn’t a case that the brand was in the doldrums and needed revitalising – Converse simply needed assistance, deeper pockets and wider reach.” “You would see two or three years of really terrific sales, and then a couple of years when the shoe was on the backburner, then yet more years where sales would pick up again” 18/08/2010 15:38 DETAILS 135 Just do it Salvation came in the form of an unlikely source. Sports giants Nike had perhaps been instrumental in bringing about the near downfall of Converse with their domination of the sports shoe market. Indeed, Nike’s dominance in the 70s was one of the reasons why Converse was adopted by the counter-culture movement. Yet as the market became more and more constricted in the 90s, Converse felt the pinch. Nike, ever innovative and opportunistic, spotted a gap in the market and, in 2003, purchased Converse for $305 million (€235 million). Th is was news, but it never really became common knowledge. Nike, identifying that they had a money-maker on their hands, were quite happy to keep a low profi le in the part they were to play in Converse’s renaissance. “In many ways, Nike let Converse do their own thing,” says Powell. “Th is is one of the reasons that has contributed to the brand’s recent success – Nike invested, but didn’t interfere because they know that to some extent they are oppositional brands. Nike remains a very athletic, urban-centric brand, and Converse really speaks to the counter-culture, to the Indie kids; two cultures that don’t necessarily mesh.” Nike knew not to change the Converse core appeal and attraction, and was more than happy to augment their product range to cover a more low-key, low-tech market. “Nike saw that Converse possessed quite a pleasant brand location in the market,” says Cheliotis. “If you look at many a Converse wearer, you will see a principally nonmainstream, non-popular, non-high street market share. Wearers are looking to stand out and say ‘Hey, I’m buying into a brand that’s different; I’m not wearing a Nike or Adidas trainer.’ If it became clear that Converse was owned by Nike – and I’ve seen research that shows that most people don’t know – that would damage the brand rather than help it, and Nike know this.” Th is is where Nike has been incredibly sophisticated. The company not only spotted a gap in the market and identified the brand to fi ll it, but has also been smart enough to allow or- ganic growth of this market, providing advice and investment, but leaving brand perception well alone. “Nike are not suddenly going to ruin a brand that has been bought into and believed in for so many years,” admits Cheliotis. “Elsewhere, you see thousands of examples where a brand is in some way associated with its parent company – for some organisations this is a good and sensible thing to do, but for Nike and Converse there is both an opportunity and a danger in doing that. Nike is well aware of this and is trying to walk that tightrope, because the strength of the Converse brand is that it is an alternative brand; it isn’t your Nike Air Max or your Reebok Classic. Clearly, when you buy a brand you want to optimise return on your investment as much as possible, but in doing so you risk the 750 million pairs of Converse All Stars have been sold to date The rise, fall and re-emergence of Converse 1908 1921 1941 1950 Marquis M. Converse founded ‘America’s Original Sports Company’ in Malden, Massachusetts. Basketball player Charles H. ‘Chuck’ Taylor wanders into a Converse store complaining of sore feet. He’s promptly given a job as salesman and ambassador for the All Star brand. Converse provide footwear, apparel and rubber protective suits for the US Army during WWII. The Converse Yearbook chronicles the lives of high school and college athletes, canonising the brand as the footwear of choice for American teens. Converse_back.indd 135 1966 Coloured and patterned shoelaces were introduced, alongside high-top versions as demand for more variety grew. 18/08/2010 15:38 136 DETAILS of their retro image. Retro is probably always cool, it’s just periods that change.” Converse has been able to nurture a special and lasting relationship with its customers, something that – while not unique to the sports shoe industry – is most defi nitely a feat only a few brands ever manage. “People relate to Converse on a whole lot of different levels,” says Powell. “I’m almost 60 and it was the first sneaker I ever wore. We have gone through periods where they were seen as the symbol of music movements, to the current situation where their customers reject the idea of having to have a technological shoe. Interestingly though, Converse have been clever in figuring out how to make the shoe lighter in weight and more comfortable to wear, while keeping its price low and its low-tech credentials in place. This has attracted a wider audience.” Niche Nike essence of the brand, which can also damage it and alienate those initial advocates and loyalists that make the brand enticing to others.” Converse converted Look around today and you see Converse All Stars everywhere: adorning toddlers, tweens, teens, young businessmen, mothers, older hipsters and even pensioners – it seems that every demographic now wants to own a pair of Converse sneakers. Whether this is anything to do with Nike’s marketing expertise is hard to ascertain, but the brand has certainly seen a dramatic upturn in its fortunes since the buyout. “As brands grow and become popular, distribution increases and more people buy them,” says Cheliotis. “Then eventually, the brand becomes not very ‘now’ anymore, and people move on. For a time, the brand still grows, but there is a bit of a lag until eventually, a tipping point is reached where the original people have abandoned it and the brand doesn’t quite know who it is targeting any more. “This doesn’t happen with Nike because they are very savvy, and what we are seeing with Converse is a brand that has gained momentum and increased exposure on the back Converse_back.indd 136 “Converse have been clever in figuring out how to make the shoe lighter in weight and more comfortable to wear, while keeping its price low and its lowtech credentials in place. This has attracted a wider audience” As the sports shoe market matures and the lines between fashion and fitness continue to blur, Nike has been able to position itself strongly in both camps. Able to both engineer and respond to shifts in trends, Nike has learnt a lot from its experiences with Converse. “Their mainstream brands sell to all ages, rich and poor, men and women,” says Cheliotis. “But the more information Nike can glean off different segments of the market, the better. For example, the type of people who wear Converse aren’t necessarily the people who run around in Nike every day, but they might need athletic shoes for some reason. So if they can provide products through the insight they have gained through Converse for that particular market, then great. Nike is always keen to learn, and a good thing about them is they’re not a brand that assumes they know everything.” Converse has clearly benefited from the digital, marketing and product placement expertise Nike has always been good at. While the All Star ‘Chucks’ have become more mainstream as a result, they have been able to retain their core appeal of being low-tech, inexpensive and all about counter-culture, which is not only a terrific success story for them, but is also an impressive feat for Nike to have achieved. Not that anybody on the street would ever know, of course. 1976 1991 2001 2010 Every member of The Ramones punk band is photographed on their eponymous debut album sporting a pair of Converse. Nirvana’s Kurt Cobain immortalises the ‘plaid shirt with Chucks’ look that comes to characterise grunge music, sounding the death knell for the shoe as sporting apparel. Converse ﬁles for bankruptcy. Converse All Stars are the most successful shoe in history, having sold in excess of 750 million pairs. 2003 Nike buys Converse for US$305 million. 18/08/2010 15:39 Your World. COVERED From the people you hire to the products you sell, if you’re in business, we’ve got it covered... cxo Technology leadership is merging with strategic and financial leadership, and senior management is being called into a partnership for the future. CXO brings together a range of voices with one shared vision: to develop a strategy that considers business needs and technology’s role in moving your company forward. Find out more: www.cxo.eu.com cataloguepage_CXO16.indd 137 Next Generation Pharmaceutical Business Management Approximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. Available for: EU, US What business processes work? What are the proven, successful strategies for taking advantage of domestic and international markets? Business Management is about real, daily management challenges. It is a targeted blend of leadership and learning for key decision-makers in government and private enterprise. Available for: EU, US, MENA Find out more: www.ngpharma.eu.com Find out more: www.bme.eu.com Financial Services Technology Infrastructure Providing for its customer’s needs and demands is the goal of financial institutions now more than ever. But it is a tricky remit to fulfill. Your customers want it all – security, cost-efficiency, speed, added functionality and, most of all, convenience. Can it be done? Read FST to find out… Available for: EU, US Infrastructure provides insight on how developers can achieve critical objectives by integrating leadingedge solutions across their operations – helping them to make informed decisions about technology and operations solutions for all of their areas of responsibility. Available for: EU, US, MENA Find out more: www.fsteurope.com Find out more: www.euinfrastructure.com 18/08/2010 15:36 138 DETAILS OBJECTS OF DESIRE Technology for today’s executive Samsung UN55C7000 3D TV has yet to fully take off, mainly due to the fact the premier 3D event ﬁlms like Avatar have actually yet to be released in 3D, but electronic ﬁrms are ready for the revolution and the Samsung UN55C7000 is a good indicator of this. The 55-inch 3D LED HDTV will not only make the latest blockbusters explode out towards your eyes with shocking clarity, it also has unique features such as the ability to connect with web applications allowing for the streaming of movies and computer games. It also features a USB 2.0 ﬂash drive for camera connectivity and has communications application Skype built in. Desirability rating: **** Toshiba Libretto W100 Tablet The ﬁrst dual screen tablet PC, the Libretto W100 is powered by an Intel Pentium Processor U5400 running at 1.2GHz and consists of two WSVGA multitouch screens that are LED backlit. With tablet technology becoming more and more popular, Toshiba has pulled out all the stops for its device, ensuring it is not ignored by those in the market. The dual screen tablet also featues 2 GB of RAM, 62GB SSD, webcam, Bluetooth 2.1 + EDR , USB 2.0 port, micro SD slot and 8-cell battery, and runs under Windows 7 Home Premium. The only question is whether a dual screen tablet is as appealing to the consumer as a single screen sleek device such as market leader, the iPad. Desirability rating: ** iPhone 4G Arguably one of the most desired pieces of technology, the iPhone 4G is the next generation model of Apple’s ﬂagship product. Boasting a higher resolution screen, longer battery life, multitasking capability and larger storage space, it is expected to be every bit as successful as its predeccsor. Of course like all Apple products, there are still some drawbacks. Due to Apple’s dispute with Adobe, the iPhone 4G will not be able to play Flash animation or access Flash-based websites, leaving a high percentage of websites still inaccessible. It also has the by now well-known tendency to drop calls made by left-handed users. Desirability rating: **** Gadgets.indd 138 Nokia N8 The Nokia N8 could give Apple’s iPhone 4G something to worry about. It is Nokia’s ﬁrst Symbian 3 smartphone and as well as having a 3.5-inch 640 x 360-pixel touchscreen and 16GB of onboard memory, it boasts a 12 megapixel camera and 720p HD video. Unlike Apple’s products, which are generally hampered by a lack of external connectivity, the Nokia N8 features an HDMI connection so you can easily show off your images, videos and music on compatible televisions and projectors. Desirability rating: *** 18/08/2010 15:41 IQPC AD.indd 1 11/08/2010 15:20 RIVERBED AD.indd 1 11/08/2010 15:23 DETAILS 141 BOOK REVIEW 1 Wall Street at War: The Secret Struggle for the Global Economy By Alexandra Ouroussoff 2 The Leaderful Fieldbook: Strategies and Activities for Developing Leadership in Everyone By Joseph A. Raelin The global economy – the ﬂattened world – demands a new type of leadership, collective and collaborative, where the solutions and vision are co-created by the team. Yet the practical application of collective leadership remains a mystery to many practicing executives and managers. The Leaderful Fieldbook helps change agents – from managers and trainers to consultants and coaches – create the conditions for transitioning from conventional to more collaborative forms of practice. Everyone is capable of participating in leadership, and not just sequentially, but collectively and concurrently – that is, all together and at the same time. The Leaderful Fieldbook presents a fresh and successful approach to leadership development across organizations. FST SAYS: An essential guide for those looking to develop their leadership skills, whether they are just starting out in management or merely looking to ﬁnetune their personal performance. The Financial Crisis: Who Is To Blame? By Howard Davis The cause of the ﬁnancial crisis is still mysterious. Myriad suspects have been identiﬁed, from greedy investment bankers 3 and governments encouraging home ownership, through feckless borrowers, dilatory regulators and myopic central bankers to violent video games and high levels of testosterone on the trading ﬂoors. Books.indd 141 Many of the problems that lie at the heart of the current ﬁnancial crisis stem from a signiﬁcant but little-known conﬂict that began in the early 1980s: Western credit agencies acquired much greater power due to investors shifting priorities, and so controlled the ability of corporations to gain access to capital. Exploiting more than six years of ﬁeldwork on Wall Street, this book describes, for the ﬁrst time, the unspoken conﬂict between corporate executives and the credit agencies responsible for assessing the ﬁnancial risk their investments posed. FST SAYS: An in-depth and fascinating look at how corporate greed and risky business strategies brought the ﬁnancial industry to its knees. Change: Bring it on! By Keely Nugent Change is a tricky concept in business. It invariably happens and yet somehow, when it does, we are often reluctant to get on board. Author and 4 strategic thinker Keely Nugent has recognised the same resistance to change in international racing horses and in her book she applies the tried and test techniques of the equestrian world to business. Using a ﬁctional company as an example, Change: Bring it on! clearly and concisely explains how to establish a winning team by managing change and the challenges it brings. FST SAYS: Simplicity is key with this book. Broken down into sections of no more than two pages, it’s manageable even for the busiest among us. A light and refreshing read while still insightful. Seven Keys to Imagination: creating the future by imagining the unthinkable and delivering it By Piero Morosini Morosini’s book examines the power of the imagination as taught throughout history, and how that can be applied to generate a successful future. An intelligent and complex book, Seven Keys to Imagination unravels the various elements of an innovative and creative mind, and applies them to real-world, industryleading examples. This book offers an alternative way of thinking about how to develop your own future; however, the parallels that Morosini draws between magic and business become somewhat gratuitous and irksome. FST SAYS: Lengthy and dense and most likely futile for anyone who currently holds a creative position. However, those who do not consider themselves natural innovators would beneﬁt from this book’s insight. Howard Davies inspects the evidence for these arguments, inviting the reader to assess each, and the likely effectiveness of the proposed remedies. FST SAYS: An interesting look at the factors that might have been behind the global ﬁnancial crisis. Hopefully lessons can be learnt for the future. 5 18/08/2010 15:35 142 DETAILS CITY GUIDE Seville About Time: +1hr GMT Currency: Euro Language: Spanish Population: 703,000 Closer to Casablanca than Barcelona, Seville is a hot and passionate city that combines the sass and class of Europe with the wild abandonment of Africa to create a beautiful and beguiling place, as CXO was only too happy to discover. City Guide.indd 142 Seville is the fourth biggest city in Spain but the largest and most important city in Andalucía, the huge autonomous community that covers the entire southern quarter of the country. Dry, hot, historic and stunning, Seville has roots in antiquity, being a former Roman and Moorish stronghold, the starting point for Columbus’ New World voyage of discovery and the home of Flamenco, tapas and pretty much every Spanish stereotype you can think of. Today, it is a popular tourist destination all year round, combining modern infrastructural marvels with some of the fi nest cultural sights Europe – let alone Spain – has to offer. Getting around Those red open-topped buses that tour the city might look like a fi ne transportation option for a city boasting only one metro line, but they aren’t really recommended during the months of May through to September. The reason? Seville is the hottest city in Europe, so the scorching sun is best avoided during the day, which is difficult to do if you’re wedged atop a bus with no roof, slowly melting into your seat as sunstroke goes from being something ‘idiotic sunbathers’ get to something you’re suddenly feeling rather worried about. Besides, Seville is small enough to walk around or, if you are feeling extra flush/ romantic/lazy (delete as applicable), you could take one of the many horse-drawn carriages that tether up at various points across the city. There is also a useful tram system that traverses much of the centre of the city. Seville airport handles national and European fl ights, but fl ights from beyond the EU will likely head to Madrid’s Barajas airport fi rst. See You simply cannot miss Seville Cathedral. Quite literally, you cannot miss it – it is the second-largest cathedral in the world and boasts the largest nave in Spain. Located in the very cultural heart of the city, this stunning monument is a breathtaking sight, particularly when viewed alongside the Giralda, which is a converted Minaret of Arabian origin; these two symbols of Christianity and Islam standing proudly alongside each other. Other notable attractions include the sweeping Plaza de Espana located in the delightful Maria Luisa Park, the 18/08/2010 15:36 DETAILS 143 TOURIST TIPS • For a glimpse at a post-apocalyptic world, head to the La Isla de Cartuja area of Seville. Here, in 1992, the city threw the Seville World Expo, which attracted 100 nations showcasing their wares to the world. A great spectacle then; an eerie, empty corner of the city now, where weeds are reclaiming the streets as life goes on, everywhere, it seems, but here. • Pack sunscreen, hats and water when out and about in the summer months. It’s been said before but it bears repeating – you will have rarely experienced heat like the heat you feel in downtown Seville in July and August. • Either avoid April altogether or plan readily in advance. Seville’s Easter celebrations are legendary and wildly popular, meaning all hotel rooms are snapped up early, the streets are full to bursting and respite is impossible to come by. You have been warned. Sleep Hotel Alfonso XIII For opulence, elegance and the most sophisticated night’s sleep you could ever wish for, there is no better hotel in Seville than the Hotel Alfonso XIII. Built in 1928 with the aim of becoming the most luxurious hotel in Europe, it is not far off – gorgeous period features combine sublimely with modern facilities and contemporary ﬂourishes, delivering a superb combination of old world charm and service coupled with more mod-cons than you can shake an iPhone at. The Hotel Alfonso XIII is located a short distance from the Guadalquivir River in the centre of Seville, and so is within walking distance to all the main sights and attractions. Casa Imperial Housed in a former 16th century palace, you will feel as though you have stepped back in time as soon as you cross the threshold at the Casa Imperial, one of Seville’s handful of ﬁve-star hotels. The architecture is unmistakeably Andalusian, which lends the hotel a languid air of tranquillity in a manner that only continental Europe can muster – chic without even trying. With a lovely terrace bar overlooking the Cathedral, business can be conducted with the utmost efﬁciency, in the ﬁnest comfort, and with one of the most jaw-dropping backdrops setting the mood. Eat 16th century Town Hall, the Mudejar-style Alcazar (which is right next to the Cathedral), the Museum of Fine Arts of Seville and the classical Bullring, which is one of the oldest bullfighting arenas in the world. All of these sights are within easy walking distance of one another. Relax In the height of summer, welcome relief from the sun can be found in the fragrant Patio del Los Naranjos gardens where you can stroll along the shaded walkways protected by citrus trees and serenaded by the soothing gargling sounds of the many fountains that seemingly spring up all around you. Alternatively, the ancient winding streets of the Old Quarter are extremely narrow, built this way centuries ago as an effective means of sheltering from the sun, and a great spot to wander along in the heat of the afternoon. Of course, the sunshine might be one of the reasons behind your visit, so if you want to top up your tan you can head to the banks of the Guadalquivir River to sunbathe. Or you can befriend a local – most apartment blocks have rooftop pools that boast unbridled seclusion and uninterrupted tanning opportunity. City Guide.indd 143 Casa Cuesta Spain is ferociously protective of its cuisine, deigning to accommodate only a tiny smattering of foreign eateries in most of its larger cities, Seville included. But what Seville may lack in Indian or French restaurants it more than makes up for with its selection of traditional Andalusian restaurants, of which the Casa Cuesta in the Triana district is the pick of the bunch. Over 100 years old, this delightful diner has an informal bar area in the front and a much more formal restaurant at the back, where artistic décor, professional staff and well-dressed clientele are to be found, in addition to some of the ﬁnest Andalusian dishes around, especially the Casa’s signature Guisos – hearty stews that originated in the city and have weathered the haute cuisine revolution to become as popular as paella throughout Spain. La Flor de mi Vina Ever wandered into a bar in a foreign city and immediately noticed the lack of tourists as all eyes fall silently on you and your hopelessly out-of-place entourage? Well, the La Flor de mi Vina is like that, but in a good way. Tucked away in the old quarter of Seville, tourists rarely stumble upon it, but are in luck when they do, for this is how tapeando – going out for tapas – is done, Sevillian style. Orders are barked across the bar, the bartender writes your order down in chalk, on the bar, slides a plate of olives and a small beer your way, then carries on serving. Before you know it, your tiny plates of tapas have arrived, to be eaten stood wherever you can, with a fork and a napkin the only thing between you and the food. No airs, no graces, just excellent, traditional cuisine served quickly and cheaply. Try the meatballs in tomato sauce, the fried squid and the grilled chicken kebabs for a true Andalusian dining experience. 18/08/2010 15:36 144 DETAILS LAST WORD Public sector pay – a need to know? In June, the new Prime Minister of the United Kingdom, David Cameron, took the bold step of revealing the salaries of public sector workers who were earning more than £150,000 (€180,000) per year. In total, 172 civil servants earned more than Cameron, which begs the question: do we have a right to know who is paid what? D oes knowing what other people earn make you happier? Say you discovered the juicy details of a colleague’s pay packet – would it spur you on to earn more yourself? Or would you be consumed by jealousy? Maybe you are in a position where you can sniffi ly dismiss the majority of others’ salaries as inferior to your own. If so, how would you feel if your salary was then made public knowledge? Whenever the curtains are pulled back on practises that are normally private knowledge, outrage invariably follows. The MP expenses scandal that swept through UK Parliament in April 2009 provoked indignation among the general public at perceived corruption, criminal activity and deceit. Th is leak not only revealed that the going price for a floating duck shed was scandalously expensive, but it Last word.indd 144 “To rant about tax as ‘your money’ is like complaining how your offspring spend your inheritance once you’re gone. You can’t. It’s not your money anymore” also shone a mirror on taxpayers’ own sense of worth – the very notion that had MPs not been claiming expenses for biscuits, second homes and late night blue movies then the average guy on the street would be better off is ridiculous. ‘Taxpayers’ money’ is a misnomer: it should actually stand for ‘the money that a taxpayer has left over once tax has been paid’, because we’ve all heard about life’s two certainties right? You can’t escape tax, so to rant about tax as ‘your money’ is like complaining how your offspring spend your inheritance once you’re gone. You can’t. It’s not your money anymore. But there is certainly an argument for transparency – at least in the public sector – which needs to be addressed. CEOs and their ilk in the private sector already have their earnings made public knowledge in AGM reports and online. Some salaries are eye watering, yet here’s the beauty of the private sector – if you object to the CEO of BMW being paid €4 billion a year (he’s not, but let’s speculate), you can always buy a Mercedes, Audi, or other make of car. You have that choice. In the public sector, chances are that you do not. Therefore, the logic goes, you should be privy to who earns what: paid by public money = public demand to know whether it’s being well spent or not. However, such an approach could have far-reaching consequences for the public sector. It could drive some of the high earners (the talent) out of public sector management towards the more flexible world of the private sector, thereby beheading public sector organisations and stripping them of the figures they need in order to maintain strong leadership, often on life or death matters. Such a diaspora of talent could seriously undermine a country’s infrastructure in a matter of years, yet in many Scandinavian countries, this practise is widespread. The salaries and tax returns of every official worker in countries such as Sweden and Norway are made public knowledge and nobody raises an eyebrow. It is a practise ingrained in the culture, and has helped to nurture living standards that are widely regarded as the highest in the world. Europe, though, is a melting pot of different cultures. What works for the Scandinavians does not always travel well to the rest of the continent (naked saunas being one such example). Transparency is not always a good thing. The general public may scream for it, but often do not like the results when they see them. The issue of public sector pay will always spark healthy debate, but is the outcome ever satisfactory? Does the general public want civil servants’ salaries slashed so that they feel ‘their money’ is being spent wisely and appropriately? Would they be happy knowing that the former CEO of their local public hospital has quit after revelations that his €280,000 annual salary was deemed ‘too much’ by the indignant on the street, and he now earns more in the private sector while in his stead comes a less experienced individual? Not an ideal situation at all. Generally, we don’t need to know. We just need to trust. Which is hard enough as it is. 18/08/2010 15:42 CONSONA AD.indd 1 11/08/2010 15:14 GOOGLE ADS X4.indd 4 11/08/2010 15:19