Beating the Odds
The business gambles that came up trumps for bookmaker Victor Chandler
Birdies and bytes Teeing off with golf’s European Tour CIO Mark Lichtenhein
www.bme.eu.com • Q2 2010
Cool for Cats
Inside the marketing mind of Puma’s Antonio Bertone
Heads up
Why it’s time for a new approach to corporate crisis management
Louis-Pierre Wenes, France Telecom | Bradley Yorke-Biggs, Aston Martin | Bob Seelert, Saatchi & Saatchi
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FROM THE EDITOR 7
Image is everything In these days of economic uncertainty, could there be a worse time to suffer a crisis of confidence in your brand?
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ose your reputation in business and you are as good as fi nished. You may think I’m being a tad melodramatic, but history has shown that repairing a broken brand takes more than a few sticking plasters and a trusty tube of superglue. Take British Airways, for instance, which has been locked in a bitter dispute with the unions, resulting in cabin crew walkouts, disrupted journeys for passengers and millions of euros in lost earnings. I myself have booked fl ights to New York in August, but deliberately opted for a rival airline due to the lingering threat of cabin crews being on strike and my fl ight being grounded. The difference in price between fl ights was negligible and the departure times just 10 minutes apart, but the bad publicity swayed my decision. Two other people I’m travelling with didn’t fancy taking a chance with BA either. So not only is BA losing hundreds of millions of euros, as well as our €1000, because of the industrial action (not to mention the effects of the recession and volcanic ash cloud), but the dispute is costing an incalculable amount to their reputation. Both corporate travellers and tourists could soon desert BA – a once trusted and respected name in aviation – in their droves if the strikes continue. And with the busy and lucrative summer season upon us, these strikes will come as a particularly painful blow for the airline and its passengers. Therein lies the crux of the problem: crises can raise their ugly heads at any time and anywhere, especially for a multinational company with a truly global reach. But it’s how we respond to a crisis that determines how we are judged by Joe Public. Burying our heads in the sand and
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hoping the problem will eventually pass us by is a surefire way of compounding the situation and getting our customers’ hackles up. The paying public want an honest and candid response – not a monosyllabic, bland press statement making a futile bid to shift the blame. They also want prompt and visible actions that demonstrate steps are being taken to put things right. As part of this issue’s focus on brand crisis management, we speak to Louis-Pierre Wenes, ex-Deputy CEO of France Telecom (page 46) – a company embroiled in controversy following the suicides of 25 employees. Th is is pretty much as bad as it gets from an image point of view, but Wenes defends the actions that led ultimately to human tragedy. We also look at those companies that got it right when a crisis struck, as well as the fl ipside of the coin: those have got it so badly wrong. The insight provides some sobering, as well as timely, lessons in leadership and PR management. After all, with the economic crisis in the eurozone and economists talking up the spectre of a dreaded double-dip recession, this could quite possibly be the worst time to suffer a crisis of confidence in your brand.
“Crisis management has significantly intensified with the emergence of online forums, blogs and social networking sites” Jay Baer, a social media and strategy coach at Convince & Convert Page 38
“Failures also make you smart, because you can’t have a crystal ball” Antonio Bertone, Puma’s global Chief Marketing Officer Page 50
Julian Rogers
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CONTENTS 9
30
Beating the odds Victor Chandler rescued his eponymous betting business from the brink of bankruptcy, turning it into a global gambling empire with half a million customers in over 160 countries. Julian Rogers has a tête-à-tête with the flamboyant bookmaker
Cover Story Repairing a badly damaged brand in the wake of a crisis doesn’t come cheap, both in hard cash and man-hours. So what lessons can we learn from those who tackled a crisis full-on and those who ducked for cover?
Counting the costs
38
Nicknamed the ‘cost killer’, France Telecom’s former deputy CEO Pierre Wenes became one of the most hated men in France after 25 workers committed suicide under his leadership. Here he attempts to defend the actions that led, ultimately, to a human tragedy
46 Birdies, bogies and bytes Without a mountain of technology going on behind the scenes, golf ’s prestigious European Tour would be firmly plugged in the proverbial bunker. We tee off with Mark Lichtenhein, the Tour’s CIO and Director of Broadcasting and New Media
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CONTENTS 10 50 Cool for cats How Puma CMO Antonio Bertone gets creative to promote this German brand in the fiercely competitive sportswear market
56 Processors power enterprise opportunity
Martin Keyworth
116 Executive Interviews
Why the latest, most powerful computer processing technology promises great things for businesses, with John Fruehe
62 In the driving seat To discover what’s going on under the business bonnet of Aston Martin, we hear from Bradley Yorke-Biggs, Director of Strategy and IT
80 Heiko Gloge, IGEL Technology 82 Andrew Rigby, Virtustream 94 Mark Lorion, TIBCO Spotfire 106 Christophe Hendriks, Escaux 116 Martin Keyworth, Steria
74 Mobile monitoring
84
76 Thirsty work
Technology improvements mean the FSA may remove its exemption of mobile calls from regulatory compliance requirements
How CIO Sabine Everaet puts the fizz into Coca-Cola’s technology operations across Europe
84 War of words Does the launch of Apple’s iPad spell trouble for the emerging e-reader market?
90 Road to recovery Andrew Kinder outlines how manufacturers can cut costs and not quality as economic conditions start to improve
92 Doing business the intelligent way Helena Schwenk of Ovum outlines the latest trends in Business Intelligence technology
96 End of an era Jordi Nelissen explains how organisations and companies can survive the end of the private branch telephone exchange
104 Maximising potential Serge Eaton on the changing communications landscape
Roundtables Bradley Yorke-Biggs
58 CRM 66 Risk and compliance 110 Content management
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CONTENTS 11 108 Putting your content to work
Regulars
142
Doug Miles explains why ECM solutions are so important in today’s economic climate
114 Legal eagles Mark Ford of legal giant Clifford Chance outlines why law firms should think outside the box when it comes to LPO (legal process outsourcing)
118 Laptop lockdown Stephen Hoare discusses how to mitigate the risk of fines under new Data Protection Act legislation
120 The inside story Uncovering the truth about IT security with former ethical hacker Jason Hart
122 Guarding the fort Mads Toubro on how financial institutions can achieve adequate levels of data protection
14 The brief 16 International news 26 In my view 138 Gadgets
139 140 142 144
Books City guide Lazy days Photo finish
140
124 The human factor James Gay, CISO for Travelex, on the importance of ensuring that his staff adhere to the processes he puts in place
114 128 The weakest computer security link Juraj Malcho outlines some of the common tactics used in social engineering techniques
130 The voice of wisdom Bob Seelert,Worldwide Chairman of Saatchi & Saatchi, on achieving perfection in leadership and never accepting second best
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CIO Europe Summit Summit 2010 19 - 21 October 2010
Find Out More Contact CIO +44 (0)29 2072 9300
InterContinental, Vienna
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.
Business Management GDS Publishing, Queen Square House 18-21 QueenSquare, Bristol, BS1 4NH Tel: +44 117 9214000 E-mail: info@gdsinternational.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 NGT.
Chairman/Publisher Spencer Green Director of Projects Adam Burns Editorial Director Harlan Davis
“The event was great. An excellent opportunity for networking and getting in touch with other professionals and finding out success stories” Christian Stoica, - Emporiki Bank
Worldwide Sales Director Oliver Smart Editor Julian Rogers Managing Editor Ben Thompson Associate Editor Stacey Sheppard Contributors Diana Milne, Huw Thomas, Marie Shields, Nicholas Pryke, Rebecca Goozee, Ian Clover, Jodie Humphries, Timon Singh, Ross Densley Creative Director Andrew Hobson Design Directors Zöe Brazil, Sarah Wilmott Associate Design Directors Michael Hall, Crystal Mather, Cliff Newman, Catherine Wilson, Tiffany Farrant Online Director James West Online Editor Jana Grune Project Manager Andrew Bahadoor Project Director Amarinder Bajwa Sales Executives Timothy Clark, Jeff Watkins, Rishi Patel 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
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The ash cloud’s cost to business
I
t’s now well over a month since Iceland’s Eyjafjallajokull volcano eruption forced most countries in northern Europe to close their airspace in what has become Europe’s biggest shutdown since World War II. A period of increased seismic activity began at the end of 2009 but it wasn’t until April 14 that the volcano erupted, creating an ash cloud that has since wreaked havoc for travellers and businesses across the globe. Airlines have undoubtedly been hardest hit by the crisis with 100,000 flights being cancelled between April 15 and April 20 alone, at a cost of €1.4 billion. Given the fact that many airlines are still being forced to ground planes as the ash cloud moves across European airspace, this figure is set to rise. When disruptions were at their worst during that week in April, the International Air Transport Association (IATA) claimed that lost revenues reached €325 million a day. Airlines were already reeling from the effects of the recession, so the disruption couldn’t have come at a worse time. “For an industry that lost €7.6 billion last year and was forecast to lose a further €2.3 billion in 2010, this crisis is devastating,” says Giovanni Bisignani, IATA’s Director General and CEO. “It is hitting hardest where the carriers are in the most difficult financial situation. Europe’s carriers were already expected to lose €1.8 billion this year – the largest in the industry.” The widespread airport closures of April that saw most European airports shut for days at a time seem to have subsided, but when the wind direction changes the cloud brings renewed disruptions to specific airports resulting in lengthy detours to circumnavigate the affected airspace. And these diversions don’t come cheap – two hours of jet fuel to divert to another airport can cost anywhere between €5000 and €8000. It is hoped that recent changes to ash cloud air safety rules will allow more flights to operate as the buffer zone – 60 nautical miles (69 miles) between areas of heavy ash concentration, where it remains unsafe to fly, and areas in which there are small levels of ash, deemed safe by aircraft and engine manufacturers – has been eliminated. This should hopefully alleviate the burden on both airlines and those planning to travel in the near future. A recent survey by the NBTA Foundation – the research arm of the US National Business Travel Association (NBTA) – of corporate travel managers at major corporations across the globe found that the volcanic ash negatively impacted travel for 80 percent of companies, at an average cost of nearly €158,000 per affected company. The closure of European air space also forced the cancellation of many business trips and meetings before they had even begun. NBTA found that NBTA-affiliated companies
cancelled nearly 5600 scheduled corporate meetings and more than 165,000 total trips that had not yet taken place. The effects of the air travel restrictions were felt across the board by most industries. There were devastating effects for the food industry with both retailers in the no-fly zone and suppliers around the world unable to continue business as normal. Farmers in Kenya, for example, were forced to dump hundreds of tonnes of vegetables, fruit and flowers destined for the UK after cargo shipments in and out of the country were grounded. Meanwhile restaurants, grocers and supermarkets across the region were left without countless products – from beans and chillies, to mangos, kumquats and physalis – that are grown on foreign soil and shipped to Europe. Logistics were obviously hit hard by the crisis and many companies had to switch to road transport to make deliveries. Dutch mail group TNT stated that it was incurring higher costs as it was forced to switch to the road network to make its deliveries.
“For an industry that lost €7.6 billion last year and was forecast to lose a further €2.3 billion in 2010, this crisis is devastating”
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Facts & Figures The volcano’s last eruption ran from 1821-1823
100,000 flights and 10 million travellers worldwide were grounded between April 15-20, 2010
250 million cubic metres of ash has been produced since the beginning of the eruption The IATA has estimated that April’s shutdown cost airlines over €1.0 billion EU Transport Commissioner Siim Kallas estimates total cost of the volcanic ash cloud crisis to be €2.5 billion Ryanair was fined €3 million by Italy for failing to help stranded passengers At its worst, the crisis impacted 29% of global aviation and affected 1.2 million passengers a day Travel was affected by the volcanic ash at 80% of companies Two hours of jet fuel to divert to another airport can cost
€5000-8000
If businesses hope to survive in a crisis landscape, investment in risk management, disaster recovery, business continuity and crisis management activities should be top of the priority list”
Travel companies too will feel a significant impact on their financial results this year. Thomas Cook, for example, has reported an €80 million loss due to the disruption – €23 million in lost revenue from travellers who decided not to rebook their holidays after being unable to fly and the remaining €57 million in costs related to supporting customers who were stranded and bringing them home. However, for some businesses it would appear that even an ash cloud has a silver lining. Hotels witnessed an enormous spike in demand as stranded travellers sought accommodation until the airspace reopened and their flights were rescheduled. Car rental companies also saw a rise in demand as travellers looked to road travel for alternative routes around the continent. Passenger numbers also soared for Eurostar and continental ferries as stranded passengers attempted to find alternatives to air travel. The high-speed rail operator (Eurostar) admitted that it was struggling to keep up with demand as tickets sold out in record time. Brittany Ferries and P&O
Ferries also reported being inundated with enquiries. The overwhelming desire is obviously that the disruption comes to an end so that we can all get back to business as usual. But this may be a little over optimistic. In the 1800s when Eyjafjallajokull erupted, it did so for fourteen months. Furthermore, scientists have said history has proven that when the Eyjafjallajokull volcano erupts, another Icelandic volcano named Katla follows – the only question is how soon. As we have seen with all crises in the past, those businesses that come out on top are the ones that have built a natural redundancy, durability and resilience capability into their operations. If anything, the ash cloud crisis has shown that risk mitigation, impact minimisation and sustainable contingencies are more important than ever. If businesses hope to survive in a crisis landscape, investment in risk management, disaster recovery, business continuity and crisis management activities should be top of the priority list – especially with the looming threat of the eruption of Katla.
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World business round-up Nigeria
USA
Dubai
Software piracy continues to present a major problem in Nigeria and has prompted software giant Microsoft to call for additional government and industry support to help combat the issue. The seventh annual global software piracy study released by the Business Software Alliance in conjunction with IDC, revealed that the software piracy rate in Nigeria is 83 percent, placing it 19th on the global list. It is estimated that the total commercial value of software stolen between 2005 and 2009 is a staggering €487 million. Software piracy has a damaging effect on the local economy as it limits technology innovation, job creation and economic growth, but it also poses security threats for the consumers using the counterfeit software.
A bill to reform financial regulations in the
According to Expedia, the US-based online trav-
US has been delayed after Senate Republicans voted to delay final action. The vote needed 60 votes to pass, but the outcome was three votes shy at 57-42. There were 39 Republican votes against the measure, which was also rejected by three Democrats. The legislation, which is said to be the biggest financial-regulation update since the Great Depression, would set up a mechanism to watch for risks in the financial system, create a method to liquidate large failing firms and would rewrite the rules regarding complex securities.
el reservation website, demand for three-star accommodation in Dubai surged 70 percent in the first quarter of this year, compared to the same period last year. However, despite this unexpected rise in interest in the budget hotel market, the three-star hotel segment only represents a third of the new hotels in the Middle East that Expedia added to its site last year. Furthermore, arabianbusiness.com reports that the latest STR Global Construction Pipeline Report shows that the hotels being planned in the region do not reflect this and luxury is still the dominant force in the market.
It is estimated that the total commercial value of software stolen between 2005 and 2009 is a staggering
€487 million
“Despite this unexpected rise in interest in the budget hotel market, the three-star hotel segment only represents a third of the new hotels in the Middle East that Expedia added to its site last year”
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China
Japan
South Korea
The job market remains barren in Beijing as many graduates struggle to find employment related to their major. The current graduate employment rate is a disappointing 38.6 percent, although this does differ according to the major. According to recent figures released by the government, 84,500 of the 219,000 college graduates in Beijing who will graduate in July had already found jobs as of May 14.
Toyota is preparing to recall 11,500 Lexus vehicles worldwide for problems related to steering. The four Lexus models in question – the LS 460, LS 460 L, LS 600h, and LS 600h L – have prompted customers to complain about mechanical and software related problems that cause the wheels not to return to original positions fast enough after making turns. Last month, Toyota also said that it will recall the Lexus GX 460 sport-utility vehicle following criticism from Consumer Reports magazine, which rated the car a “safety risk” because it is prone to rolling over in certain driving conditions.
Tensions over the mysterious sinking of a South Korean warship in March has prompted South Korea to ask some companies not to sign trade deals with North Korea. Yonhap news agency reported that government officials have been urging companies to stop sending raw materials to North Korea for processing. However, companies operating in the North Korean border town of Kaesong, which employ 42,000 North Korean workers, will not be affected by the new measures.
84,500 of the 219,000 college graduates in Beijing who will graduate in July, had already found jobs as of May 14
“Toyota also said that it will recall the Lexus GX 460 sportutility vehicle following criticism from Consumer Reports magazine, which rated the car a “safety risk” because it is prone to rolling over in certain driving conditions”
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The British vacuum
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ast October, the UK’s Conservative Party commissioned Sir James Dyson – one of the world’s leading inventors, design engineers and entrepreneurs – to produce a report setting out proposals to put Britain on course to become the leading high tech exporter in Europe. Dyson is one of Britain’s biggest success stories and in his report Ingenious Britain – published in March this year – he offers his proposals to fill Britain’s engineering vacuum by rebuilding the manufacturing and technology industries and at the same time reinvigorate the UK’s economy. “Now, more than at any time over the past 20 years, I sense there is a real opportunity to set a new vision for our economy,” writes Dyson in the report. “I believe that it’s high tech companies that can contribute the most to this new economy.” Drawing on the knowledge of fellow champions of British manufacturing – Sir Anthony Bamford, Chairman of JCB; Sir Christopher Gent, Chairman of GlaxoSmithKline; and Sir John Rose, Chief Executive of Rolls-Royce – Dyson urged the government to reawaken Britain’s innate creativity, inventiveness and competitive spirit. “We need to harness these attributes to develop new products that create nationwide wealth. Our need is greater than ever,” writes Dyson. “The UK has to earn its way out of twin black holes – its yawning trade and fiscal deficits – and forge a new economic future. Can we achieve it? My answer: an emphatic ‘Yes’. I strongly believe that the UK can develop a prosperous high tech future, driven by science, technology and engineering.” The proposals that Dyson puts forward in the report tackle the issue from a number of different angles, which, when considered and implemented together, should help to promote the long-term economic prosperity of the country. Culture is the first issue that Dyson believes necessary to tackle, and he suggests that what is really needed is a shift in public consciousness towards higher esteem for science and engineering. “The cultural assumptions of de-industrialisation extend to education. Design and technology education is struggling to shake off a dreary image, and core science subjects are being sidelined in the rush to expand the curricula. I believe that we must give our schools and universities the freedom and flexibility they need to deliver the future generation of scientists and engineers,” writes Dyson. Exploiting this knowledge is the next step and requires greater collaboration – as opposed to competition – between universities, companies and not-for-profits explains Dyson:
“Many of the best new ideas are being created in university labs and the UK has far more than its fair share of leading universities. And the fact that more than 70 percent of full-time engineering and technology postgraduates are from outside the EU shows that our universities provide world-class research led courses in engineering” But, he says, with a few exceptions, the UK is not worldclass at taking ideas out of university and into the market. One of the main problems that Dyson sees here is that the UK does not currently provide the right financial architecture for inno-
Comments... Sir John Rose, Chief Executive Officer, Rolls-Royce Group Plc. James Dyson has done an excellent job in identifying some of the steps the UK needs to take to rebalance its economy. To be successful we must ensure that our education system produces the skills required to support high value manufacturing and services. It is also important to recognise that governments have a direct role to play in shaping and developing economic activity. Whether by tax credits, grants or other incentives the UK Government needs to compete for investment with other countries where this type of intervention is considered entirely usual.
Sir Anthony Bamford, Chairman, JCB I know from my personal experience over many years that Britain is a great place to design and engineer products for customers all over the world. Talent and creativity are not in short supply in this country – what we lack is a forward-looking supportive framework for companies that want to translate invention into enterprise. All British manufacturers will welcome James Dyson’s report, and in particular his proposal for enhanced tax credits on research and development. James is to be congratulated for flying the flag for British industry at a time when it really needs to be championed.
vative businesses. “The cash-flow pressures facing many start-ups hinder R&D, suffocating good ideas before they become worldbeating inventions. Dyson vacuum cleaners would not exist were it not for Mike Page, my bank manager, who personally lobbied an initially reluctant Lloyds Bank to loan me the UK£600,000 I needed for tooling – the only way to start out on my own.” Two possible solutions to this funding gap in the UK lie in angel investment and venture capitalism, according to Dyson. But we also need to create the right conditions for R&D investment, particularly as the UK continues to lag behind EU averages in investment in R&D. If the UK is to compete and prosper as Europe’s leading technology exporter, he writes, policies need to be developed that stimulate R&D investment across all sectors – policies focused on procurement, concrete advice and tax. “Meeting the challenge requires changing economic policy. It means recognising that the policies that have been pursued for the last 30 years are not enough. After the demise of industrial
“The cash-flow pressures facing many start-ups hinder R&D, suffocating good ideas before they become worldbeating inventions”
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Hand Dryers
Vacuum Cleaners
Works in just 10 seconds – literally scraping water from your hands like a windscreen wiper. It’s the fastest hand dryer, and it uses up to 80% less energy than warm air hand dryers.
Dyson developed 5127 Dual Cyclone prototype designs between 1979 and 1984. The first prototype vacuum cleaner, the G-Force, was built in 1983. In 1986, a production version of the G-Force was first sold in Japan for the equivalent of £2000.
It includes a HEPA filter to capture and eliminate over 99.9% of bacteria from the air used to dry hands. It's the only hand dryer that's certified hygienic by independent public health specialist NSF International.
The source of inspiration for the Dual Cycline, came when Dyson thought of how a nearby sawmill used a cyclone – a 30-foot (9.1 m)-high cone that spun dust out of the air by centrifugal force – to expel waste. He reasoned that a vacuum cleaner that could separate dust by cyclonic action and spin it out of the airstream would eliminate the need for both bag and filter.
launched in 2006
The first vacuum cleaner sold under the Dyson name was the DC01, a domestic upright model, launched in 1993.
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Air is forced through two continuous apertures the width of an eyelash – generating 400mph sheets of air that scrape water from hands like a windscreen wiper in just 10 seconds.
n2 di 9 00
Digital switched reluctance motor At 104,000 revolutions per minute, the motor turns ten times as fast as a commercial aircraft, five times as fast as a Formula 1 engine and more than twice as fast as the most powerful industrial milling machines.
Features Dyson’s Root Cyclone™ technology spins the air so fast that centrifugal forces up to 150,000 times the force of gravity fling dust and dirt out of the air and straight into the clear bin.
products
Fan - Air Multiplier Up to 27 litres of air per second is drawn in by an energy-efficient, brushless motor. A combination of the technologies used in turbochargers and jet engines generates powerful airflow. Airflow is accelerated though an annular aperture. It passes over a 16° airfoil-shaped ramp, which channels its direction. Air behind the Dyson Air Multiplier™ fan is drawn into the airflow, through a process known as inducement. Air around the machine is also drawn into the airflow, through a process known as entrainment, amplifying it 15 times.
Automotive
ts
Using an airfoil-shaped ramp (like a cross-section through an airplane wing), airflow is amplified 15 times. This creates a smooth, powerful airflow, with no need for fast-spinning blades.
Pr od uc
Dyson upright machines ride on a ball so you can steer with ease - no more back and forth around corners and obstacles. Inside the ball is the motor, giving the machine a lower centre of gravity and improving manoeuvrability even further.
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Uprights Cylinders Handhelds
tu Fu
Batteries
Source: www.dyson.co.uk
“ I strongly believe that the UK can develop a prosperous high tech future, driven by science, technology and engineering”
planning policies at the end of the 1970s, policymakers unduly focused on improving efficiency – achieving growth by making existing processes and businesses more efficient,” writes Dyson. “My only quibble with this is that it’s not what the best firms actually do. Of course, successful firms are always seeking ways to improve their efficiency. But it’s not what makes them the best. Successful firms are in the business of harnessing innovation to gain sustained competitive advantage: new and better products that deliver more value to customers, priced to reflect this higher value. This drives longterm wealth creation and rising living standards. New in-
ventions and new products define economic eras. “We need more entrepreneurs. We need more innovators. We need more scientists, engineers and designers who can turn ideas into working products. We need to be better at supporting the ecosystems that transfer new ideas from universities and which incubate new firms. We need an education system that equips young people and germinates the seeds of industrial ambition in them. And we need government to support innovating firms, especially smaller ones, both through the tax system and the power that comes from being Britain’s single largest customer.”
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Antisocial media
T
witter users have had a sobering wake-up call as they realise that comments made in jest to their followers in the blogosphere are not always taken as such. When Paul Chambers, journalist and trainee accountant, chose to vent his anger at the effect that the severe weather conditions were having on UK airports early this year and threatened to blow up the South Yorkshire airport, little did he expect that his remarks could end with him being arrested and receiving fines totalling UK£1000.
Phil Stewart, Director of Customer Service at Virgin Media Business, believes that this rather misguided tweet serves as a reminder to businesses, that they must brief staff on what activity is and isn't acceptable if they are to protect their brand online. "This case highlights just how the boundaries between what people do in their professional and private lives continue to blur online, and just how important it is for organisations to develop guidelines for social media usage sooner rather than later. “Simply banning staff from tweeting at work might sound like the obvious option, but this could do more harm than good. Thousands of workers use Twitter every day to connect with colleagues and customers, and even hire new members of staff. In fact, a lot of companies are successfully using the social network to proactively provide customer service, keep tabs on competitors and promote company news. “So rather than banning staff from tweeting at work, employers should work closely with them to ensure that they fully understand that comments made online are public and could be associated with the company, regardless of whether or not they are made in a professional capacity.”
Journey of a tweet
“Simply banning staff from tweeting at work might sound like the obvious option, but this could do more harm than good”
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Security breach
Six ways to protect your business
A
• Minimise your exposure to vulnerabilities by applying the latest security updates and patches to your software programmes and operating systems. Enable automatic updates where possible.
new study has found that employees often put their own personal online security and interests above those of their company’s. The 2010 user survey, conducted by Trend Micro, found that in general employees, are ambivalent and imprudent when it comes to their company’s overall IT security. The survey of 1600 end users in the US, UK, Germany and Japan, found that risky practices and attitudes were customary, regardless of country. Even having corporate security policies in place does “Approximately half not prevent employees of those surveyed also from exercising their onadmitted to divulging line freedom and 10 perconfidential corporate cent admit to overriding information through their corporate security in order to access restricted an unsecure web websites. Approximately mail account” half of those surveyed also admitted to divulging confidential corporate information through an unsecure web mail account. Mobile workers prove more of a liability than those working on desktop machines, with 60 percent admitting to having sent out confidential company information via IM, web mail or social media applications, versus 44 percent of stationary workers. When asked about fears over the damage that web threats can cause, end users consistently mentioned violation of personal privacy, identity theft or the loss of personal information as their primary concerns. Loss of corporate information and damage to corporate reputation were the least of end users’ concerns.
Facts & Figures
• Block threats at the gateway before they reach the network with a comprehensive security solution that includes URL filtering and cloud-based protection. • Protect endpoints – desktops, laptops, servers, storage appliances – on and off the network with a security solution. • Sign up for a security threat assessment. • Make sure employees are aware of spam and how they can help prevent it. • Ensure that employees never provide personal or confidential information in response to unsolicited email or IM requests. Source: Trend Micro
4% 17% Facebook MySpace
61%
18% LinkedIn
69% of Mac users surveyed by Sophos in mid-2009 do not use any anti-virus software to protect themselves Source: Intrum Justitia Source: Sophos Security Threat Report 2010
Which social network poses the biggest risk to security?
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Graduate guarantee
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oath, tend to believe that it is at least a good starting point towards mitigating criminal activity in the business world, as those who take it are required to obey the letter and spirit of the law, refrain from corruption, oppose discrimination and exploitation, and protect the right of future generations to enjoy a healthy planet. For some, it is difficult to see what harm this can do, particularly at a time when business leaders are being urged to change their practices and take a broader outlook that does not focus solely on profits and shareholder value.
“Many claim that all business schools should be teaching their students to be ethical regardless of whether an oath exists to ensure this”
ast year, students from Harvard Business School (HBS) came together to campaign for the acceptance of an MBA ethics pledge modeled on the Hippocratic Oath taken by doctors. The turbulent business environment created by the global financial crisis, Bernard Madoff’s €53 billion Ponzi scheme and the Goldman Sachs scandal have created an unprecedented public mistrust of business, which has prompted many to question whether business schools are successfully executing their missions of educating leaders for society. With this in mind, HBS took action As a business leader I recognise my role in society and created the oath in an attempt to counter the growing lack of confidence • My purpose is to lead people and manage resources to create value that in the business elite. The oath has been championed by Professor Nitin Nohria, no single individual can create alone. the newly appointed Dean of the school, • My decisions affect the well-being of individuals inside and outside my who will take up office on July 1 and who enterprise, today and tomorrow. had previously published an article in the Harvard Business Review on making Therefore, I promise that: management a profession. In this article, Nohria proposed a code of ethics that • I will manage my enterprise with loyalty and care, and will not adwould outline values and ideals to which vance my personal interests at the expense of my enterprise or society. managers should commit. • I will understand and uphold, in letter and spirit, the laws and contracts Last year, 484 new MBAs at HBS took the pledge – partly inspired by Nohria’s argoverning my conduct and that of my enterprise. ticle – followed by numerous others at • I will refrain from corruption, unfair competition, or business practices management schools in the US. But the harmful to society. oath is not popular with everyone and some see it as a misplaced knee-jerk reac• I will protect the human rights and dignity of all people affected by my tion to the financial crisis by business apolenterprise, and I will oppose discrimination and exploitation. ogists. Consequently, about 45 percent of • I will protect the right of future generations to advance their standard the HBS graduating class of 2009 did not take the oath and a similar figure is exof living and enjoy a healthy planet. pected this year. • I will report the performance and risks of my enterprise accurately and The very existence of the oath has honestly. proven to be quite controversial and has stimulated much debate across the US • I will invest in developing myself and others, helping the management regarding its merit. Many claim that all profession continue to advance and create sustainable and inclusive business schools should be teaching their prosperity. students to be ethical regardless of whether an oath exists to ensure this. This oath I make freely, and upon my honor. Others believe that the pledge ignores the nuances of management, where Source: http://mbaoath.org leaders have to weigh up competing interests. Those who are in support of the
The MBA Oath
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Germany’s “Meetropolis” Northern lights
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wo of Germany’s biggest cities have joined forces to better leverage the benefits they can offer as attractive locations for international meetings and congresses. Cologne and Düsseldorf are now cooperating on a new marketing initiative launched by the Cologne Convention Bureau and the Convention Bureau Düsseldorf under the new joint advertising brand “Meetropolis”. Both cities, which are situated in North Rhein Westphalia – Germany's most populous state – already rank highly as meeting and congress destinations and are among Germany's major business, science and communication centres. Situated just 40km from one another in the heart of Europe, they can offer combined facilities of 300 event locations, two big exhibition centres and over 450 hotels, which makes them ideally suited to cater for the growing congress and meeting market. The “Meetropolis” brand will now be used in advertising campaigns, at trade fairs and for all public relation activity. Josef Sommer, CEO of KölnTourismus GmbH, says: “Not only our two cities Cologne and Düsseldorf profit from the shared advertising image but also interested congress and event planners. Under the new brand, you will find from now on, all relevant data on our metropolitan region from a single source. This reveals our operational excellence at a glance.” Hilmar Guckert, CEO of Düsseldorf Congress Veranstaltungs-GmbH, also believes that the cooperation will bring many benefits for the two cities. “Both Cologne and Düsseldorf hold an enormous potential for organising largescale congresses and meetings. Both cities combine high economic power and excellent infrastructure with a charming flair and impressive diversity.”
The third edition of the European Cities Entrepreneurship Ranking (ECER), which identifies the most attractive cities for starting a business has revealed that northern countries such as Finland, Germany and Sweden remain the favourite locations of businessmen, thanks to good start-up advice and access to finance. This year’s overall winner is Frankfurt, followed by the Swedish city of Malmö and Polish capital Warsaw. Other cities among the top 10 include Hamburg, Berlin, Lisbon, Helsinki, Cologne, Lyon and Stuttgart. The survey of 4500 business leaders was compiled by ECER and ranks 37 cities in 18 countries based on five specific criteria: promotion of business creation, pre-creation support such as start-up advice, post-creation support, access to funding, and the business environment. The survey shows that while northern European countries consistently record high 'satisfaction scores' from businessmen, southern cities like Athens, Rome and Milan score low in business friendliness. Olivier Torrès, President of the ECER Foundation Association noted that a business created in the south tends to generate fewer jobs than a business created in the north. Moreover, entrepreneurs in the south often start their business outside major urban centres, while most start-ups in the north are established in cities. Torrès hopes the survey results will prompt local authorities and city delegations to visit the high-ranking cities to learn about best practices in creating a friendly environment for new businesses in trade, industry and services.
Düsseldorf
Facts & Figures The Danish workforce is among the most productive in Europe, and no restrictions apply regarding overtime, which will allow companies to operate 24 hours a day, 365 days a year Rheinparkhallen Cologne Source: Ministry of Foreign Affairs of Denmark
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Encryption alone is not enough
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T departments today are faced with a proverbial ‘perfect storm’ when it comes to data security. With operating budgets being reduced, departments are expected to do more with less. Conversely, the government wants to increase the regulation of data security, as demonstrated by the UK Ministry of Justice’s recent announcement that the Information Commissioner's Office (ICO) has the power to fine organisations up to UK£500,000 for serious data breaches. There is also growing mobility throughout the workforce, and as a result, over 3500 laptops go missing every week in European airports, according to the Ponemon Institute. That’s one laptop every three minutes. This means corporations must establish processes to ensure data integrity, or face significant financial and reputational repercussions. According a report entitled ‘Cost of a Data Breach’,released by the Ponemon Institute in, January 2009, the average cost of a data breach to an organisation in the UK is £1.7 million. Encryption alone is not enough. According to a further report by the Ponemon Institute – and Absolute Software, 53 percent of non-IT business managers had disengaged encryption technology on their business hardware. This was despite the fact that 61 percent of laptop thefts in the UK have resulted in a data breach. Even if your business has encryption technology, employees can’t be relied upon to use it, and how do you secure data that you cannot track? Success lies in having a layered approach to security that enables IT to track data and provide options to access the data if a laptop goes missing. Only then will you be confident that if a laptop is stolen, data can at least be deleted remotely and, in the best-case scenario, the laptop can be brought safely home.
For more information log onto www.absolute.com
Facts & Figures Germany has been ranked as one of the world’s leading investment locations in this year’s Foreign Direct Investment Confidence Index compiled by A.T. Kearney. Moving up to fifth place overall and first in Europe, Germany’s attractiveness as a business location was recognised in a survey of top managers worldwide.
2010 FDI Confidence Index® (1) 1
China
(3) 2
United States
+
1.67
(2) 3
India
–
1.64
(6) 4
Brazil
+
1.53
(10) 5
Germany
+
1.43
(22) 6
Poland
+
1.35
Australia
+
1.33
(19) 8
Mexica
+
1.32
(14) 9
Cananda
+
1.32
(13) 10
United Kingdom
–
1.32
(11) 7
1.93
Low confidence Source: A.T. Kearney analysis
Maintained ranking
Values calculated on a 0 to 3 scale
+
Moved up
–
Moved down
High confidence (x) 2007 ranking
Top 10 City ranking measured by number of meetings organised by international associations in 2009 Source: ICCA
City
1
2 3 4 5
6
7 8 9 10
Meetings
Vienna
160
Barcelona
135
Paris
131
Berlin
129
Singapore
119
Copenhagen
103
Stockholm
102
Amsterdam
98
Lisbon
98
Beijing
96
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World Cup worries
A Top 10 The World’s most innovative companies in 2010 Source: Fast Company
1
2 3 4 5
6
7 8 9 10
Facebook Amazon
recent poll of over 1000 employers conducted by the Chartered Institute of Personnel and Development (CIPD) shows that an overwhelming majority of those questioned have no plans in place to deal with staff absence during the World Cup in June. A mere five percent of organisations have a policy in place, whilst another five percent are currently developing one, leaving a massive 90 percent totally unprepared. The worrying statistics have prompted the CIPD to issue guidance for employers, detailing various approaches that can be taken by to help employees enjoy the sporting events without that enjoyment impacting negatively on the business. One of the main suggestions of the CIPD is for employers to clarify their policy on absence, whether alcohol related or not, and ensure that workers are aware of any disciplinary action that will be taken for unauthorised absence or unsatisfactory performance. The guide also recommends that employers consider the following: flexible working hours, shift swaps, unpaid leave, and special screening of matches on premises. CIPD adviser John McGurk says: “It’s alarming that only 10 percent of employers are drafting or already have guidance in place to manage absence during the World Cup. Research suggests that when employers demonstrate they care about their staff and their interests outside of work, employees are more likely to go the extra mile for the organisation. Whatever individual organisations decide is right for their employees, guidance should be clear and communicated well.”
Apple Google Huawei First Solar PG&E Novartis Walmart HP
Facts & Figures
Broadband is available to 94% of the EU population, and is accessed by 56% of households and 83% of enterprises Source: European Digital Competitiveness Report
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Boosting performance
Payment problems
While the uncertain economic outlook continues, companies are realising the importance of basing their strategies on careful gathering of data analytics. Many are incorporating performance dashboards into their workplace to gather and interpret essential metrics. Performance dashboards such as Corda’s CenterView take the reporting and analysis capabilities of your data analytics and combine them with visual representation, giving the right people the right data in the right format to optimise decisions and accelerate results that support your business strategy. Instead of wasting time by manually searching and analysing information from multiple data sources, your team can view the information they need on a single dashboard that displays the data in a way that makes sense to them. This ability drives good decision making. Performance dashboards can help you use analytics to keep your company on track and align employees, partners and customers in your business. They show every person on every level of your organisation consistent, accurate and timely information. A dashboard can alert your team to problems, trends and opportunities in real time, enabling them to immediately collaborate and make essential decisions. A performance dashboard can keep your team focused on supporting your company’s key strategies and goals. Because team members can see what is going on, they will be motivated and confident in their jobs. While the importance of a performance dashboard is clear, keep in mind that all dashboards are not the same. By picking the right performance dashboard, you will have even more capabilities and flexibility. Options like Corda’s CenterView help companies stay up-to-date on their data analytics, make educated decisions, and prepare for the future. www.corda.com
A
Facts & Figures
KPMG’S Competitive Alternatives 2010 Special Report: Focus on Tax reveals that five of the top 10 most competitive countries in terms of tax are in Europe.
Tax competitiveness – 2010 and 2008 rankings by country Rank
Country
Total tax index 2010
2008 rank
1
Mexico
59.9
1
2
Canada
63.9
3
3
Netherlands
76.4
2
4
Australia
80.8
4
5
United Kingdom
88.0
6
6
United States
100.0
5
7
Germany
124.1
8
8
Italy
129.6
9
9
Japan
138.8
7
10
France
181.4
10
new study complied by Swedish credit management company Intrum Justitia has reported that European businesses have written off debts totalling a staggering €300 billion in the past year, a rise of €30 billion in just 12 months. The 2010 European Payment Index revealed that the written off debt – caused by companies, public authorities and consumers not paying on time – is equal to that of the national debt of Greece. The alarming figures have prompted a revision of the EU’s Late Payments Directive, which was established in 2000, and a recast will now be voted on in the European Parliament this summer. The European Payment Index survey of over 6000 European businesses has shown that European SMEs, responsible for contributing 56 percent of the EU's GDP, are the hardest hit by the rise in non-payment with a write-off proportion of three percent. Also confirmed by the study was the fact that there is a great deal of divergence in payment behaviour across Europe. Late payment risk is much lower in northern countries such as Finland, Sweden, Germany and the UK than it is in the south and east: the risk is higher in Portugal, Spain, Italy, Greece, Cyprus, the Czech Republic, Poland, Hungary and Lithuania. The study also shows that confidence among European companies is low, with just 10 percent of businesses believing that conditions will improve in the coming year. “With many European governments continuing to prop up their economies with cash injections, this €300 billion wastage figure is truly worrying,” comments Lars Wollung, CEO, Intrum Justitia. “In particular it is extremely troubling to see how hard hit the SME market has been by non-payment and the lack of confidence that conditions will improve over the coming months. With banks continuing to lend cautiously, good cashflow management – which includes taking decisive action when faced with late or non-payment – is vital to help ensure the very survival of many European small and medium-sized businesses.”
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In my view PAUL CHEESBROUGH, CIO at the Telegraph, reflects on how he headed up the digitalisation of the UK’s most conservative newspaper
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he cultural change is always the toughest part of making any change. For us as a new organisation, making sure the change happened was critical. The industry as a whole was having to go through this change as a matter of course to help their business go forward. So I think people understood the commercial realities of the situation. Resistance to change is human nature. The key advantage we had was an inspirational Editor-inChief in Wil, who was leading from the front. And he just made it incredibly clear as to why digital is our future. If we had an Editor who said the newspaper is the future we would have had a very different response and reaction from the staff. The cultural change we’ve been through was probably one of the most challenging things for any news organisation to go through. But the digital side of the business is now entirely front of mind when the journalists are thinking about a story and how they can tell it and communicate it. The overarching transformation that we’re in the midst of is really taking us towards being a digitallyled organisation that happens to have a newspaper. Content is only one part of our business. We’re also a retailer in the sense that we sell holidays and gardening equipment, for instance. One advantage is that geographically we’ve got a much wider appeal. In terms of audience, we’ve also brought appeal into other age groups and segments in the UK as well. We do seem to have attracted a younger audience online, which would have been difficult when we were simply a newspaper. With every change we make in print or online, we try not to alienate any of our readers and customers. One example of what we are doing for our traditional customers is the way we’ve utilised things like subscription offers and promotions. We’ve also got things like loyalty schemes that we’re launching at the moment where people who are long-term readers get rewarded. Retaining those customers is absolutely key for us. We’re trying to build on what we’ve got, rather than replace what we’ve got.
“The cultural change we’ve been through was probably one of the most challenging things for any news organisation to go through”
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British bosses blasted
Facts & Figures
A new survey of 5000 adult employees conducted by One Poll has revealed that a large majority of UK workers are not overly happy with the way that senior staff within their workplaces are running the show. The results show that 21 percent of workers believe that the management style employed by senior staff is authoritarian; 16 percent judge it to be bureaucratic; and 12.5 percent believe it to be secretive. Only 10 percent describe their bosses as accessible and just seven percent think senior staff are empowering.
52% of businesses in Europe say that they are not confident they will get the support they need from the banks post recession Source: Intrum Justitia
Company Index Q2 2010 Companies in this issue are indexed to the first page of the article in which each is mentioned. Absolute Software 25 Accenture 38 Adidas 50 AFP 46 AMD 56, 57, OBC Apple 138 Aston Martin 62 Astoria Hotel 55 AT&T 38 ATG 58, 59 Birdstep Technology 133 BP 38 Business Brands Council 38 CBS 38 Cerix 66, 69 Clifford Chance 114 Coca-Cola 38 Converse 50 Convince & Convert 38 Corda 23, 27 CRYPTOCard 120 CST Consulting 110, 111
Domino’s Pizza 38 Enic 30 Escaux 8, 96, 97, 104 ESET 128, 129 European Tour 98 Eurostar 38 Facebook 38 Fifty 30 Ford 38, 62 France Telecom 46 France24 46 Gatorade 38 GolfWeb 98 Good 36 Google 38 Greenpeace 38 Headstream 38 Hotel Astoria 55 HP 98 Igel Technology 80, 81 Infor IFC, 90, 91 Insignia 38
iStrategy 103 Kangaroo TV 98 Kensington 118, 119 LinkedIn 121 Lithium 58, 61 Maclaren 38 Mattel 38 McDonald’s 38 Meet The Boss 89 Mercedes 4, 38 Milan Solutions 66, 73 Nestlé 38 Nike 38, 50 PFI Knowledge Systems 13, 110, 113 Playboy Enterprises 30 Puma 50 Pure 138 Reebok 50 Reseach In Motion 2, 74, 75 Saatchi & Saatchi 136 Samsung 138
Sanlu Group 38 Siemens 6, 106, 107 Sony Ericsson 30, 138 Steria 116, 117 Sword 66, 67 Synergi 66, 71 Technologia 46 Tesco 38 Thawte 127 The Forest Trust 38 The World Health Organization 38 Tibco Spotfire 94, 95, IBC Travelex 124 Trintech 45 Twitter 30, 38 Victor Chandler 30 Vimeo 38 Virgin 38 Virtustream 82,83 Vision Solutions 122, 123 YouTube 30, 38
THE BIG INTERVIEW
Multi-millionaire betting tycoon Victor Chandler rescued his eponymous business from the brink of bankruptcy, turning it into a global gambling empire with half a million customers in over 160 countries. Today’s punter craves immediate betting and entertainment around the clock, he tells Julian Rogers.
T
he old adage states “You never see a bookie on a bicycle”, alluding to the preconception that all bookmakers swan about in top-ofthe-range cars bankrolled by hapless punters chasing those elusive winners. Cigar-puffing Victor Chandler, who has amassed a fortune of UK£160 million according to the Sunday Times Rich List, can often instead be found aboard one of his horses on the 40 acres adjoining his 10-bedroom Spanish farmhouse. In the cutthroat, esoteric sphere of gambling, this Gibraltar-based bookmaker and his trappings of wealth are tangible proof that the house (mostly) wins. My rendezvous with Chandler is at a discreet, but ostentatious, hotel tucked away in London’s upmarket district of St James’. The petit lobby is filled with ornate chandeliers, antiques and a charming grandfather clock. A portrait of Queen Elizabeth II posing in her Coronation robes hangs above the mantelpiece. This quintessentially British hotel is the Gibraltar-based bookie’s bolthole for his few days in London recuperating from an operation on his sinuses. Having perused almost every square inch of the complementary newspaper on the coffee table, a tanned Chandler finally arrives in reception – 30 minutes late for our scheduled tête-à-tête. It’s immediately clear this 59-year-old gambling magnate plays up to his moniker of ‘The Gentleman Bookmaker’ with his sharp suit, blue silk handkerchief poking over the brim of his breast pocket and expensive gold wristwatch. Even his aftershave whiffs of money. Where he doesn’t fit the bookmaker stereotype is in his demeanour; Chandler is polite and reserved, with a soft, gravelly voice, no doubt influenced by his penchant for big cigars. He apologises for his tardiness (business phone calls) and orders a bottle of still water and an espresso before we retreat to the private bar. Our lavish surroundings conceal the fact that for Chandler the past couple of years has been a tough period, especially with his big customers tightening their belts. “Business has been significantly affected at the top level, especially last year,” he reveals. “Some people were seriously affected and others pulled the reins in a bit because they didn’t know where it [the recession] was going while other people who had almost retired had to go back to work.” The high rollers used to account for around half of all business but this proportion has dropped “substantially” says Chandler, who built a reputation in the early days for accepting lumpy bets. Countries hit hard by the economic downturn have had a knockon effect on business. “Ireland is a disaster,” he exclaims. However, the bottom end of the market has survived very well. “I think this is because of the Sainsbury’s or Tesco effect
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BEATING
THE ODDS www.bme.eu.com 31
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where people are taking dinner for two and a bottle of wine home instead of going out for supper – people choose not to have a night out but stay in and have a gamble online for 20 quid.” Overall transactions (number of bets) have seen an uplift recently – this is a firm that takes around UK£1 billion a year in bets. The high rollers are slowly returning but Chandler is coy when it comes to divulging his biggest payout to date. “All big bets are relative because when you start out in business everything is a big transaction,” he suggests. “A big bet is when you have UK£200,000 in the bank and you take a risk that is going to cost you UK£40,000 or UK£50,000. A business like ours could take a risk of having a liability of UK£1 million.” It’s clear that Chandler’s responses to my questions are carefully formulised in his head before leaving his mouth; you can almost see the cogs turning, creating long, but not uncomfortable, pauses in the conversation. Where this third-generation bookie is looking to clean up is the football World Cup Finals in South Africa, just a few weeks from now. Although Chandler has little interest in football, experts are predicting that as much as UK£50 billion could be wagered on the month-long tournament. Chandler has been granted a licence to operate in South Africa just in time to capitalise on the betting frenzy. “Without doubt there will be record turnover,” says Chandler, “because more and more people have access to bet-
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ting sites than ever before.” Although Chandler is English, he won’t be cheering on his home country; it all comes to down to cold, hard liabilities for this astute businessman. “We almost certainly don’t want England to win,” he announces coolly before taking a slurp of his espresso. Historically, patriotic English punters have poured their pounds on their nation’s team but a global customer base has tipped the balance. “Because we have more customers in more countries the risk is more spread nowadays – it’s not as focused as it used to be,” he explains. Football betting’s growth has had a detrimental effect on that traditional betting medium and one of Chandler’s passions – horse racing. Football is the most popular sport in the world so it stand’s to reason today’s generation would rather have a flutter on a clash between two of Europe’s top sides rather than a nag running in a handicap at Newbury. “This sport is not only tailing off here in the UK and Ireland, but there is scant interest in it in other parts of the world,” he muses. And Chandler is openly critical of the racing industry for the way the so-called ‘sport of kings’ is marketed and run. “It saddens me that we [bookmakers] and the racing industry can’t work together to produce a product that fits the 21st century because the industry is running out of time to be as radical as it could be. We are also running a sport whose diary is based on a 19th century Victorian social diary – it’s nonsense.”
Window dressing Chandler’s sole London betting shop sits just a few streets away from his hotel. The dark wood interior, soft lighting and bank of TV screens flashing up odds has the feel of a private members’ club. As well as catering to Mayfair’s well heeled, the place also attracts the odd degenerate gambler too, says Chandler. “There’s a Greek who has lost a fortune in there over the past few weeks so the other day he threw his mobile at one of the TV screens and smashed it [after another losing wager]. That’s the fourth screen he has smashed now,” Chandler reveals, punctuated by a burst of laughter. It would appear that to ban the customer from the shop would be bad for business. Chandler’s high street presence is negligible; he sold most of his UK shops in the past decade after initially shift ing telephone betting operations to sunnier climes in the British overseas territory of Gibraltar. As well as being a popular hangout for wild monkeys, the Rock, situated off the coast of southern Spain, has attracted a stream of betting firms, primarily because of its offshore status. Chandler was a trailblazer for shift ing operations abroad back in the 1990s so that UK telephone gamblers didn’t have to pay the nine percent tax on their bets. They paid Victor Chandler, who became the largest employee in Gibraltar, a three percent service charge instead. A chance conversation kick-started the shrewd venture. “I was in
the bath and my wife at the time was reading the Daily Mail, and she said to me ‘If Irish bookmakers are allowed to take bets in the UK, why can’t you take bets from the UK in Gibraltar?’ A light went on in my head and we got the decision within one week that there was nothing stopping us from doing so.” Initially, customers were unsure about the move but they soon jumped at the chance of placing tax-free bets. “Some people were wary of the whole thing because they thought it was illegal or they were doing something illegal by betting with us. But soon we couldn’t cope with the amount of accounts we were opening up from the UK and Ireland – it was extraordinary.” The European football championships in 1996 (Euro 96) was a case in point. “During the tournament, Gibraltar couldn’t supply us with enough telephone lines to take bets so we used about 50 mobile phones, but the signal wasn’t great.” Chandler’s foray into foreign shores would be later credited as a catalyst for the UK government abolishing betting tax, replacing it with a 15 percent level on bookies’ profits. Chandler moved the whole business to Gibraltar in 1999 and today employs nearly 300 people; most of the staff recruited are fluent in at least two languages. Chandler’s interest in taking bets from non-UK bettors was first aroused by the 1994 World Cup Finals in the USA. England and Scotland failed to qualify but a global betting market was starting to flourish. “I divested most of my interest in the betting shops because that World Cup opened my eyes to the fact that there were people outside of the UK and Ireland who wanted to bet.” During the tournament a man turned up at his London office wishing to place a £1 million bet in cash on behalf of a Chinese businessman, indicating the potential that lay in the Far East. China had just begun to screen live English Premiership League football matches so Chandler looked to cater to rich businessmen wanting to bet five and six-figure sums on football. One ex-client in the Far East managed to rack up gambling debts with Chandler of an eye-watering UK£21.245 million. The collapse of the Asian stock markets left the punter short of funds to clear the debt. Fortunately for him, Chandler snipped the total owed to UK£15 million and accepted monthly instalments of UK£3 million. Gambling is illegal in many countries in that part of the world – run by underground bookies and organised gangs – but it is still a pastime ingrained in their cultures, especially in China. Chandler has websites dedicated to the Chinese but sometimes has to change URLs when the authorities in the communist country close the sites down. Despite the cat-and-mouse nature of doing business, Chandler, who makes regular business trips to Asia, appears blasé about
UK£21.245 million Total gambling debt once run up by an Asian client with Victor Chandler
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Victor Chandler’s Mayfair establishment attracts its fair share of high rollers. Photo: Diamond Projects
the risks, adding that it is a “grey area”. “It is the biggest untapped market and we have a wonderful business there that grows weekly, not monthly,” he explains. “China’s different attitude, culturally, to gambling is fascinating because it is just part of life for them.” In the western world a stigma still exists with gambling; people who enjoy a flutter are often perceived as perpetual losers. “I think there will always be a stigma,” Chandler whispers. “However, I think there is a much more of a stigma in France where bookmakers are looked upon as gangsters. I member going to Cagnes-sur-Mer in the 1980s and seeing bookmakers arrested regularly.” Chandler looked to tap into the South American market but the headache of payment systems stifled his chances. “There are rules in our business: first you get your product right – the functionality of your website and range of products – and then you get your payments in line, but we couldn’t do this is in South America because there is not the culture of credit and debit cards. Until you get this right it’s a waste of time marketing the business.” Chandler says bettors don’t want to hang around trying to get their accounts funded. “People want immediate gratification; we are similar to the porn sites in that people don’t wait. If they can’t pay for what they want and get that immediate gratification then you may as well not be in business.”
Both Chandler’s BlackBerry and Sony Ericsson mobile phones intermittently beep and vibrate during the interview but he chooses to politely ignore them and we continue. Back in the late 1990s, Victor Chandler’s Gibraltar office only accepted telephone bets. Internet betting was in its infancy. “The internet was embryonic, “ says Chandler, “the only thing on the internet were casinos.” Today, Victor Chandler’s website handles more than 90 percent of all bets. “Technology has changed the business more than anything else,” the boss acknowledges. It’s not just sports markets on offer either; customers have access to an online casino, games and financials. “We are becoming more an entertainment business,” he explains. “Although we have people who have bet with us 40 years and fourth generation families betting with us, the core of the business is not that [sports] – its about entertainment and providing a product with live betting 24/7, because the world is changing.” And like most of his rival sites, Victor Chandler’s boasts online poker – a game born out of the spit and sawdust saloons of the Wild West that has exploded in popularity due to the internet. Nowadays, players can battle it out over the virtual felt 24/7 without ever leaving their living rooms. Chandler dismisses suggestions that the poker bubble has burst, although there is little argument that the game’s surge in popularity from five or six years ago has fizzled out. “There is no doubt we have reached a plateau and the cost of acquiring customers for poker has gone up and up. We don’t make a lot of money out of poker [players pay a rake, or fee, on pots won] and I don’t think anyone does.” With poker stalling, the gaming industry is looking for the next hot betting medium. “What I would like to know is what the next poker will be, because there will be something, whatever it is, and it will grab the public’s imagination.” Chandler himself has been a fan of the game since long before the internet. “I have played fivecard stud all my life but I wish I had time to play more. I have played a few tournaments recently and was beaten in the final at Fift y [a London casino] by a 21-year-old, which nearly killed me. Earlier, I knocked his father out of the game and then he beat me,” a crestfallen Chandler recalls. While poker is a hobby, bookmaking is in Chandler’s blood – his grandfather William having established the business almost 65 years ago, as well as Walthamstow Greyhound Stadium, before it passed to Victor Chandler snr. At 15, Victor Chandler jnr was expelled from school for climbing out of a window at night to meet his girlfriend but his father managed to get him in at Somerset boarding school Millfield – a school renowned for its sporting prowess rather than academic achievements. “The headmaster was one of my father’s punters,” Chandler reveals with a mischievous smile. However, he had no intention of continuing the family dynasty. “I was hell-bent on
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Marketing, Victor’s way In an industry dominated by faceless corporations, Chandler is a larger than life character who deliberately promotes his business as a ‘bookmaker versus punter’ operation. Indeed, the idea that customers are placing bets directly with the man himself is leveraged to a competitive advantage. “Myself and the marketing team are very conscious of the fact that we are different to everyone else. It has given us an edge, especially in Asia where they like to see someone standing up and who is accountable for debts owed.” The name of the company was switched to VC Bet in 2004 but later reverted to Victor Chandler in a bid to re-establish the man behind the brand. On YouTube you will find witty advertisements for Victor Chandler; one such clip features grainy black and white footage of packed crowds enjoying
a day at the races back in the 1950s. The camera pans around and you see Chandler’s head superimposed on a bookmaker in a trilby. The voiceover from the man himself states, “Victor Chandler, the punters’ bookmaker for over 60 years.” Clients can also email Chandler directly and he has his own Twitter page dedicated to odds, offers and his opinions on sports. So is he or his marketing team behind the tweets? “I can’t discuss that” he retorts with a husky guffaw.
doing something else because any son wants to get away from his father and prove himself.” Chandler had visions of becoming a chef so enrolled at catering college in Switzerland. When that didn’t work out he upped sticks to Spain in his early twenties to work for a management consultancy company. Not long after, his father fell ill and died at 52, leaving Chandler jnr holding the reigns to the business at the tender age of 24. He also had the pressure of supporting his mother and two school-age sisters. Th is serendipitous takeover was more a case of necessity rather than any pressing desire. “It was circumstances that got me into the business rather an aptitude or wish to be in the business,” he concedes, leaning back into his chair and sliding his black-flamed specs up on his silver locks. “When I took over the business back in 1974 it was a recession, don’t forget. My accountant at the time sat me down and said ‘Do you know the business is insolvent?’ I said ‘What does that mean?’ and he said ‘You’re skint.’” Chandler sold a few shops to the big high street chains to get some cash in the bank and it “went from there” as he concentrated on attracting clients with deep pockets. He came close to selling the business to Playboy Enterprises in 1976 but stuck with it and made the most of taking tax-free bets at the racetracks (betting shop wagers were taxed). At Royal Ascot in 1977 he won UK£100,000.
very much hands-on when it comes to the day-to-day running of the company. He says his typical day varies a great deal but he makes sure he attends all the management updates. “We get together three times a week – Monday, Wednesday and Friday. It’s a good chance to catch up and I learn so much. Sometimes the meetings last 15 minutes, other times two hours depending on whether a bottle of wine comes out or not.” Away from the office, Chandler enjoys the racehorses he owns as well as breeding horses for dressage competitions. He has a property portfolio in London, Gibraltar and Spain (including his fi nca that he snapped up for £1 million four years ago with his Korean wife, Susan) and has always been a keen art collector. In fact, artist Lucian Freud is a good friend of the bookie – he even once painted Chandler’s portrait in oils, although Chandler denies this was done to pay off a gambling debt. His busy schedule curtails his art collection, though. “I used to go to a lot of auctions and galleries once a week whereas today I go to one or two a year. My life and my focus has changed because of my kids (Chandler has three young children aged 13, six and 18 months)”. With his busy life outside of running his business, as well as coming close to selling the company again in 2000 to sports media group Enic, does he have any plans to retire? “I would die of boredom if I wasn’t working,” he quickly ripostes. “It would drive me insane.” With that, my time is up and Chandler exits for an important lunch appointment – leaving Business Management to pick up the £8.50 tab for his thimble-sized coffee and bottle of water. Bookies aren’t renowned for their generosity, and it would appear fi lthy rich ones are no different.
People power Many of the people in the company’s management positions have been with him since the early days. “Everyone in the top jobs, except the IT Director, has come through the business and it’s great to see people grow up with us and have such an in-depth knowledge.” Chandler is still
“I would die of boredom if I wasn’t working. It would drive me insane”
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COVER STORY
Heads
up Repairing a badly damaged brand in the wake of a crisis doesn’t come cheap, both in hard cash and man-hours. So what lessons can we learn from those who tackled a crisis full-on and those who ducked for cover? 38 www.bme.eu.com
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By Julian Rogers
A
n outdated approach to fending off a looming crisis could be to bury your head firmly in the sand and keep telling yourself that any publicity is good publicity; after all, today’s news is tomorrow’s fish and chip paper, right? Unfortunately, that kind of laissez-faire attitude is a one-way ticket to Disaster City. For the exec at the top of the corporate tree – the CEO – it can mean falling on his or her sword if a poorly managed incident snowballs into an avalanche. The boardroom bigwigs will invariably have a trained eye on how an impending catastrophe affects the all-important bottom line, but the damage to an organisation’s reputation can sometimes prove irreparable. And while it’s a natural reaction to develop Schadenfreude-like glee if your biggest competitor’s name is being hung out to dry, don’t get too smug: your own crisis could be hurtling over the hills as we speak. A nightmare is unfolding right this second for oil and gas supermajor BP, as crude oil spews out into the Gulf of Mexico following an explosion that killed 11 rig workers. The oil and gas industry doesn’t exactly have a squeaky clean image at the best of times, let alone following this ecological and deadly disaster. BP has seen €28 billion wiped from its market value and besieged CEO Tony Hayward is all too aware that his head is on the chopping block. Company chiefs don’t have crystal balls forecasting impending crises. They can strike out of the blue, 365 days of the year, but how you react defi nes whether the incident is nipped in the bud or whether it lingers like a badly infected wound, dragging the brand’s name through the mud for weeks or months, or even years. “The damage is done by how the organisation responds to the crisis rather than the crisis itself,” suggests brand reputation expert Jonathan Hemus, founder and Director of PR company Insignia. “What an organisation does in the first hours or days is absolutely critical in terms of whether it emerges from the crisis very quickly, potentially with its reputation enhanced, or whether it’s going to do significant damage to the organisation and require fi nancial and human resources to restore it.”
In safe hands Th roughout history, safety has been at the epicentre of copious brand crises. Lose consumers’ trust in your products because of a slap-dash attitude with safety and watch your market share nosedive like a stricken plane with one wing. The food and drinks industry, for instance, has had innumerable product recalls. One that probably eclipses all others in the drinks sector was the recall of 30 million cans of Coca-Cola due to school children falling ill with vomiting and stomach cramps in Belgium 10 years ago.
The situation was worsened by the fact that the Atlantabased company was especially sluggish in its reaction to the crisis. They eventually ordered the recall, took out full-page adverts in the media to apologise and offered every Belgium householder a free bottle of Coca-Cola. But their initial reluctance to accept responsibility led to further problems down the road. “The crisis got bigger and bigger without Coke ever really establishing any influence over it until a fortnight into the crisis, when the global CEO flew over from the United States to Belgium,” says Hemus. The cost to Coca-Cola was hard to swallow. “It meant the CEO losing his job, the brand value falling and the cost of the recall running into over US$100 million. The brand has ultimately recovered, but it took good year for the organisation to get back to where it was before the crisis.” Julius Duncan is Director of Social Reputation at social media agency Headstream. He says honesty is the best policy in any situation like this. “You have to quickly acknowledge any blame, show your concern as a company and show that your customers and protecting their safety is at the forefront of what you’re thinking about. It comes above absolutely everything else and you have to stress that the whole time.” More recently (2009), safety concerns surfaced at child buggy-maker Maclaren when dozens of youngsters had fi ngers chopped off, broken and sliced in the hinges of their pushchairs. But instead of ordering a blanket recall, Maclaren had one million prams returned in the US, leading to uproar in the UK from worried parents confused by the inconsistency. “Because of the global nature the of media and the way that news disseminates now, this became a big issue around the rest of the world,” Duncan asserts. “They [Maclaren] should have gone global with it immediately and said to everybody, ’We’re absolutely shocked about this and we’ve got a free fi x here that you can get from your local store, to stop this happening ever again.’” Maclaren refused to admit liability, but has agreed to pay between €2300 and €11,600 to at least 40 children. By then, of course, the damage was well and truly done, primarily due to the mixed messages, says Hemus. “Ultimately, it wasn’t a sustainable situation to have two different messages about the same products in two different markets.” He believes the best course of action is to fl ip your perspective on the situation and look at things through the public’s eyes. How will these actions be received by consumers? Will they gain or lose confidence in the brand? “It didn’t seem like Maclaren took that perspective to their decision-making in this particular situation,” he suggests. Conversely, when toy manufacturer Mattel was forced to recall 18.2 million toys in 2007 – the most in the company’s history – due to lead paint and design flaws,
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Chairman and CEO Bob Eckert took the crisis personally. There were no mixed messages over the recall and Eckert himself was all over the media and using the company’s social media channels to create transparency. Mattel employees told of Eckert’s willingness to speak to them directly and how they felt the company pull together to overcome the challenge. “By demonstrating the right behaviours, by fi lling the vacuum and by taking steps to address the situation, they controlled it and the reputation is intact,” Hemus reveals.
Web reach It goes without saying that crisis management (as well as standard PR efforts) has significantly intensified with the emergence of online forums, blogs, social networking sites like Twitter and Facebook, and video sharing giant YouTube. All these channels are weapons in your arsenal when conveying your message; on the fl ipside, these online tools are at the disposal of Joe Public sitting at a PC anywhere in the world. It’s often said that if consumers suffer a bad experience they will tell around 10 people. If they receive good service they will inform just a fraction of this number. With the power and global reach of the web, consumers with an axe to grind or your common-or-garden activist can post, blog and tweet pretty much what they like about your organisation. Emergencies that spawn online require an online approach, says Jay Baer, a social media and strategy coach at Convince & Convert. “Companies don’t fight social media fire with social media water. If a crisis erupts on YouTube, you don’t answer back with a press release – you answer back on YouTube.” He adds: “Social media moves so swift ly that unless a company has a crisis plan in place before the crisis occurs, it’s unlikely that they can move fast enough to limit damage.” Domino’s Pizza followed Baer’s advice and leveraged YouTube to its advantage aft er two US employees fi lmed themselves carrying out vile acts in one of the fast food chain’s branches. One of the perpetrators passed wind on a sandwich, shoved cheese up his nostril and wiped his backside on a cloth. The video was uploaded to YouTube and viewed more than one million times. Th is was a potentially catastrophic situation for Domino’s, so bosses sacked the offending pair and quickly decided to fight fi re with fi re and post their own YouTube video. The crisis originated online so needed to be solved online.
In the Domino’s video, senior management, franchisees and staff expressed disgust at the offending video and pledged to sanitise every outlet globally. “They moved forward on to their front foot and started to push the agenda in the direction they wanted it to be in,” says Duncan, “because they managed to fi nd opportunity in the crisis. Coming from the shop floor, the video was very authentic and powerful.” Domino’s also used Twitter and Facebook to refute claims that this was a widespread problem, but instead a regrettable and isolated incident committed by two rogue employees. Communication was a cornerstone in the recovery. Stephen Cheliotis, Chairman of the Business Superbrands Council, believes global companies like Domino’s need to take a philosophical viewpoint because you can’t control every eventuality. “Consumers aren’t stupid; they will sit there and say, ‘It’s just some bloody idiot in Domino’s who has taken it upon himself to do something stupid.’ However, the bigger the brand and the more consumers and employees you have, the more likely there is to be a crisis. You have to have contingency plans in place for everything that could go wrong, however improbable, because your reputation is the most important thing that you’ve got. As long as brands react, people will say ‘Fair enough, they’re now supervising this closely so it can’t be repeated.’” Confectionary king Nestlé was quick to react to a damaging affair, but they chose the wrong course of action and discovered that negative publicity cannot always be swept under the carpet. Greenpeace uploaded a graphic video to the net alleging that Nestlé uses palm oil suppliers who contribute to deforestation. The video showed an office worker greedily chomping on a pretend Kit Kat made of an orangutan’s fingers rather than chocolate wafer. Nestlé’s response: get the video removed from YouTube ASAP. This draconian reaction merely fuelled increasing interest in the offending fi lm, so Greenpeace switched to video sharing site Vimeo – by which time it had gone viral. Nestlé has since announced a “zero deforestation” policy in partnership with The Forest Trust, but Duncan argues that the chocolate-maker’s efforts to stifle the video “backfired”. “All that did was make it much hotter currency, because everybody now wanted to see what was becoming known as the censored Greenpeace video that Nestlé had taken down,” he insists. “You have to realise that you can’t control who is saying what and you haven’t got the same level of control as you used to have when it was just main-
“Crisis management has significantly intensified with the emergence of online forums, blogs and social networking sites”
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The good, the bad and the ugly A sideways glance at reputation crises in recent years. The good: Mercedes Like any car launch, the unveiling of Mercedes’ new A Class in 1997 was a big deal for the German car company. However, Mercedes bosses were left with egg on their faces when the diminutive car was put through its paces with the ’elk test’ – a simulation in Scandinavia to see whether a car can cope with avoiding an errant moose on the road. A Swedish motoring journalist swerved to avoid a set of cones but the A Class toppled over, coming to rest upside down, smashed and dented. With safety of paramount importance to the car industry, Mercedes immediately postponed the car’s release and added fatter tyres, ESP (electronic stability programme), lowered the ride height and strengthened anti-roll bars. The company communicated with the public every step of the way to highlight how it was tackling the problem. For the re-launch, Mercedes invited the press along and hired the services of Formula 1 driver Niki Lauda to push the car to the limit. A delayed and costly, not to mention embarrassing, launch that was eventually put back on track.
The bad: Jyllands-Posten newspaper
The Mercedes logo (above); powdered milk is recalled in China (left); protesters burn the Danish flag (below)
Although started by a handful of people, this controversy soon spread around the world, damaging a whole country’s reputation and leaving more than 100 people dead. In 2005, Danish newspaper Jyllands-Posten printed cartoons depicting the Islamic prophet Muhammad, including one with a bomb in his turban. News of the cartoons spread in the Muslim world and soon Danish embassies in Arab countries came under siege, some being set alight. Violent protests led to more than 100 people being killed. Fuel was added to the fire when the offending cartoons were printed in more than 50 other countries. The uproar led to a boycott of Danish products in certain countries and Denmark’s Prime Minister describing the scandal as his nation’s worst international crisis since World War II. The cartoonist behind the bomb in the turban illustration was forced to go into hiding following death threats and a bounty being put on his head. A few years later, Danish police arrested three men planning to assassinate him. Denmark’s crisis lingered for years, not weeks, and has not been fully laid to rest to this day.
The ugly: Sanlu Group Probably the biggest controversy to ever hit the food industry was the Chinese melamine contamination in powder milk in 2008 that affected an estimated 300,000 people and left six babies dead. Farmers laced their produce with melamine, used to make plastics and fertiliser, in order to increase its apparent protein content. When consumed in large amounts, melamine can cause kidney stones and kidney failure. China’s largest milk producer, Sanlu Group, wasn’t the only company to sell the tainted milk but bosses did try to keep a tight lid on the scandal once reports of babies falling ill began to surface. Even the world’s best PR guru would struggle to put a positive spin on this tragic mess. Indeed, the World Health Organization said the crisis of confidence among Chinese consumers would be difficult to overcome. Four Sanlu executives went on trial in China, including the company boss, who was spared the death penalty and jailed for life. Two men accused of being responsible for the contamination were handed down death sentences. For China, which relies on its exports, this was a national disgrace that severely dented its image.
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stream media. It’s really about engaging with consumers and putting out your own content to balance out this negativity, rather than thinking you can completely control the message or what people are saying about you.” Whichever communication platform management opts for, it needs to connect with the consumer and be devoid of corporate language. Bland, impersonal statements go down like a lead balloon with the public. “The conversation needs to be authentic and transparent,” says Duncan, “and have a level of humanity to it if you’re going to really make things work on these platforms.” Baer echoes these thoughts, stressing the need for a humanised presence with communications, particular social media. “The companies that are the best at social media confl ict resolution do so by attaching real people to the scenario, not a logo. Ford did this incredibly well during the auto bailout, building an entire microsite explaining the company’s present and future from the mouths of key executives.”
Speech bubble Like Ford, part of the communications offensive will usually include sticking a congenial and voluble spokes-
person in front of a camera, be it for television, YouTube or the organisation’s own website. Conventional wisdom says it should be your CEO, and nine times out of 10 it will be. Whoever is selected to face the music needs to command authority, without appearing aloof, and succinctly convey their points lucidly. “Don’t put forward someone who has the right title but is not capable of communicating effectively,” Hemus stresses. There’s always the risk that your chosen spokesperson could squirm or struggle to express the right message if a media scrum is pitching awkward questions amid a sea of flickering flash bulbs. Charismatic Virgin boss Sir Richard Branson is an instantly recognisable entrepreneur, particularly in the UK. When one of his trains derailed in 2007, leaving one dead and dozens injured, he took full control of the PR machine in the aftermath – arriving at the crash site and becoming the face and mouthpiece for the company. But when Eurostar trains connecting the UK and France broke down last Christmas, leaving thousands of passengers stranded, some stuck in the darkness of the Channel Tunnel without food or water for 16 hours, CEO Richard Brown’s words didn’t carry the same gravitas. His PR efforts received a lukewarm response from custom-
“The companies that are the best at social media conflict resolution do so by attaching real people to the scenario, not a logo”
People brands How two high profile celebrities adopted contrasting stances to their recent scandals. TIGER WOODS
F
rom the outside looking in, US golfer Tiger Woods had it all: a glittering career, a Swedish model for a wife and more cash in the bank than any other sportsman in the world. But in 2009, his reputation and the Woods brand were in tatters when news surfaced of a string of affairs behind his wife’s back. Altogether, more than a dozen women came forward in the media with claims of having had steamy sexual encounters and relationships with the golfing great. Despite the kiss-and-tell revelations and media circus surrounding the infidelities, Woods remained tight-lipped, taking a self-imposed hiatus from golf. He did his best to avoid the glare of the media but paparazzi photos of him trying to remain incognito while checking into a sex addiction clinic only fanned the flames of speculation. Woods’ silence exacerbated the crisis, says Insignia’s Jonathan Hemus. “Everbody else was being interviewed by the media for their views and rumours were spreading like wildfire, but the one person who wasn’t shaping or exerting any influence on this was Tiger Woods himself – presumably in the hope that it would just go away but it clearly didn’t.” When he eventually faced the limelight, his ’apology’ hit out at the media rather than expressing remorse. The fallout from the whole debacle was a backlash from sponsors, with the likes of Gatorade, AT&T and Accenture axing lucrative endorsements. These companies couldn’t associate themselves with a tarnished star who shaped his brand on his seemingly clean-cut image. Woods, a magnet for sponsors like Nike, was thought to earn €81 million a year in endorsements before the adultery came to light.
VS
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ers, but the company as a whole was ill-prepared for the breakdowns and ensuing mayhem. “They tried to set up Twitter accounts but the names that they wanted weren’t available,” says Hemus. “So they were communicating via a Twitter name that had been set up to promote short breaks rather than having an account ready to use in the heat of a crisis.” Lousy crisis management and not having an effective ‘voice’ of the company meant that Eurostar took a battering for the fiasco. According to Hemus, Japanese automaker Toyota had a similar problem with its MD for the UK, Miguel Fonseca, when he appeared on breakfast television recently. Toyota had already been accused of procrastinating over the recall of more than eight million vehicles globally following cases of stuck accelerator pedals. Again, the salient issue of safety was the crux of this potentially deadly crisis. “In the interview he just was not an effective communicator,” suggests Hemus. “He did not get his point of view across well and that was bad for Toyota, but it was also bad for viewers because they didn’t get clear guidance on what they needed to do.” Even if you are blessed with a great communicator, you will need back-up spokespersons. “Otherwise, you Continued on page 44
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DAVID LETTERMAN
U
S chat show supremo David Letterman decided to tackle his personal crisis head-on – revealing live on air that he was being blackmailed over an extramarital affair. His unexpected outpouring had the studio audience initially questioning whether it was all part of his primetime talk show, but it soon became clear Letterman was telling the truth, revealing how he had had sex with women on his staff. CBS producer Robert Halderman demanded €1.6 million in hush money after discovering the adultery through peeking at a former girlfriend’s diary. Letterman displayed genuine fear for his safety during the 10-minute speech interspersed with the odd quip: “Would it be embarrassing if this were to be made public? Perhaps it would – especially for the women.” Viewers were left stunned by Letterman’s admissions but Hemus says his direct approach to the situation was the polar opposite of Woods’ head-in-thesand ploy. “As soon as allegations of an affair arose, he went on-air, apologised, and took control of the communication of the message. Yes, it was still a big story, but it was nowhere near as damaging to his reputation as it has been for Tiger Woods.” Letterman, who married his long-term girlfriend last year, with whom he has a six-year-old son, is normally very guarded about his private life so his on-screen admission was all the more startling. It also severely dented his good guy image. Halderman was arrested and eventually sentenced to six months in jail and 1000 hours of community service after pleading guilty to attempted grand larceny. For Letterman, who was commended for his honesty, the scandal had little effect on his career.
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Golden rules for crisis management ➊ Have a plan: You can’t foresee every eventuality but you need to ensure you can go on the front foot once the need arises. Fail to prepare and prepare to fail.
➋ Act fast: Hoping a
Continued from page 43
can bet your crisis will happen on the day when your super spokesperson is on holiday in Australia and not available to do the interview,” advises Hemus. Baer says customers often need to see and hear the CEO as soon as possible in a crisis. “I ask my clients whether they can get a video from their CEO recorded and uploaded to YouTube within two hours, even if that CEO is fishing in Arkansas. If they can’t then they don’t have an adequate social media crisis plan. It’s less about messaging and more about rapid response capability.” As well as good communication, experts agree that honesty is the best policy. Organisations need to come clean about their failings and where mistakes were made. Concealing the truth or trying to wriggle free from any blame merely antagonises customers and turns people off the brand. If you fumble the ball, be brave enough to admit it. “Some companies tie themselves in knots about using the ‘S-word’,” says Duncan. “If you decline to do that it becomes the story rather than actually just accepting some responsibility, saying sorry and moving the debate forward.” Th is is reiterated by Baer: “There’s no place to hide any longer; Toyota’s biggest problem isn’t really the product quality concerns, it’s the lack of transparency and appearance of a ‘cover up’.” Supermarket titan Tesco swallowed its pride and took the blame for a fuel contamination incident three years ago. Motorists fi lling their vehicles at a batch of Tesco
forecourts in the UK soon spluttered to a halt, leaving them with repair bills running into hundreds of pounds. The petrol, linked to one supplier, contained traces of silicon. But instead of blaming the supplier, Tesco took out full-page newspaper adverts apologising for the mistake and offering a refund for the petrol as well as to foot the heft y bill for repairs. They also set up a website and advice line dedicated to offering help on what to do and how to claim for repairs. Hemus commends Tesco for adopting this strategy. “I’m sure the repairs cost them many thousands of pounds but if they had not paid and said it was not their problem but the supplier’s fault, the longer-term damage to their reputation could have been far, far worse.” Having looked at the tactics to deploy and pitfalls to dodge, is there in validity in the first point that today’s news is tomorrow’s fish and chip paper? Can a 21st century company really expect to survive with this mentality or can sitting on your hands and hoping the storm clouds quickly pass save you from garnering more publicity from a bungled crisis management plan. “Doing nothing may have been a good strategy 10 years ago, but online media means that this definitively isn’t true anymore because anything that has appeared is now stored and referenced via Google,” says Hemus. “Also, all publicity certainly isn’t good publicity and I think anyone who still believes that is living in a fantasyland.”
problem goes away is not an option because there is nowhere to hide nowadays. Be quick to fire up your action plan.
➌ Be honest: It’s OK to say sorry. Consumers respect companies that admit mistakes and vow to put things right.
➍ Use social media: Banal press releases or, heaven forbid, “no comment” quotes rile consumers. Build a following on social media sites now – not in the heat of a crisis. ➎ Good spokespeople: The CEO needs to spread the right message eloquently and effectively. If the CEO isn’t that press savvy, train up senior people who can do the job instead.
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COUNTING THE COSTS
Nicknamed the ‘cost killer’, France Telecom’s former Deputy CEO Louis- Pierre Wenes became one the most hated men in France after 25 workers committed suicide under his leadership. Here, the man widely blamed as the mastermind behind the company’s aggressive restructuring plans attempts to defend the actions that led, ultimately, to a human tragedy.
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or France Telecom, the suicides of 25 workers in just 20 months represented an unparalleled PR disaster. The organisation became synonymous with draconian management practices and extreme workplace stress – and LouisPierre Wenes, its former Deputy CEO, became one of the most hated men in France. Nicknamed the ‘cost killer’ he was dubbed the mastermind behind France Telecom’s aggressive restructuring plans aimed at achieving €1.7 billion in savings by 2011. Around 22,000 workers have been laid off by the company since 2006 as part of a modernisation drive following the company’s privatisation in 2004. The latest cost savings put workers under excessive pressure, claim unions who cited relentless monitoring of staff and repeated transfer programmes among the measures that drove 25 workers to take their lives – including several who jumped to their deaths from France Telecom buildings, a worker who stabbed himself in the stomach during a work meeting, and a call centre worker who overdosed on barbiturates on the office floor. The tragic human cost of these restructuring measures led to Wenes’ resignation in October last year, when he expressed apparent regret for the consequences of France Telecom’s actions, telling media: “Despite the hard edge of the technological and economic fight, especially in our business, nothing can justify men and women putting an end to their lives. Today, like before, I cannot accept it.” A letter later sent to France Telecom staff and translated by the Wall Street Journal states: “My sense of self-restraint often prevented me – perhaps wrongfully – from expressing what I felt and better explaining what I was doing. To everyone who suffers, I hope you will find serenity and confidence.” Such emotive language represents a sharp U-turn from the Machiavellian figure painted by the French media and the country’s trade unions.
Behind the mask So who is the real Louis-Pierre Wenes? Ruthless ‘costkiller’ or a misunderstood manager pushed to the brink by his organisation’s relentless fight for survival? When Business Management meets Wenes and questions him on the scale of the suicide tragedies, there is nothing in his tone to suggest the latter. He is unapologetically pragmatic about the situation, claiming there is in fact no direct correlation between the suicides and France Telecom’s restructuring programme: “Of course a suicide is always something dramatic. That somebody ends his life is really something that makes me feel very, very bad and we have to do everything we can to avoid that. We’d been doing a lot of things even before this came into the media, like putting in place doctors in different regions of France almost 18 months before. If we go back to the number of suicides
you mentioned, I think it’s a biased view of the situation. If we look at the facts, the suicide rate at France Telecom did not increase during that period. You could see the number of people committing suicide in 2000 was even higher at that time and moreover the rate was absolutely similar to that of the overall corresponding French population. We [France Telecom] had 120,000 people. It’s 16 [suicides] a year. It’s far too much but these are the facts. A lot of things have changed since and unfortunately people are still committing suicide. The fact of the matter is that if you go through such a large transformation you will create stress at individual levels but it’s normal.” In, fact, he seems to suggest that darker forces were at work when it came to be the way the situation was perceived by the media, the French public and the trade unions, and describes himself as having been made a “scapegoat” by “external stakeholders”. “I don’t want to underestimate the situation but what I’m saying is it was not a France Telecom specific issue as such. So you must then ask yourself how did it come [to be perceived] that way? In my opinion it was because a certain number of external stakeholders had their own personal agenda and it’s always very easy to play on people’s emotions. I cannot even admit to thinking that some people took advantage of the situation to achieve their personal agenda but that’s for sure what happened.” Describing how he was made a “scapegoat” he says: “It’s very unpleasant being a scapegoat. You’re sure you’ve been doing the right things then you’re stabbed in the back for reasons, I mentioned before. A lot of these reasons had nothing to do with the business itself. It’s like you’re running a race and suddenly somebody hits you in the back and you fall over.”
“If we look at the facts, the suicide rate at France Telecom did not increase during that period”
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Above: France Telecom employees, demonstrate in front of one of the company’s outlets in Auch, France, after unions called for two days of strikes and protests.
A necessary evil? Backstabbing, office politics and scapegoating aside, Wenes says France Telecom had little choice but to drastically adapt its business model from one driven primarily by the traditional fi xed line business – to one embracing the internet revolution. Jobs were inevitably in the firing line with many skills becoming redundant. Ongoing restructuring had been taking place within the company since it was privatised in 1998. Since then 40,000 jobs have been cut as the company battled to modernise itself. “France Telecom was built on the traditional fi xed lined phone business,” says Wenes. “That accounted for almost 80 percent of its revenues and now it’s about 25 percent. We had jobs that were just disappearing because we’d been moving to being an internet business. Some jobs which existed before did not exist the next day. Between 2003 and 2008 almost 50,000 people left the company on a voluntary basis with packages that were significantly above the industry average. We also had 15,000 people who changed their jobs, moving from being technicians to the business side for instance.” But it was the manner in which these changes were enacted that union leaders say led to the 25 suicides. They have accused France Telecom’s management of running a “reign of terror”, which involved culling staff and forcing those remaining to switch jobs, or meet overly tough new
targets. The company also had a programme whereby managers were placed in new postings every three years. Wenes has been portrayed by union leaders as the main proponent of the regime. Pierre Morville, a CFE-CGC Union member told the news agency AFP shortly after the deputy CEO’s resignation that: “Wenes is symbolic: he was responsible for terror management tactics. He had to leave.” Meanwhile CFDT union member Pierre Dubois told France 24 that Wenes was insensitive to the employee suicides and that he refused to negotiate on the policy of forced transfers. “There was never any kind of dialogue with Wenes. He never agreed to meet us, not until we published an open letter calling for his resignation.” Many of those who remain in the workforce have civil service status – a throwback from the company’s existence as a state-run company. Union leaders say that while it is virtually impossible for France Telecom to let these workers go, management have resorted to bullying tactics in a bid to force workers to quit by placing them in high pressure call centre jobs from previously skilled roles. Wenes says the company had no choice but to make fast decisions on workforce changes in an economic environment which left little room for manoeuvre: “We are in an environment which is more and more constraining. The glorious gross years are over and this makes the room
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for manoeuvre for managers much narrower than it was. So the speed now at which you must react and counteract and analyse what’s going on is critical. The world is changing fast and if you try to implement the former recipes you will probably fail because the environment is so different to yesterday’s.” He goes on to say that he believes the tough economic situation put more pressure than ever on managers to meet cost targets: “Over the last decade gross [profit] was there and that erases a lot of mistakes. So the expectations or the pressure put on managers were not as strong as they are now. Now you have to be much more professional because if you make a mistake gross [profit]will not erase it. It will come back in your face.” He claims moreover that the company did its utmost to retrain staff so their skill sets could meet new requirements and that managers worked to ensure staff were placed in roles that met their existing expectations. “We had to do things for these people so we massively increased staff training. I think the training budgets were up 25 percent during that period. I always say as a manager you have to make sure that you put people in the right position. If you put them too low they will be frustrated and they will want to do more. If you put them too high they will be stressed and not able to progress.” While quick to deny allegations of bullying within the firm, Wenes admits he can appear abrasive and says working on the way his behaviour is perceived by others is a key goal of his: “One of my weaknesses is the fact that I’m a very demanding person. If you don’t know me you will think ‘If I tell him something wrong, he will kill me’. A lot of people have that impression. But if you talk to the people I work with they know that’s the way I work. My weakness is how I can overcome that image so that people feel more comfortable with me.”
The next chapter After resigning as Deputy CEO, shortly after a 51-year-old father-of-two became the 24th member of staff to commit suicide, Wenes was moved to another department within France Telecom, which is involved in the company’s business outside France. Th is, he says, was partly because, given the negative publicity surrounding his role in the company’s restructuring, he could no longer work in France. Denying that he resigned from the company, he says: “I said to my boss ‘Under these conditions I’m not able to do my job anymore – therefore I want you to give me another assignment other than this one’.” He continues: “The mood was such in France that whatever I would have said wouldn’t have been listened to because of all these rumours that we didn’t kill upfront. So it doesn’t make sense that I continue to work in France, so I’m doing special business outside France.” Despite the tragic chain of events leading to Wenes’ de-
parture from France Telecom, he claims to be proud of what he achieved within the company and looks back on his experiences within the company as positive ones: “I love what I’ve been doing. I love these teams and what we’ve done together. I love what we’ve built together and all the battles and victories we’ve been through. We made it, we brought together France Telecom from a situation where it was almost bankrupt.” But at what cost, this business success? As France continues to reel from the shock of the 25 suicides, questions must be asked as to how far businesses will and should go to survive against the economic odds, even at the cost of human lives. Questions also remain over the French government’s relatively late intervention into the management practices of this private sector company. It was not until September 2009 that the French Labour Minister Zavier Darcos agreed to meet France Telecom’s CEO Didier Lombard to discuss the situation – despite the fact that 23 workers had taken their lives since 2008. But most importantly, the situation poses a dilemma for all business leaders, over what the balance should be between companies’ responsibility for employees’ welfare, and their own business objectives.
“I’m a very demanding person. If you don’t know me you will think ‘If I tell him something wrong, he will kill me”
What happens next? Earlier this year France Telecom commissioned the HR consultancy Technologia to conduct a report into the company’s management practices. It based its report on interviews with 500 staff who were asked to air their grievances in detail. The report was published in March and urged the organisation to introduce new personnel practices and move as quickly as possible to “take charge and encourage radical change to recover its former status in the eyes of the public, shareholders, and workers”. It claimed that without quick action, the situation at the company could worsen. The report makes 107 recommendations, including a move away from the company’s aggressive management style, a more transparent HR department and a moratorium on any further reorganisation exercises. The report also advocates the introduction of a system to monitor “psychological risk factors” and to deploy a team of mediators to work with disgruntled workers. After the French government stepped in to talks with France Telecom’s management, the company agreed to discontinue the programmes and initiatives that had been identified as being particularly disruptive by staff. It has also agreed with unions to address key issues such as mobility, work-life balance and stress.
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BRAND INSIGHT
Cool for for cats cats Cool
How do you promote an ßber-cool brand for the fickle sports lifestyle consumer? Antonio Bertone, former record shop owner and club promoter, and now Puma’s global C hief Marketing Officer, offers a candid insight into his creative side.
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“
We always look at it like a relationship between two people that you’ve got to work at because if you get lazy then they’re going to dump you,” Antonio Bertone reveals when discussing the glue that bonds Puma and its customers. “You’ve got to fl irt, come up with new things, try new things and fail at things. You’ve got to be willing to put yourself under the microscope and say, ‘Is this cool or is this shit? Would anybody want this’?” It’s a refreshing and self-effacing viewpoint from a C-Level exec, but Puma is canny enough to know it can’t just follow the herd; this ‘sportilifestyle’ manufacturer and its distinctive cat logo are always looking to pounce on greater market share in an industry fusing sports, fashion and lifestyle. Bertone is putting the bounce in this cat’s step because, for him, Puma’s mission statement is pretty clear cut. “It’s about being the most desirable sport lifestyle and sustainable brand in the world.” He emphasises the importance of the key word: desirable. “We never go out there saying we want to be the biggest, the baddest or the greatest – it's just to be the most desirable. If you just stay focused on remaining desirable to your consumers you can be an eternal brand and relevant for the long term rather than just hot for the moment.” You can’t afford to rest on your laurels either, he asserts. “The art is to never be too comfortable with what you have accomplished but always look at what’s next. People are way too smart today, they're also not sitting around waiting for you to be amazing.” And strong competition breeds hunger to succeed, he explains. “Today, you compete against everything and not just those in your industry because people have discretionary money, especially as they don’t have a mortgage. Every season you have to earn your place.”
Heritage Based in Herzogenaurach, Germany, Puma, which should be pronounced ‘Pooma’, distributes its products in more than 120 countries and employs 9000 staff. The company notched up €2.46 billion in consolidated sales last year – the toughest retail environment for decades. Puma, owned by French retailer PPR, is the world’s third largest sports goods maker. In terms of sports apparel, this is a huge year for the company with the football World Cup fi nals in South Africa just days away from kick off. Puma produces the strips for the world champions Italy and a string of strong African teams – all of which will be seen by millions of fans around the world during the month-long tournament. They have also produced a universal third strip for African teams in 2010 in partnership with the United Nations. “Th is World Cup couldn't be located in a better place for us,” the CMO divulges. “It’s a big deal for us, because we’ve been a huge supporter of
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“
The bottom line is that the product has got to be good because consumers are way too smart nowadays; just because so-and-so is wearing it doesn’t mean it’s not shit
African football for almost 20 years now. Football is a key part of our identity because we’re a sport lifestyle brand and we have to stay deeply rooted in the sport.” Obviously two sides sporting Puma kits would be a dream fi nal for the board but Bertone has less loft y ambitions. “Would I love to have an African team make it to the fi nal? Absolutely. That would be amazing; mind-boggling.” Footballers like Ivory Coast’s Didier Drogba and Cameroon’s Samuel Eto’o ply their trade in Europe’s top leagues but are idolised in their home countries. The right superstars donning your sportswear can send sales in stores and online through the roof. Indeed, having the fastest man on earth – Olympic gold medallist and world recorder holder Usain Bolt – decked out in Puma attire, including the running spikes, is almost priceless for Puma. Bertone believes sports star sponsorship is important to the “overall mix” but it’s equally important not to get carried away because consumers don’t just make purchasing decisions based solely on who is seen wearing certain clothing. “In some parts of the globe maybe people are still heavily influenced by who is associated with some sports but in general it’s nice to see people competing in your products and representing your brand as an ambassador or stewardship.” But it comes back to quality of product, he argues. “The bottom line is that the product has got to be good because consumers are way too smart nowadays; just because so-and-so is wearing it doesn’t mean it’s not shit.” The company is diversifying its sponsorship portfolio by breaking into new sports like Formula 1 and, surprisingly, sailing (Puma has entered the Volvo Ocean
Race 2011-2012 from Alicante, Spain, to Galway, Ireland). Cobra Golf was recently snapped up to strengthen Puma’s golfi ng brand. Although there is fierce competition in the field of sports sponsorship and endorsements, this CMO says Puma doesn’t take sideways glances at what its competitors are up to because much of the products and ideas are conceptualised more than two years in advance of a launch. Puma does its own thing, often with less resources at its disposal. “Our whole life we have had to punch above our weight because our closest competitors are sometimes seven to eight times bigger than us. So we do well with less and I know that sounds weird but we’re more creative when we have no money,” he reveals in a nonchalant tone.
U-turn When Bertone talks about funds he is referring to back in the early 1990s when Puma was fi nancially crippled and its brand in freefall. It had also lost a heap of ground to the likes of Nike, Reebok and fierce German rivals Adidas. In stepped 30-year-old Jochen Zeitz who conducted a root-and-branch overhaul of the business, re-established the brand and put Puma on the road to fi nancial recovery. He still remains Chairman and CEO and the driving force behind the business today. “We’ve been able to evolve the company into one we feel is consumer-centric,” states Bertone. “Our job was also to make this beautiful 60-year-old brand relevant.” Bertone himself joined the company not long behind Zeitz after having been a consultant for street clothing
“
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company Converse as well as a club promoter. r. He even owned and sold a record shop dedicat-ed to underground music. “Back then it was a kind of post punk rock music that we focused d on as well as grindcore and death metal,” he explains. “We sold stuff and music paraphernalia you couldn’t fi nd at other record stores because there was a subculture of music that was bubbling up at the time, similar to sneakers. It’s all about getting people into your stuff or your wares.” He says this desire to spread the word is a trait of his. “Whether I’m persuading my friend’s to go to punk rock shows or selling them shoes, I have always been consumer-centric in a strange manner.” Bertone, the son of Italian immigrantss living in Boston, rocked up at Puma’s US door as a fresh-faced er his arm. 22-year-old with a skateboard tucked under Having not been to university or completed an MBA, Bertone knew more about 360 kickfl ips and 50-50 grinds than he did about marketing metrics. But what he lacked in qualifications he made up for with a fi nger on the pulse of what kids found fashionable and wanted to wear. He was also instrumental in Puma’s push from sports apparel into lifestyle clothing and skateboarding footwear. “I had a very big mouth and I had no professional training,” he reveals bluntly. “When I came in I think there was a lot of wonderment from my perspective because I was like, ‘Wow, I get to make sneakers’.” He had no grand visions of becoming the global marketing chief and a member of the board though. “I wouldn’t have even known what a CMO was back then; I was just happy to be employed,” he laughs. “I didn’t go to university and it’s a daunting task when you’re a kid and you have to pay for food and stuff.” Puma employed him as a trainee marketing consultant and within three years he was elevated to global marketing director. Not bad for 25.
Box cle ve r: unique eco-bag launche d
er Little Bag – a revolutionary new Puma has unveiled its so-called Clev es company says will save 8500 tonn way of packaging shoes, which the from e g houses shoes in a frame mad of paper a year. The new packagin ped in reusable shoe bags. Puma, wrap a single sheet of cardboard and me carbon neutral in 2010, says the who has ambitious targets to beco paper than a traditional shoebox. eco-friendly bag uses 65 percent less diesel consumption in the It will also reduce water, energy and percent per year. Indeed, Puma 60 than manufac turing process by more on megajoules of electricity and is predicting a reduction of 20 milli of tonnes. And due to the replacement 00 carbon dioxide dropping by 10,0 in e lighter built-in bag, the differenc traditional shopping bags with the two plastic. Clever Little Bag has been of weight can save up to 275 tonnes ner child of renowned industry desig years in the making and is the brain aging prototypes before the Clever pack Yves Béhar who came up with 40 to be the new benchmark for our Little Bag. “Ideally, I would like that packaging going forward,” says a industry and how people create shoe Bag ty frickin’ awesome.” Clever Little buoyant Bertone. “I think it’s pret nd half of 2010. will be fully rolled out in the seco
Brainstorm Bertone, who has been CMO since 2007, insists inspiration for Puma’s marketing and brand strategy comes from people around him, the media and even the weather. “I’m generally better when the weather is nice.” Bertone’s efforts have a direct impact on Puma’s balance sheet so he admits getting a real buzz from seeing what’s proving popular in the stores. “I’m a little old-fashioned in that I still get excited about what sells at the register, so I love to go into the stores and see what selling; and I love it when it’s not the thing that you thought it was going to be – that’s kind of fresh.” However, it’s not hit after hit for Puma; some products or ideas will crash and burn despite all the market research. His assessment of the thin line between success and failure is somewhat enigmatic but
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{
stat s Puma’s vital
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And with consumer opinions and purchasing choices constantly evolving, your marketing strategy needs 48 > Founde d: 19 to be fresh and relevant. Coming s e ri : 120 count > Distribution up with hit advertising campaign dust ry: 3 in ar we or groundbreaking online video ts or > R ank in sp % 6 .3 9 6 that goes viral is one of the biggest up ro G older: PPR > Main shareh challenges. “I always used to have .2 million this theory that marketing is like rnings: €128 ea t ne 9 00 2 > 7 : bug spray,” a cryptic Bertone exup C orld a equips at W > Te ams Pum plains. “You kind of come up with one bug spray and then the bugs get used to that spray and it still conveys his point. “Certain prodthey don’t die anymore, so you have to come up with uct launches sometimes make a nice something stronger to kill the bugs, and marketing is big bowl of lemonade or a really shit the same way.” omelette.” It comes back to the basic When it comes to his best “bug sprays” or successes questions that need to be answered to date, he is suddenly reticent to blow his own trumpet. before any rollout. “You need to ask your“I don’t know, I get freaked out by those kinds of quesself who is going to wear this, who is going to tions,” he responds, slightly vexed by the question. He repay for this and is it too much money? If you stick luctantly lets his guard down though. “I love the fact that to those simple questions whenever you approach a we updated the overall delivery, design and look and feel new product launch you will have much more success, but to contemporise Puma. I’m also proud of working on the sometimes people just try to make it like curing cancer first-ever Puma store in Santa Monica, which eventually and that just makes it too frickin’ complicated.” led to our rollout of retail with over 500 stores worldwide. Failure is all part of the learning curve for marketOther than that, I find it freaky thinking about this stuff.” ing execs and brand champions. It makes you stronger, So is Bertone as enthusiastic about working for Bertone asserts. “It makes you humble, especially if you Puma as he was when he arrived in his youth? “It’s been put hype behind something and then you fall on your face 16 years but I’m still really motivated. I still see a lot of – it stings for a little bit.” He adds: “Failures also make areas where we can do better but I think Puma is a great you smart, because you can’t have a crystal ball and anycompany to work for – it really entrusts its people more body who pretends they do is full of shit. You’ve got to be so than processes and I never feel like I’m a cog in the human at the end of this; it’s not like I’ve got some super machine.” It’s not all plain sailing though. “I actually get computer spitting out these ideas – it’s a human being and to earn my pay check here; I don’t want already that is faulty.” to get comfortable.”
Puma headquarters in Herzogenaurach
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HOTEL ASTORIA AD.indd 1
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ASK THE EXPERT
Processors power enterprise opportunity Why the latest most powerful computer processing technology promises great things for businesses, with John Fruehe of AMD.
B
usiness leaders may not immediately appreciate the ability of the latest processing and server advances to grow the bottom line. They may vaguely understand how innovation around central processing unit (CPU) technology has something to do with data centre performance and efficiency, but that’s often where their level of knowledge ends and they defer to the specialist expertise of the data centre manager or IT director. But those business and IT directors that actively work together to explore the advantages offered by the latest CPU developments can position their company to capture potentially significant business advantages. Put simply, the latest CPU development advances are allowing companies to do more with less, and are no longer necessarily the sole preserve of large, global enterprises with deep pockets and massive, global computing requirements.
Achieving more with less The latest processor architecture innovations enable businesses to deploy servers and PC workstations that can have more processing cores and memory, but can cost less money. As the US and Europe start to come out of the recent economic troubles, companies doing business in those regions will want to be smart about how they spend their capital. The latest processor advances have been designed to help businesses replace ageing systems with newer, more powerful ones that can allow for a condensed data centre footprint and savings on costs like maintenance, power and general IT management. To meet this demand, processor manufacturers are beginning to develop architectures that deliver a more balanced take on the tradi-
The AMD Opteron™ 6100 Series processor delivers more cores and more memory for less money tional price-performance processor equation. Specifically, chip manufacturers are making the same features and functionality available across the price-performance range. For example, a few years ago the server market would have put a premium on processors capable of being run in servers with four processor sockets. Today, increased competition and availability have brought these premiums down, which means that advanced technology can be had for a lower price than what was previously the norm.
data – rich, multimedia, browser-based data – that isn’t going to stop growing. Th is means a requirement for larger memory and more cores for data crunching and virtualisation. Th is is why AMD is leading the way with the launch of the world’s fi rst eight and 12core x86 processors in the AMD Opteron 6100 Series (codenamed “Magny Cours ”). At the end of the day, businesses want to minimise the time their IT people spend touching the hardware. It’s not just about power and performance, it’s about making all your people more efficient.
Driving efficiency Moreover, consistency in features and functionality across the price-performance range can reduce the workload for companies by minimising the need to take repetitive actions. Imagine an enterprise that used processor chips that mirrored each other in features and functionality – the enterprise could have the ability to write soft ware once and migrate it anywhere, which could greatly cut down IT costs. Also, nowadays, businesses want to run more and more complex applications and databases. I remember when I used to be able to carry around a whole presentation on a floppy disc. But there’s been an explosion of
John Fruehe is the Worldwide Business Development Manager for Server/Workstation products at AMD. Focusing specifically on distribution channel, reseller and system builders, his team helps to evangelise the benefits of AMD Opteron processors to AMD’s key channel partners. As a 15-year veteran of the enterprise market, he has held global marketing and sales management positions at key technology leaders including Dell Inc., Compaq Computer, Zenith Data Systems and CDW.
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It means more cores for the money, leaving more money for growth.
Unprecedented de price per core.1 The AMD OpteronTM 6000 Series platform. It’s more than a server platform.. It’s an investment in your future. The AMD OpteronTM 6100 Series processor roc can give you up to twice the performance n of our previous generation.2 And double the cores at the same me price.3 The AMD Opteron 6000 Series platform delivers e as many as 48 total cores in up to a 4-processor confifigu guration at significantly lower low prices per core.1 It gives you o the real world performance you need, on a consistentt ar architecture that enables scalability scal for today and tomorrow. m It’s the platform rm to buildd yyour business on. Learn rn more at amd.com/tbd.
1Based on planned 1ku pricing for AMD Opteron™ processor sor Model 6128 at launch ($266 ÷ 8 cores = $33/core). 2Internal testing at AMD performance
labs as of 2/17/10 showed a 2.13x performance gain (estimate) imate) for 2x AMD Opteron proces processor Model 6172 (“Magny-Cours”) over 2x Six-Core AMD Opteron processor Model 2435 (“Istanbul”) running SPECfp SPPECfp®-rate2006. Configuration: “Dinar” reference design, 64GB (16 x 4GB DDR3-1333) memory, 250GB SATA disk drive, SUSE Linux® Enterprise Server S 100 SP2 S 2 64-bit; 6 bi Supermicro S i A+ Server 1021M-UR+B server, 32GB (8 x 4GB DDR2-800) memory, 20GB SATA disk drive, Red Hat Enterprise Linux® Server 5.3 64-bit. 3Based on comparison of Six-Core AMD Opteron processor Model 2435 (6 cores; $989 suggested 1ku price) vs. AMD Opteron processor Model 6172 (12 cores; $989 planned 1ku price at launch). © 2010 Advanced Micro Devices, Inc. All rights reserved. AMD, the AMD Arrow logo, AMD Opteron, and combinations thereof, are trademarks of Advanced Micro Devices, Inc. Other names are for informational purposes only and may be trademarks for their respective owners.
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ROUNDTABLE
Customer Satisfaction Frank Lord and Adrian Bisaz discuss evolutions in the CRM landscape and the need to interact with customers on the many platforms they are now using.
In this era of economic woe, what impact has the recession had on organisations’ approach to CRM? Frank Lord. The recession has made companies more aware of the need to obtain ROI from all their technology and systems investments. Th is has made organisations investigate and discover more efficient – and innovative – ways of using CRM. For instance, realising that knowing the customer can also be a dynamic experience, and that personalisation and individual service tailored to customers’ needs can be achieved even before we collect data into the CRM system. A case in point is the use of automated recommendations on the website: this technology automatically recommends products or services to a customer based on their browsing behaviour during a session and/or previous purchases. It also ensures relevant content is offered to shoppers while giving the company control by ensuring, for example, that only those products in stock are recommended. Automating and personalising online merchandising gives businesses a powerful means to convert browsers into buyers and increase the value of orders placed. Adrian Bisaz. Recession puts pressure on enterprises to reduce costs while increasing or
Frank Lord is Vice President for EMEA at ATG, where he is responsible for leading the company into these markets, managing the teams that sell and support e-commerce solutions to some of the largest retailers, consumer product manufacturers, and telecommunications companies. Lord has 19 years’ experience in the software industry.
Adrian Bisaz is Director of Marketing and Business Development, Europe. He has over 20 years’ experience as an IT and telecommunications industry sales and marketing executive in both Europe and the US. Bisaz lives and works out of Switzerland and is responsible for partnerships, business development and marketing in EMEA for Lithium.
at least maintaining revenue. The only way to satisfy this demand is by enhancing productivity and improving business processes. CRM systems need to be adjusted accordingly. There
is a ‘perfect storm’ emerging from economic, structural and behavioural changes. First, there is a pressure to deliver more with less, second, social networks create a new way of interaction between people and customers and, third, traditional enterprise communication channels are breaking down. In order to cope with these changes, traditional CRM needs to morph into social CRM. What used to be a system for improving interaction with customers on a one-on-one basis (traditional CRM) is now required to be a system that offers the management of social networks; where customers engage, discuss and interact with each other outside of the companies’ control and influence. Customer relationship management is becoming social network relationship management. Social CRM is not just an extension to enterprise soft ware, but it addresses a fundamental paradigm shift on the next wave of how enterprises will deal with customers. How can effective CRM strategies lead to tangible benefits and, ultimately, improve a company’s bottom line? AB. Forward-looking enterprises have recognised the tremendous power and benefits social CRM systems can provide, and have started to adjust their workflow accordingly. They do this by integrating social networks and online communities to leverage the benefits for reducing support costs and to accelerate promotion and marketing through peer-to-peer customer interactions. As more customers rely on other peers for support questions, and more customers get influenced by other socially connected customers for their purchasing decisions, the more important it becomes for enterprises to optimise their CRM strategies. The cost for an online community are less than 15 percent of the traditional support costs. Leveraging the power of peer-to-peer interaction in social media can accelerate the purchasing process, reduce sales cycle, increase lead generation, amplify awareness, and hence, reduce the customer acquisition cost. But most importantly, adjusting traditional CRM strategies by embracing social CRM strategies will give the customer the ultimate voice and enable enterprises to be more responsive, increase agility, and be more productive in their interaction with customers and other stakeholders.
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FL. By understanding their customers’ needs, and using customer insight, companies can improve their service, increasing customer loyalty and retention. Th is is particularly important online: knowing why the customer came to our site, making their search fast, seamless and accurate will make them complete the purchase.
“The solution, in essence, is to offer the right thing at the right time to the right person, via their preferred channel” Frank Lord
Additionally, delivering an individual, personalised service can give companies an edge over competitors. Offering the same level of service online and offline is often thought to be challenging, especially since consumers today are more demanding than ever, but thanks to developments in technology this need not be the case. Finally, this has to be done using the right channel (phone, web, in store…) at the right time and seamlessly: customers use various channels to browse, communicate with and purchase from a company. They expect the company to follow them seamlessly from one channel to the next. Organisations who provide this level of service to their customers will reduce abandonment rates, increase customer satisfaction and revenue. What are the common mistakes organisations make when trying to manage CRM strategies? FL. Some organisations fail to have a ‘single view’ of the customer: either by treating the customer differently depending on the channel selected, or by not understanding the evolution of the customer’s needs. The fi rst type is due to considering the various channels (physical store, web, phone…) as independent. A typical example is a customer having a problem when fi lling in a form online and calling the company, only to have to give the same information over again.
The second type of mistake stems from the inability to manage data – or the lack of data altogether – to understand customers and predict what they should be offered. An example would be to receive an attractive discount on a TV screen just days after the customer has purchased that item. The solution, in essence, is to offer the right thing at the right time to the right person, via their preferred channel.
other social networks guarantees a thorough understanding of the customer requirements and hence provides a powerful tool optimising the customer relationship. Lithium has close to 500 customers in all kind of industries, ranging from telecoms such as British Telecom, Swisscom and O2, to retail with BestBuy and Barnes&Nobles and also technology companies like Sony Playstation, Logitech and Nokia, to name just a few.
AB. One common mistake in managing new CRM strategies is to utilise the same processes and information that have been used in the past, namely dealing with customer relationship management on a bi-lateral relation. Many organisations now realise that the traditional way CRM systems worked are not adapted to new forms of customer interactions. Implementing and managing CRM strategies without understanding the customer’s behaviour will lead to failure and the selection of the wrong programmes and inappropriate communication channels. In addition, information available through traditional CRM methods will lack insight and details required to effectively act on and react to customer’s needs and requirements. More than ever, people trust the opinion of peers when it comes to product or service recommendations, and CRM systems need to be able to incorporate the discussions and information exchanged between customers wherever they occur.
FL. Companies use different products depending on their needs, which vary as well with time. The end objective is, in most cases, to provide a true cross-channel experience to the customer. At ATG, we recently helped Tommy Hilfiger launch an iPhone application. The application gives consumers the convenience and opportunity to explore, search, and purchase Tommy Hilfiger merchandise anytime, anywhere. It provides a strong brand experience for Tommy and a rewarding experience for shoppers but, most importantly, it allows users to buy the products they want, when and where they wish – using the channels they prefer.
How have your products and services been put to good use by clients? Do you have some recent examples? AB. Lithium’s communities are structured and organised to foster interaction and growth. Most online communities die after six to 12 months, 100 percent of Lithium’s communities are continuously growing and demonstrate very healthy interactions between members. We achieve this through the creation and fostering of superusers through a sophisticated ranking and reputation platform. Our clients reap huge benefits due to Lithium’s in-depth analysis of user behaviour and our detailed understanding of social dynamics inside of the communities. Companies like Best Buy have been able to demonstrate more than €5 million-worth of benefits derived from online communities. Creating vibrant communities and connecting
“Many organisations now realise that the traditional way CRM systems worked are not adapted to new forms of customer interactions” Adrian Bisaz Th is is a good example of how to deliver customers the same level of service they can enjoy on the main website. The application melds capabilities such as personalisation, automated recommendations, and search and navigation, providing shoppers with a highly personalised shopping experience. It also demonstrates how new channels can be well integrated with existing ones. For instance, if a shopper decides not to checkout using their iPhone, their cart will follow them back to the main website. Th is integrated functionality is not only something consumers want but will ultimately help retailers increase sales. ■
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MANUFACTURING
Sports car manufacturer Aston Martin is synonymous with luxury, exclusivity and, of course, fictional British spy James Bond. To discover what’s going on under the business bonnet of this luxury marque in 2010, we hear from Bradley Yorke-Biggs, Director of Strategy and IT.
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W
With the dark clouds of recession lingering overhead for the past couple of years, the producers of high-end luxury goods were forced to brace themselves for a bumpy ride. It has been a similar predicament for the manufacturers of high-spec sports cars costing the same price as a two-bedroom apartment. It’s not that the wealthy don’t have the money anymore, but rather that in these times of austerity and belttightening, guilt sometimes comes into the equation when deciding to stroll into an Aston Martin showroom and slap down a lumpy deposit on a €150,000 model, says Yorke-Biggs. “Whether you’re the director of a company or a self-made man, then during a period of recession you’re having to cut costs, lay people off and make some hard decisions. Therefore, there may be some concern that to buy an Aston Martin and drive it into the car park at the front of the office may be perceived as being insenstitive.” Before the economic maelstrom Aston Martin sold around 7000 cars a year; since 2007 sales have dipped to under 6000. “Last year sales was slightly less because we saw hesitation in the luxury market.” Things are picking up again now though, he explains. “Confidence will gradually return – people’s personal wealth is still there, and it will be perceived as more acceptable for people to go and start spending money on luxury items such as our cars again.” Yorke-Biggs describes Aston Martin, which has a heritage stretching back to 1913, as the “smallest global car company in the world”. Currently around 90 percent of sales are equally split three ways between the UK, Europe and the US. The rest of the world (RoW) accounts for the remaining 10 percent of annual sales, however the company is pushing to build the RoW business up to around a quarter of global business. “We have been opening new dealerships in places like China andRussia, while a growing market for us is certainly the Middle East – in fact this is becoming fairly significant for us.” Business in emerging markets will swell further with the Rapide model, which has just gone into production. It’s a break from tradition for Aston Martin, being a four-door sports car as opposed to a two-door. “We’re building a four-door, four-seat, sports car which makes us just a little more accessible to a few more customers – people who might not have considered an Aston Martin before,” says Yorke-Biggs.
Make a connection With a concerted effort to globalise the appeal of the cars in full swing, Yorke-Biggs, who has been at the company for seven years, proudly suggests Aston Martin isn’t an in-your-face name in the world of motoring. “We’re not a brash brand; we’re quite an understated brand.” The company doesn’t pigeon hole its customers either; although it goes without saying they have the fair chunk of disposable
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ASTON MARTIN: A BRIEF HISTORY 1981
1913 T Lionel Martin and Robert Bamford establish the business. The Aston Martin name is born following success at the Aston Hill Climb
Victor Gauntlett and Pace Petroleum acquire the carmaker
1987 Motoring giant Ford purchases a 75 percent shareholding in Aston Martin
1922 S Aston Martin makes its first appearance overseas at the French Grand Prix 1937 140 cars are built – the highest pre-war production figure
income kicking about and a love affair with lightning-quick cars. “We try not to categorise what our customer exactly looks like, although it is normally somebody who wants to reward themselves for success in whatever sphere, but in an understated way. Although some famous individuals drive our cars, there are also many people who are perhaps less prominent but who want to reward themselves for being successful in life with an Aston Martin.” For a luxury brand like Aston Martin that affinity and relationship with the customer is paramount. A new Aston Martin owner is not just taking delivery of a desirable sports car; they are buying into an exclusive club, which means maximising customer brand loyalty. The brand wants an Aston Martin driver’s next car to be an Aston Martin, which is partly why the carmaker is overhauling its CRM strategy. “One of our most important considerations is how we talk to, communicate and listen to customers so we wanted to look at developing a revised CRM strategy. One of our mantras is that we want a oneto-one relationship with every customer.” With customer numbers swelling, this is easier said than done. “When we had 10,000 customers globally that was more easily achievable through traditional methods. However, we now have approximately 50,000 customers worldwide because we are very much a global company so it has been more challenging to give the customer a one-to-one relationship with us as a brand.” To achieve this Yorke-Biggs has to ensure the business has a clear set of business processes in place and the right supporting tool sets. It’s also about re-engineering
1947 David Martin buys the company and Lagonda
1964 X The gadget-laden DB5 features in the James Bond film Goldfinger. It went into production the previous year
Aston Martin currently has
50,000 customers worldwide
the website for customers and raising the brand’s profi le through social media. As well as leading the development of the company’s strategy and product planning, Yorke-Biggs is also responsible for the IT infrastructure, systems and services – a decision was taken more than a year ago to combine the strategy and IT role. “It became relatively clear that we needed to put IT at the centre of the business rather than as it has been historically perceived; as a support function for the business that just looks after email, phones and such utilitarian things. We also needed to do this in order to drive a more fundamental change to our core business processes and supporting tool sets,to take us into the next generation of Aston Martins. When enterprise-wide IT fell under Yorke-Biggs’ remit one of his main challenges was to simplify the carmaker’s complicated IT estate. When Aston Martin was bought by Ford in 1987 Aston Martin adopted a slice of their business processes and supporting toolsets. So after Ford offloaded the luxury marque in 2007, IT boffins had to migrate to new technologies in order to keep the business running smoothly. “So our IT estate is extremely complex and probably not as you would design it if you were given a fresh sheet of paper,” Yorke-Biggs explains. “We also want to simplify it because IT is not really core to what we do – we make fast, beautiful cars.” He continues: “In order to be truly successful and to get maximum business efficiency I believe we need to take that complexity out of the equation and rationalise the architectures and platforms we use.
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2006
X The 30,000th Aston Martin rolls off the production line. The new DBS is seen for the first time in the James Bond blockbuster Casino Royale
2007
1993 S V8 Vantage goes into production. The following year, Ford takes 100 percent control
The company is sold to a consortium of two investment houses, Investment Dar and Adeem Investment led by David Richards
Aston Martin’s first purpose-built manufacturing facility opens
2009 X DBS Volante & V12 Vantage are launched at Geneva Motor Show
We should only have uniqueness, from an IT perspective, where it truly adds business value but we have the balance a little bit wrong at the moment.” As part of this simplification process, Yorke-Biggs, whose background is in mechanical engineering, has been orchestrating the roll-out of Windows 7 across the company’s desktop environment as well as Microsoft’s System Centre ‘suite’ Most of the servers are also being virtualised and a new ERP system is being implemented due to the previous one being “dated and fragile”. Likewise, the wheels are being set in motion for phase II of a PLM strategy along with the aforementioned CRM overhaul. “We are biting off quite a lot at once so trying to customise all these applications will mean we will drown. We want to take those bits that are vanilla and only change the things that truly add value to our customers, or to our business” he reveals. “These are fairly big steps but taking out the complexity will underpin where we want to go in the future.” He is also looking to simplify the company’s complicated data centre, which houses some old Ford servers and services, and patches used to fi x problems after Aston Martin was sold. Yorke-Biggs says he can see a future where Aston Martin does not actually need a data centre. “ Although in 2007 it was the right decision for us to invest UK£1 million in a brand new data centre as we separated from the Ford enterprise, I don’t want a data centre. We shouldn’t be concerned with managing it and delivering the constant technology roadmap to keep it relevant to our business needs – we make fast beautiful cars remember,
we are not a soft ware house! ” At this stage he is investigating the use of smart solutions to provide a Lean service while the company is aiming for around 90 percent of all applications purchased ‘off the shelf’. “The trick will be to understand what the 10 percent are and how they really will add value to the business, not just for IT but for the enterprise as a whole.” And when it comes to ensuring IT delivers tangible benefits to the business, Yorke-Biggs believes his non-IT background allows him to see the bigger picture. “I’m a businessperson and a business strategist, so I will naturally always put the business requirements ahead of IT requirements; there is no point in pushing out technology for the sake of it! I have come from the other route into IT – I have a very good understanding of the business at a very broad level, having had a number of different positions. I have had to learn IT but not every 1 and every 0 of how it works. I have a good team around me that understands how the detailed infrastructure and applications work and how they relate to each other. What they need from me is the vision and ability to develop the strategies to make the business better through engaging IT.” And just in case you were wondering, the job doesn’t come with an Aston Martin as a company car. “I have a young family, so no, I don’t drive an Aston Martin full-time; although the launch of the Rapide does have my wife coming around to the idea!. We do have the pleasure of driving them from time to time, which is fantastic and helps keep me very motivated for the job.”
2003
“We shouldn’t be concerned with managing it and delivering the constant technology roadmap to keep it relevant to our business needs – we make fast beautiful cars remember, we are not a software house!”
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ROUNDTABLE
Playing it
safe
Business Management sits down with a panel of experts to gain some insight into effective risk management strategies. What factors are driving the need for organisations to have effective and comprehensive risk management strategies in place? Jürgen H.M. van Grinsven. Risk management is an essential part of the economic activities and economic development in organisations. It supports decision makers to make informed decisions based on a systematic assessment of risk. The three main factors that motivate organisations are: the volatility of today’s marketplace; costly catastrophes and regulatory-driven reforms. However, research indicates that from a business perspective there are three underlying dynamic factors that are driving the need for organisations to have effective and comprehensive risk management strategies in place. The first dynamic factor is decentralisation and employee empowerment. Organisational structures that become flatter make decision-making authority more widely distributed across the financial institution and more significant decisions are made at the operational level. This increases the need for management to understand the risk posed by these isolated decisions. The second dynamic factor is market pressure, which forces financial institutions to broaden and adapt their product and/or service offerings to the rapidly changing market, thereby exposing the institution to greater risk.
The third dynamic factor is E-commerce, which has made business activities more transparent to the customer, while increasing the need to achieve speed to market with products and services, gain efficiencies in business processes, and allocate capital to activities that have a higher return/ risk ratio.
“Companies must ensure that risk awareness and management practices are embedded in the culture of the organisation”
Anil Jogani has 25 years of global experience in enterprise and IT governance, risk and compliance management, audit, finance and general management and has operated at senior levels internationally. He is an experienced workshop facilitator and trainer and is presently a director at Milan Solutions, a boutique GRC solutions company in London.
Mike MacDonagh. The factors can be broken into external and internal issues. The former category has the most impact and of these, increased regulation is probably the most important across almost all industry groups. Every organisation now has a wealth of regulation to comply with, covering general areas such as employment law, data protection, and health and safety regulation as well as its
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industry specific regulations such as in financial services, life sciences and many others. Markets, shareholders customers are also a significant source of drivers for better risk
Mike MacDonagh is ERM Product Manager for Sword, part of ARC Logics, a Wolters Kluwer company. MacDonagh has more than 25 years, experience helping financial institutions across the globe manage enterprise and operational risk more efficiently while effectively addressing banking industry regulations, guidelines and standards.
“Internal issues are becoming more important as organisations start to realise the business value that can be delivered by better risk management”
management. This may be rating agencies (some of whom are now rating organisations’ ERM capability), investors and insurers wanting to ensure organisations are well managed, or customers needing to know that the products they buy won’t cause them harm, or that their data and payments are secure. Internal issues are becoming more important as organisations start to realise the business value that can be delivered by better risk management. By linking risk management to business objectives and to measures of performance, as recommended by standards such as ISO31000, organisations can make sure they are deriving the greatest benefit from their risk management efforts. Effective and comprehensive risk management ensures that risk management reduces risks that the business actually cares about and can help it to make more effective use of risk management resources and help to guarantee achievement of performance objectives. Both the internal and external drivers are magnified by other business trends, such as an increasingly global economy with larger, more complex and interconnected structures that are exposing organisations to greater and more complex risks. Anil Jogani. These are times of increasing change and regulations. Every change brings with it risk and opportunity, which also implies risk of loss of opportunity. Every regulation brings with it risk of non-compliance and severe consequences with stiff penalties. Faster change in both internal and external environments and more and more regulations are exposing organisations to increasing risks. As you know, risks have grown and they are of various types including strategic risk, environmental risk, market risk, credit risk, operational risk and compliance risk. These exist everywhere but need to be identified and managed effectively. You cannot manage only a few and leave others. The impact of failure can be very crippling. Gisle Bråstein. Over the last few years there have been a number of critical events, seen both from the financial and operational side, which have lead to an increased awareness and focus on risk management in general. Governance, Risk and Compliance (GRC) requirements are becoming increasingly important for corporations looking to succeed in a globalised world. Stakeholder’s demands for corporate accountability and transparency, and globalisation calls for businesses to address risk quickly and demonstrate their risk performance almost real-time. In addition to meeting national and international regulations, most companies need to demonstrate their risk,
safety and quality and even environmental performance to suppliers, partners and clients. By seeing all these factors in relation, treating them with common tools and procedures, companies will be in a position to create common overviews and performance sheets and to develop common risk response strategies that will have overall effects. Most organisations understand the value of proper risk management and have moved from a reactive risk management strategy to a proactive preventing strategy, hence minimising risk of even smaller incidents and deviations that could later result in unnecessary costs. Of course, you cannot protect yourself against every eventuality. However, what can organisations do to minimise risk in case the unforeseen does occur? MM. Much risk management in organisations is targeted at reducing expected losses by regular risk assessment, appropriate controls, insurance and other mitigation techniques. These are less effective against very rare events, situations that are caused by a combination of other factors and systemic risks. For these, scenario analysis is by far the most effective way of identifying, understanding and mitigating the impact. Taking recent events, European airlines have no experience of dealing with the effects of an ash cloud closing large areas of European airspace, they do however have experience of mitigating the effects of smaller interruption events and some of them did run scenarios of a larger closure that helped them manage the impact of the recent event. AJ. Organisations need to have comprehensive risk management processes in place; risk governance, risk response and risk evaluation. They must ensure that risk awareness and management practices are embedded in the culture of the organisation. It does not mean that one does not act for fear of risks; it means that one should consider the risk factor in all decisions and adjust expected benefits for risk. In other words always strive to optimise riskadjusted returns. GB. In a risk management framework the conventional incident focus is only a supplement to the more proactive prevention of events. In most organisations a balanced and holistic approach to risk vs event management would be the solution. Clearly, when events happen it is necessary to react to them. The reaction should however be planned and well thought out, as the best managed companies are proactive first and reactive second. Naturally, proper incidents and emergency plans should always be in place. A well structured and fully implemented management information system will bring value to this balanced approach by providing information to support short and long term planning and decision making. Reliable and credible
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people are not in the state of readiness to combat risks and they often do not implement security based on risk. GB. Today, most companies do have the procedures in place to consider risks and unplanned events, but they often miss a structured approach for dealing with them. Furthermore, the knowledge gained from the risk management process and the potential this has to influence the overall performance of the company is often left unreleased. Far too often, risk assessments are done, left in the drawer and forgotten. Those companies that can use this information in a structured way, defining and following up on risk response strategies, will learn and develop their company as a response to their risk profi le. For these companies, values are created both through finding sustainable solutions, and through avoiding risks that materialise in losses.
data from the risk sources aggregated to the levels of decision making is a key factor. This will reduce indirect costs by improving the efficiency and effectiveness of the operational risk and event management processes and will reduce direct costs by reducing the overall risk level preventing loss from unexpected events. JVG. One hundred percent protection against risk is not possible and the costs will be too high. However, organisations can learn important lessons from publicised losses and the ever-increasing attention to risk management. They also have to realise that they have a responsibility, not only to their board of directors and management, but more importantly to their employees, shareholders and the tax payer, to manage their risks. Organisations can start with registering and monitoring their loss data. From experience, we know that this is not an easy task. Moreover, organisations can raise their risk awareness and dedicate resources to risk management. This often leads to significant efficiency and effectiveness benefits for organisations.
Gisle Bråstein is Business Innovation Manager, Synergi Solutions AS. Previously he has had several positions related to risk management and MIS including consultancy, project management, sales and account management. He has worked in the energy, transport and process industry sector and has an MSc in technology management and industrial economics from the Norwegian University of Science & Technology.
What are the common mistakes people make when managing risk? AJ. I should think the common mistakes are: predicting the future using past events; putting too much emphasis on quantitative risk models; making assumptions when assessing risks but when assumptions change the assessment does not; and using worst case, best case scenarios and then normalising them ignoring a wide range of possible scenarios. Then you have the classic case of having disaster recovery plans that are not updated nor communicated so
“Most organisations understand the value of proper risk management and have moved from a reactive risk management strategy to a proactive preventing strategy”
JVG. We observe that business managers and risk managers are under pressure. They must participate in a highly competitive environment while solidly honoring their professional obligations and navigating their business safely toward the future. Paramount to their success is the ability to identify, formulate, assess, deliver and communicate value propositions to their clients. Sometimes they seem to forget this. We argue that the success of an organisation goes in tandem with the collaborative participation of its clients and a well-implemented risk management framework. Each client is unique and in order for a value proposition to be effective it has to be tailored to the client’s specific needs. Furthermore, organisations should realise that the most obvious benefit from such a framework seems to be preventing catastrophic losses, other less obvious benefits are that it prevents rework and stimulates win-win situations. MM. While many organisations would admit to managing risk in disconnected silos across an organisation, which has a significant impact on their ability to manage risk on an enterprise-wide basis, probably the most common
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and damaging mistake is the failure of many organisations to implement a culture of risk management across the organisation, from top to bottom. Just as happened before the introduction of Total Quality Management in the 1980s, until managing risk becomes the responsibility of everyone in the organisation, rather than just that of the risk team, it cannot be managed effectively and organisations will fail to realise the positive benefits of good risk management. Do you have an example where your services have benefited a company with its risk management recently? GB. We have had some really positive feedback from the companies that we work with. Annica Örn, Patient Safety Coordinator, Landstinget i Östergötland said: “Instead of assuming why things happened, you can document it and spark real actions”. Another very happy client is Ørjan Storesund, HSE Coordinator, STX Europe, who said: “Our HSE changes programme is worth €7 million per year in reduced insurance costs”. Elaine Rust, Global HSEQ System Manager, Subsea 7 said: “Synergi is a highly flexible system. Once you understand the possibilities you will realise what a phenomenal and massive tool it is”. And finally Kurt Kriter, Vice President EH&S for Exploration and Production, Hess Corporation said: “Synergi provides us with real time reporting of EH&S issues and the opportunity to learn from each other. Additionally, Synergi provides us with a consistent action tracking and reporting tool which supports continuous improvement. These factors are important aspects of a growing business”. JVG. We have recently engaged in a project that aimed at implementing IT risk management within a bank. The services of this bank are highly dependent on its wide variety of IT applications. The portfolio of different systems, technology and the different life cycles of the applications demand a well-structured risk management process. With our GRC soft ware, managers are enabled to store their risks and controls, and link them to IT processes, projects and applications. Th is provides them and the board with valuable insights. We used our embedded control framework for evaluation of the controls against best practices. The workflow in our GRC soft ware provides support in the follow-up process for all actions within the organisation. The bank will start soon with monitoring the effectiveness of the key controls and measuring their key risk indicators. The scheduler, in our GRC soft ware, helps in planning the required testing of controls and collection of evidence. Using our methodology and tooling helps the bank with their required SAS70 certification. The bank further experienced an increased risk awareness among management and all IT staff.
MM. We partnered with the Operational Risk Consortium (ORIC), implementing Sword to upgrade its web-based IT platform to capture, aggregate and analyse operational loss events in the insurance and investment industry. ORIC was created by the Association of British Insurers (ABI) in 2005 to help insurers share industry-wide data on operational losses, with a view of improving their measurement and management of operational risk and is used by around 25 insurers. Sword’s powerful reporting and graphical tools help ORIC members to visualise risks, analyse trends and predict loss outcomes. Sword data is used to benchmark individual firms relative to the whole industry or selected peer groups. It can also be used for more sophisticated statistical analysis, such as internal modelling of operational risk under the Solvency II Directive. “Gathering good-quality operational loss data is a major challenge for the insurance industry – perhaps more than in banking,” said Mariano Selvaggi, Director of ORIC. “We therefore believe this world-class IT platform will greatly enhance our members’ data collection and reporting systems, not only for modelling purposes but also for their scenario analysis exercises. Sound operational risk measurement and management play important roles in the European Solvency II Directive.”
Dr.ing. Jürgen H.M. van Grinsven is Director at Artena Business Consulting. He is the author of the books Risk Management in Financial Institutions – formulating value propositions and Improving Operational Risk Management and many other publications. He is a member of PRMIA, GARP, a frequent speaker at (international) congresses and is teaching risk management at Nyenrode University.
“The success of an organisation goes in tandem with the collaborative participation of its clients and a wellimplemented risk management framework”
AJ. We specialise in automating governance, risk and compliance processes and help companies save up to 70 percent of their costs and time. Our enterprise-wide risk and compliance management system at a large internet-based business ensures they do not fall foul of about 80 regulations that they have to comply with. High-risk areas that were identified were compliance risks, data theft, vendor risks, and misuse of credit cards. The cost of compliance and risk management that they were incurring was significant. A lot of time was spent on collecting risk data, on surveys and disseminating risk information. Different people had different views of risk across the organisation. We have helped them establish and maintain a common risk view across departments and levels and make risk-aware business decisions. In particular, it has helped them reduce the time and cost incurred in the risk evaluation processes of collecting data, maintaining risk profi les, and analysing risk. At the same time, the system has strengthened security and provided a platform for continued compliance.
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Need to run a Ɵght ship And the spotlight is on you. It’s Ɵme for our GRC soluƟons.
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It is tough leading a company or a department these days. Tougher when you are expected to deliver higher value than before – higher performance at lower costs - while managing the ever increasing risk and compliance. You have to run a Ɵght ship and stay on course. You would need to use some or all the tools of the trade to deliver value, manage risks and comply with the myriad of regulaƟons – best pracƟces, value management, programme management,
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NEXT BIG THING
Mobile monitoring Technology improvements mean the FSA may remove its exemption of mobile calls from regulatory compliance requirements.
S
ince 2008, many fi nancial services firms have been forced to record and store the deskphone conversations that employees conduct with clients, to meet their regulatory compliance requirements. The Financial Services Authority (FSA) reasoned that recording relevant calls would help resolve disputes, improve regulatory adherence and avoid market abuse. As a result, equities, bond and derivatives trading fi rms are currently obliged to retain call recordings made from a fi xed-line phone for at least six months. Initially, the FSA exempted conversations held on mobile devices, on the basis that the inherent technical challenges and the cost of implementing such an undertaking hampered its viability. But now the FSA is reviewing this exemption, given the availability of new systems and technologies, which make it easier for firms to capture and store mobile calls.
Removing the exemption The FSA’s reconsideration comes as no surprise. The use of mobile phones continues to grow throughout the world, with the smartphone market increasing at an even faster rate (based on Q1 2010 figures, IDC stated the smartphone market grew 56.7 percent year-onyear – May 2010). Therefore it is short-sighted to think that organisations in the fi nancial sector should not utilise and benefit from technology that makes employees more productive and efficient when on the move. Lift ing the exemption would enable firms to empower their employees to make decisions and transactions wherever they are using their smartphone, so avoiding current workarounds or missed opportunities. Many firms have even banned the use of mobile phones for transactional conversations completely, whether on personal or company-owned devices. While that action has
underwritten complete transparency and propriety for those firms, it has also limited their ability to capitalise on the productivity and profitability opportunities that mobile working offers, and has potentially limited the quality of service they are able to offer their clients.
“Inevitably any firm seeking to adopt mobile call recording solutions faces security challenges in protecting their call recordings and other corporate data”
challenges in protecting their call recordings and other corporate data. Again, firms who use the BlackBerry platform to achieve this have an advantage – the security architecture inherent in the BlackBerry platform can be leveraged to ensure complete data security, ensuring that all data is encrypted end-to-end, and that recordings themselves are never stored on the smartphone. What’s more, the powerful administrative control that the BlackBerry platform delivers can ensure that call recording systems can’t be bypassed by the end user on BlackBerry smartphones. Th is means that fi rms can mobilise confident that any action and call taken by their staff on a company-owned BlackBerry smartphone can be safely and reliably recorded, wirelessly transmitted somewhere else and stored securely and efficiently for later retrieval.
Technology advances
Raising awareness
Since the publication of the initial regulations, the technology and cost barriers have been quietly coming down. Firms who are already using the BlackBerry platform, for example, can quite straightforwardly integrate off-the-shelf products from independent soft ware vendors, which allows them to securely record and store relevant client phone calls without significant end-user effort. These products generally integrate seamlessly and straightforwardly with fi rms’ existing BlackBerry infrastructure, and also with fi xed line telephony infrastructures, meaning that the recording and management of mobile phone calls becomes a part of an already familiar system.
Many fi nancial services firms remain unaware of the increasing affordability and feasibility of mobile call recording solutions, and have reacted defensively to the FSA’s Consultation Paper. However forward-thinking fi nancial services companies are now looking for ways to make a virtue out of this impending necessity. Many have realised that there is more to mobility than simply another regulatory burden. For clients too, the mobility scenario has many advantages. A broker who is mobile is a broker who is approachable. If a dealer is unable to take a call because he’s out of the office, then he’s no good until he can get back to his desk. But a broker who can compliantly take instruction, wherever he or she happens to be when the call comes in, is a broker who can provide better client service and more business for the firm. ■
Inherent security Inevitably any firm seeking to adopt mobile call recording solutions faces security
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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 Price Waterhouse 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.
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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 got 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 very 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, and that 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 fi rst 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 expectations for both the business here in Europe and our IT counterparts in Atlanta [the Company’s headquarters].
Above: Sabine Everaet
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 operat-
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ing 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 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 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, easy of support, etcetera. 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 and different opportunities for CIOs but how you shape the role is based on your own
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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 creativity that helps them to see the opportunities, pro-activity to carve out the work when the opportunity arises, and a lot of drive and passion for learning and execution.
“We need to be ready as an organisation to have generation Y onboard, and have them be productive�
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. „
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EXECUTIVE INTERVIEW
The desktop diet Heiko Gloge, Managing Director and Partner at IGEL Technology, answers Business Management’s questions on why thin clients are the desktops of the future. What exactly is a “thin client”? Heiko Gloge. Th in clients are the modern form of personal computers and terminals. They provide access to applications running elsewhere on a network and have a keyboard, mouse and user experience just like a PC. Th in clients can be used for a wide variety of tasks including word processing, email, data processing, voice and multi-media. They are available as desktop, mobile and all-in-one LCD integrated devices. Unlike a PC, thin clients do not run applications and store no data; they simply collect keystrokes, mouse clicks or audio/video input from the user and display the application interface. What are the advantages of a thin client over a PC? HG. Since applications are deployed centrally on a server, the whole IT infrastructure becomes far easier and less time consuming to
“Thin clients use much less energy than PCs and can cut CO2 emissions by up to 52 percent”
manage. There is far less to manage or misconfigure on a thin client and their remote management soft ware dramatically reduces IT support desktop visits. The total cost of desktop ownership is dramatically lower and IT budgets can typically be reduced by 25 percent or more since less ‘fi re fighting’ is needed. Data is far more secure since it is centralised and backed-up, thus offering compliance with
the many data protection regulations. No moving parts and no local hard disk make thin clients resistant to viruses and very reliable. The average lifetime of a thin client can be up to eight years with dramatic return on invest (ROI). Organisational and IT change becomes much easier due to the speed and ease of rollout and deployment. How do they operate? HG. Traditionally, thin clients have been used to connect to server-based Windows applications running on Citrix or Microsoft using an architecture called terminal services. The server acted as an enormous ‘PC mainframe’that could share applications with many users concurrently. Today, there are far more ways to deliver applications than terminal services. A modern thin client should be able to deliver any server-based application, from old to new, and could include applications based on Microsoft Terminal Services, Mainframe, Blade PCs, Virtual PCs (VDI), Web, Java, VoIP and even Multimedia. Th is ability to access any network application, regardless of how it is delivered, is at the core of our design philosophy and is why we call our range of thin clients the IGEL Universal Desktop series. Can these devices work with any operating system? HG. The IGEL Universal Desktop series is available with three different operating systems: Microsoft Windows Embedded CE, Microsoft Windows Embedded Standard and Linux Tell me more about this easy, central management. HG. IGEL Universal Management Suite 3 is an easy-to-use, yet extremely powerful soft ware that allows you to remotely manage your IGEL thin clients so that support costs are kept to a
After starting with Melchers in 1988 Heiko Gloge was made General Manager of its NetCom division, which in 2001 became IGEL Technology GmbH. He was one of the founders of the European Thin Client Forum in 2002 and is currently Chairman of the Thin Client & Server Based Computing group in Germany’s IT industry association, BITKOM.
minimum. It has a host of features that make the management of large groups of thin clients with lots of local protocol clients and soft ware tools, spread over large WANs, extremely easy, fast and secure. And all this capability comes free with every IGEL thin client. And finally, are thin clients environmentally friendly? HG. For organisations looking to reduce their carbon footprint, electronic waste and energy bills, thin clients have strong credentials when compared with PCs. Th in clients use much less energy than PCs and can cut CO2 emissions by up to 52 percent even if the additional server capacity and data centre cooling is considered (Fraunhofer research paper). In addition to reducing CO2 and energy, thin clients generate 66 percent less electrical waste. We were one of the fi rst thin client vendors worldwide to ensure all our devices are WEEE and RoHS compliant. Every device bought in Europe can be recycled free of charge at end of life upon customer request.
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EXECUTIVE INTERVIEW
A virtual revolution Andrew Rigby explains the benefits that cloud computing has to offer and the dangers for those that choose to ignore it.
Why should companies embrace cloud computing and in what way will it improve their operational efficiency? Andrew Rigby. Many organisations are still stuck in an inefficient model of utilising physical infrastructure. As such, virtualisation, which is the ability to run multiple applications and operating systems on a single server by creating ‘virtual machines’, has carved its success. Cloud computing is the evolution of this shift and addresses virtualisation issues by off-loading management of virtual infrastructure by moving into ‘the cloud’. Put simply, the cloud is a fully developed virtual data centre, supported by companies that have the expertise and resources to manage companies’ virtual infrastructure efficiently and securely. As a result, companies reap the benefits: lower total cost of ownership whilst capitalising on the advantage of higher availability, enhanced scalability and massive flexibility. How can companies prepare themselves for the move to the cloud? AR. Moving corporate data to the cloud is not a tactical decision. It requires a business transformation. Companies first need to fully understand what they are trying to achieve and determine if objectives can be met through a cloud strategy. Th is step is made possible by working with consultants who can analyse infrastructure, determine benefits and map out strategy. Only then can the requisite mobilisation and transitioning services be put into place. What implementation challenges and potential pitfalls must companies work to avoid when deploying cloud computing solutions? AR. IT teams often think they’ve taken the necessary steps to virtualise their infrastructure to prepare for a move to the cloud, when in fact they’ve only completed a fraction of the virtu-
alisation they should to optimise investments. They could be leaving volumes of space on servers unused making the investment almost not worth the effort. Moving to the cloud is a significant undertaking, starting with deploying an optimised virtual environment. Experts can evaluate the environment in order to engineer the most effective cloud solution. It is also important for companies to understand that they have options for cloud deployments. Virtustream recently introduced a hybrid enterprise cloud platform called xStream that gives companies the flexibility to manage data that is completely on-premise (within the company’s own data centre), completely off-premise or a mix of on and off premise. How can they ensure they will be working on a secure platform and that their data will be protected? AR. Because many cloud environments are multi-tenanted, companies often express security concerns. First, they should determine if they feel comfortable with their virtual data centre being housed in a multi-tenanted environment, where infrastructure is shared (though shared securely). If so, look at cloud providers’ access policy to ensure that the information in the companies’ virtual data centre is secure. There should be no overlap in access from one virtual data centre to the next, which can be achieved by implementing security technology and policies to ensure data moves securely from the moment it enters the data centre. An additional level of security that providers can deliver is the ability to audit or restrict access to information. The ability to offer this level of security separates private enterprise clouds from the less secure public clouds. Providers of private enterprise clouds, like Virtustream, will be conservative about sharing security information, and when companies
Andrew Rigby is General Manager EMEA Region, Virtustream. He supports Virtustream’s growth strategy throughout Europe, bringing more than 26 years' experience in information technology and the skills to oversee international operations. Rigby joined Virtustream from IBM where he held several executive leadership roles focusing on resolving complex business and IT related issues for clients in various vertical industries.
engage with these providers, they can more thoroughly outline security best practices. What will happen to those companies that choose to ignore the cloud computing revolution? AR. Cloud computing is expected to grow as more companies understand the benefits. More conservative companies may be hesitant to embrace the cloud, but they stand to lose market share to more nimble competitors that can leverage benefits to lower operational and product costs. Additionally, data centre space is becoming increasingly difficult to come by and more expensive. Pair this with national attention on companies’ carbon footprints and power consumption, running inefficient, expensive physical infrastructure will become even more detrimental to companies’ overall business strategy.
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Apple CEO Steve Jobs introduces Apple’s new tablet computer in San Francisco in January. Analysts are divided as to its potential impact on the e-reader market
War of
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The emerging e-reader market has given both device manufacturers and content providers a much-needed boost over the last few years. But as the battle for readers’ eyeballs heats up, what direction will the sector take next?
I
f the buzz generated at this year’s Consumer Electronics Show in Las Vegas– the technology industry’s premier showcase for parading new product ideas – is any gauge of market health, then the burgeoning e-book sector is booming right now. Electronics vendors and device-makers alike were jostling for floorspace at the industry-leading event, as firms looked to capitalise on the stellar success of Amazon’s Kindle in transforming e-readers into what one commentator called “the thinking-person’s iPod”. Barely a day goes by without an announcement of a new device release or acquisition; at CES alone the industry witnessed the unveiling of the Orizon from Bookeen, the RCA Lexi, the iRiver Story, the Jinke SiPix readers, the Hanvon WISEreader, the Cool-er readers from Interead, the Ocean and Tidal series from Copia, and a pair of E6 and E10 e-book readers from industry heavyweight Samsung. And these are just the most interesting of the dozens of new devices on show, all of which hope to earn the tag of ‘Kindle killer’ and capture a share of the rapidly expanding digital reader market. In fact, the interest in e-readers, or e-books as they are called now, has reached fever pitch. Amazon CEO Jeff Bezos fielded nothing but Kindle questions at the company’s most recent shareholder meeting, while last summer Prime View picked up E Ink, the company that supplies the screen to the Kindle, for a mouth-watering €172 million. And heavyweight companies ranging from electronics giants like Sony and Fujitsu to booksellers like Barnes & Noble are aiming to upset Amazon’s early advantage. One of this year’s most eagerly anticipated releases is the QUE reader from Mountain View, California-based Plastic Logic, which claims to be the first e-reader device specifically targeted at the business community. “The thing that really differentiates our product is the fact that, from the ground up, we’ve designed it for business users,” says Plastic Logic Chief Executive Richard Archuleta. “We started out by looking at how business people use paper, and we found that a huge majority of people print things out to read and study them rather than read them electronically – even if those documents are already in electronic format. So we spent a good amount of time trying to understand whether there was a need there that could be met with an electronic device that would read like paper, and could essentially replace the paper that
business people had. And we believe that there is.” Up until now, digital juggernaut Amazon.com – leveraging its position as a dominant book retailer – has catalysed the market for e-books. But Forrester Research Analyst Sarah Rotman Epps believes that this is just the beginning of the e-reader revolution. “Competitors will attack Amazon’s market position by launching new features, expanding content beyond books, dominating markets outside the US, reducing costs and improving relationships with publishers,” she suggests. All of which plays into Plastic Logic’s hands. “We didn’t try to create an e-book reader, and we weren’t trying to create something that was just primarily an email client either,” explains Archuleta. “We were trying to come up with a new class of product that would actually lighten the load for business people, so that they didn’t have to carry paper with them all the time. Corporations use paper for a number of different purposes – take people in sales force automation programmes where they always need access to the latest price sheets and catalogues, for example. To be able to always have those with you on a very thin, very light device that you can carry around and that gets updated all the time because it’s always connected to the internet is very empowering. There are also a number of
“Competitors will attack Amazon’s market position by launching new features, expanding content beyond books, dominating markets outside the US, reducing costs and improving relationships with publishers”
The shape of things to come Forrester Research provides its top 10 predictions for the e-reader market in 2010 1. E-Ink won’t be the only game in town anymore 2. Dual-screened smart phones and netbooks will eat away at the e-reader market 3. Applications for non-dedicated e-readers will increase in use 4. E-readers will get apps that will increase their fuctionality 5. Amazon will release a new touch screen Kindle 6. Barnes & Noble will eat into Amazon and Sony’s near 75 percent control of the market 7. E-books will sell over €400 million in the US 8. E-textbooks will become more popular but still have modest sales 9. Newspapers and magazines will publish their own apps and create new content devices 10. The EU, China, India and Brazil will power global e-reader growth, but the US will still be the largest market
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The amazon kindle currently owns 68% of the e-reader market
vertical markets – healthcare, for example – where there’s a lot of application for a device like this; the military is very interested in it too, for everything from in-field use to classroom training.” Archuleta cites one client – a large airplane manufacturer – that expressed an interest in using the device to empower its service personnel, many of whom need to crawl around inside aircraft fuselages to conduct inspections and other maintenance work. “They need access to big stacks of documents, and right now they might use a laptop or a tablet PC, but if they could have something that was one third or less the weight of what they currently have, it would really make their jobs a lot easier,” he says. Another significant area of market growth will be in the emerging e-textbook market. “The education market is a big one for us in the future,” says Archuleta. “The technology we’ve developed with the display allows us to go into a number of different markets and to position electronic reading devices for different purposes.”
Forrester agrees that this sector could prove lucrative for device-makers, but suggests that the drivers for growth could come from a surprising source. “The textbook tipping point won’t come from Harvard, MIT or even Stanford,” says Epps. “We think it will come from developing nations like China and India, whose universities will use technology to leapfrog ahead of Western counterparts. China is already a fast-growing market for e-readers like Jinke Electronics’ HanLin eBook, which sells for €239 and includes 600 free books. We expect the textbook e-reader market to start this year with modest sales of content through the Kindle DX, with greater adoption starting in 2011 and reaching more sizable numbers by 2013.” She feels that while frequent book readers drive device and content sales today, the next five years will see an explosion of the e-reader textbook market, and in 10 years, the market will be driven by businesses going green in government, education, health and other sectors. “With retailers, mobile operators and device manufacturers all vying for a piece of the e-reader action,” she says, “pub-
iREX DR800SD
A CROWDED MARKET
iRex’s new touch-screen eReader is quietly offering many of the same features as other, better-known readers. The screen is larger than many of its competitors: 8.1 inches. It has wireless capabilities and also supports formats like ePub and PDF. Unlike the Sony Touch Edition, the iRex’s touchscreen can only work with a stylus, reports CNET, but the iRex screen doesn’t have the glare that Sony users complain of. However, the price is a daunting €319.
SKIFF READER The largest and highest-resolution electronic-paper display yet unveiled in a consumer device, the Skiff features a full touchscreen that enables users to intuitively navigate and engage with the newspapers, magazines, books and other digital content they purchase through the Skiff Store, as well as personal and work documents. The Skiff is the first consumer product to feature the nextgeneration of e-paper display – one based on a thin, flexible sheet of stainless-steel foil.
AMAZON KINDLE 2 Perhaps the most popular e-reader currently on the market, Amazon’s Kindle 2 (an update of its original Kindle) has a lot going for it. “The well-established Whisper Sync technology lets people keep track of a single book across multiple devices, there’s a physical keyboard right up front, and the device can even browse the web,” says tech review website Engadget. Drawbacks include the lack of support for ePub formats, and the inability to share e-books with other devices.
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lishers should proactively shape their own e-reader opportunity – or miss their last best chance to control their own destiny.” Indeed, the 2010 e-reader story is likely to extend way beyond just e-books and include newspapers and magazines augmented with audio and full-colour animations, video and imagery. Establishing partnerships with publishers and other content providers will be key for device-makers going forward. Of course, the big question for everyone in the market is whether the next-generation e-book reader will prove to be dead on arrival thanks to the Apple iPad and the advent of its slate tablet PC siblings. Apple’s latest addition to its product family generated unprecedented excitement prior to its announcement earlier this year, but many commentators remain skeptical as to which market category it will fall into. Archuleta, for one, doesn’t see the iPad as a direct competitor. “To be honest, we don’t see it as much of a threat,” he says. “The user interface that we’ve developed, which is unlike anything else in the market, is really
designed for how business people work, and how they manage their documents is something that’s a huge differentiator for us. And even though the iPad’s not on the market yet, it’ll be interesting to see how it evolves over time, because right now it’s very close to a laptop in a lot of its capabilities, and the business users we talked to aren’t necessarily looking for a product to replace their laptop. The customers we’re targeting have both a smartphone and a laptop, and what we fi nd is our product is really designed to replace the paper that they have in addition to that, rather than those devices themselves.” And he’s not the only one bullish about the future for e-readers. Glen Burchers, Consumer Marketing Director for chipmaker Freescale Semiconductor, predicts that the e-reader market will continue to grow over the next few years regardless of the impact of the iPad. “For the average e-reader customer, leisure reading is the primary leisure activity, before TV, before the internet,” he says. “The average e-reader customer is 47 years old, makes €60,000 a year and reads two books per month. But the
Apple’s iPad
PLASTIC LOGIC QUE READER Plastic Logic’s QUE reader is about a third of an inch thick and features an 8.5-by-11-inch screen. The device is designed for business folks, featuring support for Word, Excel and PowerPoint, plus BlackBerry file connectivity. The QUE also puts extra emphasis on newspaper content, highlighting publications such as the Wall Street Journal and USA Today. The sticking point could be price: QUE comes in two flavours, the €519 4GB WiFi model and the €639 8GB WiFi/3Genabled version.
SONY READER TOUCH EDITION Sony’s touch-screen e-reader is in many ways a great alternative to the Kindle. It supports ePub documents and PDFs, and the touch screen is a very sleek design. As CNET says, the reader has “a clean, minimalist styling and only a handful of buttons”. A major drawback, especially compared to the Kindle, is its lack of wireless capabilities. Gizmodo also points out Sony’s problems with glare, which can make the reading experience unpleasant.
BARNES & NOBLE NOOK The recently released Nook could be Kindle’s first real competition. It has a dual-screen interface, featuring a colour, touch-screen component. It supports ePub and PDF and allows readers to share books. And, as Engadget says, “the best addition here isn’t Google Books or the free WiFi; it’s the Barnes & Noble book-buying experience. If there’s one thing the company knows how to do, it’s sell books, and that’s clear when using the Nook to browse or purchase titles.”
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tablet market consumer is much different: their primary function is web surfi ng. The typical web user is younger: student age, and not into leisure reading. The average American teen is online 35 hours per week. They’re on their phone 30 minutes per day. They need a bigger screen device. These are two different markets.” Nonetheless, a ChangeWave survey of 3171 consumers – conducted in the aftermath of the Apple iPad announcement – shows a huge wave of pre-launch demand for the device and offers key evidence that the Apple tablet will have a major impact on the e-reader, laptop and home-entertainment markets going forward. Among consumers who already own an e-book reader, the Amazon Kindle (68 percent) towers over its closest rival, the Sony Reader (10 percent). But to gauge the potential impact of the iPad on this market, ChangeWave asked e-reader owners whether they would have purchased their current e-reader if the Apple iPad had also been available. While nearly half said they would have still bought their same device, better than one in four report they’d have bought the Apple iPad if it had been available at the time of purchase. The survey suggests that the iPad is now poised to capture an astonishing 40 percent of the e-reader market going forward in the fi rst 90 days after its launch. Companies like Amazon, Barnes & Noble and Sony aren’t standing still. Analysts say they’re planning major facelifts this year for popular e-readers including the Kindle and the Nook. Some of the changes may include switching to colour touchscreen technology and making the devices more durable. A big selling point for Plastic Logic is that its device is made primarily of (you guessed it) plastic. “Our current display in the QUE Reader has over a million transistors in it, and all those transistors are made out of plastic,” explains Archuleta. Not only does this have obvious benefits in terms of making the device more robust for the user (a major criticism of the current generation of e-readers – and indeed, of the Apple iPad – has been their reliance on breakable glass screens), it also simplifies the manufacturing process significantly. “With silicon, it takes about three weeks from when the material goes into the factory until you can build the display. But with our process, it’s just a few days, which offers significant benefits.” Even so, many commentators believe it is inevitable that the e-reader market will be severely impacted by Apple’s involvement, if for no other reason that the company has an uncanny knack of convincing otherwise sane and rational people that their products are must-have accessories for digital living – even if their use is not entirely clear. “Do I want an iPad as a replacement for my MacBook Pro?” tweeted MacFormat magazine’s usually sane and rational Chris Phinn. “No. Do I want one as
a replacement for my iPhone? No. Do I want one? Yes.” Whether consumers will be willing to shell out for both a standalone e-reader device and an iPad remains to be seen. It is this force – the irrational power of desirability – that could prove to be the biggest hurdle for e-readers going forward.
Below: A banner for the DMC Worldwise Copia e-reader sits on display during the 2010 International Consumer Electronics Show
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ASK THE EXPERT
Road to recovery Andrew Kinder outlines how manufacturers can cut costs and not quality as economic conditions start to improve.
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iven the difficult conditions that have prevailed in manufacturing throughout the economic downturn, you may think that the only good course of action is to stay hunkered down and wait for it to all blow over for good. Thankfully, however, there are plenty of signs that recovery is underway across Europe and there are a number of actions that manufacturers can take to accelerate their own recovery. Infor offer five strategic actions that organisations can undertake today. These actions are not only cost effective, but can help manufacturers immediately, putting them in a better position to take advantage of the recovery. Smart move #1 – Protect cash. Businesses recognise the critical importance of cash management, particularly at times when capital and credit are difficult to come by. One way in which manufacturers can release cash is through reducing inventory and work-inprocess levels. Infor has observed an uptake in technology solutions around demand and inventory optimisation in the past year and resurgence in interest in Sales and Operations Planning (S&OP). Smart move #2 – Pursuit of productivity. One measure that is consistent among manufacturing leaders is their relentless focus on productivity, whether this be their production assets, people, warehousing or transport. It makes sense to make the optimum use of existing resources before investing in new products, especially in current times. Technology solutions that help you achieve this are in vogue. An example of this is production scheduling, through intelligent sequencing a plant can reduce time lost due to changeovers by 30 percent and reduce costs through the reduction of overtime or other shift premiums.
Smart move #3 – Go green. Whatever your beliefs on the causes of climate change, it is certain that over the next decade manufacturers will need to adapt to operating in an increasingly carbon constrained economy. Government legislation will demand it, important customers will select their suppliers based on it, and having a sustainability strategy for manufacturers is not just good environmental stewardship, it makes good business sense too. Reducing energy use, reducing waste and recycling materials saves money. One way in which manufacturers can profit from this is
“Since 80 percent of the total cost of operating an asset can be in the energy it consumes over its lifecycle, it makes sense to monitor this intently”
through Infor’s EAM Asset Sustainability solution. Since 80 percent of the total cost of operating an asset can be in the energy it consumes over its lifecycle, it makes sense to monitor this intently. By maintaining equipment at its peak performance, energy bills can be cut by eight to 20 percent. Smart move #4 – Rent instead of buying. You may want to adopt new technology to help you to a stronger, faster recovery but huge upfront costs are a tough sell in a tight-money environment, no matter how big the future payoff might be. An alternative might be to subscribe
to business soft ware rather than buy it outright. Th is preserves cash and without the upfront payment associated with purchased soft ware, has the fi nancial effect of shortening the time to benefit. Soft ware as a Service (SaaS) or Application Managed Services (AMS) are both alternative deployment options offered by Infor to help companies address cost or resource concerns. Smart move #5 – Upgrade your business software. Almost all manufacturers have some form of enterprise resource planning (ERP) system and the normal agreement includes an annual maintenance and support fee entitling customers to the latest versions. Research across the industry, however, shows that the majority of organisations are not on the latest release of their soft ware, with many on versions several years old and facing an uphill effort and high cost to update to the latest version. In effect, this means companies are not getting the full value of their soft ware investment and are missing out on newer capabilities that could help improve efficiencies and innovate processes. Infor has tackled this problem with Infor Flex. ■
Andrew Kinder is the Director of Solutions Marketing at Infor. He is responsible for setting the strategy, determining focus industries, aligning forward development direction and driving global execution through marketing and sales enablement and has a background and particular interest in enterprise resource planning.
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BUSINESS INTELLIGENCE
Doing business the intelligent way Ovum analyst Helena Schwenk explains why BI remains a top priority for CIOs and how they can employ the technology as a recession-busting tool.
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T budgets are coming under increased scrutiny and pressure especially if the economic downturn continues. But, while a recession might well force companies to pull back on some IT investments, Ovum believes that any new initiatives will address specific business pain-points and offer quick and visible payback. BI fits into this category – focusing on key issues like securing and increasing revenue from profitable customers, rationalising and reducing operational costs, providing greater visibility into cross-selling opportunities and improving customer satisfaction. Hence, Ovum believes that BI will continue to rank among the top three priorities for CIOs this year.
Recession busting technology While many companies will instinctively use BI as a cost-cutting tool, smart companies will continue to invest in BI solutions to intelligently scale back operations and maximise efficiencies from business processes they already have in place. In a recession, BI allows companies to take a more calculated and informed approach to
tightening their belts, making sure that any cost cutting measures don’t cut across their top business priorities or cut out the valuable Brazilian rosewood with the deadwood. Moreover, they will increasingly focus on using BI to maximise revenues, optimise operations and grasp new and lucrative business opportunities before their competitors do. While a recession might well force companies to pull back on some IT investments, there’s rarely any question of a BI project being pulled or cancelled due to a cut in costs. If anything, an economic downturn could in fact speed up its deployment from a piecemeal departmental deployment to deployment across the wider enterprise. Ovum expects the riskaverse fi nancial services sector to lead the charge in new BI projects over the coming year as they realise the need to analyse their businesses and the market in order to boost revenue performance and to segment (profitable) customers more clearly. However, BI customers are also becoming increasingly cost-conscious. Companies are insisting they do more and more sophisticated types of BI with less money
“In a recession, BI allows companies to take a more calculated and informed approach to tightening their belts”
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and IT staff. Ovum believes that’s a good thing – it will make BI more focused and efficient, which in turn has a better chance of returning tangible benefits. It will also continue to force BI vendors away from their traditional premium pricing models, resulting in broader adoption of BI beyond an elite group of executives and analysts to front-line business users.
New models As a result of the economic downturn customers are becoming more risk averse and are looking for more costeffective ways of implementing BI. Th is will challenge traditional BI and data warehousing implementation approaches and put new development, deployment and packaging models like open source, soft ware-as-a-service (SaaS) and pre-packaged appliances on the radar screens of more BI customers in 2010, particularly SMBs. Additionally Microsoft’s market entry and BI strategy aim to make BI a commodity technology that customers will expect to implement easier and for a lot less than the complex, premium-priced solutions of the past. These are some of the key BI technology trends that are developing: Open source: Open source BI is still a fledgling market and its evolution is still a far cry from its evolution to free solutions that are advanced by the developer community around the globe. However, it is no coincidence that Linux is now the fastest growing platform for new BI projects. The continued interest in open source BI in 2009 is a clear counter-reaction against the market dominance of a few vendors due to consolidation. Open source BI pioneers like JasperSoft and Pentaho, which were once considered temporary illegal aliens in the BI market, are establishing themselves as permanent residents, getting funding, issuing new code releases and starting to win over larger non-traditional enterprise customers. Economic forces are also playing directly to open source, particularly for fi rst-time BI buyers. These companies are looking for a cost-effective way to deploy BI without having to fork out a heft y upfront fee for a packaged commercial offering. First-time open source implementations will always be prototypes. But if successful they will evolve into fully productive BI systems that are backed by commercially licensed support services from open source BI vendors. SaaS BI: Providing BI as a hosted online service is gaining increased market acceptance, especially among smaller, cost-conscious businesses. 2010 will be a decisive make-or-break year for SaaS BI adoption, especially as seemingly similar cloud infrastructure models start to take root. Most of the early adoption thus far has been among SMBs or departments of large organisations. The real test for SaaS BI will be to break into the enterprise market. When SaaS starts to uproot complex enterprise
applications, including BI, it will truly have broken into the mainstream. But vendors will start to demonstrate how a small and simple SaaS solution can quickly kickstart an actionable enterprise-wide BI strategy without having to undergo a big and complex customised enterprise data warehouse (EDW) project fi rst. In large enterprises, Ovum expects these SaaS deployments to proliferate by fi rst complementing existing BI tools, applications and infrastructure. Ultimately any spike of SaaS BI adoption rests on the success of SaaS’s poster-child application, namely Salesforce and whether it can withstand the economic pressures being put on its slim margins model. However, Ovum expects at least one major breakthrough this year – the on-demand model will also (fi nally) enable BI vendors and partner channels to offer functionally focused or vertically oriented analytic solutions, without the pain of conventional BI deployment approaches. Ovum believes there is an untapped opportunity for vendors to offer vertically focused SaaS that can quickly plug skill-gaps in organisations that are restricting them from doing specialised and advanced analytics like pipeline analysis, predictive analysis and fraud loss prevention. BI in the cloud will also ride on the coattails of steady SaaS BI adoption. Even though the defi nition of cloud computing continues to shift like the clouds in the skies, the notion of hosting BI infrastructure and using BI services will start to gain the attention of CIOs and IT directors. Much of that is due to the noise that major cloud platform players – Google, Microsoft, Amazon, Salesforce.com and others – have made in 2008. Application form factors: The emergence of new competition from influential vendors like IBM, Oracle, HP, Microsoft and Teradata is helping to reinforce the value of data warehouse appliances and is bringing it into the BI mainstream as an alternative model. The appliance form factor – which gives companies the operational ability to plug and play BI technology without wasting time and money on assembling the hardware and software infrastructure – is catching on fast and threatens to break the traditionally high price-entry barriers for BI. Significantly, it offers mid-sized firms a chance to engage in complex and high-end BI, which can be deployed at a fraction of the cost and time compared to traditional enterprise data warehousing. In the coming year, Ovum expects more BI tools and applications will be increasingly bundled with data warehouse appliances. More data warehouse vendors will also pre-integrate BI tools and applications – either their own and/or those of their partners – into their appliance bundles. These data warehouse/ BI appliances will also be increasingly tailored, packaged and priced for specific vertical market segments and even specific functional applications.
Helena Schwenk is a Senior Analyst within Ovum’s software application team and is based in the UK. She has over 15 years’ experience working within the IT industry as both an analyst and IT practitioner. Her areas of focus include business Intelligence, performance management and data warehousing. Schwenk holds a BA (Hons) in Computing and Information Systems.
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EXECUTIVE INTERVIEW
Intelligent solutions Mark Lorion of TIBCO Spotfire discusses the latest developments in business intelligence solutions.
Mark Lorion, Vice President of Marketing, joined TIBCO Software Inc in 2007 as part of TIBCO’s acquisition of Spotfire, Inc. In his current role, he is responsible for product marketing, field marketing, marketing communications and overall go to market strategies for the Spotfire product line at TIBCO. Before joining Spotfire, Lorian led marketing at PeerDirect Corporation, where he helped re-launch the company following its acquisition by Progress Software. He earned his MBA with honours from the Olin Graduate School of Business at Babson College and a degree in Economics from Syracuse University.
How does TIBCO Spotfire differ from other business intelligence (BI) solutions? ML. TIBCO Spotfire allows organisations to equip every employee to quickly discover new insights in the information they work with every day. Unlike traditional BI, TIBCO Spotfi re soft ware shifts the power to ask and answer virtually unconstrained questions to front-line business users – the people who make decisions every day – without requiring countless new reports or custom queries from IT. Th is type of speed and flexibility is difficult to achieve quickly with traditional BI solutions. Specifically, no other vendor combines five key elements – clarity of visualisation, freedom of spreadsheets, relevance of applications, confidence of statistics, and reach of reports – in a single user experience.
Many BI vendors are now focusing on analytics. Can you explain this shift? ML. Although BI tools are becoming somewhat easier to use, they remain a challenge for most non-technical employees, especially if the suites require deep knowledge of underlying data models, schema and metadata. If BI enables quick, daily business decisions on issues such as allocating resources and inventory, users shouldn’t be forced to waste time sift ing through irrelevant data for answers. Analytics takes the user’s role and responsibilities into account, serving as a key ingredient in a company’s business strategy by driving innovation, competitive advantage, and fact-based decision-making. If empowering business users to measure, monitor and manage business performance is the end game for BI, then analytics is an area where vendors and organisations must excel. What is driving the business need for analytics? ML. During good times there is often enough slack in the system to allow bad decisions (or missed opportunities) to be forgiven or even to pass unnoticed. But when times are tough, a bad decision or missed opportunity can mean the end of your business. There is huge pressure to make better, more informed decisions and to drive businesses in innovative ways to combat rapidly changing markets. Th is tells us that, even when times are hard, there are opportunities to be found; the trick is to fi nd them. That’s where analytics comes in. TIBCO Spotfi re products are fast and flexible, allowing companies to ask new questions immediately and fi nd new insights. Our customers, industry leaders among the Global 2000 – including Pfi zer, Procter & Gamble, Toshiba and Texas Instruments – have deployed the TIBCO Spotfire Analytics platform to gain an information advantage over their competitors. Using our solution, customers have made new discoveries, solved
costly manufacturing problems and improved sales performance. TIBCO recently announced TIBCO Spotfire 3.1. What features does it offer that distinguish it from other offerings on the market? ML. Unlike traditional BI tools, which for the most part aggregate historical trends only, Spotfi re 3.1 projects them forward with whatif scenarios. Anyone in the company can ask questions on demand and our analytics will provide future predictions based on behindthe-scenes data-driven methods. As a result, predictive modeling – long the mainstay of statisticians and vacant from traditional BI
“If empowering business users to measure, monitor and manage business performance is the end game for BI, then analytics is an area where vendors and organisations must excel”
applications – is now available to all business professionals in any business process. By combining the power of S+ and R tools with the Spotfire Enterprise Analytics platform, customers get a rapid prototyping environment for analytic applications that combines highly interactive, exploratory analysis with the power of statistical and predictive modeling. Users can then share their interactive analyses, including guided workflows, via a local library or web-based application. ■ For a free trial of TIBCO Spotfire visit: http://spotfire. tibco.com/eval. To view interactive demos of TIBCO Spotfire, visit: http://spotfire.tibco.com/demos.
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INDUSTRY INSIGHT
End of an Era Jordi Nelissen explains how organisations and companies can survive the end of the private branch telephone exchange.
have to cope with local or in-the-cloud integration, it will also have to handle an accelerated arrival of new applications. Time-to-market of new services and upgrades needs to be as short as possible. The focus must be on identifying and managing the services for end users, without the time wasted on detailed technical tasks.
Most common models
T
he evolution to unified communication is omni-present and has come to a point of no return. Amongst other trends, telecom will evolve into fully IP based networks. Th is is a key-enabler to dramatically change what communication and collaboration means for organisations. A new wave of IT-based applications will be deployed and will benefit from this IP-based infrastructure to integrate Video, IM and a range of other collaboration and communication services. Integration of these applications will happen on premises, such as CRM or e-mail, and with in-the-cloud applications, such as mobile or professional collaboration networks. So how does this affect organisations’ requirements? The choice of the solution becomes a strategic business decision. It needs to accommodate the conflicting demand for new services and features, while delivering cost savings. Freedom of choice, now and in the future, is a critical criterion. The trap of so-called ‘open’, but de facto proprietary solutions needs to be avoided. The IT infrastructure will not only
Today, the industry deploys two widely used solutions: the on-premises ‘sort it out yourself’ model and the hosted ‘managed’ model. Both models have significant limitations with respect to the identified requirements. The fi rst solution is the on-premises or ‘sort it out yourself’ model, which involves a manual set-up, configuration and maintenance of all applications on a variety of dedicated servers. When new applications are added, this leads to an exponential complexity, as the integration and set-up is dependent on manual processes, handled by certified engineers. They are in charge of the delivered quality through a selfconstructed SLA. Upgrades are equivalent to a full re-installation. As a result, most organisations do not perform upgrades on a frequent basis and systems become out-dated. The hosted ‘managed’ model saves the company from the hassle of support and maintenance. Nevertheless, it is a model with standard features and does not accommodate the individual needs of companies requiring more flexibility or the need for local IT back-office integration. For many customers, it is a key security concern to be on a shared platform. Although this is sometimes chosen by small companies, it is not a feasible solution for enterprises and larger organisations who want to control their own applications and services. In conclusion, the solutions described above do not meet all the set requirements. But the hybrid model described below does.
The ESCAUX Hybrid Model The Hybrid Model combines the full flexibility of the on-premises model with all the services offered by the managed model and is completely based on open standards. It consists of a service centre and a set of identical appliances that run all applications. The appliances are installed in a frictionless way, within the organisation and across different sites if desired. The service centre takes care of many tasks, such as the creation of services, the delivery of soft ware, the monitoring of appliances, the reporting of SLA, etc. Th is happens in an industrialised way. Changes or additions – new users, applications, soft ware or sites – are done through a unified and systematic approach. At any time, services and appliances can be re-produced without manual intervention or dependency on certified engineers. Th is way, organisations keep full visibility and control over the entire solution. Although it is not a must, the service centre is usually installed in a dedicated hosting centre for security reasons and to facilitate integration with in-the-cloud services. Another advantage is that it allows for a full integration with mobile operators. The Hybrid Model solution complies with all the identified requirements. The total cost of ownership is significantly lower, while ensuring superior services now and in the future.
As one of the founders and COO of ESCAUX, Jordi Nelissen’s guiding motif is to design and build frictionless products and services enabling the creation of an unmatched managed service infrastructure. Prior to ESCAUX, Jordi acquired enormous operational and technical experience in senior positions at Belgacom, COLT and Alcatel.
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SPORTS TECHNOLOGY
Birdies, bogies and bytes Without a mountain of technology going on behind the scenes, golf’s prestigious European Tour would be firmly plugged in the proverbial bunker. Julian Rogers tees off with Mark Lichtenhein, CIO and Director of Broadcasting and New Media, to hear more about his key role and how preparations are faring for the 2010 Ryder Cup.
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lthough golf is sometimes described by its detractors and those who have suffered the ignominy of a bogeyriddled round of 18 holes as the best way to spoil a good walk, it is now a multibillion-dollar industry. Its top stars travel the world, have money-spinning sponsorship deals and battle it out for purses worth millions of dollars. Even despite his recent annus horribilis and subsequent loss of lucrative sponsorship deals, Tiger Woods is still sport’s fi rst billionaire. And although it’s always been portrayed as an elitist sport, increasing numbers are getting into the game, particularly in the developing world, as professional golf tours expand into new territories. With golf garnering so much attention nowadays, you could argue that Mark Lichtenhein has landed one of the plum IT jobs in Europe. Last year, the tour stopped off at 36 countries and staged 100 tournaments as far afield as Dubai and Kazakhstan. The IT and broadcasting infrastructure that has to be set up at each tournament – often a greenfield site in the middle of nowhere – is mammoth, including over 80 kilometres of television cabling. When the golf fi nishes, it’s all taken down and the Tour jets off to the next location to begin the whole process over again. “You couldn’t do this job if you didn’t enjoy golf because it’s not a nine-to-five job and can be fairly all-consuming as I’m sure my wife will testify,” says Lichtenhein. He never leaves home without his clubs, though. “My handicap is nine, which just
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about puts me on the board of respectability in this organisation,” he reveals modestly. “I’m not a great golfer, but I enjoy it.” Lichtenhein, a soft ware engineer by education, joined the Tour in 1999 after having been a founding force behind Silicon Valley start-up GolfWeb in the mid-nineties, the first ever website dedicated to golf. In the past 10 years he has been instrumental in the evolution of europeantour. com and rolling out new technologies for on-site IT infrastructure. As with most sports, the Tour’s information systems and technology have to be ready on time for the first player to tee off; delaying the start of a golf tournament because of IT snags is not an option. “The events don’t stop when the network goes down, so it’s not a question of when you’re ready but how ready are you when the event starts,” he explains. Unlike the US PGA Tour that has to deal with one country, one language and one culture, the challenge of the European Tour can leave Lichtenhein feeling like he’s landed in the rough. “Last year, we were in 36 different countries which means it is very challenging dealing with 36 suppliers for telecoms, broadband or whatever we need on site. Th is is why we try to control our own destiny and bring as complete a solution to site as possible – we can’t rely on a local telco trying to work out why the DSL [digital subscriber line] doesn’t work or why they can’t give us symmetric connectivity.” The Tour is self-sufficient with its own VoIP (reducing the need for temporary lines, and Tour staff have the same number the world over), Wi-Fi and super-fast satellite broadband just in case there is a glitch with the local telco’s internet supply. Most of the golf courses the Tour turns up at don’t have a permanent infrastructure but Lichtenhein seems to relish the challenge of unearthing solutions to ensure each tournament runs smoothly. The varying locations and cultures all add to a unique mix. “It means we have to have a lot of innovation and different ways of thinking depending on where we are. It’s compounded by the fact that we’re not only in a different country, but we’re in a green field often in the middle of nowhere, which doesn’t even necessarily have good mobile signals or mobile access.” He continues: “Some courses, however, are well served, particularly those that have infrastructure like hotels on site, but we go to some fairly remote courses that are very beautiful but not necessarily known to the local telcos.” Indeed, that’s the nature of where golf courses are situated, sometimes at a windswept outpost miles from any town. The course itself can be spread over 30-square kilometres, which adds to the expense of installing temporary networks. “The countries that we think might be more challenging tend to surprise us by being rather good,” Lichtenhein explains. “We go to South Korea and it’s fantastic because they probably have the best broad-
“We’re living in a real time world where the value of the data decreases dramatically with every second that passes afterwards” band on the planet. We went to India and hats off to our Indian partners because we had great connectivity. However, it’s closer to home where we seem to have more difficulties: Scotland is not very densely populated and it has some remote courses so we’ve certainly struggled over the years out there but generally things are improving as broadband availability improves with every country upgrading its networks. Compared to 10 years ago it’s night and day but the demands on the network are 20 times higher than they were.”
Data manager Mark Lichtenhein
As in most sports, information is king for the spectators gathered at the course and television viewers watching at home. Wi-Fi networks now relay scores to the leader board and other data back to the IT hub, which is regurgitated to the public and media. The Tour was one of the fi rst sports to pioneer the use of wireless technology for its scoring and today Wi-Fi is ingrained in everything that goes on behind the scenes. “Wireless technology in all its manifestations is really key for us,” says Lichtenhein, “especially because we are working over a wide area. We put down 80 kilometres of cable a week for television, so we don’t even have to compound that by putting out huge data networks as well by cable.” He adds: “We are so mobile and here today, gone tomorrow, that you don’t want to put in permanent infrastructure for one week
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of the year, even when you’re coming back to the same course another time. We look for technologies that help our efficiency and reduce the overhead of setting things up and the costs associated with it.” Out on the course, an army of volunteers carry handheld devices to collect stats as the tournament unfolds, while GPS is used for calculating ball positioning, distance to the hole, ball speed and more. The scoring and stats are delivered to a worldwide audience, whether they’re embedded in television pictures, stand alone data on a website, syndicated to third parties or provided to the press. “Data is very much our product,” Lichtenhein states. Indeed, the thirst for information is hard to quench; golf followers want as many stats as Lichtenhein can provide. “There is an insatiable demand or appetite for information because our audience wants to know every last detail of everything that’s happening on the golf course. There’s an awful lot of data out there so it’s just a question of capturing it all.” This is where Lichtenhein thrives. “My role is very much to look after all those digital assets and to ensure that they’re produced in the most timely and cost efficient manner and distributed to all their respective destinations as quickly as possible because we’re living in a real-time world where the value of the data decreases dramatically with every second that passes afterwards.” Following what’s happening on course can be a difficult proposition for spectators, whereas on television you have the commentary, close up action of all the shots and a plethora of stats and graphics. To redress the balance the Tour is working closely with Canada-based Kangaroo TV to stream live footage of the action and data feeds to a handheld device that users carry with them around the course. The Tour predicts that in the near future this same
footage will be available to spectators on their smartphones. “Unlike a stadium sport where you’ve got action replays and you know exactly what’s going on, it’s much more difficult on a golf course with 18 holes,” Lichtenhein acknowledges. “And on television you know instantly who is leading; as a spectator walking around the golf course you don’t. So this is the kind of thing we are working on to improve customer experience.” But any technologies Lichtenhein rolls out usually come with a heft y price tag, especially given the open environment of tournaments and the globetrotting nature of the Tour. “It’s a huge cost because all of this is temporary infrastructure,” he explains. “It’s not like erecting a giant screen at Lord’s Cricket Ground and then leaving it there for the year – you’re picking it up and taking it somewhere else, so it’s got to be durable, transportable and cost effective.” As well as being CIO, Lichtenhein is charged with the broadcasting side of the operation, being Co-Managing Director of European Tour Productions – a joint venture with IMG Media – which produces almost all of the Tour’s telecasts on behalf of the broadcasters worldwide. A specialist live golf team has now produced more than 400 European Tour events while each week 20 hours programming is delivered to over 30 customers worldwide. Around 220 people are on site every week for the broadcasts. “We produce all the pictures that you see on television stations around the world, be it Sky in the UK, Sky Deutschland or the Golf Channel in the US, so we bring a lot of infrastructure with us and are dependent upon technology. The Tour broadcasts the action in high definition to viewers at home and IPTV HD footage locally to hospitality and the clubhouse. The Tour uses the services
€116,892,269 Total prize money on the European Tour in 2008
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of a company called Creative ve Technology to deliver the pictures to plasma screens around round the course.
Eyes on the prize The ‘big one’ for Lichtenhein nhein is the 2010 Ryder Cup at The Celtic Manor Resort in South Wales in October. Europe’s top players versus the he best the United States can muster in a match that takess place biennially. It’s one of sports most prestigious events nts and is expected to draw 200,000 golf fans and 1000 journalists to the nearby city of Newport and a globall television audience of tens of millions. Lichtenhein nhein has been making preparations for thee competition for the past four years.. “It’s the biggest golf event on thee planet – much bigger than any of the Majors.” Lichtenhein stresses that four years is a short time in terms of planning an eventt like chnology the Ryder Cup but that technology n this time. can evolve dramatically in ns back in 2006 Indeed, making tech decisions or instance, we are was a tricky proposition. “For putting in 100MB symmetricc connectivity but it’s situated in a valley. There are a couple of PSTNs [Public ks] if we can fi nd them so we Switched Telephone Networks] are having to put in a lot of fibre fibre from the local exchange. We are looking at some fairlyy sizable costs to run all this for a week but it’s an event that’s going to be under the world’s gaze.” Preparations were ramped up in October of last year as the IT and broadcast teams nailed down what they needed. By this April, a team was assigned to concentrate solely on the Ryder Cup and system testing began. The Tour will also be relying on outsourcing partners to make it all happen. HP, for example, will provide a unified wired and wireless network infrastructure to ensure fast, secure internet access to every corner of the complex, including the tented village, hospitality pavilions, business centre, media centre and the ream rooms of both Europe and the United States. Lichtenhein says any solutions he implements have to be tried and tested; the Ryder Cup is too important to be wrestling with unproven technology just before it starts. “We are very innovative but we would never use something that hadn’t been fully tested, particularly for the Ryder Cup. So if somebody came along and said they had this great solution for the Ryder Cup I would think that’s fi ne but let’s have it out on a European Tour event a year ahead so that we can see it in action, we can use it and by the time we get to the Ryder Cup we haven’t got any surprises.” Th is cautiousness is important but Lich-
tenhein is quick to reiterate that the Tour is innovative. “We are constantly innovating. One of the great assets we have is our high public profi le which has meant we are profile fortunate enough to capture the imagination of a lot of technology companies who come to us with solutions that they think would work for golf. Some of them do and some of them don’t, so I think we’re well placed in terms of understanding what’s going on and events like the Ryder Cup only helps to reinforce that.” The overall goal for all this technology is to improve the user experience, he says. “We are always asking ourselves how we can improve things, deliver a better experience for our television viewers, website visitors and spectators but it has to be cost effective and build the business going forward.” Looking into his crystal ball, Lichtenhein doesn’t foresee a ground-breaking technology development but rather ways of better using the technologies currently available. “I don’t think we’re going to have a paradigm change in the way that the internet changed things 10 or 15 years ago when it went mainstream. However, I do think we’re in much more of a consolidation phase about how best to use these technologies, and things like, VoIP are very important to us.” As he converses you notice that Lichtenhein seems to be always naturally smiling; he really does seem to still relish this role. Working in a sport that you love is a dream combination that most of us never get to experience.
“We are looking at some fairly sizable costs but it’s an event that’s going to be under the world’s gaze”
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iStrategy Europe 5th-6th October 2010 The Millenium Gloucester Hotel, London, UK Transforming the Enterprise with Digital Expertise
Participation in Social Media and Interactive Marketing is no longer revolutionary.
it’s crucial.
In 2009, companies with dedicated social media activity boosted sales by over 18%, while those with minimal or no presence saw a 6% decrease. As 2010 marks a shift in consumer mentality from recession to recovery, companies must adjust their strategies according to how customers make purchasing decisions. Brand differentiation will be key, and companies must be at the forefront in areas like social web, mobile apps and SEO in order to create a distinguished customer experience. iStrategy October 2010 marks the next step in your marketing strategy. Here, you will learn: • The biggest trends in consumer spending online • Innovative technologies for communicating with customers and how to best implement them
• The top 10 most important factors in your social media strategy • How to measure your social capital and monetize your efforts • Hot buttons to bring people to your web store front • How to find your best fit in integrating email and social media • How to deliver a response-driven, relevant message The simple truth is that there is no magic one-sizefits-all marketing mix. iStrategy will arm you with the deep understanding of aligning social media and digital strategy according to your organization’s processes and operations to achieve the objectives you’re after. Join us in October to network, share ideas, and most importantly find out how to build your marketing strategy to its fullest potential.
For More Information, Please Call: Max Ford, Global Event Director. Tel: +44 (0) 117 915 4753. Mobile: + 44 (0) 7798 820 711
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EXECUTIVE INTERVIEW
Unified Communication and freedom
ESCAUX CEO, Christophe Hendriks, on the emergence of unified communications (UC) trends and why the no-nonsense approach works best. In a nutshell, how do you define unified communications? Christophe Hendriks. When people talk about UC, they tend to refer to end-user functionalities and the improved communication possibilities resulting from it. Of course, this is very important, however, we go a step beyond: we offer a unified approach to the installation and management process of the unified collaboration environment. Why did your customers need an alternative type of UC solution to the systems they already had in place? CH. Many early customers of our solution were no-nonsense companies looking for efficient and pragmatic solutions. We understood the root cause of their challenge. Their existing solution was based on many servers, operating systems and applications. Every set-up for new applications or new sites had to be manually managed and integrated. As a result they required certified engineers to manage all these
interfaces and operating systems. Therefore, the quality of the end-result is highly dependent on people. On top of this, manual integration is a limiting factor as new applications arrive increasingly fast and we don’t always have visibility on how organisations will evolve. Stepby-step our customers made us understand that we really are an alternative in UC.
to an important lower total cost of ownership. Our user functionalities work with all types of devices. Mobile devices become a true part of the solution and as a result, there is no longer a difference between a fi xed and a mobile device. An example is that an employee can see the status of any colleague who is in conversation on his mobile device.
What is unique about the solution that ESCAUX offers? CH. We offer on-premises enterprise and corporate solutions. Services are delivered in an industrial way, while keeping full flexibility to configure the services you want for your users. Delivering services in an industrialised way means that they can be re-produced at any time without manual interventions or dependency on certified engineers. Changes or additions – new users, applications, soft ware or sites – are done through a unified and systematic approach. At any time, you keep full visibility and control over the solution. As a result this leads
What do you mean exactly by a unified approach? CH. All services and applications are managed through a single, unified interface. This also means that administration, back-up and recovery are managed in an identical and systematic way for all applications. Let me give you an example: with a classical approach, you need to organise the back-up process yourself. You are accountable to make sure it works at any time, on any site, for any application. The risk is that the taking of a back-up is forgotten or is interrupted. And how are you managing to retrieve the correct back-up version and make it work?
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So, it is a process full of risks. In our unified approach, a systematic back-up is built-in for all your sites and applications, and is always accurate. Therefore, you enjoy a guaranteed recovery of all services in a minimum of time. This is the key difference between a manual and an industrialised process. Organisations have to manage an increasing level of complexity: multiple sites, new applications and so on. How do you support them with this? CH. We offer the ICT manager the productised tools to control, replicate and deliver end-toend services, irrespective of the number and geographical location of the sites. Our technology enables organisations to offer more frequent updates and upgrades to their users. On top of this, ICT managers can take advantage of an easy-to-use service creation environment. This allows them to create local or in-the-cloud services, through one single interface. All this results in significant time and efficiency savings. I’m convinced that the ICT manager’s role will more and more evolve from moving boxes to ensuring services.
company and it’s our mission to remain independent of any soft ware or hardware vendor, at any time. Are there any other benefits from being hardware independent? CH. All applications can run on the same appliance, whether it is telephony, fax, unified messaging, video, collaboration and so on. For big set-ups, we share the load over multiple appliances, running the same set of applications. Th is results in a more efficient use of each appliance. Therefore less appliances are needed in the end and customers enjoy a lower investment and maintenance cost. Another benefit of this is that we can offer one single Service Level Agreement, including SLA-reporting. What about ROI? CH. As I explained, we breathe and think ‘unified’. In the same spirit, we have reflected this in our pricing, which is based on a fi xed price per user and which is all-inclusive. This means, for example, that you enjoy recovery for all applications, have an end-to-end SLA and all future updates and upgrades. How many ICT
“As organisations evolve and continue to challenge costs of for example travel, we see a continued growth of collaboration tools, such as video and IM”
We’ve heard some other ICT companies say they are ‘open’. How ‘open’ is the ESCAUX platform? CH. ‘Open’ is indeed a very trendy term nowadays and it’s an excellent selling argument. The majority of the suppliers pretend to be open, based on the argument that they support SIP. However, if you ask them to connect any brand of phone, with auto-configuration and keeping the same functionalities as their own brand, the real answer is ‘no’. They are de facto proprietary and prefer to protect their own, hardwareoriented business. Another thing to consider is whether you can connect any soft ware of your choice. ESCAUX is truly based on open standards. We are a 100 percent soft ware-based
managers can budget for an annual baseline upgrade, including installation and project cost? When you consider that IT evolutions come faster and faster, up to date systems and a very short time-to-market is key. If these upgrades would now be included in the solution and were frictionless to activate, who wouldn’t want them? How do you manage to retain customer loyalty in challenging economic times? CH. We have a proven track-record with customers across Europe, and beyond. They operate in both private and stock-listed companies and public institutions and rank from 10 to 30,000 users, operating on single or multiple
Executing a successful strategy starting in a complex market and high-tech environment is Christophe Hendrik’s speciality. Being very results-minded, he is committed to delivering private and public organisations enhanced collaboration benefits and cost efficiency. Prior to becoming CEO of ESCAUX, he held senior commercial positions in COLT, AT&T and Alcatel.
sites. During economically challenging times, customers are even more open to consider more cost-efficient solutions. We have a singleminded focus on UC and our sole mission is to excel in this area. Therefore we have developed a customer charter with 10 commitments. Our largest shareholder is a stock-listed investor who has taken a long-term commitment to support the success of ESCAUX. How do you see the future of unified communication? CH. We have been operating in the sector for a while and some trends are obvious. There is no way to stop the evolution towards an IP-based integrated network. PSTN and ISDN networks are coming to an end very fast. Features will move from hardware-based to a soft ware platform or even merge into the network. We see a new wave of in-the-cloud and web-based applications and a growing impact of professional collaboration networks accessed in a secured way. As organisations evolve and continue to challenge costs of for example travel, we see a continued growth of collaboration tools, such as video and IM. Th is will impact intra and extra company collaboration. Therefore, scalable and flexible solutions, like ESCAUX, will become a must.
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ASK THE EXPERT
Maximising potential Serge Eaton of Siemens Enterprise Communications on the changing communications landscape.
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he way we are communicating socially has changed. We are now all regular users of landline, mobile, VOIP, IM, ‘presence’, video, blogs, RSS; and the list is growing. So too are the devices we use. How many of us have a desktop PC, a personal and a work mobile or smartphone, a laptop, and perhaps we’re thinking about a new iPad? Business, driven by consumer behaviour, needs to leverage these new ways of working to allow colleagues, customers and partners to communicate and collaborate in the most appropriate and practical way.
The unified communications solution Unified Communications (UC) is growing from strength to strength because it provides a way through the communication maze for businesses. UC consolidates disparate communications technologies like messaging, voice, web and video conferencing, enterprise instant messaging and so on to a single unified experience for the user. UC has other benefits. By combining all your communications into a single, manageable interface and simplifying the way you share information you can drive down costs and increase people productivity. Although unified communications carries with it great promise it also poses significant challenges. Ubiquitous access to data (mail, voice, messaging, video) across multiple and varied devices and channels increases the risk of loss of sensitive or confidential data. If you work in a regulated industry, it is critical to consider how UC will affect your company’s regulatory compliance. There are a growing number of data compli-
ance and regulatory obligations with which virtually every organisation must comply. These obligations are focused primarily on the archiving, encryption and monitoring of certain types of communications. For example, fi nancial institutions, energy-trading companies and others must be able to prevent or limit communications between
“If you work in a regulated industry, it is critical to consider how UC will affect your company’s regulatory compliance”
certain departments or functions within their organisations. These rules can change drastically once communication is consolidated. For example, the Financial Directive MiFID specifically requires compliance by retaining conversations that reference any trades. The most serious practical problem faced by business is the loss of corporate data in the event that a device is physically lost or stolen. Data breaches in 2009 cost UK fi rms an average of UK£64 for every record lost (Ponemon Institute). Th is was an increase of seven percent from 2008. Fines are also increasing. Under an amendment to the Data Protection Action, 1998, from 6 April 2010 data controllers and their businesses that breach data protection laws are liable to fi nes of up to UK£500,000.
And what about the cost of the loss of company reputation and credibility?
Forewarned is forearmed It is clear that without forethought an organisation may be exposing itself to a variety of risks, including legal sanctions and enormous fi nancial losses. Identity and access management is a way of controlling and managing these risks. It gives an organisation the ability to assign roles to individuals. Based upon these roles access privileges to different services and data are granted. It can also provide single sign-on (one user name and password) and strong authentication across all communication and collaboration services. Th rough an integrated, efficient and centralised infrastructure, identity and access management combines business processes, policies and technologies. It enables companies to control and secure access to any resource, quickly and efficiently manage change across the organisation and fi nally to protect confidential information from unauthorised users. The challenge is for UC to become Secure UC. The only way is to build in, not bolt on identity and access management strategies into a project right from the start and therefore realise the promise of UC. Serge Eaton is Lead Consultant for Identity and Access Management at Siemens Enterprise Communications. He has worked in the IT industry for 14 years and has a broad experience and knowledge of business and technical security and identity and access management. Prior to his appointment with Siemens, he was an Executive Consultant responsible for Atos Consulting’s identity, access and biometrics capability addressing IAM and IdM issues.
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CONTENT MANAGEMENT
Putting your content to work After 25 years of ECM experience Doug Miles of AIM knows a thing or two about how our industry is changing. Here, he tells Business Management why ECM solutions are so important in today’s economic climate.
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rganisations, both public and private, are operating in an era where they are called upon to no longer simply be ICT enabled, but ‘information management compliant’. The emphasis in these times is about being able to handle the proliferation of information born as a result of the increasing number of channels by which individuals and businesses are able to communicate with each other. At AIIM, we represent the Information Management community as the global association for both users and suppliers of Enterprise Content Management (ECM) solutions. These are the strategies, services and technologies that enable organisations to capture, manage, store, preserve and deliver information to support business processes, and are the key to successful performance. By staying in control, organisations are able to maximise efficiency, productivity and business continuity. Th is isn’t easy - which is why AIIM exists.
The here and now In today’s markets, everybody in every office, at every desk, is using computer tools to complete their daily work. Employees often need two or three different packages in the workplace, and when you occasionally come across terms like ‘typing pools’ you realise that in the past people didn’t generate their own documentation at all, but had secretaries to do it. The changes in this process run parallel to ECM development. What used to be people with fi ling cabinets
along the walls and secretarial assistants to run those filing systems, is now people generating their own documents and filing them away in non-official systems and against non-official schemes. When I started on computers, for example, you could only use an eight-character uppercase file name to define a file or a document. That’s now moved on to long file names with folders and sub-folders, but we still have this crazy concept of “My Documents” which has no place in the business world. Ultimately, whether a business goal is to meet increasingly complex regulatory requirements or to gain faster access to information, planning is the key to any successful implementation. At AIIM we have highlighted four cornerstones of ECM benefits – compliance, continuity, collaboration and cost reduction – and we understand that as a business makes progress through the project, the ECM investment should build rewards for the organisation, reduce day-to-day costs, improve customer service and lower the all-too-real risks of compliance infringement.
“In today’s markets, everybody in every office, at every desk, is using computer tools to complete their daily work”
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While many of the larger financial organisations already understand this and have been dealing with these issues for many years, once you get down to the mid-market area you see that people actually look at these compliances as something they do in response to a particular directive and not as something they should look at on a day-to-day basis. That’s something that has to change. What’s more, even the most tech-savvy company has to realise that at the end of the day, it’s still the people behind the technology that really matter. And while CRM processes cover most of those issues, banks and insurance companies need to understand the importance of this and many are subsequently connecting their CRM systems with their help desks and are now moving toward connecting the document management side of the bank as well. Undeniably, and especially in today’s unruly markets, organisations are having to dramatically change their business models in very short periods of time. For example, if you’re merging the headquarters of two different financial institutions, you have to make sure that all the procedures, processes, documentation, human resources and quality
Cornerstones Doug Miles explains the four cornerstones of ECM benefits Compliance This has been very much the fore and very much a strong driver in the financial sector. Certainly with what we’ve been seeing over the last year, with companies being absorbed into other companies or having to do joint mergers, you reach a point where the value of a company is down to their information governance as much as it is their financial governance and their customer relationships. Continuity Being able to store things electronically provides you with continuity and also helps with continuity planning so that you can improve access. That offers its own scenarios in terms of the fact that you can also outsource off shore processes without needing to set up physical transference. Collaborations This covers everything from shared project sites through to web 2.0 and enterprise 2.0, wikis and blogs and so on. There is an issue there, and the collaborations going on at the moment aren’t being handled too well. There are repositories of documents sitting around in sites that should be made available. Cost reduction This covers the obvious productivity benefit of being able to move documents through the business process and in a way that allows companies to monitor, measure and improve the way the process is done.
schemes are made available to everybody involved in that merger. You then have to quickly roll all of that out across the other businesses that you’ve acquired or that you’ve merged with, and that’s a massive challenge.
Key features In terms of financial services environments, records management is key for most organisations. They may be storing information for the short term or for the very long term, but either way, what has changed over the last few years is the fact that there is now a need for a dialogue between records managers and IT managers. As it stands, nobody is sure how you store away an electronic record and make sure it’s accessible in 15 or 20 years’ time, but what is clear is that if you are required to pull some of that material back, or if a customer demands to know what information you hold on them, then trying to pull that out of a paper system is always going to be horrendously expensive and very, very slow. In fact, it has almost become mandatory these days for anybody in those regulatory environments to provide solutions that give organisations the ability to designate records, store records and pull records back in a fairly adept way at any point where they might need to be audited. Furthermore, anybody who currently uses X-drives or file-shares to store their documents rather than keeping them in a proper ECM system, or anybody who is not taking measures to store their emails in a reasonably controlled repository are putting themselves at big risk. As people start to look at the collaboration benefits and extend search portals to do things in their business, then the reuse of knowledge and the speed at which people can find information and respond to data is going to be so much better. Of course, it could be considered that these functions will become part of the operating system and I think we’re moving to a scenario where content management services will incresingly become part of the underlying infrastructure. Microsoft knows that this is what people need to have and that’s what its Share Point solution is aspiring towards. But I think there will be a blurring of the dividing line between what is an ECM overlay and what is actually provided as a service within the operating system. Similarly, on a higher level, companies are looking to just have one business process management tool across more or all departments. They’re looking to standardise their business around a set of tools and then merge their processes on to that system. So further down the market, the sort of exposure that people will get to these tools will decrease their cost and it will become the role of ECM to ensure that every person at every desk has a way of knowing where to put their documents somewhere safe and somewhere accessible in a controlled way. Doug Miles is UK Managing Director for AIIM Europe
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ROUNDTABLE
Enterprising ideas Business Management grills the experts on the need for implementing a successful and effective Enterprise Content Management system.
What factors are driving the need for effective Enterprise Content Management (ECM) strategies for organisations today? Paul Thompson. ECM offers the capabilities to efficiently and effectively manage the challenges imposed by the demanding business requirements of the modern world. Availability of information, agility of business process, interoperability of diverse business functions and conformity to legal requirements are a few of the critical success factors for enterprises to survive in the modern and competing global market space. Enterprises, while striving to achieve these critical success factors, are further exposed to the complexity of massive volumes of variant data and information, which exists in a broad array of formats. Complex and extended business processes spanning across the business functions and partners around the globe, need integration and interoperability, and fulfi lment of compliance to legal and regulatory requirements. Luciano Balzarini. In times of downturn and shrinking budgets, companies try to fi nd the right combination between cost containment and increase of operational and organisational efficiency. Organisations have already made strong cost-cuts so now the need is to fi nd the right direction to increase profits. The automation and optimisation of processes is one of the areas that can help achieve a proper balance. Through a correct definition of
Paul Thompson is a seasoned veteran of the IT industry. Co-founder and CEO of PFI Knowledge Solutions, he has developed it into a successful technology solutions company. His leadership style is practical and pragmatic, all about getting results, developing people and being motivated by their success.
Luciano Balzarini is CEO of CST Consulting, an IT Consulting, System Integration and Technology, and Business Services provider focused on ERP & ECM. With more than 15 years of business and technology experience on ECM in the EMEA market, Balzarini and CST Consulting help customers to optimise the management of information and corporate processes.
company processes and business entities, we can automate flows to increase efficiency. The result is a completely integrated process at the functional level and not at the architectural level. Almost half 47 percent of users don’t have
confidence in their information, according to the AIIM survey State of the ECM Industry. And a recent CEO study by IBM found that more than 60 percent of CEOs agree that businesses need to do a better job of leveraging their information. Therefore it is important to ensure that the information organisations use daily is trusted information. With trusted information a company can reduce costs and optimise ROI, operate efficiently, drive more innovation, control and minimise risk and make better decisions faster. To achieve these goals a company has to digitalise and classify paper documents, analyse processes and optimise them by automating and monitoring the entire workflow. Can you outline some of the most common mistakes that can undermine the success of an ECM implementation? LB. During an ECM implementation, the most common mistakes can be a lack of customer’s requirements or a lack of goal/KPI (ROI, costs, efficiency, etc.) and so analyses are not effective and cannot satisfy customers’ expectations. Sometimes analyses are very poor both for operational and technological aspects and they don’t underline actual needs. Another problem can be fi nding a proper balance for too specific analysis and an exception management too detailed; these factors could generate an extension of project time.
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Moreover, one of the most important elements before implementing a BPM project is to conduct a Business Process Analysis and a Business Process Reengineering to minimise or eliminate problems. Finally, for a successful ECM implementation, companies have to develop a long-term vision and an enterprise strategy to analyse elements according to a global perspective.
“It is important to ensure that the information organisations use daily is trusted information” Luciano Balzarini
PT. At PFIKS we emphasise to our clients that the groundwork for successful ECM implementation starts well before the project kicks off. A successful ECM implementation requires equal consideration of the challenges from technology, to organisation, governance and processes. As a component of IT infrastructure, ECM inevitably involves changes to the organisation, people and business processes. A failure to address these issues in a coordinated way will lead directly to a failed ECM implementation – like building a new house with a terrific design but no occupants. To avoid this pitfall, organisational and process issues must be addressed at the same time – perhaps even before the technical challenges – and the business and organisational needs must be treated with the same level of importance as the technical and IT requirements. It is also critical to engage key stakeholders from the impacted business divisions early in the project, ensuring the end product fits into the business processes. ECM implementation efforts often reveal great opportunities to streamline business processes and open up long-overdue communication channels between organisations. At the same time, engaging resources from both the business and technology groups can stimulate ideas for innovative process improvements, and help reduce the effort involved in change
management and training. In the end, this joint effort will enable implementation of a successful ECM system that business users and technology resources design, build and operate together. Can you give us an example of how your products and services aided an organisation with its ECM needs? PT. The American Society of Materials (ASM) is a customer who relies on our expertise for supporting and maintaining their enterprise content management infrastructure. As Stan Theobald, CEO of ASM, says in their Strategic Plan: “Content is everything material”. ASM’s business is all about bringing 775,000 content items to their members. To help them do that they use PFIKS to implement and support their ECM infrastructure (Vignette/OpenText V8 ECM and Autonomy Meaning-based Search). PFIKS has worked in partnership with ASM and has brought its specialist skills to bear on this key business programme. LB. A good partner for ECM has to support its customers throughout the entire project lifecycle, providing services such as: analysis, BPA/BPR, architectural design, system installation and configuration, system development and customising, system testing and roll-out, training services and project management. A good partner also has to provide a real solution to a business problem. This means vertical and technological competencies, to provide a complete application (both in-house or soft ware as a service) that adds value to organisations (ROI optimisation, operational efficiency, innovation, risk control, etc.) The organisational impact of a good solution must be minimised. In fact, a business solution has to fit the way a company usually operates, without changing internal processes. A good solution has to be modular (to support functional evolutions) and scalable (to follow the customer growth). What developments or trends do you predict might take place in the ECM industry in the future? LB. When content management becomes a commodity, organisations will focus on busi-
ness process management (paperless company), and business intelligence/performance management (BI&PM). A complete BI&PM approach means realising forecasts and budgets (the classic planning, control and analysis cycle), but also performing real-time analysis on core business processes and contents. Th is helps enterprises to understand in real terms where and why certain processes don’t work and how to ‘fi x’ them. In short, reporting, analysis, dash boarding and scorecards have to be implemented not only for data, but also for content and workflows. PT. The future for enterprise content management is becoming clearer and it is fuelled by networked communities, adaptive work processes, pervasive collaboration, self-describing information sources, and the ability to leverage intelligence captured in a flexible content infrastructure. By linking people, processes and information, it will allow us to work more efficiently, reduce the cost of operations and capture new opportunities through innovative business processes. It will enable us to transform the content and repositories from records of past activities into valuable resources that
“ECM implementation efforts often reveal great opportunities to streamline business processes” Paul Thompson
proactively drive business management, insights and decision-making. The real growth for the ECM industry may be in new ASP applications that suddenly become viable and cost effective. PFIKS is already offering complete ECM system functionality for processing, decision-making, validating, and approving a transaction. These systems can substantially reduce transaction costs for business and provide real flexibility for businesses that need an agile approach to changing business circumstances. ■
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PFI Knowledge AD.indd 1
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LAW
Legal eagles
LPO (legal process outsourcing) is transforming the way law firms process documents – cutting down costs and boosting efficiency. MARK FORD, Knowledge Centre Director at Clifford Chance, which has set up a legal process offshoring centre in India, explains the benefits of the arrangement. What is the difference between legal process outsourcing and offshoring? Mark Ford. We’ve chosen to go down the offshoring route. We set up a subsidiary that we own, control and manage so it’s different to the way some of the firms have entered into agreements with third party outsourcing providers. The main reason we did this is because for us quality is absolutely paramount. We felt that was the only way we could be absolutely certain about the quality of the staff we get and the way they are recruited, trained, managed and supervised.
if it’s to reach what I believe to be its potential, I think there needs to be a lot more done not just around moving the tasks but re-engineering the tasks.
Can you see the benefits of outsourcing for other companies that choose to go down that route? MF. The benefit I suppose is that it requires less upfront investment. And it’s easier, to a degree, to do something quickly, particularly if you want to dip a toe in the water and test it out. I can imagine that if you were a firm that either didn’t have resources or wasn’t sure that you saw this as a big thing in the future you could just hire a company like Integreon and do a few projects and see how it goes before going to the expense of setting up you own operation.
what they do as being in any way process driven. In fact if you talk to a lot of lawyers and say “we want to speak to an LPO provider about helping with some of your work” they just don’t understand that concept. I think that is the challenge of the next phase in the evolution of the LPO model – to not just move the process but to redesign it in a better way.
Is cost the main benefit of legal process outsourcing or offshoring? MF. It’s much more cost effective to do this. And it’s not just the staff costs but the associated overheads as well that are significantly lower. In terms of evolution I think there are potentially other benefits as well. Most of what we’ve seen in the legal outsourcing or offshoring space so far has been about taking existing tasks and moving them offshore. But
How challenging will the process of re-engineering tasks be? MF. It’s a fascinating challenge because lawyers are a pretty conservative bunch and most lawyers don’t like to think of
What sort of processes, in your opinion, need to be reengineered? MF. The obvious process is US or UK litigation. It’s incredibly document intensive and there are all sorts of inefficiencies in the way that this is traditionally done. So, for example, if you have a million documents to review
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What potential pitfalls exist around LPO? MF. The most obvious one in my mind IS about quality. That’s what we’ve focused a lot of resources on at a number of levels to ensure we recruit only very good people. We recruit only from the best law schools in India and we put people through a very rigorous recruitment process, make sure that we invest in their training and put them through a substantial induction and training programme when they first arrive.
typically they go through a series of filters with increasingly senior people. The first million might be reviewed by contract paralegals and then they might get whittled down to 100,000 and they get reviewed by junior associates. Then they get whittled down even further and they get reviewed by senior associates and partners and specialists in the case. So you have a situation where the same document might be reviewed many times by different people and it’s obvious that there must be more efficient ways of doing that. We’ve already started to take existing processes and have them done in lower cost locations by lower cost resources. The next stage is to look at whether there is a better process we can apply to achieve the same result. It’s early days but it’s what I see as the next challenge. Not just for us but for the whole industry. What feedback are you receiving from client and lawyers regarding LPO? MF. My sense from talking to people who are active in the industry is that there are a lot of people who are hoping that this whole LPO thing will go away and clients will stop asking nasty questions like “why are you charging us these high rates for these basic tasks?” But I believe the toothpaste is out of the tube in a sense and it’s not going to go back in. Why would clients allow that to happen when its been very conclusively demonstrated now that this sort of model can work and can be very effective in reducing costs substantially? Clients are generally extremely enthusiastic about LPO. It all happens behind the scenes from the client’s perspective. They are getting Clifford Chance quality advice at a lower cost. There’s no downside or risk from their perspective. And as you would expect they are very enthusiastic about that. They have responded very positively to that but that’s not to say that all lawyers automatically get it and certainly some people are resistant to the idea.
What communication challenges exist when it comes to working between offices across different time zones? MF. Certainly there are challenges in communication in different time zones and geographic locations. And certainly it’s a bit more complicated. You can’t just pop next door or down one floor to explain to somebody what you want them to do. But, equally, the system can often make projects easier. For example, you can have one team working in one time zone and then at the end of their day they can hand over to somebody else who is coming in to the office in a different time zone. So you can actually be incredibly efficient on big projects where you have large teams that are geographically dispersed. Time zones that we fretted about when we started turned out usually to be more of a help than a hindrance. What I would mostly say to people who think it’s all going to be awfully difficult, is that it’s not that different for what any of the big international firms have been doing for years anyway. There aren’t really significantly more challenges than there are with co-ordinating a large scale international M&A transaction where you’ve got lawyers from say 10 countries advising.
“There are a lot of people who are hoping that this whole LPO thing will go away”
About Clifford Chance Clifford Chance is one of the world’s leading law firms. It focuses on the core areas of commercial activity, capital markets, corporate and M&A, finance and banking, real estate, tax, pensions and employment, litigation and dispute resolution. Clifford Chance has 29 offices in 20 countries and 3600 legal advisors globally. The firm is structured around six global practice areas: * Banking and finance * Capital markets * Corporate/M&A * Litigation and dispute resolution * Real estate * Tax, pensions and employment
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Steria AD.indd 1
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EXECUTIVE INTERVIEW
Taking LPO to a new level Martin Keyworth examines the new focus on LPO (Legal Process Outsourcing) and explains the critical need for legal organisations to look at new ways of doing business.
It's what we do time after time and without boasting, we really are very good at it.
Martin Keyworth is the Director of Steria's Legal and Business Services division. He is responsible for managing Steria's extensive range of services and solutions for legal and regulatory organisations throughout the UK.
Is LPO a new area of expertise for Steria? Martin Keyworth. Steria has been successfully working across the UK and Europe for the last 40 years offering an extensive range of BPO (business process outsourcing) services to clients including banks, retail organisations, telcos and media companies as well as across government and the public sector. But perhaps a lesser-known fact is that we also work extensively across both the legal and regulatory fields and are currently managing complex case management services for a leading medical/legal organisation. Doesn't a solicitor need to be involved in case management? MK. Surprisingly no, although the process needs to be administered legally, the biggest challenge is administration, which requires rigour and attention to detail to ensure that all aspects are carried out efficiently. And this is what Steria brings to the table – a proven ability to deliver regulatory compliance to proscribed standards and guidelines 24/7.
What is your strategy in this sector? MK. Simply to be the best LPO service provider in the market. We have made a significant investment in re-engineering the end-to-end case management process and have dramatically improved its efficiency and effectiveness. We can deliver services from a broad variety of locations, are technology agnostic and can work with almost any platform or solution. Steria can also leverage its delivery capability to flex according to volume shifts. Th is ensures that we can transform the legal process supply chain and deliver considerable cost and efficiency savings. Does that mean you don't just work from India? MK. Yes that's right. An agnostic delivery capability is fundamental to our strategy and we can deliver on an almost worldwide basis. India is no longer the only location for delivery of services and we now have centres right across Europe. As an example, our Polish Delivery Centre is of a size, capability, sustainability and most importantly data privacy perspective, to offer the best, most flexible service to our clients. You say that you 'share the risk' with your clients. What does that mean? MK. We have a simple philosophy based around a single word – 'partnership'. Steria's ability to reduce operating costs, to design and transform processes is something that we know we can deliver. But what most organisations really want is the ability to grow their business with a 'partner' who will stand shoulder to shoulder with them, sharing the risk and giving them the ability to have an on-demand operational capability without making significant investment. And this is what we offer.
So are you getting much traction in the sector? MK. It's all going very well and we are delighted with the market response to date. The legal sector is traditionally very risk averse and steeped in a corporate governance structure that doesn't tend to embrace holistic change. Law fi rms face constant regulatory change and pressure on fees and the recent drop off in work has put them under considerable strain. Our offering of expert LPO services with guaranteed service levels, regulatory rigour and significant efficiency savings is a great solution to many of these issues – and one which legal companies haven't been slow to spot.
“We can deliver services from a broad variety of locations, are technology agnostic and can work with almost any platform or solution” How does Steria differ from other LPO providers? MK. We see ourselves as pioneers in the LPO space. Although this market is very new, we believe that we have created a solution that will enable law firms to take the next evolutionary leap in their development. Our ability to offer highly bespoke solutions at extremely cost effective levels is merely the starting point. We are now working on an innovative partnership strategy with several key legal organisations – allowing us to grow our LPO offering. So all I can say is 'watch this space'. To find out more, get in touch with Martin Keyworth directly on 01252 667236 or visit www.steria.co.uk/legal.
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INDUSTRY INSIGHT
Laptop lockdown
the total cost to the business is attributed to lost man-hours. On top of this there’s the danger of significant €576,000 fi nes.
Kensington Europe’s Stephen Hoare outlines how to mitigate the risk of fines under new Data Protection Act legislation.
A cultural shift
O
n April 6, 2010 the UK’s Information Commissioner’s Office (ICO) gained new powers to issue fi nes of up to €576,000 for serious breaches of the Data Protection Act. Fines are not restricted to the UK. In 2007, Spanish authorities issued fi nes following data breaches totalling €19 million. The heaviest fi nes will be issued where contravention of the data protection act is likely to cause substantial damage or substantial distress. In addition, data controllers must have known, or ought to have known, that there was a risk that a contravention would occur and failed to take reasonable steps to prevent it. The fi rst line of defence is prevention, which is exactly where laptop locks come into play. They are an
“CSI data shows that 42 percent of network breaches are proven to result from a stolen laptop”
organisation’s first line of defence, even before a fi rewall or network security. CSI data shows that 42 percent of network breaches are proven to result from a stolen laptop.
The human element Sensible organisations won’t overreact. They will already have procedures to properly handle personal data. However, can organisations be sure that their employees will comply with their policies and how best should they be enforced? Having appropriate policies, procedures, practices or processes in place is great but they need to be embraced and implemented by the whole organisation. Common sense policies combined with an office culture that fosters and expects security lock usage can be quickly implemented by adopting the principles set out in Kensington’s free Corporate Security Policy. The policy is written by research analysts IDC. Organisations will find that the policy document can be the catalyst of cultural change to safeguard itself, its employees and its customers against the chain reaction of disastrous events that can be triggered by laptop theft . The cost of laptop theft is not just restricted to fi nes or replacing the lost laptop, 49 percent of SMEs take two to four days to replace a laptop, causing huge disruption. Approximately 17 percent of
Laptop theft affects you, your colleagues and your organisation. Once upon a time turning off the lights, switching your monitor to standby, monitoring what you printed or recycling your envelopes would have been ridiculed as an inefficient use of time. Today, mindsets have changed. There’s been a cultural shift that is being driven by responsible individuals. Empower your employees to demand that their colleagues do all they can to protect their business. Adhering to their organisation’s policy is a start. If your organisation doesn’t have a physical security policy you might want to adopt ours. You can download it at www. logon-lockon.com At Kensington we say that our business is protecting yours. IT managers say 40 percent of their laptop theft would not have occurred if a security cable had been in use. Here’s some common sense advice to help minimise the risk of laptop theft: 1. Take laptop threats seriously. Educate staff and issue locks 2. Demonstrate how to attach a laptop lock when issuing it to staff and run regular awareness campaigns 3. Register key codes and combination codes so that they can be retrieved if needed. Keep keys and codes safe, certainly not on post it notes or in drawers 4. If there’s someone loitering in your department, investigate their intention, politely 5. Never leave an unattended laptop unlocked
Stephen Hoare is Kensington Europe’s Security Business Development Director. Before joining Kensington he was a Senior Product Manager for the EMEA region at Belkin. Kensington supported the Council of Europe’s Data Protection Day in January when it officially announced its LogonLockon campaign. Visit the campaign microsite to download Kensington’s Corporate Security Policy. www.logon-lockon.com
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HACKING FOCUS
What exactly is ethical hacking and how does it work? Jason Hart. An ethical hacker is someone who understands how to gain access to a company’s systems in order for them to cover the vulnerabilities and other problems within the business prior to someone else fi nding them. I’ve worked with some major global organisations, which I cannot name. But ethical hackers can work with any company from an SME business to a large global bank. All businesses are opening up their networks now, adding remote working solutions and doing more on the web. And this makes them more vulnerable. Who are the real hackers? JH. We call these people hackers but they are often disgruntled ex-employees or people who are still working within organisations. Or they could be a competitor. Hacking doesn’t have to be malicious; people often do it as a challenge. They hack into companies’ websites then deface them, effectively putting graffiti onto the websites. In the UK there are thousands of websites that are hacked into in this way. It’s easy to do – even my grandmother could do it. The way of doing it is simply to get hold of someone’s username and password. To do that, go onto YouTube and search under ‘how to crack someone’s username and password’ and you get thousands of different videos that are about ten minutes long.
The inside story
What part does social engineering play in the hacking process? JH. A good example of this would be, ‘Fred’ has just started at a new company and has announced this on his LinkedIn page. A hacker could contact Fred and say ‘I notice you’ve just joined the company, I work within the IT security department and I need to confirm you have all the relevant policies and procedures and that you have been given the right URL for your remote access web mail account.’ Fred is then asked to disclose the information. A week later the same person contacts Fred and tells him there have been some business continuity issues within the company and tells him to click on a web link to check their login details still work. What has happened is that Fred has been directed to a fake external website and by now the hacker has his username and password through befriending him and gaining his trust. Social engineering is a very old concept but combined with technology it’s very powerful.
In his former life Jason Hart hacked into websites for a living. Here he gives an insight into the life of an ethical hacker and what companies should do to protect their websites from invasion.
What is the greatest risk to companies from hackers? JH. One of the most important risk factors large organisations have to consider is possible damage to their reputation or brand integrity. People don’t put a value on these types of things and it’s very hard to do so. But to have a security breach and for that to be on the front page of The
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Times newspaper the next day means your credibility has gone overnight. It doesn’t matter if you’re a small charity or a large global organisation, your reputation is crucial. Part of reputation, credibility and integrity these days is about taking information security seriously. And unfortunately many people still aren’t taking it seriously. What should organisations be doing to guard themselves against attacks by hackers? JH. First of all it’s about understanding what the potential risks are. But there are also some other fundamental things people can do. Many have implemented firewalls, anti-virus soft ware and content fi ltering. But when it comes to protecting passwords they haven’t really done anything, and yet they are still opening up their network and businesses to third parties. Being able to control usernames and passwords is vital and having a form of two-factor authentication mitigates a lot of that risk. Th is enables companies to control who is coming in and out of their business networks. What kinds of two-factor authentication processes should companies be looking to implement? JH. Two-factor authentication can be used to log into any remote application, online application, and remote working solution or VPN solution. In any instance when people are getting information externally from the business, they should be using two-factor authentication. Th is is not a new technology. CRYPTOCard for instance, has been around for 20 years. However there are now easier and simpler ways to implement it. CRYTOCard soft ware is a service which allows you to solve problems instantly, within minutes without any infrastructure or hardware requirements, removing all the hassles and headaches of implementing a two-factor authentication solution. And it’s cheaper than a cup of coffee per month.
Jason Hart
“One of the most important risk factors large organisations have to consider is possible damage to their reputation or brand integrity”
now is that people are becoming very technical and it’s all about the technology solving the problem. But unfortunately technology only solves a very small part of the problem. I think people need to get some real basics in place. For instance, usernames and passwords have been around since 1959 and that was a control that was put in place to protect four computers at the time. We now use it to protect every single part of our assets and our IT infrastructure. People don’t even go onto the internet now without using anti-virus soft ware. So why are we still using a control that came about in 1959 to try to solve millennium issues. What do you think should be done to educate people about the risks of not having adequate IT security authentication methods in place? JH. We need to start educating people now because they still don’t believe the risks. We’ve got children growing up who, at the age or five or six, are already using computers and seeing the internet as another form of life or reality. Children are given sex education at school so why aren’t they given internet education in the same way. The same principles and levels of awareness need to be applied there. Jason Hart is SVP of CRYPTOCard.
What security concerns do you have around cloud computing? JH. The fundamental thing, the underlying element that secures cloud computing and the ability for an individual to access that cloud computing application, is a username and password. And if that username and password is not protected using two-factor authentication then certainly the whole credibility of cloud computing falls down because it’s wide open. But for cloud computing you can use two-factor authentication to mitigate the risk. In your career you been instrumental in creating the role of Chief Security Officer. Wold you say that role is increasing in prominence now within organisations? JH. If you look at any Fortune 500 company now they have a Chief Security Officer, which is fantastic. The view
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INDUSTRY INSIGHT
Guarding the fort Mads Toubro of Vision Solutions on how financial institutions can achieve adequate levels of data protection
F
inancial services companies face particularly strong demands to protect the integrity and availability of their data and systems. Clearly, losing all record of customers’ assets is not acceptable, but the need for data and system availability extends beyond good business practices. The fi nancial services industry is among the most heavily regulated of industries. Some of the regulations imposed upon fi rms in this sector require stringent protection of data and systems. The need is unequivocal, but how can fi nancial institutions achieve the level of data and system protection required by customers, regulators and prudent business practices? To answer that question, one must understand the threats to data integrity and availability.
The problems with tape are many. For one, restoring a data centre from tapes takes too long. Furthermore, because backup tapes are created only at night, data added or updated during the day is a risk. Journaling can protect this data, but a disaster that destroys a pro-
“Typically, more than 90 percent of downtime results from normal planned maintenance”
IT security threats Today’s computers are very reliable, but hardware and soft ware failures represent only a small fraction of the causes of data and system unavailability. Disasters rarely occur, but because of the enormous potential costs they impose, disasters must also be addressed in risk management plans. Human errors are more frequent occurrences, but they are still not the most common reason for data and system unavailability. Typically, more than 90 percent of downtime results from normal planned maintenance. At one time, “banking hours” allowed systems to be shut down during evenings, nights and weekends to perform maintenance, but global fi nancial operations, online banking and ATMs now require 24x7 system availability. Traditionally, nightly tape backups were the primary form of data protection, but they are inadequate for fi nancial institutions.
duction database will likely also destroy any local journals. Th is problem can be overcome if a remote journaling option is available, but this will not resolve the recovery time issue because, after a disaster, databases must fi rst be recovered from tape before being brought up to date using the journal entries.
High availability solutions To fully meet their data and system availability requirements, fi nancial institutions require a high availability (HA) solution that replicates all data to a secondary system at a location far enough from the production server such that a disaster is unlikely to affect both systems. Then, users can be switched quickly to the backup system if a disaster occurs or maintenance must be performed
on the primary system. HA alone is not sufficient. Often only a portion of a fi rm’s data is destroyed or corrupted. For example, an operator might accidentally delete a critical fi le or a computer virus might delete or corrupt just a few records. Th is type of problem might not be noticed immediately and transactions may continue to be processed. If so, the organisation needs a way to recover only the specific data items or fi les to their state immediately before the problem occurred. Traditional HA and disaster recovery technologies do not meet this need. Tapebased backups store data at night. Updates applied during the current day will not be stored on any tape. An HA solution doesn’t help in this case either because its replicator will immediately copy the deletion or unauthorised modification to the backup system. Fortunately, Continuous Data Protection (CDP) can solve this problem. CDP captures changes made to production databases and fi les and sends them to a secondary, disk-based data store. In most cases, CDP technologies can send the data to a remote location. Most CDP products provide graphical interfaces that automate the data recovery processes and make it easy to recover individual data items and fi les to a specific point in time.
Based in Lausanne, Switzerland, Mads Toubro is responsible for Vision Solution’s business in the mature markets in Europe: Germany, Austria, Switzerland, Italy, Spain, Portugal, France, Benelux, Nordics, the UK and Ireland. Vision Solutions, Inc. is the world’s leading provider of high availability, disaster recovery and systems/data management solutions for IBM Power Systems.
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Vision AD.indd 1
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SECURITY
The human factor As CISO for Travelex, James Gay is accountable for security across the company. One of the main challenges he faces is not technological but rather ensuring that the staff adhere to the processes in place.
S
ince the fi nancial crisis put the global economy in a stranglehold, the market for international payments services has rapidly expanded as businesses and consumers the world over place increased importance on cash management. Businesses in particular have sought to achieve integrated global payment platforms that are capable of meeting their international payment needs. Travelex, the world’s largest non-bank provider of international payments and foreign exchange solutions, is well placed to take advantage of this market expansion, and rivals even the largest global banks in its ability to deliver a truly global payment solution. In September of last year, consulting fi rm TowerGroup ranked Travelex Global Business Payments as the industry leader in global payment solutions for the SmallMedium Enterprise (SME) market and as number three globally for innovation in payments in the SME market. Th is is testament to the fact that Travelex continues to innovate in the payment industry. James Gay is the CISO at Travelex and despite the importance that many attach to the role of technology in innovation he tends to believe that when it comes to security, technology is important but it isn’t the most
important part of the puzzle. “The security industry as a whole has realised that it is no longer a control and blocking industry. It is a business enabler. People expect security. You can see the challenges that people are facing with the loss of personal data, bank fraud and credit card fraud and the security industry is at the forefront of helping people resolve those challenges. So we have to be more of a people business than we’ve ever been,” says Gay. In his view, the technology is an enabler for what Travelex do, but without the proper concepts of how to deal with the people part of the puzzle the technology isn’t really much use. “The technology is always going to be there as we need the tools to implement things and we need to do things faster, cheaper and better,” says Gay, but he is quick to stress that the main areas of investment over the next 12 to 18 months will be in people. “Without the right people it doesn’t matter how good your technology is, you will not be able to implement it properly,” he explains. The importance of understanding business needs before investing in technology is vital since the market is awash with technology solutions – some better than others – and businesses need to have the correct person in place to make decisions regarding the viability of technology investments.
“Without the right people it doesn’t matter how good your technology is, you will not be able to implement it properly”
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Th is, Gay believes, is the most challenging aspect of rolling out any type of information system, whether it is security related or not. Most of the challenges he faces in his role are human as opposed to technological. “Security and information security is about people. It’s about getting people to understand that they are adding value somewhere and that they are responsible for security. Everybody in a company is part of the security and if they don’t understand that then we are heading for trouble,” he warns . As CISO, Gay believes that he is not actually responsible for security at Travelex, but rather he is accountable for it and those who deal directly with the customers, those who do fi nance and those who work in the offices, are responsible for security. “I simply make sure that they have the tools and the awareness to get it done,” he says. “I’m accountable for the quality of that process.” And this is why processes are so important. It’s no good implementing them if the staff cannot work with them or they slow the staff down and they end up circumnavigating them, says Gay. “The whole point of our security is to add a protective shell around our processes, but it shouldn’t get in the way of those processes. If there is a quicker cheaper way of doing things – as long as it doesn’t increase the risk to the company – then we have to fi nd a way of enabling the security in a different manner.” The way that Gay evaluates the effectiveness of the business processes is quite hands on and involves him actively getting the opinions of those who use them – his staff. Wandering around the office he inquires as to how and why staff do what they do and likewise how they would ideally like the processes to work. Based on these responses he then tries to fi nd a compromise that lies somewhere between efficacy and security. There are obviously some processes that are unavoidable such as audit trails, which are required by legislation, but even in this case Gay says that this doesn’t necessarily have to be done the hard way. “In my experience there are easier ways to do things and still be as secure and have the same risk mitigations. You just have to think outside the box,” he says. But, he stresses, this can’t be done by just looking in from the outside, it requires that you work with your staff so that you can become an integral part of the solution rather than the problem. And this pretty much sums up Gay’s management style in general. “I think Tom Peters coined the term ‘management by wandering around’ some years ago. If you sit in your office you’re going to see symptoms. I’m naturally an inquisitive person, wherever I’m working a business I want to be part of it, part of the sales process and part of the delivery process,” he says. “As the CISO I have to be part of the security process, but this is just part of the quality delivery of the organisa-
tion. So by being out there and by being an integral part of it and by knowing what people are doing, what they are trying to do and by knowing what is failing, I get to see the things that are actually going to happen to us. So although I get to see the symptoms, if I haven’t predicted something happening, then I haven’t done a very good job,” explains Gay. Th is wandering around is also something that he encourages his staff to do so that they too can understand how things can be done better. “Part of being a CISO is making sure that the next generation of CISOs understand the thought process, the risk management process and the risk assessment process,” says Gay. “So quite often
10:1 Cash Passports are expected to out sell travellers cheques during 2010.
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I won’t come up with a bright idea, in fact I try not to. I try and get my people to do the same sort of analysis that I do.” But as much a Gay likes to be in the thick of it, he admits that being on the frontline and seeing every problem that arises is not actually very realistic in his job. So he relies heavily on the feedback from his user base as to the problems and failures they experience. But despite the proactive and interactive approach of Gay and his staff, it is still necessary to implement some kind of measuring process in order to judge performance. Th is is an integral part of business intelligence. “I think there has fi nally been a realisation that we can no longer have people wandering around in white lab coats, but if you can’t measure something, how can you see whether you are doing it well or badly?” asks Gay. “The only way to measure things is to have that intelligence behind it as an integral part of the quality delivery of a business. Your metrics are just as important as the fi nancial performance of the company and the market impact that you have,” says Gay. Another aspect that he rates very highly is the need to look outside of Travelex at the whole security industry rather than just at the fi nancial services industry, in order to learn what the tools of the future will be. Academia is an extremely important source of information for Gay and he monitors it to see what is occurring in encryption technology, banking and in the credit card arena, which is particularly pertinent since Travelex recently launched its own prepaid cards. “I’m halfway through a Ph.D. at the moment because I believe that by interfacing with academia, understanding what academia is thinking and helping it to understand the problems that we face, then we have a joint approach to solving some of those problems. You have to interface with everybody that has an opinion. You don’t necessarily have to take those opinions on board, but opinions will form the body of knowledge that you use to move forward,” says Gay. He is already doing this with the likes of web 2.0 and the cloud and plans to do so with regards to the newer mobile technologies. “I look at some of the industry forums, not necessarily the security industry, but wherever people are looking at new ways of doing things and at new ways of breaking things. If they’re going to break, they’re going to break in an insecure manner, so I want to know their ideas are on how to stop them from breaking in the future.” Regarding mobile technology, this is something that Gay welcomes and he says it is something that Travelex will have to get involved in otherwise it risks not being in business at all. “Mobile is what people are saying is going to be the new contactless technology. We need to embrace the way that people are going to be using it but also under-
stand that we then have a duty to educate our customer base, not just our employee base,” says Gay. He goes on to explain that there is an important distinction between those who have to learn to adapt to this new technology – digital immigrants – and those who have grown up with the technology and are comfortable using it – so-called digital natives. Digital natives, he says, are the people that he will be doing business with and they need to ensure that they are in a position to do that as seamlessly as possible. “They don’t want to know about passwords and authentication and whether it’s a BlackBerry or an iPod. They just want to know that they have communicated with you, that they have a request for service and whether we are fulfi lling that service correctly or not, because if we don’t they are going to go somewhere else,” he says. “We’re not there today and I’m not going to pretend that today we are ready for iPods and BlackBerrys, but we are actively embracing where we need to be. “So my job as CISO and as part of the information technology team is to help the business embrace the new world willingly,” says Gay explaining that he has a fantastic group of executives behind him. “My boss has been made responsible for mobile technologies, which is great because I’ve got a really great relationship with my boss and I can try new stuff out there and I don’t have to explain to 100 people on a committee. I can just go to my boss and say ‘Let’s have a try at this’ or ‘Let’s have a look at that’,” he says. Having a supportive executive also makes it easier for Gay to sell information security. By all accounts this is no easy task as you are selling something for which effectively the very best outcome you can hope for is nothing. “In a lot of the fi nancial services areas nothing is a pretty good result and by having a supportive executive it’s not that difficult to sell the need,” says Gay. “The quantity is always a difficult discussion in any business. I would like to have perfection. The executives would like to have perfection. We look at the cost and we balance the risk with what we are willing to pay. In an industry like ours where we are in the business of risk, we take a risk on a daily basis and that risk decision is made by the executive on an informed basis. It’s my task to make sure that they have all the information to make that decision. Sometimes its quantitative and sometimes its qualitative. “Sometimes its just a plain-old case of ‘I’ve been doing this for so long and I can tell you that there will be a problem if we don’t do this’ and luckily, with the respect I have from my boss and the executive, if I have to pull that one out of the bag they say ‘Well if you really believe that then we will go with you, but don’t play that card too often’.”
“My job as CISO and as part of the information technology team is to help the business embrace the new world willingly”
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INDUSTRY INSIGHT
The weakest computer security link Juraj Malcho outlines some of the common tactics used in social engineering techniques designed to convince computer users to download malware and divulge sensitive information.
W
hile exploits targeting holes in computer soft ware are on daily order, we are presently seeing a rise in social engineering techniques. Computer users are relatively easily duped into downloading a slew of malware – ranging from rogue antivirus solutions, to bogus applications, free music and adult content. In order to view this content, many of these “apps” require the user to first install a video codec or ActiveX component, which makes the user into easy prey for encrypted, password-protected threats. Social engineering, in short, encompasses a set of fraudulent techniques, strongly aided by a psychological aspect, with the aim to trick computer users into performing a desired action.
The human predicament The issue of social engineering is fast becoming the topic of the day. The fact that we humans are social creatures predisposes us to become the weakest link in the proverbial security chain. The knee-jerk reaction to what we are up against seems to be to push more education and awareness about these types of threats. Many experts, however, are skeptical. Everything related to malicious code is evolving at a phenomenal rate – the code itself, the delivery techniques and the tricks to dupe users. Some attacks out there may be quite amateurish, but many bear the signs of professionalism with all the hallmarks of credibility. Phishing scams can be very convincing – often with uncanny resemblance to the original source. Presently, we are seeing ever-more directed attacks, designed to go after specific information. To increase their effectiveness, the ploys often contain an impressive amount of detail, complete with the victim’s intimate personal data.
Storm Worm, aka Win32/Nuwar, is a piece of malware that can be infamously dubbed the present-day master of social engineering. Its name was inspired by fake pieces of news used during the early stages of the worm’s spreading. In November 2006, when the worm had been distributed in emails, it contained subject headings straight out of an apocalyptic thriller, announcing “Putin and Bush starts NUCLEAR WAR! Check the fi le!” or “Nuclear War in Russia! Read news in fi le! ”
“The fact that we humans are social creatures predisposes us to become the weakest link in the proverbial security chain” After a fierce windstorm had swept across Europe in 2007, the worm was announcing “230 Dead as Storm Batters Europe.” The similarity in the structure of the worm’s variants wasn’t evident in the beginning, thus the new worm was simply dubbed Storm, (Stormworm). Since then, the worm has been using all major world headlines to fi ll in the subject of spam it sends – and registering a high success rate. What is interesting about this particular form of malware, compared to similar phishing threats, is its low graphical quality. It’s not that the malware’s authors could not do any better – it’s just that their model meets the threshold criteria to arouse the curiosity of the target audience. It is a well-known fact that people are
drawn to bad news, making this an important psychological aspect behind the attack’s design. Similarly, in light of the financial crisis, people have been caught by scammers using fake news concerning their financial institution. Suddenly, an email would appear announcing “Wells Fargo is buying Wachovia” and you happen to be Wachovia customer. Next thing you know, you are requested to “update your records to help us with the merger.” Needless to say, many people actually fell for this ploy and volunteered banking information they would often think twice about sharing with their spouse.
Some tips to stay secure Be suspicious of emails from unknown senders. Use a trusted security solution to scan all email attachments before opening or downloading them. Do not discuss any important information via unsolicited emails (or phone calls, for that matter) without verifying first the authenticity of the sender. Know that most legitimate fi nancial institutions will not ask you for sensitive account information via email. Wishing you safe browsing and emailing in cyberspace. Juraj Malcho currently works for ESET as Head of Virus Laboratory. He joined the company in March 2004 as a virus researcher, responsible for threat detection and research. He has given presentations at several security conferences, including ISOI and Virus Bulletin, and has been actively participating in AMTSO.
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LEADERSHIP
As the worldwide Chairman for Saatchi & Saatchi and the man responsible for rescuing the business and several US firms from collapse, Bob Seelert’s corporate credentials are exemplary. Now he has decided to share his management and trouble-shooting secrets with aspiring business leaders in a new book. Diana Milne meets him to find out his pearls of wisdom.
The voice of
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H
aving built a reputation as an ace trouble-shooter with numerous high profile company turnarounds under his belt, the indomitable Bob Seelert is not a man who accepts failure – in any area of his life. Describing the standards he expects from his employees, he recounts the instructions he gave to his PA on her appointment: “The standard of performance for your job is what I call flawless execution. What I mean by that is you will ensure I am always in the right place at the right time, fully prepared with everything I need in order to perform and that will happen 100 percent of the time. It will happen flawlessly, I’ll never be late and I’ll never be in the wrong place.” Even his leisure activities are pursued in the ruthless spirit of uncompromising perfection. Seelert is a keen golf player, but admits even off the course, his competitive streak won’t rest: “I try to perform at a high level on the golf course. I don’t go out there for a social or relaxation type of thing. I go out there to try to post a good score.” While one can’t help sympathising with Seelert’s PA, it’s this uncompromising approach to life that has driven Seelert’s phenomenally successfully career. After graduating from Harvard College in 1960 he embarked on a 23-year career with General Foods Corporation which ended with him becoming Worldwide CEO of Coffee and International Foods and overseeing one of the biggest mega mergers in US corporate history, the acquisition of General Foods by Philip Morris in 1985. This ability to hold the reins of a company steady in times of turbulence provided the impetus for Seelert’s future career as a corporate turnaround king. To date he has executed turnarounds at the likes of Kayser Roth, a leading leg-wear manufacturer and Topco, a US grocery co-operative. His biggest coup however was the transformation of Saatchi & Saatchi in 1995. At the time when he took over, the Saatchi brothers who founded the agency had been ousted following a rebellion by the company’s board members and went on to form the rival agency M&C Saatchi. Senior figures from the new agency soon defected to the new rival and the company lost around €46 million worth of revenue in the space of weeks. As the company teetered on the brink of collapse, Seelert was appointed as CEO of Cordiant, the UK holding company that was formed following the shareholder revolt. In 1997 he moved the company’s headquarters to New York and was made Chairman of the company. He masterminded the merger in 2000 of Saatchi & Saatchi with France’s Publicis Group at a share price 450 percent higher than the starting level. Ever since the company has improved its financial performance yearly.
Getting results For Seelert taking on Saatchi & Saatchi was the biggest challenge of his career. “The thing I’m most proud of is
when I came into Saatchi & Saatchi in 1995,” says Seelert. “When the Saatchi brothers were ousted by their board six percent of the revenue had walked out of the door. They’d gone across town to start up a new and supposedly rival agency. The company was losing money, it was literally burning cash. It had too much debt at too high an interest rate. Soon everybody in the company and all the clients were asking ‘should I stay or leave’. That was a really difficult situation. A friend of mine called me at the time and said ‘congratulations but you’d better enjoy it fast because it won’t be there in three months’.” Seelert believes a large part of his success in transforming the company’s fortunes was due to his strategy of being a gs very physical presence in the offices. “One of the things ce that I did was to get a very significant personal presence e. I with as many offices as possible as quickly as possible. lledidn’t isolate myself in an office and just send out bulletion tins. I think I immediately gave some sense of inspiration and leadership that things were going to work out ok. I got around to offices that accounted for 65 percent of our worldwide revenue within the first six months that I was there. I met with the top 20 clients and with the 10 leading shareholders who owned more than 60 percent of the shares. So I was in 24/7 mode and I was an in-your-face personal presence trying to inspire people and give them confidence that we were going to survive and prosper.” It’s this inspiring leadership that Seelert now hopes to impart to the rest of the world’s aspiring or current business leaders in his novel Start With The Answer. The book contains a series of business lessons based on his own experiences, including leadership case studies, personal conduct and turnaround practices. In the guide, Seelert, claims to offer “timeless wisdom for aspiring leaders”. He says he believes that although the leaders of today face very different challenges from when he started out in his management career, the basic principals remain the same: “The whole challenge of leadership and how to be a great leader is the same today as it was back when I got started. Leaders fundamentally have to do three things. They have to set direction for the enterprise, establish standards or expectations for how the enterprise is going to perform and they have to unleash the energy of the organisation.”
Making dreams come true One surefire way to unleash this energy, claims Seelert, is to set in stone the company’s “inspirational dream” – a message that should be conveyed, preferably, in just 20 words. “Martin Luther King didn’t get up at the Lincoln
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Memorial and say ‘I have a vision’, he said ‘I have a dream’. Because dreams are a very powerful thing. We created Saatchi & Saatchi’s inspirational dream in 2007 and it is ‘To be revered as the hothouse for world changing ideas that create sustainable growth for our clients.’ That’s 17 words. You should do this in 20 words or less which is very hard to do. But it’s because you want everybody to be able to, in theory, tape that strategy to their forehead. It should be short and memorable so every single person in the company knows what it is.” Also key to inspiring employees is to set high standards for the company’s performance, from the start, says Seelert: “One of my core values is a belief in the long term, in growth, continuous improvement and out competing all of the companies in our peer group. Maybe some people don’t set expectations high enough and don’t encourage people to come forward and perform at a level that they are really capable of. The coach of an American football team had a great motto: ‘ask a lot of your people, expect a lot of your people. They will usually meet it’.” But does this sort if idealistic leadership sit well with employees at a time of economic turmoil when companies face the daily threat of revenue loss and job cuts? Seelert admits the CEOs of today face very different pressures from those he encountered in his early leadership career,
but says he believes an “inspirational dream” and leadership can carry a company through any crisis and enable its core values to remain intact: “Of course, we’ve been caught up in the difficulties of the 2009 economic environment. But we haven’t changed a word of our inspirational dream. When you can write it and sustain it in good times and bad it’s a really powerful statement that can go on forever. Are there more pressures for leaders today? Yes. Is there a faster pace and more wide ranging considerations including political, social and global considerations? Yes. But is the fundamental role of the leader any different today? No. He still has to do the same basic things.” Indeed, Seelert has had plenty of experience of leading a company through times of crisis, having specialised in company takeovers and turnarounds. He describes the experience of running the Maxwell House coffee division when severe weather conditions destroyed a crop of coffee trees: “One of the most demanding operating environments that I was ever in was when I was at Maxwell House and was going through the consequences of what was called the “black frost” in Brazil. The frost actually killed off all the coffee tress and dramatically changed the price of the raw material for us by billions of dollars in a very short period of time. Figuring out how to survive and prosper in the coffee industry through that period was an extremely
BOB SEELERT’S 10 GOLDEN RULES OF LEADERSHIP 1. When formulating goals, start with the answer and work your way back to the solution. Do not get bogged down in the morass of yesterday. Get going toward where you need to be in the immediate future. 2. Get out in front of people immediately and position yourself as the new leader in the company. Tell them who you are, what you believe in, why you are there, your perspective on the situation, and how you intend to proceed. 3. Bring an extraordinarily high sense of urgency to what you are doing, but also look before you leap. People are anxious for results, but this is no time for dead ends. Think carefully about everything you do, but keep moving. 4. Do not sit around headquarters! Get out to where the work is done – plants and field offices. You need this input, and you need to be a motivating force for people. 5. Go out and listen to customers and clients. At Kayser-Roth, one of my first visits was to Wal-Mart. They told me, “Mr. Seelert, we are concerned about the viability of your company as a supplier.” Two years later, we were named their vendor partner of the quarter. If I had not personally gone there to listen and learn, I doubt that this would have happened. 6. Listen to everybody in the organisation who offers an opinion about the business — don’t just hang around with the people who report to you. There are two sides to all coins and stories. You need to understand both. If you can, meet with your competitors or the heads of similar organisations.
7. Recognise that you cannot get the job done alone. Open communications and clearly assigned accountabilities are essential. Your visits to locations provide the forums for rallying and directing the teams, as well as quickly identifying the true talents across the organisation. 8. Lay out your vision, purpose, values, beliefs, objectives, strategies, and plans for accomplishment as quickly as possible. People cannot really get going until you set the right direction. 9. If you do not have the internal resources to get the jobs at hand done, do not be afraid to use outside resources. At Cordiant, we employed Price Waterhouse Business Turnaround Services. At Kayser- Roth and Topco, we hired Luther & Company. 10. Develop the short list of critical priorities and stick to it. At Cordiant, it was two things: stabilise clients and staff, and refinance the company. Accomplishing these two goals set the stage for everything else.
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Advice to the young at heart Bob Seelert offers his advice to first time company leaders:
It’s terribly important to know who you are, what you stand for and then to carry that through your career. Ask yourself what the values, beliefs and principles are that you subscribe to and how you carry those forth. For me those have always been a belief in the long term, in focusing on growth, fostering continuous improvement and out-competing our peer group. So you need to rally your organisation, and recognise and reward your employees for their accomplishments. I always stand for the same things so people know who I am and what they can expect. My hope has always been that that has provided inspiration to them and that I’ve led an organisation they have wanted to be a part of. And that’s brought out the best in them and in the company
There has been a 10% worldwide plunge in the media spending in the past 10 months
challenging operating event. Initially the cost of raw material increased by 700 percent and the crisis played out over five years.”
A sign of the times Although he sticks to his belief that economic circumstances have not created a new leadership template, Seelert acknowledges the dramatic ways in which companies’ relationships with their customers have been affected by technology such as social media. The advertising industry has been on the front line of these changes and having been hit hard by the economic downturn, with a 10 percent worldwide plunge in media spending in the past 12 months, it must adapt to survive. Seelert describes the way the advertising industry has transformed following the advent of digital media: “The internet allows instant access and instant gratification on any issue or any communication. This is having a tremendous impact on our business. When I first started in business, I could have a print and television campaign to launch a product in the United States, which would reach 90 percent of American consumers four of five times within a four-week period. Now that’s completely impossible because media is so fragmented. We used to intrude into people’s homes. Now we need to get invited in by them. We don’t want to bludgeon people over the head with messages now, we want to make connections with them. We live in a world of incredible
social interconnectedness now.” He goes on to say, however, that he believes there is still a place in the global business market for traditional media: “The digitally driven world is having a tremendous impact on a lot of mediums, but I don’t think they are going to go away. Some mediums last year were down by as much as 30 percent while the digital world was up by 12 percent. But I don’t think any of these things are going out of business. They are just going to have to find their new place in the sun.” Although he believes the worst of the economic decline is over in the US, he no longer views it as Saatchi & Saatchi’s priority market, predicting that it will be taken over by China – the next stop on his tour of the company’s global offices. “My own view is that we have entered into what I would call the Asian Century and more specifically the Chinese Century. I’m very big on China. It is an incredibly dynamic, growing market, which has fantastic prospects. So if you asked me where I thought the growth was going to be I would say it would be there.” Going on to describe other emerging markets with high potential, he says: “Some of the African countries are growing rapidly in our business as are the Latin American countries. But the Western World is in a different mode right now. It is struggling to recover and media spend in the US for instance, will be down in 2010 for the third consecutive year.” For Seelert, entering the more creative world of advertising represented a major departure from the more pragmatic manufacturing industries he had been accustomed to working in. Summing up the differences between the two worlds, he says: “Our business is all about people and ideas. We don’t have any factories or formulas, products or manufacturing capabilities. Our only assets go up and down in the lift every day. These are very intangible, soft kind of assets as opposed to factories and production lines”. He says too that: “Here at Saatchi & Saatchi we have a lot of right-brained people who are creative and see the world through a different pair of glasses than a left-brained person would. Manufacturing companies have more left brained kinds of people which is why we always hired advertising agencies to get access to the right-brained people who could generate insights and ideas to help build our business.” When asked, however, whether these rightbrained creatives make great leaders, he says: “When you’re leading a public company that all comes together in a profit and loss kind of statement, you have to have a certain quantitative appreciation and understanding of how revenue comes in at the top and turns into something called profit at the bottom.” It’s quite clear then which category Seelert falls into. Having masterminded numerous company turnarounds in industries as diverse as creative advertising, fashion and coffee production his ability to generate profit and performance perfection in good times and bad is one any aspiring business leader should learn from.
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Travel I Gadgets I Books I Leisure I Money
Downtime
Get ready to play Rocker Dave Stewart lifts the lid on his business knowledge in his book, Business Playground.
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GADGETS & BOOKS
CITY GUIDE
LAZY DAYS
PHOTO FINISH
A look at the latest tech and book releases
We jet south to sample charming Buenos Aires
A motor yacht that won’t break the bank
Things turn ugly in Greece’s capital
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CREATIVE THINKING
Get ready to play Adding author to his extensive resume, rocker Dave Stewart is releasing a book, Business Playground, divulging his business tips, revealing why creating a culture of creativity – and allowing some playtime – is the key to success.
A
s one of the most respected and accomplished talents in the music industry – achieving over 100 million album sales with Eurythmics partner Annie Lennox – Dave Stewart has long been at the forefront of musical innovation. Now, he’s turning his hand to revolutionising the world of suits and corporate boardrooms. The transition from musician to business coach isn’t the most obvious of progressions – but, as Stewart explains, rock stars have more in common with business executives than it might appear at first glance. “People in pop are often involved in complex contracts and complicated deals or negotiations,” he says. “A lot of them don’t take any notice of what’s going on – they have managers taking care of it. I was one of those people who was asking about parts of the contract I didn’t understand, and then immediately you’re engaged in a business conversation, just as you would be if it was a company making biscuits and you’d have to talk about everything from retail and finance to marketing. Basically, you have to understand how a business works if you’re in it.” Over the past 25 years, Stewart has built up a wide range of business experience. When the Eurythmics stopped recording in the early 1990s, Stewart began directing shorts, taking photographs and working with advertising agencies and it wasn’t long before he was asked to do some presentations on his creative background. “Creativity, even then, was an overused word and bandied about all the time – it’s like, yawn. But one thing I did demonstrate was how to make a commercial for US$10 using an eight-millimetre camera. And I slowly started to become prescient in terms of foreseeing how the future would be influenced by technology and all that stuff.”
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After receiving invitations to all sorts of industry events, it wasn’t long before Stewart began meeting people outside the music business in a variety of different sectors, and from there it was just a short step to the point where he began doing consulting work. In February 2008, in what seemed like an odd pairing, Stewart was named a founding member of Nokia’s new Artist Advisory Council, an initiative created to foster an artist-friendly environment within the company, and is an official Change Agent for the firm. Stewart, with strong ideas on how technology and digital business models could benefit acts and their fans, and Nokia, one of the world’s most progressive communications companies, are together striving to help fans and artists better connect and communicate through social networking capabilities. Last year, he was named as one of Fast Company’s 100 Most Creative People in Business. Now, he’s putting his experience to good use. The subtitle of his new book, Business Playground, is Where Creativity and Commerce Collide – and Stewart explains that it focuses on two worlds that have been forced together. “When the internet happened, a lot of smaller, entrepreneurial companies recognised its potential, whereas a lot of huge corporations just didn’t understand why people weren’t going to their websites. They started getting in creative people and creativity suddenly became important; the rise of companies like Facebook that were created in a garage or a college dorm really turned them on to the possibilities.” Stewart wrote the publication in collaboration with Mark Simmons, author of Punk Marketing, who has been involved in many huge advertising campaigns as well as having been an advisor to the Bill Gates Foundation. Stewart explains how the duo got together: “We decided to write the book from both our points of view married together and then go out and interview people in companies. And then we wrote anecdotal things about stuff I’ve experienced with fun, creative games that make your brain think differently – you’ll see it in the book, it’s fun and it’s defi nitely not a business textbook. “It’s like there are a series of unconnected dots that are what make creative thinkers win. When we interviewed Paul Allen from Microsoft, for example, he talked about how he was walking past a newspaper stand when he saw the front cover and noticed an article about a particular company. And he could have just walked past the stand, but in his head, something went boom, because it was connected to something that he was working on with Bill Gates at the time. When he went to meet this company and heard about the operating system they were developing called Q-DOS, Paul said at that moment he could almost visualise laptops.” (Gates and Allen later reinvented Q-DOS as MS-DOS and redefi ned the computing landscape.)
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Stewart explains that the book is meant to shock your brain into thinking in ways that you hadn’t previously considered. “The book is very humorous and it’s poking fun at traditional mores, but on the other hand it’s got a slant to it that points out that your business won’t survive unless you admit and welcome in these kinds of thought processes,” he adds. The book is designed to reveal all about what businesses and entrepreneurs need to know to nurture a culture of creativity within their organisations, and Stewart explains that the book is aimed at anybody who’s interested in learning more about creativity in business – from a teenager who wants to start a band, to huge corporations, to small businesses with two employees. “Obviously some companies are better at looking after this creativity than others, which is why the book focuses on fi rms like Google and Pixar where employees are incentivised to come up with ideas.” But of course, there is more to building a creative culture than funky-shaped chairs and beanbags. “It’s all about creating an atmosphere in which people are free to express themselves, as opposed to sitting at the end of a great long table as an underling and not feeling as though you can say anything,” says Stewart. “There have to be moments and times where everybody is comfortable and involved enough to be able to say something. Japanese companies have been doing it for years, but there are still so many companies out there that see themselves as rigidly fi xed as to who or what they are.”
In review Through a quirky selection of ideainducing games and stimulating stories, Dave Stewart and branding guru Mark Simmons reveal how to rediscover your creative side with lessons from innovative companies like Google, NASA and Nokia. Business Playground is a fascinating take on the impact of creativity on business success, with an interesting selection of games designed to take you out of your comfort zone and help you start thinking from an opposing point of view. Overall, an alternative to a heavy-going business manual and a must for the bookshelf, with a fun take on many vital business sectors – get ready to play.
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GADGETS
The latest tech to tug at your purse strings
T Samsung UE467000 Since James Cameron’s Avatar smashed box-office records with its jaw-dropping threedimensional visuals, the whole entertainment industry has gone 3D crazy. With fi lms, video games and sporting events all being given an extra dimension, it didn’t take long for television manufacturers to latch on to its potential for the home. Korean electronics firm Samsung has just released its svelte 46-inch model boasting 3D capabilities, although viewers will still need to don the silly specs (just two pairs are thrown in with this €2000 unit). This is definitely a piece of tech to wow your friends with; however, one huge downside is the lack of 3D content available at the moment; although 3D Blu-ray players and dedicated 3D channels are on their way. Good things come to those who wait.
S Sony Ericsson Xperia X10 The past year or so, Sony Ericsson has found itself losing ground to its rivals, particularly in the smartphone market. To redress the balance, the Japanese-Swedish manufacturer has released the singing all dancing Xperia X10 running on Android. The unavoidable selling point is the massive VGA high-resolution screen – it dominates the front of the device. The generous fourinch screen size means the X10 is slightly on the porky side at 13mm thick and 135g in weight but this phone is packing a lot of kit, including an 8.1 MP camera, GPS, 348MB of RAM and 1GB onboard storage. It also has a 3.5mm headphone jack. Can the X1 dislodge Apple’s crown? It’s unlikely but Sony-Ericsson have made a fi ne stab with this handset.
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26/5/10 16:09:26
DOWNTIME 139 BOOK REVIEWS W Apple iPad After months of waiting, Apple has fi nally unveiled its latest piece of shiny new tech in Europe – the unimaginatively named iPad. Apple believes its new tablet-style device will occupy a gap in the market between an iPhone and a MacBook. For the critics (of which there are many), therein lies the problem; it’s too big to fit in your pocket and too impractical to replace a laptop. There’s no denying the iPad’s seductive curves and glorious 9.7-inch screen will have Apple fans’ palms perspiring, but its ability to garner mass-market appeal looks unlikely. For starters, it cannot run Flash and it won’t even allow you to multi-task. It also has no USB port, no SD slot, no camera and no GPS. In essence its an iPhone on steroids.
Casting an eye over this quarter’s new book releases Building Strong Brands By David A. Aaker With this issue of Business Management putting brand crises under the spotlight, it would be pertinent to look at a book that gets to the bottom of winning marketing and branding strategies. Aaker’s book discusses the secret’s of blue chip companies such as McDonald’s, Kodak, Smirnoff and Harley Davidson, how they have successfully built huge brand names and where others have tried and failed failed. It’s packed with anecdotes, facts, figures and graphics that convey Aakar’s points in a clear and concise way. BM says: A must read for any CMO or CEO looking to raise their company’s profi le.
T Flip Mino HD 8GB It’s amazing to think how much camcorders have shrunk in size from the days when you needed put on a back brace before hauling a breeze block-like piece of kit up on your shoulder. The pocket size Flip Mino is about the same size as a chunky mobile phone and records in HD, capable of capturing 120 minutes on 8GB of built-in memory. A convenient USB arm fl ips out from the side of the unit for transferring video to a PC or Mac, doing away with the need for scrabbling around for a USB cable. The easy-to-use FlipShare soft ware allows you to edit, email or upload video to YouTube or MySpace. Th is is a point and shoot camcorder that even the biggest of technophobes would not have any trouble getting to grips with.
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Austerity in Business: 39 Tips for Doing More with Less By Alex Pratt With the European economy in a tailspin and countries like Greece on its knees, we could all do with advice on business in these especially lean times. Alex Pratt, an award-winning entrepreneur and one of the UK’s leading business figures, has produced a book that, although small in size and just 220-pages in length, is packed with advice and practical examples highlighting, as it says on the tin, doing more with less. The insightful quotes from sages of business every few pages are fascinating too. BM says: A light-hearted read with great advice that needs to be fully absorbed.
How Remarkable Women Lead: The Breakthrough Model for Work and Life By Joanna Barsh, Susie Cranston and Geoffrey Lewis
Th is book is based on five years of proprietary research and raises provocative issues such as whether feminine leadership traits are better suited for our fast-changing, hyper competitive and increasingly complex world. The writing is concise and easy to follow as the authors guide you through how and why women succeed in business, particularly male-dominated environments. BM says: Interesting and thorough lessons based on the accounts of successful leaders.
26/5/10 16:09:29
DOWNTIME 140 CITY GUIDE
Buenos Aires Argentina’s capital is rich in culture, history and charisma. A thriving metropolis where the old world charm of Europe meets the seductive spirit of Latin America, Buenos Aires is one of the most enchanting cities on earth.
Time: -3hrs GMT Currency: Peso Dialling code: +54 Airport code: EZE About Argentina’s capital is one of the most cosmopolitan cities in the Americas. Home to around one third of the country’s population, Buenos Aires is an alluring metropolis that boasts European style architecture, gourmet cuisine and a buzzing café culture. Each year, the city attracts great numbers of visitors, arriving in search of Argentina’s tango heritage, famed museums and galleries and legendary parrillas (steak restaurants).
Getting around The Subte (underground system) runs regularly beneath the streets of Buenos Aires and is by far the quickest way to move around the city. Like most cities’
metro systems, the Subte can get very busy at rush hour, though avoiding the roads makes it the most efficient method of transport. The city’s black and yellow taxis patrol the streets 24 hours a day. They are relatively cheap, but be sure that you are charged by the meter and use small currency denominations wherever possible. For a cheaper option try the city’s bus system, that has many routes running 24 hours a day.
The Argentinean Open Polo Tournament takes place at the 16,000 capacity Campo Argentino de Polo in November every year.
Eat Tomo 1 Some of the finest in traditional yet elegant Argentine dining that Buenos Aires has to offer, with a simple yet chic décor and an expansive wine cellar. Main courses start from €13 Caseros For an understated yet sumptuous dining experience, Caseros is the place to go. This unpretentious brasserie serves locally sourced dishes prepared to a high standard at modest prices. Set lunch menu €7. Evening main courses start from €6
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Dos and don’ts
Sleep Magnolia Hotel This elegant boutique hotel is tucked away down a cobbled street in the heart of the city’s Palermo district. A classic town house that has been restored to a contemporary yet charming hotel, Magnolia benefits from original features such as the quaint courtyards as well as exceptional staff. Rates: Rooms start from €130 a night CasaSur Hotel Chic and stylish, this is one of the most sophisticated hotels Buenos Aires has to offer. Situated in the distinguished Recoleta district an easy distance from plenty of galleries, CasaSur boasts a luxurious spa and gourmet restaurant steeped in rustic charm. Rates: Rooms start from around €160 a night
• Avoid taxi scams by insisting that the meter is running and appearing to know where you’re going. • It is customary in Argentine culture to greet the oldest or most important person of a party first. • Argentines like to do business with people they know and trust, and prefer a face-toface meeting rather than impersonal telephone or written communications. • Appearances are important. Whether you’re going to dinner or to a business meeting, formal yet stylish attire will carry you a long way.
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From the airport Ezeiza International Airport is located 35 km south west of central Buenos Aires and serves around five million passengers each year. There are a number of shuttle companies, such as Manuel Tienda Leon, that run between the airport and the city centre, departing every half an hour. For a more direct route to your hotel, try one of the numerous taxis that wait around the airport reception area, but be sure to avoid touts. Taxi Ezeiza and GCBA cost around €20 to the centre of the city. For a more extravagant introduction to Buenos Aires, try Silver Star Transport. US expat Fred will pick you up from Ezeiza in his town car and show you the sites of the city before dropping you at your hotel for €61.
Relax You would be hard pushed to visit Buenos Aires and not experience the spirit of tango. Argentina is the home of this seductive dance and for one of the best shows in town try Bar Sur, an intimate and exclusive venue exhibiting traditional tango at its fi nest. Those looking to take to the floor themselves might pay a visit to the Centro Cultural Torquato Tasso. People visiting the city between
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September and November can enjoy a refi ned trip to the Campo Argentino de Polo to watch a polo match. If you are looking for something slightly less tranquil spend an afternoon at Estadio Alberto J Armando (La Bombonera) experiencing the thrills of Argentine football first hand. For the ultimate way to relax in Buenos Aires however, simply take a stroll around the colonial streets and sip a freshly roasted coffee at one of the copious cafés.
See No trip to this culturally rich city would be complete without a visit to the presidential palace Casa Rosada. There is a public museum paying homage to past leaders of Argentina and visitors can check out the balcony that was the historical site of the Perons’ presidential speeches and subsequently immortalised by Madonna’s performance in Evita. For a taste of traditional Latin American art be sure to spend an afternoon at the Museo de Arte Latinoamericano de Buenos Aires (MALBA), which boasts one of the fi nest collections of the region’s art in the world. Other sites not to be missed include the 18th century Basilica de Santo Domingo and the arresting Reserva Ecologica Costanera Sur.
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LEISURE
Lazy days Find your sea legs with this stylish yacht.
M
ost of us dream of one day cruising on the high seas aboard our very own luxury boat but the chances of our numbers coming up on the lottery are about the same as Elvis being discovered alive and well. However, this motor yacht by Fairline won’t require a seven-figure sum to get a taste of the nautical high life – it retails in the UK from £195,000 excluding VAT. The Targa 38, which delivers remarkable performance on the water, is designed to sleep three people while the saloon has seating for six and features a state-of-the-art entertainment console. It also includes a comprehensively equipped galley with panoramic hull window, a spacious open plan cockpit and plentiful sunbathing areas for catching some rays under the Mediterranean sun. All I need to do now is put my house on the market.
www.fairline.com
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27/5/10 13:46:47
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26/5/10 14:43:17
DOWNTIME 144 PHOTO FINISH
A
laser beam is pointed in the face of a Greek riot policeman during a 10,000-strong anti-austerity demonstration in the centre of the capital, Athens. Greece’s debt crisis has been allowed to spiral out of control, forcing eurozone members to agree a US$146 billion bailout for the embattled south European nation. The eye-watering level of debt led to deadly protests on the streets and brought Athens to a standstill.
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26/5/10 16:55:56
Tibco AD.indd 1
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