business management issue 3

www.bme.eu.com • Q1 2010

IN THE DRIVING SEATCranking up Volkswagen’s IT with CIO Nick Gaines FOOD FOR THOUGHTWhy sustainability is top of Nestlé CEO Paul Bulcke’s agenda

PLUS Cloud computing: the truth behind the hype

Football boss Karren Brady on breaking stereotypes in business

“bigsoftieI’m a

really”BMEU COVER.indd 1BMEU COVER.indd 1 25/1/10 13:05:3725/1/10 13:05:37

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While the effects of the re-cession are still being feltacross many industrysectors, judging by theinterviews in this issue,

spending on IT projects is still in full swing.Few companies have been untouched by the

downturn with budgets slashed across the boardand job cuts being announced daily. But, ITseems to be one of the few areas that is still re-garded as a high spending priority. Take Kier forinstance. As one of the UK’s biggest buildingfirms, it has been hit hard by the recession, withorders for new projects in the UK believed to bedown by around 60 percent according to theproperty consultancy Vail Williams. In this issuewe meet the company’s Head of IT, Terry Walker,who says he believes the worst could be yet tocome for the industry, as orders for new projectsdry up. However, despite these harsh conditions,IT projects remain on course, with the company

customer satisfaction. It is also looking to investin the future in social networking related tech-nology, which would encourage Volkswagen carowners to let the world know about their latestpurchases. Meanwhile Kier’s new communica-tions network – though a huge financial invest-ment – will greatly improve the speed ofcommunication between customers and thosebuilding projects on the front line, whether athome or abroad. It’s a true sign of the times thattechnology no longer comes at the bottom ofcompanies’ spending priority lists. And evenmore so in a climate where they are looking forevery opportunity to slash costs in other areas.

Diana Milne Editor

having recently signed a €5.5 million contractwith Cable & Wireless for a new communicationsinfrastructure. The same is true for Volkswagen.Like all automobile manufacturers, it faced someof the worst conditions in its history last year.However, as we hear from its UK CIO, NickGaines, the company’s plans to overhaul its entireIT infrastructure and re-engineer core processeshave been untouched by the recession.

These stories reflect the fact that IT is beingused by companies as one of the most powerfulweapons in their arsenal when it comes to fight-ing back against the downturn. The short-termcost of investing in new IT systems is no longerdifficult to justify, even in these conditions, be-cause of the longer term return on investmentand innovation – in particular the ability of tech-nology to win customers and customer loyalty.Volkswagen for instance, is investing in a com-plete overhaul of its sales and CRM systems in abid to speed up the sales process and thus increase

“The trick is that most workingwomen have two personalities. Theyhave their home personality and theirwork personality and the trick is notto let either of those personalitiesdrain the life out of the other”Karren Brady, Vice Chairman of WestHam United (page 28)

“The first thing that we’re proud of is thefact that we’ve followed customer de-mand and listened to customers. That’salways been a problem in a large compa-ny because there are so many peoplewith opinions”Al-Noor Ramji, BT Group CIO(page 44)

“The roadmap is all about a clearand straightforward frameworkoutlining our strategic direction,which everyone at our company isaligned with and implements on adaily basis”Paul Bulcke, CEO Nestlé(page 40)

FROM THE EDITOR7

Technology matters Investing in innovation is imperative forcompanies hit by recession.

ED NOTE BMEU3_jan10 25/01/2010 15:06 Page 7

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32

28

CONTENTS9

Playing to winKarren Brady, football boss and star of TV’s The Apprentice, talksexclusively to Business Management about doing business in aman’s world

Food for thoughtNestlé CEO PaulBulcke onsustainability and therole the world’s biggestfood company has toplay in improvingglobal health

In the driving seat Volkwagen UK’s CIO NickGaines lifts the lid on hiscompany’s IT roadmap

34

CONTENTS BMEU3_july09 25/01/2010 13:10 Page 9

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44 A sharper focusAl-Noor Ramji, BT Group CIO, reveals howthe telecoms giant plans to keep ahead of thecompetition

50 Building connectionsKier Group’s Head of IT Terry Walker onbuilding an IT infrastructure to support theconstruction giant through the downturn

58 Straight talkHow Vodafone is taking a standardisedapproach to IT in a bid to slash costs

66 Welcome to the cheap seatsFind out what Europe’s most controversialbudget airline is spending its IT budget onwith Ryanair’s Head of IT, Eric Neville

74 The big questionIT managers reveal their top technologypriorities in Ernst & Young’s latest GlobalInformation Security Survey

80 Spinning the security webFrost & Sullivans’s Ekta Aggarwal puts ITsecurity under the spotlight

84 Business, interruptedDisaster recovery experts offer their advice onclaiming compensation for business losses

58

G O L D S P O N S O R

INDUSTRY INSIGHT

48 Xavier Martin, Alcatel-Lucent72 Kris Hardinan, Siemens Enterprise

Communications78 Roger Hockaday, Aruba Networks86 Stephen Hoare, Kensington

Security92 Geert Jansen, Red Hat108 Christina McKeon, Infor

EXECUTIVE INTERVIEWS

55 Odd Sverre Østlie, TANDBERG65 Ravi Pather, Psytechnics94 Dr Joseph Reger, Fujitsu

Technology Solutions GMBH112 Mark Creasey, iEnterprises Europe120 Thomas S. Senger, Kofax126 Thomas Bostrøm Jørgensen,

LUUP132 Chris Methven, IHS

CONTENTS11

ASK THE EXPERTS

63 Ben Hobby, BT Conferencing70 Thomas Jell, NETGEAR82 Sarah Whipp, Symantec88 Floris van den Dool, Accenture100 Brian Klingbeil, Savvis102 Fredrik Ring, Logica Group118 Colin Rowland, OpTier

90 Optimisation throughvirtualisationWith Saumya Upadhyaya of Frost and Sullivan

96 On cloud nineWe investigate the myths surrounding cloudcomputing

104 Switching channelsJohn Linwood, Chief Technology officer at theBBC, on why the broadcaster is undergoing adigital revolution


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123

128

114

CONTENTS13

114 Staying one step aheadStandard Life’s CIO Keith Young reveals howtechnology keeps the insurance giant ticking

122 Takeaway technology Meet the woman behind the technologytransforming the takeaway food industry: JaneKimberlin, IT Director of Domino’s Pizza

128 Action on energyEU Energy Commissioner Andris Piebalgsexplains the progress Europe is makingtowards securing sustainable energy supplies

134 Are you being served?Business Management grills MagueriteSequaris, CEO of the hospitality tradeassociation HOTREC, on the issues facing theindustry

G O L D S P O N S O R

16 The brief18 News 26 In my view 138 City guide140 Books142 The knowledge

REGULARS


Chairman/Publisher SPENCER GREENDirector of Projects ADAM BURNSEditorial Director HARLAN DAVIS

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Creative Director ANDREW HOBSONDesign Directors ZÖE BRAZIL, SARAH WILMOTT

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Find Out MoreContact CIO at (+44) 0117 921 4000

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The CIO Summit is a three-day critical information gathering of the most infl uential and important CIOs from across Europe.

CIO Europe Summit 2010

The Park Hotel, Bremen, Germany23rd - 25th February 2010

A Proven FormatThis inspired and professional format has been used by over 100 executives as a rewarding platform for discussion and learning.

“Great venue to meet with other CIOs and vendors in a single location; it really allows access to a lot of information in a short time.” George Vasquez, CIO, Community Medical Centers

“It was of great value to me to participate in the summit. I had a tough meeting schedule there, but would definitely like to participate in next year’s summit. I got some valuable information and good contacts for future business relations.” Birger Hague, CIO, Danske Bredband

A Controlled, Professional & Focused EnvironmentThe CIO Summit is an opportunity to debate, benchmark and learn from other industry leaders. It is a C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer networking, and coordinated technology meetings.

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UPFRONTTHE BRIEF16

Fellow eurozone recession vic-tim Greece may have returned toeconomic growth, on paper, in thethird quarter of 2009, but its debts –the heaviest in the EU – have dealt adevastating blow to the country’slong-term economic future.Currently its debt is estimated at amassive 113 percent of GDP. Its bud-get deficit, meanwhile, amounts to12.7 percent of GDP. The country’sgovernment has recently embarkedon a three-year plan to cut its budgetdeficit to 2.8 percent of GDP by 2012.However, a poll by Reuters shows an-alysts see a one in five chance that thecountry will seek a financial bailoutfrom the EU this year. Meanwhile in

December, the ratings agencyStandard & Poor’s downgrad-

ed Greece’s credit ratingand claimed the countrywas not capable of im-proving its financial situ-

ation without EU support.Ireland is another

country that has emerged fromthe recession, but with its economyanything but intact. In Decemberthe government announced itsGDP had risen by 0.3 percent in thethree months to September, beatingmarket predictions of a 0.1 percentrise. However, overall in 2009, theeconomy contracted by seven per-cent compared to the previous year.Industrial production dropped by10 percent while investment fell 35percent and construction, the pre-vious driving force behind theeconomy, plummeted by 34 per-cent. The situation has forced thecoalition government to introducedrastic cuts, including slashingpublic sector pay by five to 15 per-cent. Meanwhile, the country hasbeen left with a budget deficit worth12 percent of GDP.

2009 was a very bad year forIceland and with the country undermounting pressure to pay back a €3.6billion loan to Britain 2010 looks as

recover. In its latest gloomy outlookfor the country, the risk measurementagency Moody’s predicts that Spain’srecession will last well into the secondquarter of 2010. Meanwhile its GDPwill grow by just 0.2 percent this yearand unemployment will exceed 19percent. By December 2009 3.9 mil-lion people in Spain were out of work– 25 percent more than a year earlier.Its unemployment rates are twice the

When it was announced inNovember that the eurozone econo-my had emerged from recession, thefuture looked bright for the region asa whole in 2010. But a closer look atindividual countries paints a very dif-ferent picture with many predicted tosuffer the long-term effects of thedownturn, well into the year ahead.

Spain is believed to be the coun-try that will take the longest time to

EU average and rates are expected toreach 20 percent by 2011. The coun-try’s beleaguered housing market isthe source of many of its woes.According to Moody’s prices therehave fallen by 9.5 percent from theirhighs in 2008 and oversupply inSpain, which has around 1.5 millionvacant homes, will lead to a “long pe-riod of adjustment” for the country’shousing market.

THE BIG PICTURE

Spain’s recession is

predicted to last well into

2010

How a closer look at Europe’s financial situation reveals we haven’t seenthe back of the recession.

UPFRONT BM EU3:25 June 25/1/10 14:26 Page 16

UPFRONTTHE BRIEF 17

though it won’t be much better. In2009, Iceland’s economy suffered thebiggest fall in its history. The thirdquarter saw its GDP tumble 7.2 per-cent year on year while national out-put fell by 5.7 percent. The countrywent into complete economic melt-down following the collapse of itsbanking system. Together its threebiggest banks owe over €42.5 millionto foreign lenders and the govern-ment has been forced to seek billionsof dollars worth of aid from theInternational Monetary Fund. TheOrganisation for Economic Co-oper-ation and Development has forecastthat its economy will contract furtherthis year. Meanwhile the country’sgovernment has predicted thatgrowth will not return until 2011.

The countries of Eastern andCentral Europe have been hit just ashard as Iceland and worse thanmost other European countries,particularly as there were alreadyexisting structural economic prob-lems, inflation and budget deficits inmany of those countries. Bosnia, forinstance, had an unemploymentrate of 40 percent in 2009 and itsGDP contracted by three percent. Italready had €45 million in loansfrom the European Bank forReconstruction and Development.Bosnia has now received a €1.2 mil-lion loan from the IMF. The Balticstates have also been hit hard. Latviahas suffered the hardest with unem-ployment currently at 17.2 percentand external debt worth 124 percentof GDP, 90 percent of which com-ing from loans. Estonia has debtsworth 116 percent of GDP andLithuania suffered a massive 22.4percent decline in GDP in the sec-ond quarter of 2009. These detailsshow that while the EU as a wholemay have emerged from the reces-sion, enjoying growth of 0.2 percentin the third quarter, there is a longway to go before the finer details ofthe big picture tell the same story.

A security officer demonstrates a new full body scanningmachine on trial at the UK’s Manchester Airport. Thescanner x-rays to the depth of 10mm to produce anoutline of the person's body which is then used to detectconcealed, potentially dangerous objects

Several hundred people enjoy a flashmob snowball fight, which wasorganised through the internet between people living at Berlin'sdistricts of Kreuzberg and Neukoeln. The freezing January weathergripped Europe causing mass disruption and heavy economic losses

French soldiers carry the coffin ofPhilippe Seguin, the former Frenchpolitician and president during hisfuneral ceremony at Les Invalides in Paris

EUROPE’S NEWS IN PICTURES

People walk in front of the Yeni Cami Mosque in Istanbul at dusk. Istanbul has beendesignated as European Capital of Culture 2010 for a period of one year duringwhich it is given a chance to showcase its cultural life and development

Police remove an anti-war protestor afterhe displayed a burning mask outside theIraq Inquiry in London

Job seekers wait to be assisted at a state labour officein Szekesfehervar, Hungary. Hungary's jobless raterose to a record through November, leaving Europe’smost indebted eastern European nation to hand outmore welfare payments


UPFRONT18 EUROPEAN NEWS

FRANCE

The French banking giant Societe General(SocGen) has revealed it expects to writedown a further 1.4 billion euros in risky as-sets. SocGen announced it expected itsprofits for the fourth quarter of 2010 tocome in significantly below analyst expec-tations of between €850 million and €960million. Shares in SocGen tumbled 5.9percent following the news. The bank hadalready recorded write downs of €1.9 bil-lion in the first quarter and €1.7 billion inthe second quarter.

GERMANYNew figures released by the FederalStatistics office show that Europe’sbiggest economy shrank by five percentin 2009. The slump represented thebiggest contraction since World War IIfor Germany, which emerged from re-cession in the second quarter. The gov-ernment currently predicts growth of 1.2percent for 2010, however some analystspredict this forecast will be increased to1.5 percent. Carsten Brzeski of INGFinancial Markets told the BBC: “The re-cession is yesterday’s story. Today’s storyis the ongoing recovery. We expect theGermany economy to be the growth en-gine of the eurozone in 2010.”

UK

The UK faces a higher education melt-down if government plans to cut fund-ing go ahead, the leaders of the country’stop universities have warned. TheRussell Group, which represents top UKuniversities, wrote in the Guardiannewspaper that education standardswould be severely affected by the cuts.“It has taken more than 800 years to cre-ate one of the world’s greatest educationsystems and it looks like it will take justsix months to bring it to its knees”, thearticle stated. Universities across thecountry are facing cuts of over €1 millionover the next three years.


19EUROPEAN NEWS

SPAIN

Spain’s economic woes continue withnew figures showing the number of peo-ple out of work rose by 543,657 inDecember compared to November. Theyear closed with almost four million peo-ple unemployed across the country,794,640 more than in 2008. Employmentin December fell particularly sharply inthe country sector, plummeting by 7.56percent followed by a fall of 2.31 percentin the industrial sector. Foreigners faredworse with unemployment rising by37.85 percent in 2009 overall.

ICELAND

The Icelandic president has re-ignited adiplomatic row by refusing to sign aplan to repay the €2.6 billion the coun-try owes to Britain. The UK govern-ment paid compensation to UK saverswho lost money when the internet bankIcesave collapsed. However, OlafurRagnar Grimsson then declared thatthis decision had failed to take publicopinion into account and he has calleda referendum. Speaking in a televisedstatement, he said: “The people must beconvinced that they themselves deter-mine the future course.” This drew a ju-bilant response from Icelanders, onefifth of which had signed a petition op-posing the repayment plan.

GREECE

Herman Van Rompuy, the EU’s newpermanent president has met with theGreek Prime Minister GeorgePapandreou and announced the countryis now taking steps to address its crip-pling debt and public deficit. The coun-try is currently burdened with debt worth113 percent of its GDP. The country’s re-cently elected socialist government wasgiven until the end of January to presentits crisis plan for tackling the situation tothe EU. It has pledged to reduce thedeficit to 8.7 percent in 2010 by cuttingstate spending and tackling tax fraud. MrVan Rompuy said he was confident theGreek government was taking the neces-sary steps to address the situation.

UPFRONT


Small businesses are out oftouch with modern workingpractices such as home-basedworkers, according to a surveyby OneDrum. The surveywarns that small businessesshould streamline workingpractices and deploy flexibleworking practices to increasestaff productivity. Key findingsof the survey included the factthat over 80 percent of employ-ees stated they would be pro-ductive working from homeand less distracted by interrup-tions. Despite this, 61 percent ofemployers never offer employ-ees the option of working fromhome. Even though one thirdof employees said they could doall or most of their job fromhome, 55 percent of employersfailed to see that flexible work-ing could increase employeeproductivity. Phil Flaxton, CEOof Work Wise UK, said:“Employers looking to get themost from their workforce needto consider smarter and moreflexible ways of working. Thereare a number of technologiesthat support a productive homeworking environment.”

A UK telecommunications specialist has suc-ceeded in installing the world’s most southerlycall centre. The call centre was implemented atthe Neumayer III Research Station in the SouthPole, which is operated by Germany’s AlfredWegener Institute for Polar andMarine Research. The researchstation, which was equippedwith a call centre byNextiraOne, acts as a basefor scientific research in theSouth Pole. It is also used as alogistics centre for expeditionsinto the South Pole and for polaraircraft. It is manned by a team of ninepeople all year round, and the workforce swells to30 during the Antarctic summer.

Following the completion of the call centre,a direct satellite link now connects the Alcatel-Lucent Omni-PCX Enterprise system at the baseto the German institute’s headquarters inBremerhaven.

NextiraOne assembled and tested the Omni-PCX system in Bremen then trained a member ofthe Alfred Wegener how to use it. Project manag-er Gerold Prehn said: “We transferred our know-how directly to the Alfred Wegener Institute sothat we could keep everyone’s costs for this pro-

ject to a minimum. Otherwise both the traveland the installation costs would have

been astronomically high.”The team also faced the

challenge of being able toprovide ongoing supportonce the solution had been

installed as the Polastern re-search and supplies ship serving

the base only travels there every sixmonths. “We put together a compre-

hensive set of every possible spare part as well asindividual manuals and documentation devel-oped specially for the Alfred Wegener Institutein order to make the system as easy as possible tounderstand and operate for the researchers at thestation,” said Axel Hustedt, System Specialist atNextiraOne.

FAST FACT

is the world’s most popular password according

to the latest report bysecurity firm Imperva

123456

COLD CALLING SI

ZE M

ATTE

RSA supply

ship only travels tothe Neumayer

Research Station inthe South Pole everysix months

UPFRONTCOMPANY NEWS20

THE RESULTS ARE IN

According to Business Week, Apple andMicrosoft are in discussions to replace Google asthe default search engine on the iPhone. BusinessWeek sources claims that any Bing-iPhone dealwould likely be short-lived as Apple looks into thepossibility of its own search engine.

Apparently, the ultimate concern is searchadvertising – Google has grabbed 65 percent ofthe traditional PC-based search market in large

part because it has had far more information aboutwhat people are looking for and can use that to re-fine its search algorithms. If Apple cuts this datasupply off, Google is at risk of losing its edge insearch. And while there have been long-runningdisputes between Microsoft and Apple for sometime now, it is thought that Microsoft is consideredmuch less of a threat in the emerging world of mo-bile computing. Plus, Microsoft’s search technolo-gy is gradually being viewed as a strong alternativeto Google’s.


Source:CNN

Boston Consulting GroupHarvard Business Review

World’s largest economic opportunity?

Female income China’s GDP India’s GDP

$13 trillion

$18 trillion

$4.4 trillion$6.6 trillion

2014 (est)

2009

$1.2 trillion$1.8 trillion

Women’s control of consumer spending

0

1

2

3

4

5

6

US

Japa

n

Ger

man

y

UK

Fran

ce

Chin

a

Italy

Spai

n

Cana

da

$ tr

illio

ns TotalControlled by women

Women in the workforce Female consumers

“Despite women’s dominant buyingpower, many companies continue to market mostly to men and fail to explorehow they might meet women’s needs”The Female Economyby Silverstein and Sayre

64%Percentage of purchasesmade or influenced bywomen

$20 trillionAmount women globallycontrol in consumer spending.This is estimated to increase to $28 trillion by 2014

40% of businesses in the USare owned or co-owned by women

But only 38 of the top 400 companies are run by women

Women on average only earn 77 cents for every dollar men do

Women account for 57% of students in higher education worldwide

$

Women spend over70% of consumerdollars worldwide

UPFRONTCOMPANY NEWS 21

HAVE WE UNDERESTIMATED THE FEMALE CONSUMER?

THE FUTURE’S BRIGHT

Job seekers face a brighter future in 2010 if we areto believe figures from the Association ofExecutive Search Consultants, which recentlyconducted its 2010 Member Outlook Survey. Thefigures revealed that 91 percent of executive searchconsultants have a neutral to positive outlook forthe business this year. 77 percent of those ques-tioned said that they were expecting revenues toincrease in 2010 and over half reported plans totake on more consultants this year. Areas expect-ed to see the most growth this year are the health-care/life sciences and energy/natural resourcesindustries.

Women now drive the world economy, controlling $20 trillionin consumer spending and earning $13 trillion a year. Womenrepresent a market bigger than China and India combined.

The results show a vast improvement in atti-tudes since December 2008 and twice as manycandidates are now considering a career movecompared with 2009. “There is a discerniblechange in the attitude of senior executives as theycompare and evaluate opportunities within theirexisting workplace against new opportunities else-where. It is often in turbulent times that unusualcareer openings occur for talented executives andthose willing to consider a move can be highly re-warded,” said AESC President Peter Felix.

Commenting on the findings, he said: “Theseoutlook results for 2010 indicate very strongly thatthe executive search business, and thus the seniorexecutive hiring market has turned a corner. It is

indicative of a new spring in the step of top man-agement of organisations and a realisation thatwith a new environment decisions about thequality of executive teams are of para-mount importance. I amvery pleased to knowthat our memberfirms, representingthe highest qualityin the worldwideexecutive searchprofession, areagain able to viewtheir market place with adegree of optimism.”



CLOUDING OVER

JOBS OF THE FUTURE

versal and personal branders tohelp people establish their ownbrand across social networkingsites. It also predicts that police of-ficers will be needed to monitor

weather manipulation andthat electronic waste

data managers willbe needed bypeople whowant to avoidbeing tracked

online.Meanwhile, sur-

geons who are able togive people extra memory ca-

pacity will also be in high demand.The report was commis-

sioned by the Department forBusiness, Innovation and Skills.

If you’ve ever dreamt of being aspace pilot then 2030 could beyour lucky year. A report hassuggested that it could become aregular job in 20 years, along-side, virtual lawyers andavatar managers.

The UKgovernment re-port into thejobs of the fu-ture offers afascinating in-sight into theworld of 2030 em-ployment. Other professionsthat it claims will be in demandinclude farmers of geneticallyengineered crops and livestock,specialists in climate change re-

Surgeons who are able to

give people

capacity will be in demand by 2030

extra memory

The latest issue of the BusinessManagement Middle East edition talksshop with self-made billionaire, entre-preneur and philanthropist MUKESH‘MICKY’ JAGTIANI. This is the rags-to-riches tycoon who started with a singlebaby clothes store in Bahrain and builta retail empire. “I believe innovation isthe fuel that keeps the busnessgoing...If you don’t innovate andevolve with your customers you willsimply fade into oblivion,” he says.

To read more go to www.busmanagementme.com

GLOBAL PERSPECTIVE

FAST FACT

A survey of CIOs, IT directorsand senior IT managers at largeorganisations has revealed thatover half use or are plan-ning to use cloudcomputing.However, only14 percenthave a solu-tion in place tomanage thetechnology. Thesurvey commissionedby Zeus Technology shows thatalmost half of senior IT staff worryabout lack of cost control in rela-tion to cloud computing while 27

percent are concerned about scal-ability. The biggest concern, how-ever, which is bugging 65 percentof respondents, is vendor lock-infor cloud services. The results

show a need for more so-phisticated tools to

monitor and con-trol cloud usageand the move-ment of applica-tions from cloud

to cloud.Moreover, accord-

ing to 53 percent of re-spondents, introducing

government standards and legis-lation to control clouds would alsoboost adoption rates.

The biggest concern bugging around

of respondents is vendor lock-in for

cloud services

65%

Barack Obama is the politician over

of the UK population would want to be stuck on adesert island with according to a poll by PRS for Music

40%


LondonParis

Frankfurt

Barcelona

Brussels

Madrid

Munich

Amsterdam

BerlinMilan

Languages spoken LondonInternal transport LondonQuality of life for employees BarcelonaFreedom from pollution GenevaAvailability of office space Berlin

Climate the government create DublinValue for money of office space BirminghamCost of staff BucharestOverall London

External transport links LondonQuality of telecommunications LondonQualified staff LondonEasy access to markets London

Source: Cushman & Wakefield

Key

Each circle represents the

individual ranking of the

city within the categories

Each colour represents the

category on which the

rankings are based

Top cities of each category


EUROPE’S BEST CITIES TO WORK IN

MONEY DOESN’T MATTER

Accountants are no longer essential on theboards of global corporations. That’s accordingto the latest research by McKinneyRogers, which claims that the topfour skills required to help com-panies out of the recession areleadership, strategy, innova-tions and sales skills.Financial skills meanwhilecome in fifth place. The surveywas conducted on behalf ofMcKinney Rogers by Acritis whichsurveyed 100 senior directors in FTSE andFortune businesses.

Chris Hart, a partner at the firm, claims theresults prove accountants no longer enjoy theprestige they once did when the recession first

hit: “Financial skills came to the fore as the scaleand the speed of the credit crunch and recessioncaused panic in many boardrooms. But ac-countancy skills have had their day in the sun

and for 2010 the skills being prized arethose abilities linked to achieving

growth – leadership, sales, inno-vation and strategic skills.

He goes on to say that ex-ecutives wanting to succeed inthe boardroom should prove

they have these skills: “Themessage for executives looking to

succeed in the top boardrooms, par-ticularly those with specialist skills such as fi-

nance and marketing, is that once again it ispersonal skills around seeing and shaping thebig picture that matter to other executives – notyour ability in functional areas.”

Financial skills came to the fore

as the scale and thespeed of the

and recession causedpanic in many boardrooms

credit crunch

Over 80 percent of businesses acrossEurope now have broadband connections,according to figures by Eurostat, the statisti-cal office of the European Union. A surveyof broadband penetration was conductedamongst businesses across Europe, and theresults of the survey have shown that broad-band technology is now helping the major-ity of European companies to do morebusiness via the Internet.

Access to broadband means that busi-nesses are able to sell and buy goods onlinefar more easily, enabling them to cut costswhilst increasing profits. The study indi-cated that 12 percent of turnover for thesecompanies was attributable to businessconducted online.

GETTING CONNECTED



Microsoft has released an emergency out-of-band patch to fix the security breach inits Internet Explorer web browser.Attackers exploited the vulnerability in sev-eral recent high-profile targeted attacks, in-cluding the recent Trojan Hydraq attacksagainst Google and several othercompanies. Internet Explorerversions 6, 7 and 8 are affectedby the vulnerability, as theymake up the bulk of the ver-sions used today. However,the only in-the-wild exploitcode for this vulnerability detect-ed thus far is confirmed to affect justInternet Explorer 6. Joshua Talbot, SecurityIntelligence Manager at Symantec SecurityResponse, commented, “Based on our in-the-field detections, this security vulnera-bility has only been used in a very limitednumber of targeted attacks so far; however,they appear to be very high profile at-tacks. The most likely attack vectorused in the incidents seen thusfar is targeted emails contain-ing legitimate-looking at-tachments or links to websites sent to high-level em-ployees. When the attach-ment is opened, an exploitfor the vulnerabilitysprings into action and thecomputer becomes infected.”

The release of the patchcomes after government agen-

cies in several countries, including France,Germany and Australia, recommended thatusers switch to alternative browsers. Aspokesperson for rival Mozilla said that dailydownloads of the company’s Firefox brows-

er by French Internet Explorer users dou-bled to about 80,000 after France

issued its recommendation.The rise is similar to that ex-perienced by Mozilla andOpera Software ASA ofNorway for their browsers

in Germany. Mark Miller,Director of Microsoft’s

Trustworthy Computing initiative,said the company had been “working aroundthe clock to develop and test a security up-date that will eliminate this problem” andcouldn’t release a fix sooner. He added thatMicrosoft is in touch with government agen-cies around the world about this most recent

security issue.

EMERGENCY PATCH FOR EXPLORER

Number of Firefoxdownloads daily by

French Internet Explorer users since

the warning

80,000

FAST FACT

Spam containing hijacked IPs tripled inDecember 2009, meaning it is more impor-tant than ever now to delete all spam.Symantec’s latest spam report, The State ofPhishing, claims that this spam, also knownas Dotted Quad spam, has shown a markedincrease, with a particular emphasis on tar-geted brand attacks in which popular web-sites are spoofed. Globally, the UK wastargeted as a top three for brand attacks justbehind the US.

DID YOU KNOW?

memory sticks were found inUK customers’ pockets when

they were taken to be washedat dry cleaners, according to

Credant Technologies

4500


amount earnedto date 13.01.10

(worldwide)

productionbudget

$1bn

$50m

$1.37bn

$230m

advertisingbudget

$150m $200m

VS

$7.20* averageunit cost

$59.99

otherbig earners

(worldwide)

Titanic$1.8bn

Guitar Hero III$2bn

World of Warcraft$100m per month

profitto date

$990m $750m

THE BATTLE OF THEBILLION-DOLLAR ENTERTAINERS

*Average US cinema ticket priceSources: www.telegraph.co.uk | www.imdb.com | gamespot.com

Underinvestment in IT has cost companiescustomers during the recession and has dam-aged innovation according to business leaders.They told an international study by BT GlobalServices that IT budgets cuts in the re-cession are impairing business per-formance. The EnterpriseIntelligence survey, was con-ducted across 13 countries andinvolved identifying the chal-lenges faced by European CIOs.According to the survey a quarterof senior business executives believeIT budget cuts have harmed innovation while23 percent say this has stopped them from win-ning new business. Over a quarter complained

COMPANY FOCUS

that difficulties in finding the right informationwhen they need it has cost them business.

Hanif Lalani, CEO of BT Global Services,said: “This research provides a snapshot into

the current mindset of global CIOsand senior executives, and it

should act as a call to action onkey issues such as the role ITplays in driving global busi-ness success. The research

also highlights that in the cur-rent climate, CIOs face key deci-

sions about how they approach theupturn, when it comes, to ensure they thrive.There is a growing consensus that innovationwill be rewarded as we exit the recession.”


According to research firm Frost & Sullivangreen IT projects are gaining traction withintech companies despite the recession – as longas they can prove a conclusive ROI. In its thirdannual Sustainability in Telecoms: Return onEnvironmental Investments report, the researchfirm indicated that cost savings, better differen-tiation and improved brand loyalty were all keydrivers for investing in green projects.

Principal Anaylst Sharifah Amirah said:“The amount of environmental investments inthe ICT sector should at least double in the nexttwo to three years. Despite the lack of concreteframeworks at the 2009 Copenhagen summit,individual governments, stakeholder and con-sumer pressure will continue to drive business-es to adopt more sustainable operations.”

However, the report cautions that mea-surement frameworks for most are still at a veryearly stage, due to being held back by a lack ofstandard measures and the difficulty in measur-ing non-tangible benefits.

GREEN GETS THE GO AHEAD

ICT firms are still attractive prospects to pri-vate equity investors. A report by businessand financial advisors Grant Thornton UKLLP claims ICT firms are still the over-whelming favourite for private equity in-vestors looking for their next bigopportunity. The report surveyed 40 leadingprivate equity investors that back ICT firmsin the UK. It recorded that 84 percent saidtheir firm planned to undertake an acquisi-tion in the UK ICT market over the next 12months. Wendy Hart, Corporate FinanceAdvisory Partner at Grant Thornton, said:“Our survey indicates that there will be stiffcompetition for quality ICT assets in thecoming months. 72 percent of existing pri-vate equity backers of ICT expect an overallincrease in investments in the sector and anincreasing number of private equity housesare looking to move into the ICT space.”

Green IT was also named as an at-tractive investment proposition by 39 per-cent of respondents.

TECHNOLOGY INVESTS

There is a growing

consensus that

will be rewarded as we exit the

recession

innovation

The film and videogame industries have beenlocked in a head-to-head scrap to relieve con-sumers of their hard-earned cash this winter – but itseems we can’t get enough of both. Hit game ModernWarfare 2 has made over US$1 billion in worldwidesales since its release in November while JamesCameron’s 3D film Avatar has also racked up over aUS$1 billion worldwide. The revenues show the enor-mous draw of two separate entertainment platformsthat, in recent years, have been fighting over their tar-get demographic.

BILLION-DOLLAR BEHEMOTHS


UPFRONTIN MY VIEW26

When Dell began we made a decision to focus firston business customers – the thinking being that thebigger the customer, the more share we have. But today that’s changing and the consumer markethas since become a lot more important to us and of-fers a lot of opportunity to grow. It’s a combination ofnew capabilities, new products, new design and newpeople, which combined with a new leadership ap-proach has allowed us to go after that opportunity.

Our consumer business is now growing quite fast.In contrast to two years ago where we basically hadzero places where somebody could buy a machineother than the telephone, now we have 43,000 retaillocations where someone can buy our products.

There’s a lot of focus, because of the financial crisis,on cost and cash flow, which is a natural reaction toa crisis.When you focus on cash and cash flow you start to re-alise you want productivity because you don’t get farmoving a business forward without it, and followingproductivity you start to think about growth. Thismight not be the focus that everybody has today, butI feel confident that over time we’ll move back to focuson productivity and growth.

Dell is evolving itself from a product company intoa solutions integrator, where we’re bring completesolutions to our customers whether they’re thebiggest companies in the world or governments,SMBs or consumers.And those integrated solutions are not just the thingsthat we develop ourselves with the thousands of engi-neers that we have at Dell, but they also include tech-nology from our partners.

One of the things you see in this business is that youcan’t do everything yourself. It just doesn’t work.We’ve done about 10 acquisitions in the last two years,and although I wouldn’t necessarily go looking for anacquisition, we’re going to have a consistent strategyof acquiring new capabilities to enable our business togrow and do more for our customers.

DELL INC. FOUNDER AND MULTI-BILLIONAIRE MICHAEL DELLREFLECTS ON THE COMPANY’SSUCCESS AND ITS FUTUREFOLLOWING ITS 25THANNIVERSARY CELEBRATIONS


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

Absolute Software 76Accenture 88Aer Lingus 66Alcatel Lucent 10, 48, 49Amazon 96AMR-Partners 96Apple 144Aruba Networks 32, 78, 79BA 66BBC 104Birmingham City 28Blue Coat Systems 15BT Conferencing 4, 63BT Group 44Business Week 20Cable & Wireless 34Cadbury 29Channel 4 28CRM Association 110Dell 28Denon 144Domino's Pizza 122easyjet 66Ernst & Young 74European Commission 134Facebook 80, 104Fijitsu Technology Solutions 94, 95Flybe 66Frost & Sullivan 80, 111

Google 144Grand Hotel Europe 138IHS 132, 133Hotel Astoria 137Hotel Augustine 135HOTREC 134HTC 144IBM IFCIDC 74iEnterprises 112, 113Infor 108, 109, IBCKempinski Hotel 138Kensington Security 86, 87Kier Group 50Kofax 120, 121LBC Radio 28Logica 102, 103, OBCLuup 126, 127McKinney Rogers 23Meet The Boss 87Microsoft 24Mobile World Congress 61Mothercare 28Néstle 40Netgear 70, 71NewsGator 12Nortel 39, 58OpTier 118, 119Psytechnics 64, 65

Redhat 92, 93Ryanair 66Savvis 100, 101Siemens Enterprise Communications 8, 72, 73Sony 144Standard Life 114Symantec 6, 82, 83 Tandberg 2, 55, 56Tata Consultancy Services 34The Schumacher Group 96T-Systems 34Twitter 80, 104UNESCO 138Vodafone 58Volkswagen 34Work Wise UK 20Yahoo 104Yankee Group 96YouTube 80

Fashion retailer Primark’s mete-oric success shows no sign of abat-ing with the latest figures showing itssales grew strongly in the last quar-ter of 2009.

Associated British Foods,which owns the chain, said salesrocketed by 19 percent in the 16weeks to January 2. It now antici-pates a “substantial” rise in full yearprofits. There are 196 stores acrossEurope and last year the British re-tailer opened its first stores inGermany, Portugal and Spain. Itsgrowth comes as other retailers suchas Next and H&M feel the pinch ofthe economic recession. Its ownerssay it has benefited from a move to-wards buying cheaper clothes.

COMPANY FOCUS

COMPANY INDEX Q1 2010

A SWEET DEAL

The future of the UK’s Cadbury no longer hangsin the balance after Kraft Foods’ bid to take overthe 150-year-old chocolate maker was finally ac-cepted. It paid €10.4 billion in an offer wortharound €6 per share. The deal is the culmination offive months of bartering by Kraftwhose initial offer was described as“derisory” by the Cadburyboard. Speaking after the boardwas urged to unanimouslyback Kraft’s latest bid, RogerCarr, Chairman of Cadbury,said: “We believe the offer repre-sents good value for Cadburyshareholders and are pleased with thecommitment that Kraft foods has made to our her-itage, values and people throughout the world. Wewill now work with the Kraft Foods managementto ensure the continued success and growth of thebusiness for our customers, consumers and em-ployees.” There has been concern that the takeovercould lead to job losses, however, Prime MinisterGordon Brown has said he’ll work to ensure thatCadbury’s UK employees are not put at risk. He

said: “We are determined that the levels of invest-ment that take place at Cadbury in the UnitedKingdom are maintained and we are determinedthat, at a time when people are worried about theirjobs, that jobs in Cadbury can be secure.” Cadburyemploys 46,500 people worldwide and has its UKsites are in Bourneville, Birmingham, Somerdale

and Bristol. It was founded in 1831 and hasgrown to become the world’s largest con-

fectionary group.

UPFRONTCOMPANY INDEX 27

FAST FACT

Less than

of IPv4 (the fourthversion in thedevelopment of InternetProtocol) addressesremain unallocated,according to NumberResource Organisation

10%

The deal is worth €10.4

billion


28 www.bme.eu.com

COVER STORY

Karren Brady ED_7jan10 25/01/2010 13:33 Page 28

As the first woman to conquer the male-dominated UK football in-dustry, you’d expect Karren Brady to be a pretty tough character.So it comes as a surprise when she claims to be anything but. “Asmuch as I’m portrayed as quite ruthless, I’m actually a big softie re-ally,” she says. “I like to think I’m firm but fair.” She may deny it butbecoming the Managing Director of Birmingham City aged just 23took guts and a very tough skin. Brady describes the challenges of tak-ing on the job: “Well it was quite difficult when I took over in 1993. Iremember going to an away game at Watford and asking the guy at

the desk where the director’s box was. He said ‘Yes dear, the wives go to the ladies room’. And I said‘Actually I’m not the wife of the director, I am the Managing Director.’ And he put on his glasses, lookedat me and said: ‘Oh yes, you’re that woman. Stay here and I’ll have to find out what to do with you.’Because that’s what it was like in those days. There were no women around.”

Brady goes on to describe the “blatant sexism” that existed in football during that time and theway this was conveyed in media coverage of her appointment. “I remember I had to go to a FootballLeague tribunal because Birmingham had been accused of poaching a manager. I was on the trainto London and the person opposite me was reading the Daily Mirror newspaper. When he openedit I saw a picture of myself on the back page wearing a short skirt with the headline ‘Sex Shooter:Brady will do a Sharon Stone in front of the tribunal.’ People talk about sexism today, but in thosedays it was absolutely blatant.”

www.bme.eu.com 29

PLAYING TO

When Karren Brady took over as the first female boss ofBirmingham City FC in 1993, she quickly built a reputation as a

hardnosed businesswoman who could beat the men at their owngame. But, as she prepares to embark on a new TV career, she tells

Diana Milne her fearsome reputation is undeserved.


be doing something different to me. I do have to sit there and say to myself‘Board meeting or sports day, board meeting or nativity play?’ When you’reat the board meeting you’re wishing you were at the sports day and when

you’re at sports day you’re wondering what’s happening at the boardmeeting. I think the trick is that most working women have two

personalities; they have their home personality and their workpersonality and the trick is not to let either of those person-

alities drain the life out of the other.”Not surprisingly, the challenges faced by working

mothers in business is a subject that is very close to herheart. She believes strongly that the UK government

does not do enough to support women by providing af-fordable childcare options. “One of the issues is working

women trying to get the government to allow affordable,quality childcare and allowing that to be tax deductible. If

you’re a working mother and you have to employ someone to lookafter your children why shouldn’t you be allowed to deduct it?” Women inbusiness is not the only issue bugging Brady. She is critical too of the sup-port provided by the UK government for small businesses, claiming that thered tape involved inhibits entrepreneurship in the country. “I think there’san awful lot of red tape for businesses and I think that small businessesshould be able to have a lot of that taken away from them. There’s an awfullot of difficulties with small businesses employing people as some of the

The winning streakIn the 16 years that she managed Birmingham City Brady did everything

she could to eradicate sexism. By the time she left, following the takeover ofthe club last October, 75 percent of its senior management team werewomen – a far cry from when she was the only person wearingskirts in the boardroom. And Brady had successfully proventhe point that women can succeed in a male-dominatedworld. Three years after she took over, the club posted itsfirst profit and in 1997 it launched on the stock market,valued at the time of the float at UK£25 million. Duringher time at the club she increased spectator numbersfrom 6000 to a sell out capacity of over 30,000 on aver-age. And by 2002 the Blues had finally won a place in thePremier League. In 2007 the club was valued at over €68 mil-lion and last year was sold for €94 million.

Football is not the only area in which Brady has honed her busi-ness talents. She sits on the board of several major corporations, including thebaby clothes giant Mothercare and the broadcaster Channel 4. Her achieve-ments are all the more impressive given that she has successfully juggled hercareer with family commitments, bringing up two children with her husband,the Canadian footballer Paul Peschisolido, who played for Birmingham Cityfor two seasons. She admits she sometimes struggled with her dual commit-ments: “It’s a constant struggle and I think anybody who says it’s easy must

30 www.bme.eu.com

75%of Birmingham City’ssenior managementwere woman when

Karren Brady left the club

Karren Brady with former Birmingham City Chairman David Gold. He and David Sullivan now own a 50 percent share in London football clubWest Ham United, where Brady is now Vice Chairman


www.bme.eu.com 31

Career woman Karren Brady began her career as an 18-year-old at theglobal advertising agency Saatchi &Saatchi before becomingJunior Account Executive at London’s LBC Radio. She tookon the role of Birmingham City Managing Director in1993 and increased its value to over €68 million duringher time in charge. She is a popular media figure, havinghosted her own TV show the Brady Bunch and presentedseveral TV shows including Loose Women and Live Talk onITV. Brady has written four books, a factual account ofher first season at Birmingham City, two novels and herlatest book, about successful women in the businessworld. She is also a columnist for The Sun newspaper, TheEvening Mail in Birmingham and The Guardiannewspaper and in 2008 launched her own magazine,Today’s Business Woman.

Brady sits on the board of the business board of themental health charity Scope and is the Ambassador forBirmingham Women’s Aid. She is currently Chairman of themusic magazine Kerrang! and is a Board Director ofMothercare, Channel 4 Television and Sport England. Shewas made a Fellow of the Institute of Sales and Marketing in2008 and has won a string of business awards, includingNatwest’s Everywoman Award in December 2008.

A word from the wiseKarren Brady’s advice to job hunters

As the UK plunged deeper into recession lastyear, Karren Brady was recruited by the UKmorning TV programme GMTV to advise jobseekers on how to get back into theworkplace. Here she gives a sample of theadvice she doled out to viewers:

“The thing to do is to get your confidenceback. When you’ve lost your job your self-esteem goes and your confidence goes andthat’s one of the hardest things toovercome. What I look for when I employpeople is enthusiasm. And I think whenyou display those key skills in an interview,you stand out.”

“Writing a professional CV is veryimportant indeed, as is practising foryour interview. Little things likeremembering what interview you aregoing for may sound obvious but this isvery important. A lot of people apply forso many jobs that they lose track of whothey’ve actually applied to. Doing someresearch on the company they are goingto see is crucial.”

“When you’re actually in the interviewyou should try to strike the balancebetween talking about yourself and beinginterested in what the person has to say.So I would say treat job applications likeany other business project in terms ofhaving a plan. You have to remember thatthe person on the other side of the table isgoing to see 10 other people who areequally qualified. Think about what wouldmake you stand out.”

rules and regulations make it very difficult for them to expand in the way thatthey would.”

Pastures newBrady hopes her latest incarnation – as the replacement for Margaret

Mountford on the hit BBC television series The Apprentice – will give her aplatform from which to address some of these issues but also to help to en-courage budding entrepreneurs. As the sidekick to Sir Alan Sugar on the showwhich airs this summer, she will be responsible for overseeing the candidateshoping to become Sir Alan’s apprentice as they take part in various money-making challenges. And she says she is very much looking forward to passingon what she has learnt. “I’d like to be able to tell them where they are goingwrong and how, if they’d tweaked their ideas, they would have been better oreasier to communicate. I think one of the most amazing things I’ve learntabout doing this is how the show is actually like holding up a mirror againstthe contestants’ own personalities and allowing them to develop, and actual-ly teaching them a bit of tough love as well. I think one of the most importantthings about The Apprentice is that the people that come through the processactually learn something from it.”

Brady is also a big advocate of the concept of learning from a mentor asan apprentice. After all, it was through being taken under the wing of DavidSullivan, the owner of Birmingham City, that her own career took off. She was

“

”


ARUBA AD P32.indd 1ARUBA AD P32.indd 1 22/1/10 16:07:5622/1/10 16:07:56

first spotted by him when she was selling radio airtime onLondon’s LBC radio. At the time she told entrepreneur Sullivanthat if he bought advertising from her and it didn’t increase his sales shewould give him his money back. He bought the slot and his sales increased. LaterBrady went to work for him and it was her that persuaded him to buyBirmingham City. Describing the influence this early mentoring had on her ca-reer, she says: “I think one of the most important things in business is if some-one in the business likes you and guides you, puts you under their wing andguides you to better things. I certainly had that in my Chairman David Sullivan,who took a keen interest in my career and did a lot of mentoring for me and thatwas very important and key to my own success.”

A life changing momentBrady’s meteoric career rise suffered a temporary blow when she was di-

agnosed with a potentially fatal aneurysm in her brain, which was discoveredin February 2006. At the time she was given the choice of an operation thatcarried a high chance of a severe stroke or the insertion of a coil to break up theaneurysm that carried the risk of death on the operating table. She opted for thecoil, a decision she describes as the toughest in her lifetime, and thankfully she

lived to tell the tale. The incident, she says, served to reaffirm her lifegoals – but also forced her to take time out to enjoy the perks of her

lucrative career. “I understand, when people get very ill, thatthey look at their life and say ‘I hate my job, I hate my hus-

band, I want to change everything and go off around theworld.’ But I think that it made me reflect the fact that ac-tually I really did like my life and I wanted to live it for aslong as possible,” she says, adding that she decided that she

deserved a well-earned break: “My best friend was broughtup in Hong Kong and for years I’ve been saying that next

time I’d go back for a visit with her. But I could never fit it in.After my illness I did fit it in and it made me realise that you’ve got

to do some of the things that you’ve planned to do otherwise what’s thepoint of working so hard for them?.”

Despite having said previously that she doesn't see a future for herselfin football, shortly after being interviewed by Business Management Bradyaccepted the post of Vice Chairman of West Ham United, which is nowowned by her former bosses David Gold and David Sullivan. And, havingalready stirred up controversy by suggesting the club changes it name toWest Ham Olympic if they move to the London 2012 stadium, it seemsBrady is back on top form and still playing hard ball. n

www.bme.eu.com 33

Courting controversyLast summer saw the end of a two-year police investigationinto alleged tax irregularities by Karren Brady and the formerBirmingham City owner David Sullivan. The two had beenarrested by City of London police officers in 2008 then again inearly 2009 as part of a wider investigation into corruption infootball. It is believed the investigations centred on taxmatters involving two footballers. Following the news thatthe investigation was being dropped, the following statementfrom the law firm BCL Burton Copeland was issued: “David

Sullivan and Karren Brady are pleased to confirm thatfollowing a two year investigation by City of London Police andHer Majesty’s Revenue and Customs into Birmingham CityFootball Club they have today received written confirmationthat a decision has been taken that no proceedings will beinstituted. Whilst always confident of this outcome, the periodof the investigation was understandably a stressful time andDavid and Karren are now happy to put the matter behindthem and look forward to the future.”

Karren Brady increasedBirmingham City’s

value to over

€68 MILLIONduring her time in

charge

I think one of the most importantthings in business is if someone inthe business likes you and putsyou under their wing and guidesyou to better things

“”


Any CIO who inherits an outdated and inefficient IT in-frastructure has a tough job on their hands. But whenNick Gaines took up the role at Volkswagen UK in2008, he faced the added complication of disparate sys-

tems across the company’s various brands and an unproductive out-sourcing partnership. Immediately he set about the task of first

fixing the technology basics before starting to implement a uni-fied IT infrastructure across the group. Describing the system

in place when he took up the role, he says: “Basically we werein a position where Volkswagen had become a large business

but we hadn’t invested much in our IT infrastructure for anumber of years. A lot of our systems were written 20 or 30years ago and were running on some mainframes that we op-erate from our business in Spain. And to say these systemsthat run our core business are ancient would be an under-statement.”

Ringing the changesA particular concern, for Gaines, was the fact that the

UK’s core online sales system was run on an outdated

In the

Since taking on the role of CIO ofVolkswagen UK, Nick Gaines has changed IT

from a taboo subject to a key element ofthe car giant’s business strategy.

Diana Milne reports.

DRIVING SEAT

AUTOMOTIVE INDUSTRY

34 www.bme.eu.com

NICK GAINES:7jan10 25/1/10 14:45 Page 34

www.bme.eu.com 35

mainframe system based at a Volkswagenplant near Barcelona: “The system was basedon the old green screen variety of mainframe,and this is what our retailers used to sell cars. Sowhilst we may have an amazing presence on theinternet, hidden behind all of this was some pret-ty ancient stuff. On top of that we were runningcomputer rooms that should have been demolishedas health hazards,” he jokes.

Gaines blames the state of the company’s outdated ITinfrastructure on the fact that nobody within the companyhad previously taken charge of the situation and developed aroad map to change it. There was also, he says, a lack of under-standing of the link between IT and the company’s business objec-tives: “I would say the best description is that no one had loved the IT.And that alignment between what the business needed and what the ITwas doing was disconnected.” Gaines was determined to change this andimmediately set about creating an agenda for change, starting with phaseone, “fixing the basics”. This involved replacing Volkswagen’s core salesand CRM systems and rebuilding its IT infrastructure to put in place

proper project and programme delivery methodologies. It also involvedputting in place an “IT service management culture” and rebuilding

the IT team. He and his team have only just completed this phaseand have so far replaced the core sales systems for the Skoda and

Seat brands. A new data centre has also been put in place, fol-lowing the migration of data from Volkswagen UK’s previous

facility in Milton Keynes. Gaines hails the project a successso far: “To run a project for two years then bring it in ontime, cost and quality is a rare event in the IT industry. Soto do it when you’re changing everything around at thesame time is an interesting challenge.”

Joined up thinkingThe second phase of Gaines’ action plan is to develop

core IT systems that can operate across Volkswagen’s dif-ferent global businesses and brands. Explaining the think-ing behind the project, he says: “What we try to do is,rather than having unique brand-specific and market-spe-

cific solutions, with each brand and country doing theirown thing, I’ve been working with my colleagues across the

rest of Volkswagen and we are choosing common systems andhosting them as shared services to a number of different coun-

tries. Some of my colleagues have said, ‘we’re giving up somelocal autonomy’; but in reality we’re gluing together the business

and exploiting capabilities on a global scale.”As well as creating common core sales, vehicle logistics and CRM

systems; this involved the virtualisation and building of new data cen-tres and replacing outdated operating systems: “I had a very large num-

ber of old servers and other obscure operating systems, which were basedon unmaintainable hardware, so we’ve virtualised almost everything andthen rationalised out the variations of databases, middlewares, operatingsystems and so on and that’s been quite an interesting activity.”


within the business: “Forget building infrastructure and new applica-tions. By far the biggest journey for our business has been to build a dif-ferent culture both within IT and between the business and IT. Because

at the end of the day we’re not here to do IT.I’m here to sell more cars and more parts, tosell more finance and to drive down costs. ITis just my specialist skill and the extra value Ican add. I position IT as the tool with whichwe can transform the way we do business.”

In order to achieve this, Gaines had to builda team with the right attitude, and to recruitmembers who were “motivated emotionally bythe business outcome and not the technical pu-rity or esoteric, architectural beauty of IT”. Hebelieves he has achieved this, creating a team be-hind him with the right attitude towards ITwithin the organisation: “The MD said to me theother day that the IT folk have now got a springin their step. They’ve got a smile and a positiveattitude. This is a huge personal journey formost people and we’ve made some tough deci-sions along the way.”

Perhaps the biggest mark of how success-fully Gaines has raised the profile of IT withinVolkswagen has been the fact that despite theharsh economic conditions, particularly in theauto industry, investment in technology andGaines’ ambitious plans to overhaul the IT in-frastructure have not been affected: “I’m verylucky that we have an enlightened board inGermany as well as the board in the UK whorecognise that there’s a huge opportunity to in-novate in the sales process and IT is pivotal tothat. As a result of that my strategic pro-grammes to rebuild the infrastructure and re-engineer the core business processes remaineduntouched by the recession. Our board voted toprotect them throughout this time and that’sbeen incredibly positive.”

The technology horizonThough Gaines and his team are still deeply

entrenched in the transformation ofVolkswagen’s IT infrastructure and services, he isalready looking ahead at how the company canfurther capitalise on emerging technologies, suchas cloud computing. Because it outsources somany elements of its IT, Volkswagen is already auser of cloud computing technology. Gaines sayshe is impressed so far with the speed with which

cloud technology enables technology changes to take place: “The interestingthing about cloud computing is the time-to-market speed. You can imple-ment change quicker when you remove the dependency on the end device

When it came to transforming Volkswagen’s IT, re-assessing the com-pany’s outsourcing arrangements was high on Gaines’ agenda. With thisin mind, last May the company signed a five-year contract with India’slargest IT firm Tata Consultancy Services (TCS).The agreement will see TCS supportVolkwagen’s business transformation pro-gramme and its move to a standardised businessplatform. The move represented the first timethat Volkswagen had implemented a mixed on-shore and offshore model for its IT systems. Thecompany also has outsourcing agreements withCable & Wireless, which handles its telecom-munications needs, and T-Systems, whichmaintains mainframe applications. Gaines de-scribes the advantages of having agreementswith multiple outsourcing partners: “Whatwe’ve been able to do is significantly improveservice delivery performance and cut costs aswell because we’ve been matching the capabili-ties of our partners to the needs of our businessbetter. If you only have one partner then it’s in-evitable they won’t be a good match across allthe different things that you want to do and alsogetting a bit of competition in the mix encour-ages a better level of performance.”

He said that in terms of outsourcing agree-ments the company had learnt from the experi-ences it had with a previous outsourcingpartner: “For a long time we were working witha single outsourced partner and the relationshipwasn’t very great. I think that the challengeswe’ve had in the past were almost because we’vebeen a little bit too hands-off as a customer andso we’ve adopted a different stance now whichis about driving the performance of our part-ners a bit more proactively and that’s been pret-ty successful.” Gaines goes on to say that thenew arrangements with outsourcing partnershave already improved the efficiency ofVolkswagen UK’s day-to-day operations.

Building bridgesIt has been all the more important for

Gaines to prove the validity of his IT projects,given what he describes as the previously vastgulf that existed between those working on thetechnical side of Volkswagen and those in theboardroom: “When I arrived IT wasn’t eventhe whipping boy. It was almost regarded assomething you didn’t want to be anywherenear. It’s hard to put it into words, but people had the lowest possibleview of IT in our business.” He says his proudest achievement to date asCIO has been transforming that attitude and raising the profile of IT

36 www.bme.eu.com

Nick Gaines

Volkswagen GroupThe Volkswagen Group,

headquarted in Wolfsburg Germany, isone of the world’s leading automobilemanufacturers and Europe’s largestcarmaker. In Western Europe one infive new cars is manufactured byVolkswagen and in 2008 the groupincreased the number of cars deliveredto customers to 6.257 million.Correspondingly, its group sales rose to€113.8 billion.

There are nine car brandsmanufactured by Volkswagen:Volkswagen, Audi, Bentley, Bugatti,Lamborghini, Scania, SEAT, Skoda andVolkswagen Commercial Vehicles. Eachbrand operates as its ownindependent entity.

In total, the group operates 61production plants in 15 Europeancountries as well as sites in theAmericas, Asia and Africa. It hasnearly 370,000 employees worldwidewho produce over 26,600 cars eachday. Volkswagen’s cars are sold in over150 countries.


Notable subsidiary brands and date of acquisition

1964 1990 1998 1999 2000 2009

Brand headquarters

1998

Production locationsCountries where VW is sold

370,000employeesworldwide

6.3 millionvehicles sold

26,600cars produced

each day

€1.5 billionoperating profit

€77.2 billiongroup sales revenue

www.bme.eu.com 37


or the end infrastructure.” He adds, however, that for him the most interest-ing aspect of the technology in the year ahead will be security – a key chal-lenge for Volkswagen with its disparate brands and global operations: “Tobring together cloud-delivered services, internal-delivered services and conventional services thebiggest challenge for a large enterprise like ours issecurity. Particularly when I’ve got a heavily out-sourced supply chain, globally delivered servicesfrom our factories around the world and UK deliv-ered services both from our outsource partners andfrom here. Actually creating the right securitymodel to match the service to the business is really tricky stuff.” He says thisissue becomes even trickier for companies moving from delivering servicespredominantly internally to delivering cloud services: “The issue is where theboundaries are and how you design security when you’ve got a virtual sup-ply chain running a virtual infrastructure for a virtual business.”

As well as cloud computing, Gaines is keen to harness the power of so-cial networking in order to increase loyalty among Volkswagen customers

and spread the word about its products: “A customer who has a great experi-ence with us will become an advocate and they will help to sell more cars. Theymight be tweeting about their new Skoda or whatever and the value they gen-

erate could be huge. So we have to bethere delivering services that supportthat world. The change in consumer be-haviour is a really exciting place for ourbusiness. I think it will drive innovationin the year ahead.”

Gaines labels himself a “nerd”, de-scribing his obsession with the latest

technologies as “my secret vice”. But he says it’s not IT itself that excites himbut its role as a business enabler: “The technology is almost irrelevant to me.All these different technologies are merely different ways of delivering ser-vices. What really matters is matching the service you deliver to the needsof the business.” And it’s this ability to translate technology from geek speakto business case that has helped Gaines to put IT at the heart ofVolkswagen’s operations. �

“The challenges we’ve had inthe past were almost because

we’ve been a little bit toohands-off as a customer”

1 in 5

new cars in Western Europe are produced by

Volkswagen


NOVELL AD P39.indd 1NOVELL AD P39.indd 1 25/1/10 13:54:2925/1/10 13:54:29

As for many other organisations, 2009 was a tough year forNestlé. Its recently announced nine-month figuresshowed that the food and drink company had managedorganic growth of 3.6 percent in the first three quartersof the year, down from 8.9 percent for the same period in2008. However, in a business environment such as

today’s any growth is positive and CEO Paul Bulcke is keen to put these fig-ures into some kind of perspective. “They come on top of many years ofstrong performance, which delivered profitable growth period after period,year after year,” he says. “Let us just look at the past three years for example.For the period of 2006 to 2008 our sales and constant currencies are up 27 per-cent and our EBIT increased 43 percent with significant improvements inEBIT margin and the return on investment capital. We invested CHF 29 bil-lion in growing our business. CHF 14 billion of that in capital expendituresand CHF 15 billion in acquisitions. At the same time we returned a total ofCHF 28 billion to our shareholders, CHF 12 billion from dividends, which in-creased 55 percent over the period and CHF 16 billion from our share buy-back programs.”

Behind these numbers, Nestlé has continued to pursue its aim of shiftingaway from just being a food producer to a company profile that gives equal

weight to health and wellness. Giving structure to this transformation is a‘road map’ that clearly sets out where Nestlé is headed. “The road mapclearly defines what we want to be as a company,” Bulcke continues. “Wewant to be the world’s recognised leader in nutrition, health and wellness,and also the reference at the same time for financial performance in ourindustry. It defines what we want to leverage to succeed. First, our prod-uct and brand portfolio backed by strong R&D capabilities, our un-matched global presence in the world and our people, values and culture.It defines also where we see opportunities for particularly acceleratedgrowth in nutrition, health and wellness with emerging consumers andour properly positioned product initiatives and out-of-home consumptionand in premiumisation.

“It then also defines how we deliver efficiently and effectively every day,to consumer relevant innovation and renovation across our brand and prod-uct portfolio, to continuous improvement of our operational efficiencies byhaving our products wherever the consumer looks for them, and by commu-nicating and connecting better with our consumers. That is what the roadmap is all about, a clear and straightforward framework outlining our strate-gic direction, which everyone at our company is aligned with and implementson a daily basis.”

40 www.bme.eu.com

Nestlé’s financial performance in 2009 was, despite being positive, hard for CEO Paul

Bulcke to swallow. This charismatic boss sees last year as a blip for the Swiss food anddrink giant as he sets his sights firmly on establishing Nestlé as the world leader innutrition, health and wellness.

MANUFACTURING

THOUGHTFOODFOR

Nestlé ed_7jan10 25/01/2010 13:13 Page 40

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nutritional status intakes and dietary habits of different populations in orderto best target consumer needs.” Nestlé has been fortifying food and beveragesfor many years now and has a large product portfolio, largely focused on de-veloping countries. A key line is in fortified milks, which have the significantbenefit of being comparatively cheap to produce, enabling them to be afford-able for those in most need. By the end of 2010, these milk products are hoped

to be available to millions of consumers in over 70 countries. For a compa-ny whose relationship with the developing world has drawn con-

siderable controversy in the past, it would be easy to dismissthese efforts as little more than a smokescreen aimed at

patching up a tarnished image. However, Bulcke insists thatNestlé’s efforts are motivated by a balanced combinationof business imperative and social responsibility.

“It is our hope that our strategies in product fortificationwill over time contribute significantly to the eradication of

malnutrition and of micronutrient deficiencies around theworld,” Bulcke states. “This mapping activity is a good example

of how our business activities link up with society in a responsible andsustainable way. We call this creating shared value. In this particular case

we are contributing to the solution of a public health problem with products thataddress the nutritional needs of specific parts of the population, and in doing sowe serve both society and our shareholders at the same time.”

Sustainability is an increasingly vital component of how just about everyindustry does business. It’s therefore no surprise that Nestlé is devoting plen-ty of resources towards addressing it. The company is increasing its use of

Aside from Nestlé’s financial ambitions, the company is also taking a cru-sading approach to major global social issues. “At the beginning of the 21stcentury, malnutrition remains one of the most serious problems facing hu-manity,” says Bulcke. “It is an underlying cause of around 35 percent of deathsin children under five years old and mainly in the developing countries.Micronutrient deficiencies exist in iron, iodine, vitamin A and zinc in bothadults and children. These deficiencies are especially common in Africa,South Asia, and Southeast Asia. Overall one-third of the world’spopulation is deficient in iron, iodine, vitamin A or zinc, ora combination of them. Severe iron deficiency exists inAfrica and in parts of Asia and South America, causingdelay in mental development in children and reducedphysical performance. Vitamin A deficiency is partic-ularly severe in South Asia and Sub Saharan Africa, re-sulting in blindness and increased susceptibility toinfections. Iodine deficiency is more scattered across theglobe and is also responsible for impaired mental develop-ment, and widespread zinc deficiency leads to poor growthand reduced immunity.”

Bulcke clearly believes that Nestlé is uniquely placed to address some ofthese issues. “Over one billion Nestlé products are purchased every dayaround the world, which are or could be carriers of micronutrients,” he con-tinues. “We are now mapping out our product fortification efforts againstknown micronutrient deficiencies across the globe. Working with local healthand nutrition experts, we are analysing local nutrition landscapes including

42 www.bme.eu.com

Nestlé runs nutrition education

projects in

30COUNTRIES


Fairtrade products across its brands and recently announced that the ex-tremely popular KitKat chocolate bar will now be made from Fairtradesourced cocoa. In addition to partnering with organisations like Fairtrade,Nestlé is also working on its own initiatives. The Nestlé Cocoa Plan was an-nounced in late 2009 and builds on the company’s efforts to help farmers bybringing its plant science knowledge to bear to ensure a steady and sustain-able supply of cocoa in years to come. Recent history has seen an unprecedent-ed rise both in chocolate consumption and cocoa prices, so it is vital for a massiveconfectionery producer such as Nestlé to have a securesupply of raw materials. Supplies of cocoa and coffee,another major part of Nestlé’s business, depend uponfarmers at a local level and as a result, the company willbe investing CHF 460 million over the next decade ona range of initiatives to keep the beans flowing in.“These cocoa and coffee sustainability programs arepart of our commitment to carry out our business in aresponsible and sustainable manner, and in line withour values and our principles,” says Bulcke. “Over the10 years since we created our sustainable agricultureinitiative, millions of farmers have benefited from ourfree technical assistance. This is a strong holistic pro-gram with our agriculture suppliers. It aims to improveefficiency and risk management in the supply chainand it supports sustainable development in agriculture.Today our company provides free technical assistanceto over 600,000 farmers.”

But sustainability isn’t purely an issue for farm-ers and suppliers. It permeates right through the or-ganisation to the impact of how products arepackaged and produced. “We have invested 250million CHF250 this year alone in sustainabilityprojects in our own factories and operations,”Bulcke continues. “These include renewable ener-gies, reducing water usage, and improvement ofour overall carbon footprint. Bottle light weight-ing is just one of these projects among many of therecent capital investments we have made in sus-tainability. Nestlé Waters continues to be theleader in PET bottle light weighting. Since itslaunch in 2007 the Eco Shape bottle in the UnitedStates alone has saved around 100,000 tons ofresin. In energy savings this would be equivalentto 78,000 cars taken off the road this year. Welaunched a ultra-lightweight 1.5-litre bottle inSpain last year for Nestlé Pure Life, which is theworld’s lightest bottle of its kind. This bottle isbeing rolled out now in other countries. We believe that it is important thatour shareholders, consumers, customers, suppliers, other stakeholders andthe public at large understand how we positively link up our activities withsociety in a responsible and sustainable way and this is what we mean bycreating shared value, and the role it plays in the convergence of growth,sustainability, and nutrition. In fact, this is the key to creating and main-taining trust with society in general.”

Nestlé was founded in the 19th century on the bedrock of infant formu-la, a product designed to improve the health of consumers. In light of the hugeupswing in popularity of so-called ‘functional foods’ with positive healthbenefits this marks the company out as being significantly ahead of its time.“It is the core,” confirms Bulcke. “It is the soul of our strategy. We have aroad map and we have put in the centre the ambition to be a recognisedleading nutrition, health and wellness company. We have said also that weare driving a very important R&D structure that is inspiring our strong

portfolio and brands, so we are focusing on severalplatforms for that.”

Key to keeping Nestlé at the nutritional cuttingedge is a commitment to continuous innovation.Bulcke describes a perfect situation as one where theproduct portfolio is in a constant state of churn, sothat new developments and nutritional benefits canbe incorporated without delay. But improving prod-ucts is only part of the story. Consumers need to un-derstand exactly why nutrition is so critical. “Thiswhole thing is linked to information, to inform thepeople about nutrition,” Bulcke says. “There’s noth-ing with less present education in general than nutri-tion. I remember when I was in school we never hada one-hour course in nutrition, and yet at the sametime it’s so important in your life and you have to takenutritional decisions. Everybody has to make nutri-tional decisions several times during the day deci-sions, so we are not prepared for that. Governmentsare starting to be involved here.

“We as a company have a nutrition compass,which is on every Nestlé product. Consumers see acompass that gives some comprehensive informationthat helps to induce that better awareness and un-derstanding of what nutrition is all about. In theframework of creating shared value we have also an-nounced that we’re going to drive a global pushthrough the market that gives kids a global nutritioneducation program. We already have quite compre-hensive programs in 30 countries that we do togeth-er with local authorities to educate kids on nutritionbecause, the multiplying effect of educating kids alsofor the future but in their families, is quite dramatic.”

As 2010 kicks off, Nestlé is ready for another bigyear. As befits the biggest food company in the world,it is pursuing a global vision, one that has the poten-tial to bring big rewards for shareholders and con-sumers alike. Bulcke recognises the responsibility

that a multinational of Nestlé’s size has and also understands the power itcan wield. “We put nutritional values into our food and our portfolios, thathas a broader context of also affecting nutritional decisions by the peopleso they go for more balanced and healthier diets in their lives,” he says.“This is a very global equation that we have to be part of and actively driveour knowledge through this whole process. It’s a very, very important thingthat is so close to what we want to do as a company.” n

www.bme.eu.com 43

60/40+

60/40+Nestlé’s 60/40+ concept is thetangible expression of thecompany’s vision. Increasingly theconsumer is looking to food toprovide nutritional and healthbenefits – not at the expense oftaste but in addition to it. As aresult the company aims to makeproducts that achieve both 60/40consumer taste preference and anutritional advantage. This meansthat not only should six out of 10consumers prefer the Nestléproduct to a competitor’sequivalent but that there shouldbe a nutritional plus too.Nutritional assessment is carriedout by R&D nutritionists andgenerally compares a Nestléproduct with the main competitorproduct. The nutritionalassessment examines the levels ofnutrients and the intrinsic value ofkey ingredients in our products.The potential contribution theproduct makes to daily needs for ahealthy balanced diet can then bedetermined. The assessmentidentifies nutritional strengths andweaknesses, and providesdirection for product improvementleading to nutritional superiority.


TELECOMS

A sharperfocus

44 www.bme.eu.com

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www.bme.eu.com 45

BT recently merged its CIO and CTO functions. Why was this deci-sion taken – was it about making cost savings and better effi cien-cies within the group or for other reasons?Al-Noor Ramji. I wouldn’t be stating the truth if I didn’t say that we did save money. But that wasn’t the intention. Th e issue was to acceler-ate what we call ‘concept to market’. In plain English, it’s about making sure we deliver new products faster to the marketplace by hooking up the research functions, innovation functions, all the way through to the marketplace. Th is has become crucial for us because you have people worrying about the top line as well as the bottom line. Also, you need to make sure that people who are working in similar disciplines inter-change, so there’s no silos between and far more opportunity to advance in one of the fi elds. For instance, lots of architects would like to get into research and vice versa. Th e size of the CTO function wasn’t huge and we will grow it as we need to as opposed to, just going in one direction.

We also need to make sure things happen faster so bringing two organisations together was one way of making this

happen. Th e third reason was about convergence. We’re increasingly getting soft ware lead-in, regard-

less of whether it’s network or product or IT. You can’t install a new network now without soft ware being the long pole in the tent.

Do you foresee a trend developing and other companies bringing the two roles and depart-

ments together?AR. I spent most of my [working] life outside telcos where

it is completely normal. I always had a CTO reporting to me. It’s more to do with telcos, I think, than anything else, where the CTO used to run the networks and research and so on, and the CIO ran what you would call the OSS (Operational Support Systems) side. As soft ware begins to play a bigger role you will begin to see more companies follow-ing the way Google has done things with no separation between the CIO and CTO. Vodafone, for example, has gone the other way and the CIO reports to the CTO. So yes I do so see this happening more and more but I don’t know whether it could be called a trend. It should certainly happen if soft ware is a prime driver.

Could you explain about the benefi ts of the creation of your fi ve Global Development Centres and the reduction in complexity that the Virtual Data Centres (VDCs) will deliver?

In today’s fi ercely competitive telecoms space, BT is seeking to diversify its revenues to cater to changing communications trends. But morphing yourself from a predominantly telco business into a global network and IT services provider creates unique challenges, as Joaquín Schmidt learns during an interview with BT Group CIO Al-Noor Ramji.

BT operates in more than 170

countries

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46 www.bme.eu.com

How do BT’s VDCs help in slashing your carbon footprint? What other initiatives are you undertaking in an effort to be more ‘green’?AR. Th e green issue is something we have been doing for a long time and believe in a lot. Th e VDC obviously has diff erent fl avours, including power savings. Most servers in a data centre are running at between 5 to 15 percent and at the top end, where people are really good at managing servers, they run at about 30 to 50 percent. By virtualising that layer, you immediately get a reduction in power consumption. And by structuring your data centre in such a way that you only blow air. For example, you suck out air from the top of a rack, whereas typically what you do is you’re blowing cold air either from the top or from the bottom and you’re trying to cool the whole room. On the next layer you’re virtualising the CPUs to actually cross-share. Whereas before you would have disaster recovery as a separate thing, you no longer need that because one data centre will serve as a back-up for another. Or in the same data centre, you’ll get virtualisa-tion both within and across data centres. Th at gets rid of the whole data centre, if you’ve have enough data centres. Clearly, if you’ve only got the one then it doesn’t save you anything.

21CN is one of the biggest IT programmes in the world. What lessons have you learned from this huge project and how much has it deliv-ered thus far in cost savings from the original UK£1 billion target? AR. Th e total cost savings so far amounting from the switchover to our 21CN network are UK£600million. In terms of lessons learned, when you’re running a very large programme you forget the human element, because you focus on the technology and the massive spend as well as the excitement around building something new. Th ere has to be a migration to be done because you can’t move everyone overnight from one system to another, or one network to another, because, quite frankly, most of the

AR. First and foremost in a global organisation, which also does so-called outsourcing and off shoring, you need to distribute the people to be near customers, to be with their colleagues and to be organised in such a fash-ion that the ‘lead to cash process’ is laid out on the fl oor. If you imagine that going from initial lead or a contract with a customer all the way to billing and then getting paid for it, is a lead to cash process. So how do you lay it out physically on a fl oor, in a building? Th en you combine situating the customer in the middle of it, although the customer comes and goes as you develop things, and link them up by white boarding and video linking in such a natural way that people will actually speak to each other to avoid travel.

Avoidance of travel has fi nancial advantages and it speeds up col-laboration because you just speak. Th e microphones are hanging off the ceiling like lights so you speak normally, share things on a white board and you touch it with your fi nger. It is about a little bit of technology, a little bit of physical collaboration, and a little bit of lay-out which forces people to think through what their customer is going through. As you can imagine, if 24 steps were taking six months to get through it would tell you pretty quickly the customer isn’t going to be too happy. As well as massive savings in collaboration, we found at least a 30 per-cent saving in costs.

Blue-sky thinking

BT subsidiary launches mobile ‘cloud’.

Dubbed “Silicon Valley’s fi rst phone company”, Ribbit Corp. was snapped up by BT in 2008 for US$105 million. The business recently launched Ribbit Mobile, a free web-based service that allows mobile phone users to manage calls, messages and phones in the ‘cloud’, as the company’s founder and CEO Ted Griggs explains: “The basic idea is that if you have a mobile phone and you have a computer, it links them together, so that if you’re not able to answer your mobile phone, you can answer it on your computer. If you’re not able to answer it on your computer, it will take a message and transcribe that message into text, and then it will send that back out to you, either as an email or an SMS.” Ribbit Mobile’s target market is the mobile professional and the service will work on almost all of the 60 million mobile phones in the UK today. “In the future, no one will buy a mobile phone without a cloud backup,” says Griggs. “Ribbit Mobile represents the fi rst step in that future.”

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www.bme.eu.com 47

Whilst you were undertaking 21CN, the full force of the recession struck. How are you being affected by the downturn – are budgets being cut and are you being asked to do more with less?AR. Of course, most of us in the world are being aff ected but the good thing is that we were on target. We were heading that way anyway because of our past investments in 21CN, but, in particular, the ‘right fi rst time’ programme that we ran. Th e programme yielded a lot of benefi ts, which reduced costs anyway, while the number of customer complaints has declined so he’s the number of phone calls. Again, we’ll give you that data if you wish. But that resulted in cost savings anyway fundamentally. Th en we had our platform programme, 21CN, which allowed us to cut costs. We’re now putting in a new operating model, which will reduce costs even further. I guess next year we’ll get another similar amount out. So over three years, we’ve saved a lot of money.

BT has transformed itself from a telco business into a global network and IT services company. What’s been the secret of BT’s transformation and what technology milestones are you particu-larly proud of?AR. Th at’s a good a question. Th e fi rst thing we’re proud of is the fact that we’ve followed customer demand and listened to customers. Th at’s always been a problem in a large company, because there are so many people with opinions. A couple of times we were messing around with technology for technology’s sake. We were thrilled that we were going to be the world’s fi rst all-IP network and so on. However, the custom-ers really do want faster speeds and they want diff erent products.

From the competitive landscape point of view, we’re in fairly good shape, because we have the biggest ethernet footprint across the UK. So competitively we’ve improved. I think the milestones were obvi-ously 21CN, the Ethernet programme, the BT Home Hub, BT Vision, the fi bre rollout and Ribbit (see box out). Th ese are BT milestones so I’m not trying to take the credit. However, I am probably most pleased with being able to give more than two million customers a home hub. It’s easy to do these things in small numbers or give them to one bit of the country, but rolling them out nationally is totally diff erent.

What gives you the biggest buzz about being CIO at BT? AR. Getting customers together with the coolest technology. For instance, my mother-in-law has a problem with mobile phones. She asks me why we say they are easy to use? I tell her they’re easy to use because you press the green button and then you dial the number, and then you press a red button. But she says ‘Why is it red to stop and green to go’? Th en I realised it’s because she’s Indian and red is a good thing in India. Like the Chinese stock market, for example, when it’s red, it’s up. As a Brit, I think red must be a bad thing – stop. On iPhone there is an application for this problem, which is a pretty cool technol-ogy. When we see a new technology we have to consider whether we can get it to 10 million people because we are a scale company – a big company. We have to do things for a lot of people. We will never beat your one-man band who will do things for one customer. So bringing customers useful technologies and in scale are the things that give me the biggest buzz.

customers don’t care. Unless you give them something brand new, they don’t want to move. Th e migration period takes a long time, and people don’t plan for the migration period as much as they plan for the destina-tion. It’s a bit like the desire to get to the top of Everest. You assume you are just going to land by helicopter when in fact you forget you need to have ropes, tents and oxygen on the way up.

So I think the lesson learned was migration planning, which is a lot bigger than just the fi nal destination would lead you to believe. For example, part of our plan is to replace the little electronic messages that come up at bus stops to tell you how long it will take for the next one to arrive. Th is is run by an ISDN line so when do you plan to disconnect it and connect it back up? Another example is Barclays. When do you migrate the whole bank to the system? Th ey won’t take very kindly to you slipping in the odd branch here and there. Th ese sorts of exercises need to be planned very carefully.

Th e next lesson was that people needed to be trained in a very diff er-ent skillset when you make massive changes. Th ey are used to repairing things that go wrong or they’re used to doing a tiny bit of building but when you’re replacing the whole country’s networks and platforms and systems, suddenly the amount of new stuff you do is enormous. It’s a bit like living in a house and then learning how to build one – it’s not at all the same thing, right? I can do some repairs to a house but I couldn’t build a new one. Also, the silos that we had, had to be broken, whether there were network people not speaking to systems people, across all lines of business. Th ey all had to sit together and work together.

Presumably the planning that has gone into 21CN has been in-tense? AR. I’ll give you an example: you may need a new kitchen but most of us don’t build kitchens for a living. If you did, however, you would be very careful to make sure the plumber arrived just before the electrician, who arrived just before the cabinetmaker and so on. You can forget this in a large project. People will say, ‘I turned up and the site was closed so I went home’.

Th e guy who went home creates problems for the guys who then turn up later. So the synchronisation of humans and the careful tread-ing of work was enormous. We had 20-odd vendors who had to arrive, and they themselves were outsourcing to others, so it was a big people coordination task.

“We’re proud of the fact that we’ve followed customer demand and listened to customers. Th at’s always been a problem in a large company, because there are so many people with opinions”

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48 www.bme.eu.com

Globalisation is transforming competition into a fast moving target. Th e com-petitive landscape changes every day, enabling new

and innovative services to be launched rapidly, creating an unanticipated threat for enterprises. We believe the companies that will succeed in this global market transformation are the ones that inter-connect their core assets – namely their network, people, and processes – with real-time communications to harness a hidden wealth: the knowledge of their employees and partners. Knowledge is the real competitive diff erentiator that no one can copy. We call these companies “dynamic enterprises”.

One way to address competitive challenges while increasing col-laboration is through Web 2.0. Its services are increasingly important for a company’s performance and we believe that they will become the ‘de facto’ foundation for collaboration. Knowledge is probably one of the most scat-tered resources in an organisation, and this phenomenon cannot be fi xed through business applications.

Enterprise objectives are less about technology and more about posi-tively infl uencing its business performance. Our vision is that IT depart-ments will shift from technology houses into internal business service providers, delivering the digital weapons to help their business units gain

market share and become more profi table. Th is implies that CIOs need to focus more on the essentials. Two trends will emerge:

• All-IP, service-aware networks will become the norm, supporting applications from the core (or the carrier’s point of presence) to the device, which is not possible with heterogeneous technologies.

• Managed communications services models will be favoured for OPEX-based deals.

We believe carriers will play an increasingly important role in helping organisations be dynamic.

Unifi ed communications simplifi es communicationsUnifi ed communications (UC) has been perceived so far as the cross-

roads between the telecom and the IT worlds and, in many cases, compa-nies have struggled to demonstrate a clear ROI. We believe that the UC market as we know it today will transform into what we call ‘contextual communications’, where real-time communications off ered by UC tech-niques will be embedded into composite applications that aim to serve specifi c business needs. UC’s role will not only be to simplify communica-tions, but rather to make sure that there’s no latency in communications between people during critical business instances, such as a sales negotia-tion. Th en UC’s contribution to business will become indisputable.

Increasing customer satisfaction So far customer service excellence has been the primary vehicle to

measure customer satisfaction. In some situations, customer service agents’ skills are not suffi cient for providing the right answer at the right moment, (fi rst contact). Organisations should consider expanding customer service

beyond the contact centre walls, by integrating com-pany experts into the process. For example, in our Genesys off ering, we provide agents with the ability to reach an expert during an interaction with a customer through the integration of presence-based UC and collaboration features embedded into their screen pop-up application.

Th is is a single market and integration naturally

happens as long as a company understands the combined value of the com-ponents of a dynamic enterprise: network, people, process and knowledge. We’re used to getting a dial tone and internet access. Communication now has little value, it’s almost a commodity. However, if companies consider it part of a broader scope, which puts business imperatives at its centre, then it becomes a real diff erentiator in a Web 2.0 world where collaboration is the name of the game and will be for many years to come.

INDUSTRYINSIGHT

Xavier Martin offers an insight into the challenges enterprises are facing in today’s turbulent business environment and how becoming a dynamic enterprise helps address these problems.

Xavier Martin is is VP of Strategic Marketing at Alcatel-Lucent Enterprise &Vertical Markets – a position he has held since 2002. Prior to this he was Worldwide Marketing Director for Contact Center Solutions, Communication Applications and Unifi ed Communication solutions. His career includes 20 years of management experience in software solutions, database management systems, business intelligence and contact centres.

“One way to address competitive challenges while increasing collaboration is through Web 2.0”

Becoming a dynamic enterprise

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have put their money where their mouth is in a way. Th ey are sharing the load with us. Taking the risk. We’re currently in the process of migrating to Cable & Wireless and are still actually fi nishing that off . We’ve been going on that for about six months now. And we’re letting some of the BT lines just run out naturally.

Why is it so important for a company like Kier to have a robust com-munications infrastructure?TW. We have offi ces and sites across the country and obviously the sites are fairly fast moving. Some can last as little as 12 weeks and others go on for years.

Any company needs good internal communications. But when you’re dealing with construction you have to set up a site at very short notice and we’re dealing with very large clients. We work in frameworks and we have to be able to both tender electronically and receive instruc-tions electronically so when we go on site we need to have access to all the contract documents and be able to deal with amendments electronically. We also need to be able to run collaboration soft ware on site. Th is may be mandated by the client and if we don’t have that we can’t start. We

CONSTRUCTION

What were the reasons behind the company’s decision to migrate to a Cable & Wireless communications network?Terry Walker. We’ve moved to Cable & Wireless because we felt we’d get a more responsive approach and more of a partnership approach with them. So far that’s proven to be the case. Prior to that we’d been with BT for 10 years. Th ere was a lot of dissatisfaction with BT: it has been broken into various parts and it’s very hard to fi nd a way through that. Th e or-ganisation is not transparent to the client and I didn’t feel that they were sharing our problems. Th ere was a lot of pain but it wasn’t being shared.

Mainly it was to do with getting sites set up quickly. Getting people on site to do the telecoms work when they said they were going to be there. And resolving issues that came up. And it was just not happening in a very eff ective way.

Did you consider contracts with other communications and net-working companies?TW. Th ere was a tendering process and we took the view because we’re pretty stretched resource wise that we would use a third party company for this. Th ey are called Total Network Collective. Th ey fronted it for us and they did a very good job. We did a virtual RFP fi rst and they recommended companies which they thought would meet our require-ments. We chose Cable & Wireless because we felt they were onboard in terms of a partnership approach. We wanted shared responsibility for resolving the issues. And one of the key things was that we signed up to a performance bond, so if they don’t perform then we get some sensible recompense for that. With BT they do pay if they don’t respond in time but they pay nothing that’s worthwhile. It means that Cable & Wireless

Having just signed a €5.5 million contract with Cable & Wireless to build a new communications network, Kier Group’s investment in IT shows no sign of being dented by the recession. But while technology remains a top priority for the construction giant, head of IT TERRY WALKER tells Business Management that there are tough times ahead in 2010.

Buildingconnections

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can’t dig a hole, we can’t do anything because we don’t have the detail we need. So it’s critical these days that as soon as we start on site we have the comms infrastructure in place. Th e comms lead time is the biggest issue for us from an IT perspective.

What new technology will Cable & Wireless’s WAN introduce to Kier’s construction sites?TW. Cable and Wireless have got some interesting new products which I think will help us. We’re going to get some more bandwidth on site. And whereas in the past people would just want email, now they are using collaboration soft ware. We’re also using document management systems and web based systems so we need to move a lot of data rapidly to and from the site. Mainly we’re going to get better bandwidth than we’ve had before and resolve any issues we had.

What are the challenges involved in running technology on so many different construction sites and are there uniform systems across all your sites?TW. We off er diff erent types of products depending on the size of the site. If I’ve got a short run 12-week site then I’ll probably put in broadband. Where we’ve got a large project, say building a prison that is going on for two or three years, then we’ll put in pretty much offi ce based comms. At one end of the spectrum the main criteria is to get a rapid site set up as fast as possible. On the other hand we want resilience and back up and stability. Th erefore we over engineer the line to some extent.

Reading Central, a joint venture with Invista Real Estate

Kier employees on site


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Can you describe a particular project the company is working on and the IT set-up on the construction site?TW. One we’re doing currently is a prison called Featherstone Prison in the West Midlands and we’re putting in several bandwidths there. We are going to sell some of that bandwidth on to our contractors. So rather than them having to set up their own comms we are going to provide the whole comms side. Cable & Wireless provide the line and are help-ing us to set up the technology and they are helping us to subdivide the technology so we can sell on the link to our sub contractors. So it’s a close working relationship with them to get that set up.

Kier works on many interna-tional projects, including in

the Middle East and Dubai in particular. Do you run the same systems in those countries as you do across UK sites?

TW. Not directly because in Dubai, for instance, the cost of comms is very high and the cost of putting a line back to the UK is prohibitive. So they use their own local internet service providers in Dubai. Working in Jamaica, we do have comms directly to Jamaica. And they use our systems based in the UK. It depends which country we’re working in and the cost of putting in the solution. Dubai is particularly diffi cult because the comms costs are very high. Th ere is a big diff erence in costs in Dubai compared to the UK. We’re just looking at doing some work in Saudi Arabia and that also represents a bit of a problem for us. Th is is to do with the infrastructure because the places where we work are not necessarily next to any major conurbations. It will be dealt with locally.

How high a priority is IT within Kier and how crucial is it to the smooth running of its operations?TW. It’s pretty critical these days. A large part of our business now is also support services. Th at is very much process driven and the IT systems drive the business. Support services is a 24/7 365 days a year operation so keeping that up and running can be quite a challenge. On the construc-

tion side we’re moving to a more rapid site set up pace. We are also moving higher volumes of data and we do rely on IT for receiving all this information. IT is seen by the management as a business tool. We have a top-level steering committee, which is a subset of the board so it is seen as important. Traditionally IT spending in construction is not as high as some other industries but I do I think that is increasing slowly. And I think IT is more important than ever now in terms of communicating with the client and manag-ing the business.

“IT is seen by the management as a business tool”- Terry Walker

Left to right: recent Kier developments. The Port of Liverpool wind farm Lingfi eld Park Racecourse


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TW. We have had a look at that. We think that will come in but I don’t think it’s in its full form that we can use at the moment but we’re keeping

a close eye on it. We’re moving heavily along the virtualisation route because

that will save us costs and reduce the hard-ware requirements. We are looking at servers

because for a given investment I can reduce the cost of running a service. I don’t need to buy new hardware every time and it gives me a lot of benefi ts in terms of disaster recovery. I can recover a system very quickly if it is virtualised.

The global construction industry has been hit hard by the economic downturn. Has this affected spending on IT within Kier?TW. Yes, in the last year we’ve made a move to centralise our IT. In the past we’ve had a hybrid model. Centralising IT has resulted in some cost savings coming out of that. We’re also looking at putting in an asset management system, which would include both hardware and soft ware. We’re fi nding that hardware is sitting around in various offi ces. It’s spare and not used whereas I could use that elsewhere in the group. Soft ware, we could put in soft ware harvesting so that if somebody is not using an application we could take it back and reallocate it to another person. Th ere is uncertainty. We are not sure where the bottom of the downturn is going to be in terms of construction. We are thinking it will probably be late this year that things are going to get quite tough. We are build-ing projects that were designed before the recession now and there is not enough stuff going through the design phase for us to build later in the year. Th e private sector has been badly hit and we’re doing quite a lot of

What IT projects will you be working on at Kier in the year ahead?TW. Th is fi nancial year we’re not looking at new projects, we’re looking at consolidating what we’ve got. Th ere’s a lot of work going into buying better so we’re reviewing all our suppliers. Th e Cable & Wireless choice was one of many buying operations we’ve got going on. We’re currently looking at hardware, voice and printing. We’re doing a lot to try to buy better and standardise what we’ve got.

Is managed printing services an area that you will be looking at in particular?TW. We’re going to look at that. It will be diffi cult for us to do but we’re certainly going to move along that way. We’re going to go out with a tender in the next couple of months. We’ve currently got far too many printers of too many diff erent varieties across the group, bought in diff erent ways. So we need to buy better, standardise and reduce the asset base.

Are there any other aspects of IT that you could considering con-tracting out?TW. Not specifi cally at the moment. We’ve got a good in-house team and we can do most things ourselves here, more cost eff ectively than going outside. We go outside for specialist help with back up all our systems and we do that extensively. With our in-house team we don’t really need to rely on outside people too much and we can probably do that more cost eff ectively ourselves.

Many European companies are currently considering the benefi ts of cloud computing and virtualisation. Are these areas you and your team are looking at?

thaware r

g.

Kier Group employs more than

11,000 people

worldwide

The new UK Supreme Court, converted from the historic Middlesex Guildhall in London’s Parliament Square


public sector work and that has held up well but that may be aff ected by a change of government so there’s a lot of unknowns at the moment.

Does this situation make it diffi cult to forecast what should be spent on IT projects in the year ahead?TW. Yes it does. We’re going into the budgeting process for next year and I don’t quite know what the fi nished position will be at this point. I’ll go

with a wish list then we’ll have to look at whether we can justify that. Th e situation is very patchy. Some bits are looking quite positive but other bits we just don’t see the work coming through because of the private sector. We think it will be very diffi cult for the next 12 months at least.

You have worked at Kier for 10 years. How would you describe the experience of working there and how has it changed in the time you have been there?

TW. It’s very big. It has traditionally been largely decentralised so it’s quite diffi cult to co-ordinate things such as IT across the group. Cen-tralising IT has been quite a challenge for the group to get their heads around that but it’s throwing up a lot of savings. I’d say also that Kier is a very people orientated company. Th ere’s now much more business understanding of the need for IT and there’s a better understanding of the value cost model. I think we’re moving in the right direction. We’ve achieved a lot in Kier in the last decade.

“Th ere is uncertainty. We are not sure where the bottom of the downturn is going to be in terms of construction”

A Kier housing development

Kier was instrumental in creating the largest liquefi ed natural gas terminal in Europe at Milford Haven in South Wales

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How can telepresence deliver tangible ben-efi ts and even a competitive advantage for organisations today?Odd Sverre Østlie. Organisations that have greater access to experts make quicker deci-sions and those who work closely with custom-ers, suppliers and partners are more likely to be successful. Telepresence makes this all possible. It enables people to collaborate face-to-face re-gardless of distance, resulting in reduced travel and costs, all whilst unifying the organisation and increasing productivity. It is visual col-laboration taken to an entirely new level, where thousands of details seamlessly work together to provide an immersive, natural forum that helps ensure everyone is on the same page. Research from the Aberdeen Group demonstrates that telepresence helps build customer relationships by enabling a 21 percent faster response time. Th is also helps to generate 22 percent more rev-enue from existing customers. Moreover, the instant face-to-face collaboration with experts and decision-makers anywhere in the world that telepresence enables, helps speed up deci-sion making and time to market.

What are the main drivers behind the adop-tion of telepresence? Is it cost savings, fl uctuating fuel prices and meeting ‘green’ targets or are there other reasons?OSØ. Costs savings, fuel prices and green targets are all drivers in the uptake of telep-resence. Cost savings deliver the clearest ROI for telepresence and are typically measured as the money saved on the transportation, hotel, food and incidental costs associated with in-person meetings. A Forrester Research report published in February found that companies using telepresence save about 20 percent on travel annually. Moreover, a strategically placed telepresence implementation can pay for itself in a year or less.

In tough economic times, cost savings from travel reduction alone can justify new

technology deployments, but many innova-tive companies have had the foresight to im-plement telepresence as a way to help achieve their environmental sustainability goals, such as TNT. Th e global express delivery company implemented telepresence as part of

its ‘Planet Me’ programme and estimates a 20 percent reduction in travel, which has signifi -cantly reduced carbon emissions.

Th ere are also productivity benefi ts that can be gained with telepresence. For example, the time saved and confusion eliminated by replacing phone and email communications with face-to-face video collaboration. Who hasn’t been on an audio conference call won-dering who – if anyone – was listening to them, or struggled to be heard while others talked over them? In addition, replacing an in-person meeting with a videoconference can save hours or even days in travel time. Th at is time that can be spent working more productively or even at home with family and friends.

Can you recount a recent solution you pro-vided for a client and how it created better effi ciencies?OSØ. Th e mobile operator Vodafone started using TANDBERG video conferencing in 2006 and it has transformed the way the company does business. Vodafone intro-duced a company-wide video conferencing programme that included ‘VC lounges’ and

EXECUTIVEINTERVIEW

A global meeting place Telepresence heralds a new era in videoconferencing that attempts to put people from all over the world in the same room. To discover more, Business Management speaks to Odd

Sverre Østlie of TANDBERG.

rewards for using video to incentivise em-ployees. Th e programme has been a huge suc-cess. Employees have fully embraced visual communications and the company has saved over 80,000 business trips during a three-year period. Vodafone has also saved more than

17,000 tonnes of CO2 from a reduction in business travel.

As technology evolves what does the future hold for telepresence?OSØ. Th e future for TANDBERG telepresence is focused on making the experience more accessible and easier to tailor to any organisa-tion’s unique setting. One size does not fi t all for telepresence; that’s why we have already created options that scale to the scope of a deployment. As we move forward we expect to see telepres-ence develop into two main streams; the tradi-tional formal, fi xed-format (for generation X), and a more fl uid, informal style (for generation Y). For the latter, expect to see increasingly immersive display types, interactive and touch-sensitive technologies and closer integration with advanced collaboration tools for people who are comfortable with technology. Th e future of telepresence will take the new way of working to the next level.

Odd Sverre Østlie, Vice President, Telepresence and Advanced Solutions Group, TANDBERG, is responsible for go-to-market strategy, overlay sales and integrated solutions for telepresence and unifi ed communications including PC-based video.

“Th ere are also productivity benefi ts that can be gained with telepresence. For example, the time saved and confusion eliminated by replacing phone and email communications with face-to-face video collaboration”

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What is the role of IS in these challenging times?Albert Hitchcock. I think IS has a very valuable role to play in companies that are going through a lot of change, and my view is that the IT func-tion actually has a unique position. It looks right across the business, understands how the business runs, understands the business processes, and has a unique viewpoint really on how to optimise business. So in challenging times, obviously the ability to confi gure the business pro-cesses, look at how business functions get optimised together, look at the whole as opposed to each of the parts is quite a valuable thing to be able to do, so IS is quite well positioned to do that.

Within Vodafone, as within all businesses, you have the sales side and you have the business side. They have different dynamics – one is quick, demanding immediate responses while the other is slightly more thorough. Do you fi nd that IS has to manage the tension be-tween the two?AH. Yes, it’s interesting really. I think there are a number of diff erent facets to how we manage a business such as Vodafone. Clearly we have to run a very tight operation. We have to deliver very high quality service to our customers, and so there’s a very high quality focus within the en-vironment in terms of driving continuous improvement and driving the

TELECOMS

It has taken 25 years for Vodafone to mushroom into the world’s largest mobile telecoms fi rm. But with the company looking to slash huge costs on the back of the recession, we catch up with Group CIO Albert Hitchcock to discover how he is making cuts and why the telecoms industry

is racing into a “rich world of capabilities”.

Straight talk

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KPIs (key performance indicators) and the key metrics of how we deliver a quality service. At the same time, we have to be agile. We have to do a lot of new things – experiment with new technologies, bring about business change and drive new revenue streams. So we have to manage that dual-ity, all this solid, down to earth business processes to drive the quality aspects but at the same time respond to new internet trends, new revenue opportunities and move very quickly in a fast development cycle.

So how can the CIO be a better busi-ness partner?AH. My view is IS has to be at the forefront of the business. I think in the past, it was very easy for the IT function to be a back offi ce function sitting remote from the business run-ning things like data processing or ERP systems. I think businesses were quite comfortable with that in a way because it was almost a necessary evil. In 21st century business, IT really drives a lot of business, and most businesses around the world could not survive without an eff ective IT function. I think because of the way business is carried out today and because of the reliance of business and IT on each other, it’s very im-portant that the CIO and the IT leadership team in an organisation are very much at the forefront of driving business change.

With it having moved from being a back offi ce function to very much being a front offi ce function, it puts a lot of emphasis on the skills and the capabili-ties of the IT organisation. No longer is it adequate just to get a computer science degree and to just focus on the technical aspects of the job. I think increasingly IT professionals have to be confi dent at communicating. Th ey have to be good leaders. Th ey have to inspire their teams. Th ey have to be able to un-derstand the business dynamics of the business they’re in and contribute to those business decisions, so it requires a much more rounded set of skills and a much more business orientated set of skills. A lot of IT professionals are perhaps not so comfortable with that aspect. So a 21st century business has to be at the forefront, has to be contribut-ing to business decisions and business outcomes in a very diff erent way.

But what about the so-called ‘legacy’ employees who have been in IT for a number of years and perhaps don’t have those skill sets at time when IT is changing incredibly quickly?AH. I’m a fi rm believer in giving people lots of experience in their careers, so moving people around between functions, both within technology

and outside of technology. Th e traditional approach would be that you joined and IT organisation as a systems analyst and you typically rose through your career in a stovepipe. If you started off as a UNIX administrator, you may become a UNIX programmer and then you may run a data centre team before becoming a data centre manager. Th is keeps people very siloed in their experiences and their knowledge when we’re looking for very rounded people in technology, so we’re looking for people to understand infrastructure, but we’re also looking for them to understand applications. We’re looking for them to understand business processes. We’re looking for them to become very comfort-able working with business managers and people in other functions.

So getting people to move around in technology is one thing that we’re trying to encourage between net-works and infrastructure applications, but also getting people to move in and out of technology. Why don’t we take people out of technology

Vodafone was formed in 1984 as a subsidiary

of Racal Electronics

Plc.

Currently boasts 323 million customers Employs

79,000 people

worldwide

THE RIGHT NUMBER

Albert Hitchcock

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plexity of integration. So we have two contrasting situations: product development, where we’re looking to be at the forefront where we’re doing stuff in-house, but also working with best-in-class suppliers and providers in terms of evolving the whole customer experience and then the in-house applications – the in-house IT of how we run the business whilst moving to a much more standardised footprint.

What then for you would be meaningful IS metrics?AH. I think there’s always a combination. Clearly, we have to run a very high quality service delivery, and so there’s a whole set of metrics around data centre performance, network performance, both for our internal employees as customers and our external customers. So those are tradi-tional IT metrics that we would apply like most companies would apply, but increasingly we’re also looking at business eff ectiveness metrics. In other words, how does IT infl uence revenue? How does IT help reduce churn? So we’re increasingly looking at IT performance in a business context. Creating that linkage between the IT dashboard, if you like, and the business dashboard is something that we’re very focused on.

And how do you balance the need for autonomy from each business line with the need for synergy across the entire enterprise?AH. Th is is a challenge. Clearly, local country businesses or operating companies need to be very close to their customers so they arguably need to do things at a local level. Th is means driving customer relevancy and driving very high quality service to our customers. Each of the countries in which we operate have diff erent statutory and legal and market condi-tions that have to be taken account of. Having said that, a lot of what we do in every single country can be very similar so we’re looking at how we can blend the standardisation roadmap with the needs for local services and the needs for local requirements. We are driving a very big focus on

and put them into marketing? Why don’t we get some marketing people in technology? Why don’t we move some fi nance people into technol-ogy? It will create a much richer base of experience because I think it’s through this widening of experience that we become more rounded in our outlook. We get a better understanding of how business operates end to end. We become much more comfortable with contributing to business decisions. We become more consultancy based, not in a bad way, but in a way of being able to understand how you blend technical requirements with business requirements. At the end of it not only do we want very well rounded, seasoned technology professionals, but also business professionals.

Vodafone has plenty of technology partnerships. How much is de-veloped in house and how does the CIO decide what to build and what to buy?AH. I split that into two areas. Clearly we are very much involved in the build side as it relates to new technologies that are at the forefront of changing our customer experience, and so we do have an R&D function. We are developing products and services very much at the leading edge. If I contrast that with what I will call the more traditional IT focus of running internal systems like BSS, OSS, ERP, we’re moving much more into a packaged, out of the box type environment. Because Vodafone is a relatively young company, we don’t have the encumbrance of the mainframe legacy era so a lot of our applications are packaged applica-tions anyway.

We are focused on whether we can simplify that landscape because we have many packaged applications across the company. We’re very much on a path to reduce the number of discreet technologies we have and move much more into a standardised footprint, which is packaged, off the shelf soft ware not in-house written to reduce the cost and com-

A view of where Vodafone has operations, subsidiaries, affi liates and network partners

Vodafone’s operations, subsidiaries, affi lates and network partner


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can streamline and simplify the business and processes, the more we can take out in terms of technology cost.

Is it not the case that you would be doing this regardless of any economic downturn and this is simply a smart thing for Voda-fone to do? AH. Yes, I think so. When I came into the role it was clear that we needed to simplify some of the aspects of IT and we have been on a simplifi cation journey. Th e current economic climate has brought that more into acute focus so it’s important we do those things faster than we would have done normally. It’s important that we focus on those in terms of the priorities so that we can get costs out of the business quickly in order to put more em-phasis on the speed of delivery of those cost saving programmes and improve the speed of how we drive the simplifi cation agenda. I think it’s a good IT practice in any company to be very conscious of cost. I’m not creating

future legacy. I’m not creating future cost. Th e role of IT leadership in a company is to think business, to think shareholder, to think customer impact, and so cost is one of those very important aspects that needs to be managed as part of an ongoing, professional delivery of services.

You spoke about standardisation and the more near-term goals. What is the longer-term vision for Vodafone and what are your key strategies to achieve these targets?AH. It is very much about balancing the running of the business at an optimal cost base and a high degree of effi ciency and we’re doing a lot of benchmarking externally with the various benchmarking organisations around the world. Th e other side is the innovation side of the equation, which is how do we deliver the most compelling end user, end customer experience? How can we bring technology together to drive the con-vergence of services and capabilities, whether those are internet-based services, VoIP, presence, content, widgets, applications and so on.

We’re moving into a very rich world of capabilities that we’re off er-ing to our customers and technology needs to be at the forefront both in terms of creating the vision but also the roadmap of how we deliver it into the business, We’re on the forefront of a very large change because we’ve spoken about these sorts of technologies for a number of years, but it’s really happening now in 2010. Th ese technologies are reaching a level of maturity where they’re real for the fi rst time, so it’s quite exciting now that we can actually look at creating a roadmap where we know there are going to be tangible assets in the next few years that will make a substan-tial change to the environment.

standardisation but we’re also conscious that in certain situations there will be local country needs that have to be adhered to. It’s about achiev-ing that balance so we see the benefi ts of standardisation plus the benefi ts of being able to respond to local market needs. Th ere’s still a long way to go and that will drive a lot of benefi t for us.

Vodafone plans to shave a mammoth €1.1 million off of costs by 2011, How are you looking to reduce operational costs and how are you working around any actual impact on the IS function?AH. Like most businesses on the planet right now, we’re looking at cost clearly, and it ranges right across the spectrum of technology – ev-erything from the very standardised approaches of how you take out infrastructure costs, application costs. For instance, every company’s probably considering things like data centre virtualisation. We’ve had a big programme looking at reducing cost in the data centres, driving out the utilisation of our equipment, putting in place standards across our infrastructure environment, moving to a standard PC image across the company, moving to a standard hardware across the company and driv-ing procurement practices with our providers renegotiating contracts. All these things are not specifi c to telecommunications or Vodafone.

I think pretty much everyone’s looking at this right now but we’re doing a lot of that. We’re also looking at our business processes and how we can simplify them. A lot of the technology complexity has come about because of complexity in the business processes and the fact that we do things diff erently, so we’re looking at how we can standardise a lot of that and how we can start working much more in a single way across the globe. Once we start unifying those business processes and improving those areas and streamlining those areas, we can start to take away some of the technology complexity. So it’s a very tight linkage here between complexity business processes and costs in technology. Th e more we

Albert Hitchcock took over the reins as Group CIO of Vodafone in August 2007, following some 14 years with Nortel where he saw it through its economic crisis in 2001. Hitchcock, who holds electronic engineering and systems engineering degrees, is responsible for Vodafone Technology Information Services Organisation and the IS strategy and functions within Vodafone and its operating companies.


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use of audio and videoconferencing, such as ex-perience in driving and setting up adoption pro-grammes, training, helpdesk support andproactive service monitoring.

BT Conferencing provides tools that trackusage of systems and calculate the savings, notonly in numbers of flights and miles, but also,using your metrics, the amount of money andCO2 saved. Using these tools you can show fig-ures on the ROI in video. A major electronicmanufacturer has saved itself over €1.7m withineight months by utilising a fully managed CiscoTelepresence solution.

In today’s uncertain environment it is veryimportant to keep your key employees and busi-ness functions working effectively. Establishing aconferencing culture, whether this be audio, weband/or video, means that when there are obsta-cles to working, whether they be adverse weath-er conditions or a power cut in your office, yourbusiness is ready to communicate effectivelythrough this, wherever your employees may be.The key element is making sure this is in placebefore a crisis takes place. When looking to im-plement a conferencing solution, there is no onesize fits all approach . The right solution, that willgive you maximum return, will be dependant onyour individual business needs, objectives andbudget. This is where BT Conferencing andCisco can work with you to establish what is rightfor your organisation. With more reasons to im-plement a solution, why not contact us for a freeconsultation. �

Finding the right solution to meet yourbusiness goals is critical. It is importantto start with your business needs andobjectives and build a solution from

there. For example, researching and understand-ing how many meetings can be replaced withconferencing and the number of people that needaccess to facilities. These key factors along withoverall business objectives such as cutting carbonemissions and travel costs will help determine theright solutions for you. Travel costs for face-to-face meetings are a major avoidable cost, but onlyif the alternatives to doing business are economi-cally viable, user-friendly and business quality.Audio, web and videoconferencing offer such so-lutions and increasing numbers of organisationsare discovering the business benefits they can helpdeliver. These solutions are the means by whichpeople can experience effective, unified and real-time collaboration. As an example, experiencewith our customers shows that for an organisa-tion of 10,000 people, typical travel costs for face-to-face meetings are approximately €117.Conferencing typically replaces 52 percent offace-to-face meetings, yielding a €1.33 millionP&L saving.

Carefully matching the communicationmedium to the message is critical to the success ofcommunication. Nonverbal cues delivered face-to-face (in person or over video) can determinethe success or failure of communication. Video

allows full interactivity and immediate feedback.Telepresence takes this to the next level with life-size, crystal clear images, as well as rooms built togive you the experience of being in the sameroom. In today’s business landscape, factors suchas global and dispersed workforces, minimisedbudgets, and increased corporate social responsi-bility have also positioned video as an obviousand necessary communications tool. With video,the ROI benefits commonly identified as havingthe most immediate impact are the efficient use ofexecutive time and reduced travel. However,video also serves as a critical communication toolin preserving the face-to-face phase of relation-ship management, across departments, business-to-business and between partners.

Investment in video systems is one thing, butinvestment in managing those systems and fullusage and adoption is another. The financial andenvironmental benefits from increasing use ofconferencing can be quantified. However, it iseasy to overlook the human factor issues whentrying to change the meetings culture. To getwidespread adoption, you have to get peopleusing the technology, and experiencing how valu-able it can be. A significant amount of effort andongoing user support is required to maximise the

Putting telepresence to work A look at how to find a virtual meeting solution that is bothtechnically sophisticated and cost effective.

ASK THEEXPERT

Ben Hobby leads the video product, service andmarketing operations for the EMEA region at BTConferencing and has been in the conferencing industryfor 12 years. Prior to BT Conferencing, Hobby was withWire One where he focused his efforts on managing anddriving international sales efforts. He holds a degree inManagement Studies from Reading University.

BEN

HOBBY

“Global and dispersedworkforces, minimisedbudgets, and increased

corporate social responsibilityhave positioned video as an

obvious and necessarycommunications tool”

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Your solution focuses on telepresence ap-plication performance and service level management. What does this mean and what benefi ts does it deliver for telepres-ence users?Ravi Pather. Telepresence brings expectations and in order to meet those expectations and maintain confi dence in the service, a user experience (quality of experience) based ap-proach to service and performance manage-ment is needed. Th is is not business as usual, relying on traditional network-focused tools and metrics that drive an estimation of service performance. Users expect consistent service levels and good customer support, so telep-resence performance and service level man-agement means that if and when things have gone wrong, IT can not only acknowledge the problem exists, but can repair it quickly and in the fi rst instance, using the right resource, typically proactively before users notice any degradation in service levels.

How does it reduce IT operation and sup-port costs?RP. One of the largest challenges to any IT organisation supporting real time voice and video is the lack of visibility for actual call performance based on the user experience, particularly in the multi-vendor, multi-device world now deployed. Th e IT cost burden is from this lack of visibility with the wrong tools and service management processes in place and a reliance on working reactively, waiting for problems, rather than proactively avoiding

problems. Far too much time and resource is wasted in problem management, escalating problems to the wrong resolver or support resource and having support calls bouncing across the IT organisation trying to fi nd the correct owner who can identify the problem and provide the fi x. Th e Psytechnics solution provides the necessary call detail supporting the Level 1 service desk (problem acknowl-edgement, problem escalation, proactive ser-vice management), the Level 2/3 support teams (advanced diagnostics and root cause analysis, proactive problem resolution) and business and operations management (real time service level visibility and reporting, trend reporting, SLA compliance reporting), providing highly accurate and effi cient service management process support.

The telepresence sector has mushroomed recently. How are you assessing the market at the moment and does the recession mean more organisations are looking to cut back on their travel and carbon footprint?RP. Th is market is growing rapidly with telepresence use driven by the need for increased collabora-tion and communications eff ectiveness, helped by improved multi-vendor interoperability, reduced equipment and travel costs and carbon savings. In support of this, many

EXECUTIVEINTERVIEW

enterprises are looking at outsourced telepres-ence and video conferencing services to help reduce capital expenditure as well as the IT operating and support costs derived from the increased management and deployment com-plexity. In that respect many service providers are reviewing their service off erings in terms of the breadth of services as well as how to dif-ferentiate themselves with a signifi cant focus on managing the customer experience as well as the business model supporting the service itself. Th ose enterprise organisations that will manage telepresence in-house are in many cases reviewing their IT support processes and tools having learned the hard way from their earlier VoIP experiences.

What do you think will be the catalyst for widespread telepresence adoption? RP. Improved collaboration and communi-cations eff ectiveness is aided by technology simplifi cation, multi-vendor interoperability and price reductions. Simulating face-to-face meetings in a telepresence suite, or being able to talk face-to-face with a customer or col-league from the desktop by simply clicking an icon has revolutionised the adoption and use of this technology; it’s as simple as making a phone call. However, maintaining adop-tion, use of and confi dence in these services is through the delivery and management of a consistently good user experience. Th e impact of this rapid evolution of enterprise communications is further disaggregation of the communications delivery infrastruc-ture and requires a common view of service performance over a wider range of network elements and communications devices. In short, the management of the performance of enterprise communications becomes more diffi cult with the complexity unifi ed commu-nications inevitably brings.

Ravi Pather is responsible for developing and implementing Psytechnics’ ‘go to market’ message and models driving revenue growth into key European enterprise and telecoms

markets. He brings more than 15 years of seasoned leadership and experience, previously building Intellidens’ European operations and developing its multi-million dollar European customer base.

A 21st century way of workingTo get the lowdown on the burgeoning telepresence market and how it can revolutionise the way you do business, we talk to Psytechnics’ Ravi Pather

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AVIATION

WELCOME TO THE CHEAP SEATSBudget airline Ryanair may be best known for its low prices, but when it comes to investing in technology it is prepared to spend big bucks, as Head of IT Eric Neville reveals to Diana Milne.

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Despite the seeming unpopularity of its charging policies and the introduction of a raft of new ‘hidden costs’ for passengers, Britain’s most successful budget airline, which featured in the BBC Panorama documentary Why Hate Ryanair earlier this year, continues to go from strength to strength. In the fi rst six months of

2009, its total passenger numbers rose 15 percent to 36.4 million and it currently carries more people across Europe than any other airline. It’s a major achievement in economic conditions that have left its larger rivals fl oundering. Indeed in a recent interview with the UK’s Times newspaper, Ryanair’s CEO Michael O’Leary boasted that his airline could soon topple British Airways as the UK’s dominant carrier: “It is hard to know when it will happen because it is hard to keep up with how fast BA’s passenger numbers are declining. We will overtake them at some point.”

Behind the scenesTh e airline’s success is due not only to its aggressive pricing strate-

gies, but also to the work going on, unseen by the public, in its back offi ces to streamline the carrier and support its rapid growth. Head of IT Eric Neville is behind the technology driving the airline’s success. Despite predictions by the aviation technology provider SITA that investment in airline IT is expected to drop to an all-time low this year, he is upbeat about the prospects for Ryanair’s own IT expenditure. “Obviously we’re looking at anything we can do to reduce the cost of what we’re doing. Everybody in the industry is. But at the same time we do realise that to change your processes you have to invest. And sometimes you have to spend money to save money.”

With this philosophy in mind, Ryanair recently awarded a €15 million contract to Cable & Wireless to manage its European IT and communica-tions network in the 151 airports to which it fl ies. Under the terms of the contract, Cable & Wireless will provide an ‘always on’ communications network for the airline, which will cover all passenger interactions with the airline, including check-in kiosks, and each Ryanair site will be connected to a secure wide-area network.

Th e arrangement will dramatically improve Ryanair’s operational eff ectiveness, says Neville, who explains how, under the previous system, Ryanair would have to apply for licenses from the telecoms authorities of the countries it fl ies to for back-up broadband connections. It will save costs and improve effi ciency by using VoIP as part of the Cable & Wire-less network. “In the current set up, we have hundreds of invoices every month from telecoms providers. We also have outbound voice charges. At the moment we pay local rates to the local telecoms providers, which are higher compared to what you’d pay if you had a consolidated voice off ering. Th e new system will reduce the voice costs for everybody and centralise the billing and invoicing process, which currently creates a huge amount of work for our fi nance department. Th is will be a much simpler model.”

Th e system will improve the reliability of Ryanair’s communications, supporting such crucial parts of the operation as the timely taking off and landing of fl ights. “Obviously these time slots are quite crucial,” says Nev-ille. “If there’s critical information that needs to be passed around, then you need a robust telecommunications infrastructure in place to make sure the communications are clear and reliable. More robust telecommunications technology will also support the introduction of Ryanair’s self-service check-in kiosks, which currently operate in 10 airports. Th e Cable & Wire-less network will ensure that there is a reliable communications link back

From left to right: Gerry Lawlor, Cable&Wireless Worldwide; Sean Mahon, Cable&Wireless Worldwide; Michael O’Leary, CEO, Ryanair; Eric Neville, Head of IT, Ryanair


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to the main Ryanair IT system, as Neville explains: “Cable & Wireless will be providing the primary cir-cuit and the back-up circuit for the kiosk so that it can get back into the overall reservation system to process the data. So locations with kiosks, such as Stanstead or Girona, will be very reliant on our infrastructure to make sure they keep running.”

Looking ahead, Neville predicts some major changes to the way airlines operate and to the passen-ger experience in particular. While self service-check-in may seem a forward-thinking concept, it is just the tip of the iceberg according to Neville, who predicts it won’t be long before paper boarding passes no longer exist and passengers hold all their fl ight details on their mobile phones. “In an ideal world, passengers would be able to just scan their mobile phones in order to get on to a fl ight. Th at’s the direction the airline industry would like to go in because it’s easier. But obviously you’re dependent on airports having this functionality. And that’s probably still a bit of a way off . But this is one of the projects we will be looking at because we think that in the future the mobile phone will be a major part of how passengers interact with the airline.”

Big spendersFor now, however, he says he and his team have

“an endless stream of projects” they are working on, with none, he claims, threatened by the economic downturn and the reductions in IT spending across the European aviation industry. “I have enough proj-

1985Ryanair is set up by the Ryan family with a share capital of just UK£1, and a staff of 25. The fi rst route begins operating daily from Waterford in the southeast of Ireland to London Gatwick. Passengers: 5000

1986Ryanair launches fl ights from Dublin to Luton after obtaining permission from the regulatory authorities to challenge the British Airways and Aer Lingus duopoly on the route. The launch fare of UK£99 return is less than half the price of the BA/Aer Lingus lowest return fare of UK£209. Passengers: 82,000

1991The company switches its main London base from London Luton Airport to the new London Stansted Airport in Essex. Despite the impact of the Gulf War, Ryanair makes a profi t for the fi rst time, of UK£293,000 for the year.Passengers: 651,000

RYANAIR TIMELINE1990Ryanair accumulates UK£20 million in losses and goes through substantial restructuring. The Ryan family invests a further UK£20 million. The airline is re-launched under new management. It moves to a single aircraft fl eet type, scrapping free drinks and meals on board and reducing the lowest fares from UK£99 to just UK£59 return. Passengers: 745,000

Budget airlines

Routes by airlineCountries served

Passengers travelled (2008)

43.7 million

50.9 million

7.5 million

200

165

73

(number of aircraft)

Source: Figures from respective websites

2008’s revenue

13countries

25countries

29countries

€594 million

€3010million

£2622million

Average route distance Number of airports served

774km

1277km

1300km

Number of employees

30005262

6107

184 routes

950 routes

380 routes

66airports

151airports

113airports

Ryanair is Europe’sbiggest airline

in terms of passenger numbers


www.bme.eu.com 69

common approach to what information has to be passed where and how. We have one central reservation system, but the Spanish have requirements for data to be transmitted in one format then the UK needs it in a diff erent format. It’s a huge challenge for us because regulatory requirements can suddenly change and then we have to spend six months on a project to work around that. It’s not just a simple code change. It would be lovely to see one consolidated European standard rather than individual mandates coming in from diff erent countries all with diff erent requirements.”

Th e greater focus on passenger information in light of tightened airline security means that Ryanair is now required to gather more pas-senger information than ever before. Th at, coupled with the increase in passenger volume, means the airline’s IT system has to process more information than ever before. Th is, he says, does create some technical challenges: “Th e sheer volume of what we put through the system each day is huge. We have millions of hits each day to our system, particu-larly when we have our free seats sales, and we have to cater to that. Th is means having a scaleable 100 percent uptime solution and a robust disaster recovery plan in place.”

Despite the enormity of the operation he is supporting, Neville’s IT team still only consists of 26 members of staff in what he describes as a tight knit company. “Generally here everybody works hard and it’s a good group. Everybody here is in the same building, and we’re all in a very ‘on top of each other’ environment.” Th is, he says, makes the process of asking Ryanair’s management for funding for IT projects relatively easy: “You go in, you put your case together and it’s a yes or no. It’s as simple as that. You don’t have to go to America or someplace else for approval. Realistically, you just put your case together and if it makes sense, we do it.” It’s just such a no frills approach that has made Ryanair the aviation giant that it is today. But if Neville has anything to do with it, the airline certainly won’t be cutting corners when it comes to technology.

ects to keep me going for quite a long time here,” he says. “Th ere’s no plan to end any of them because ultimately the projects we are doing are either benefi cial to us, the customer or to streamlining the process.” Indeed, he goes on to say that automation of some processes could ultimately help airlines to steer their way through the downturn: “If you look at us, 99 percent of our bookings come through the web, which obviously saves costs. Simplifying the process of getting people from the check-in area to the aircraft is what we want to look at now, which is why we’ve introduced the 100 percent check-in system. As much automation as possible is what we’ve got to try and aim for.”

While Neville is optimistic about Ryanair’s plans to continue spend-ing on IT improvements, he is aware too of the challenges posed by work-ing in such a security conscious industry, particularly when it comes to the handling of passenger information. Neville says one of the biggest problems around such data regulation is the lack of a common European standard across the region. “One of the biggest challenges we have is regu-latory requirements. Th ere’s obviously a huge drive right now for passenger information. My biggest issue with that is that there is no single European

2008 The EU Commission’s Charleroi case, which claimed Ryanair’s low cost agreement at the airport was funded through a subsidy or state aid, is dropped. The airline announces half-year profi ts that are 47 percent down on 2007’s interim profi ts due to soaring fuel costs. Traffi c, however, grows by 19 percent.Passengers: 50.9 million

2000In January, Ryanair launches Europe’s largest booking website – www.ryanair.com. Within three months the site is taking over 50,000 bookings a week.Passengers: 7 million

1995Ryanair overtakes Aer Lingus and British Airways to become the largest passenger airline on the Dublin-London route (the biggest international scheduled route in Europe). It buys four more Boeing 737s from Transavia bringing the fl eet to 11 aircraft. Traffi c for the year exceeds two million for the fi rst time.Passengers: 2.26 million

2005Five new bases are launched, at Liverpool John Lennon Airport, Shannon in the West of Ireland, Pisa, Nottingham East Midlands and Cork, giving the carrier a total of 15 bases throughout Europe. Passengers: 30.9million

Cheap ThrillsRyanair is Europe’s largest budget fare airline with 32 bases and over 950 low fare routes across 25 countries, connecting 151 destinations. By the end of 2009, Ryanair will operate a fl eet of 200 new Boeing 737-800 aircraft with fi rm orders for a further 102 new aircraft, which will be delivered over the next three years. Ryanair currently employs a team of more than 5000 people and expects to carry approximately 50 million passengers this year alone.


ASK THEEXPERT

Making the move to cloud com-puting is a key strategic com-mitment that can transformproductivity and business agili-

ty. The critical issue is security; you need an in-frastructure protected at every step to allow thefull deployment of applications and services thatwill deliver the phenomenal returns a privatecloud architecture can bring. The latest develop-ments in Stream Scanning Technology andDistributed Spam Analysis from NETGEAR areunlocking the full potential of cloud computingfor businesses of every size.

The pace of change in the online worldseems only to be matched by the ability of hostileusers to develop ingenious new ways of bypassingtrusted security systems. The figures, as always, arealarming. Gartner tells us that in 2007 the numberof web-hosted threats increased 800 percent, whileanother recent study found that 79 percent of web-hosted threats come from legitimate sites, whichhave been hijacked by hackers. Then we learn thatattackers broadcast an average of 40,000 computersecurity threats each day – 15 million each year – atan estimated cost of €70 billion per annum. Yet thereality is that security technologies have taken amajor stride in their battle against the ever-chang-ing threats. When it is protected by the intelligentand proactive security solutions now available,moving to the private cloud is a practical, produc-tive and cost-effective strategy.

Unified defenceNETGEAR's patent-pending Stream

Scanning Technology is designed to accommo-date the unique needs of a virtualised or cloud-based infrastructure. The NETGEAR ProSecureSTM family of web and email threat managementappliances incorporates both Stream ScanningTechnology and Distributed Spam Analysis, giv-ing organisations a unified defence against someof the most sophisticated threats now circulatingthe internet. Stream Scanning Technology brings

network security fully into the online world byoperating in the same way as the threats it is facing.Conventional computer security solutions usebatch scanning, in which a file must be downloadedcompletely before it is scanned, causing unaccept-able latency in the network. The new ProSecure ap-

pliances deploy Stream Scanning Technology tobegin the scan as the first packets arrive, rather thanwaiting for a complete file. If there is a threat, it isdetected sooner, and if the file is clean it passesthrough the defences with negligible disruption.

Proactive spamprotection

NETGEAR's DistributedSpam Analysis focuses on thethreat carried by email and em-ploys a cloud-based architecture toapply an unprecedented level of so-phistication to its defences. The so-lution consists of two elements: theProSecure STM gateway securityappliance, and the NETGEARSpam Classification Center for in-the-cloud Distributed SpamAnalysis. The STM appliance com-municates with the SpamClassification Centre in real time,obtaining up-to-the-second infor-mation on spam and malware out-breaks. All types of email-bornethreats can be detected and classified instantly, basedon the analysis of more than 50 million sourcesaround the world.

In comprehensive benchmark testing, NET-GEAR Stream Scanning Technology consistentlyperformed five times faster than traditional batch-based solutions. Independent tests by Miercom alsodemonstrated that the ProSecure STM familystopped over 50 percent more threats than com-

petitive products tested, including more than 99perent of all spam and email threats.

Tests were also conducted on the NETGEARProSecure UTM family of Unified ThreatManagement appliances, focusing on their ability

to stop malware and viruses. Apartnership of two leading inde-pendent test laboratories inGermany, AV-Test GmbH andThe Tolly Group, foundProSecure up to four timesmore effective than competitorproducts.

The NETGEAR ProSecureSTM family includes theProSecure STM150, STM300and STM600 models. It has beensuccessfully implemented in awide range of industries – fromgovernment, to healthcare, toretail – with deployments rang-ing from small companies withfewer than 50 users, to geo-graphically dispersed networkscomprising thousands of users.

As the private network moves to the privatecloud, it now has the intelligent security it needsto reach its full productive potential. n

SECURING THE CLOUDCloud computing may be all the rage these days but it throws up its own

unique security headaches for CIOs, according to Thomas Jell.

70 www.bme.eu.com

Thomas Jell has beenManaging Director ofNETGEAR Germany for three-and-a-half years. Havinginitially joined the company asa Retail Account Manager in1999, he is now recognised forbuilding the NETGEAR homebusiness in Central Europe.

“Attackers broadcast an average of 40,000computer security threats each day at an estimatedcost of €70 billion per annum”

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nications), or out-tasking of functions within general operations where it makes most sense (i.e. service desks or network monitoring). Out-tasking can off er key fundamental advan-tages over outsourcing: to test the validity of your business case on a lower risk basis, and also, to retain a stronger mix of strategic and operational control in your operation. Th is decision – to out-source or to out-task – rep-resents one of the core pillars of your smart sourcing business case and strategy, either as a step or a destination.

Be diligent in your diligenceUnderstanding what you have in your net-

work, where it is, and exactly how much it costs to support appears easy but, in reality, it’s diffi -cult to pinpoint with accuracy. Don’t be fooled by a provider that claims to magically achieve a full understanding of what you, the network owner, sometimes struggle to achieve. It’s im-portant to test your potential provider. What is their process for diligence and auditing? What is the typical cycle? What are the timeframes for diff erent site profi les? What tools do they use? And most importantly – what happens when their fi ndings are not accurate or are vastly diff erent to yours? Who validates and

how? Th e bottom line here is that if you get the audit wrong, you’ll undoubtedly run into avoidable challenges further down-stream.

Collaborating on riskTh is is where the diff er-

ence between providers really starts to materialise. Within this strategic partnership you are considering, there are some key questions to consider: who’s responsible for system uptime? Do you have an explicit plan for demarcation of responsibility and resolution? But so much more importantly, when things

do go wrong, what is the provider’s answer beyond ‘service credits’? What will they do to ensure system recovery and where have they done it before? And lastly, what is your provider prepared to put into contract to un-derscore their commitment to de-risking your continuity and quality of service?

their business needs to get to – how they will fund the transformation, where they will fi nd the skills and how they will keep the core of their operation agile. Th is is the real potential of the out-sourcing. But for many, this is also the elusive grail of out-sourcing, and for some, the unfulfi lled promise. So, how do you make out-tasking and out-sourcing work for you?

Out-tasking: In reality, there are many factors involved in building and running a suc-cessful out-tasking operation, but experience has shown three factors, in particular smart sourcing, diligence, and ‘risk collaboration’ make the real diff erence in setting up a suc-cessful model

Smart-sourcing: Single IT outsourcing agreements are right for those who can maximise the benefi ts of taking everything out of house, but for many others this route represents a path that is too extreme. In such cases, you may wish to consider out-tasking as your starting point. By out-tasking, we mean one of two things –either the out-tasking of ‘towers’ within your IT enterprise (i.e commu-

Times are tough. With pressure still on both the top and bottom line, IT professionals are fi nding it harder than ever to walk the tight-

rope of operational effi ciency versus building for growth – something not made any easier by the global economic meltdown. But there is good news. Despite our shared economic chal-lenges, the world of IT innovation has proved fertile ground over the past few years, with growing momentum and maturity around solutions such as ‘cloud’, FMC and unifi ed communications, together with the continued growth of more established sectors such as out-sourcing and out-tasking.

So why does out-tasking continue to be a strong proposition, especially in a downturn? Simple, it’s one of the few IT propositions able to make an immediate and tangible impact on cost reduction. Whereas many other technol-ogy promises wander into the murky waters of ‘productivity gains’, out-tasking with elements of service provision and technology change (at an agreed, recurring cost) does stand out in the mist as a true, measurable beacon for cost reduction and transparency. But it’s not just about cost. Th e strategic value of out-tasking is what really gives it meaning and traction with the forward thinking, strategically ori-ented IT professional – those looking at where

Kris Hardiman lifts the lid on the importance of smart sourcing, due diligence and strategic risk partnerships.

Making out-tasking work for you

INDUSTRYINSIGHT

Kris Hardiman is VP of Services Marketing for Siemens Enterprise Communications. Having worked within the fi eld of IT Sourcing for the past 10 years, Hardiman has held positions in global service portfolio management, sales and marketing. Siemens Enterprise Communications is a global provider of UC services and solutions.

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How do you protect your organisation’s brand and reputation inan environment of change? How do you identify and managenew risks? How do you overcome increasing challenges to de-liver an effective information security programme? How do

you comply with new regulations and industry requirements? These are justsome of the questions that information security leaders are struggling with –and must find answers to – if they are going to outpace change and protecttheir organisation’s most critical information assets. Over the last year, wehave witnessed a global economic downturn become a crisis for many coun-tries and many organisations and we have seen the competitive landscapedrastically altered for many industries. Although there are signs of economicrecovery, the impact of these difficult times will continue to be felt by manycompanies as they reshape, restructure and reinvent themselves.

Information security leaders are facing considerable challenges as a re-sult of the current environment. It would be naive to think that informationsecurity has not also been impacted by economic pressures; the need to re-duce costs and provide more results from investments already made extendsto all areas of the enterprise, including the information security function. Tosupport this statement, there is evidence from our survey that many more or-ganisations are struggling with a lack of skilled and trained information se-curity resources. Our survey respondents are also reporting that finding

THE

74 www.bme.eu.com

ITSECURITY

bigQUESTIONSenior IT professionals from 1900organisations in over 60 countries wereinterviewed for Ernst & Young’s 2009 GlobalInformation Security Survey. Here BusinessManagement reports the survey’s mainfindings and the pressures currently beingfaced by IT security managers.

Earnst & Young ED_4August 25/01/2010 11:39 Page 74

adequate budget for information security is a major challenge for the coming year.These are clear indicators that information security is not immune to external eco-nomic forces and must find ways to improve efficiency and effectiveness whilekeeping spending to a minimum. The current environment is also producing arise in both internal and external threats. Our survey participants reveal a grow-ing concern with reprisals from recently separated employees as well as noting anincrease in external attacks on their company websites and networks.

Regulatory compliance is also top of mind for information security leaders,and our survey confirms that it continues to be an important driver of informa-tion security improvements. Several industries and countries are moving towardmore regulation, primarily related to data protection and privacy.Correspondingly, companies are reporting an increase in the cost of complianceas the complexity and the number of regulations also increases. In this 12th an-nual global information security survey we take a closer look at how organisa-tions are specifically addressing the changing environment, including the risks,challenges, increasing regulatory requirements and new technologies.

Managing risksIn the last several years, we have seen a shift in the way technology is being

deployed to support the flow of information. The increasingly mobile and globalworkforce, coupled with the rapid adoption of broadband and over-the-air tech-nologies, has changed the way many organisations use technology and informa-tion. As a result, it has expanded or perhaps even eliminated the traditional bordersof the organisation and the conventional digital perimeter paradigm. Organisationsmust now adjust their information security risk management approach – from‘keeping the bad guys out’ to protecting information no matter where it resides.We consider this to be a more ‘information-centric’ view of security and a moreeffective approach. Not surprisingly, improving information security risk man-agement was the top security priority for our survey participants, with 50 percentof respondents indicating that they plan to spend more and 39 percent planningto spend relatively the same amount on this initiative over the next year.

In addition to the technology shift, the current economic environment isfuelling an increase in the number of threats organisations are facing. The in-crease is driven not only from external sources – our survey found that 41 per-cent of respondents noted an increase in external attacks – but also from withinthe organisation: 25 percent of respondents witnessed an increase in internal at-tacks, and 13 percent reported an increase in internally perpetrated fraud.

A structured and repeatable risk management approach is the core elementof an information security management system (ISMS). It is also the approachchosen by a majority of companies to address their information security risks.Our survey results show that 44 percent of respondents currently have an ISMSin place or are in the process of implementing one, with another 32 percent con-sidering an ISMS solution. Information security standards are also playing an in-creasingly important role in shaping the ISMS for many organisations. Althoughonly eight percent of respondents have achieved formal certification, 36 percentof respondents indicated that they are using the ISO/IEC 27001:2005 securitystandard as the basis for their ISMS. Standards can provide organisations with aset of leading practices related to information security risk management and area logical starting point in developing an effective and comprehensive ISMS.

In 2009, the primary challenge to effectively delivering information securi-ty was the lack of appropriate resources, with 56 percent of respondents rankingthis as a high or significant challenge; this is an increase of eight percentage pointscompared to our 2008 survey results (48 percent). In somewhat of a contradic-

tion, our respondents indicated that the two leading areas for reducing spend-ing over the coming 12 months will be for outsourcing services (18 percent) andin-house staffing (16 percent). It appears that although organisations recognisethe availability of resources to be their most significant challenge, only 20 per-cent of respondents plan to hire more in-house resources and only 14 percentplan to spend more on outsourcing to help alleviate this issue.

Allocating adequate budgets to information security continues to be a chal-lenge in 2009, with a total of 50 percent of respondents ranking this as a high orsignificant challenge; this is a very notable increase of 17 percentage points over2008 (33 percent). This is also particularly interesting in light of the fact that 40percent of respondents indicated that they planned to increase their annual in-vestment in information security as a percentage of total expenditures, and 52percent planned on maintaining the same level of spending.

The survey results clearly show that information security budgets are notbeing significantly reduced, nor is the security function being asked to take onmore responsibility than in previous years. So why do organisations continueto struggle to find adequate security budgets? One contributing factor may bethat 44 percent of the organisations that participated in the survey still don’thave a documented information security strategy. In the absence of a well-thought-out information security strategy, it will continue to be difficult to ar-ticulate and build the business case for an appropriate budget allocation,particularly in today’s economic climate. The lack of a cohesive strategy alsomakes it difficult to prioritise spending decisions and to ensure that scarce re-sources are being allocated to where they will provide the most benefit. It ismore important than ever for organisations to develop comprehensive, risk-based security strategies, prioritising spend based on the value of the assets atrisk, both in order to justify budget requests and to make sure that they aregetting maximum benefit out of those budgets.

It has long been generally accepted that authorised users and employeespose the greatest security threat to an organisation and that raising and main-taining the awareness level of those people is a crucial part of an effective infor-mation security strategy. In spite of this knowledge, this remains a significantchallenge and a significant issue for many organisations. While most organi-sations (74 percent) have a security awareness programme, less than half ofall respondents indicated that their programme includes such things as: up-dates and alerts on current threats (44 percent), informational updates on newhot topics (42 percent), specific awareness activities for high-risk groups suchas social networking users (35 percent). Furthermore, only 20 percent of re-spondents indicated that they measure the effectiveness of their awarenessprogrammes and modify those programmes based on the results.

Given that the challenge associated with organisational security awarenesshas not been reduced over time, it can be concluded that many current securitytraining and awareness programmes are not working as well as they could be. Itshould also be noted that 73 percent of respondents have no plans to outsourcetheir security training and awareness programmes. Yet, when we look closer atthe 12 percent of respondents who currently outsource this activity, we find thatorganisational awareness is less likely to be a significant challenge. In fact, it doesnot make it into the top three challenges for these organisations. This may illus-trate the fact that more organisations should begin to look for outside help to de-sign, execute, monitor and (or) measure the effectiveness of their securitytraining and awareness programmes.

Regulatory compliance continues to be one of the top priorities for organi-sations and an important objective of the information security function. When

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asked about the importance of specific informationsecurity activities, 46 percent of respondents indi-cated that achieving compliance with regulationswas very important with an additional 31 percentconsidering it important. This is not surprising,given the considerable attention and focus on com-pliance efforts over the last several years by most or-ganisations.

When we asked how much companies werespending on compliance efforts, we found that 55percent of respondents indicated that regulatorycompliance costs were accounting for moderate tosignificant increases in their overall information se-curity costs. While this number is down from 65percent for the preceding three years, only fivepercent of respondents plan on spending lessover the next 12 months on regulatory compli-ance. This may be an indication that organisa-tions are spending too much of their securitybudgets on demonstrating point-in-time com-pliance as opposed to implementing a compre-hensive information security programme wherecompliance is a by-product and not the primarydriver. The point is further supported by the factthat only 36 percent of our survey respondentshave deployed a solution for continuous moni-toring of security controls. Moving to a morerisk-driven security programme and leveragingcontinuous compliance monitoring technolo-gies may allow organisations to reduce theamount they spend on demonstrating compli-ance and either reduce their overall security in-vestment or focus it on more value-addedinformation security services.

Data protection and privacy are key com-ponents of regulatory compliance and are gain-ing more attention from governments andregulators. The number and complexity of pri-vacy-related regulations is increasing; yet, 68percent of respondents stated that they have aclear understanding of the privacy laws and reg-ulations that may impact their organisations. Inaddition, 63 percent of respondents indicatedthat they include privacy requirements in con-tracts with external partners, vendors and con-tractors. Although it is encouraging thatcompanies are recognising their privacy re-quirements, it is also clear that far too few or-ganisations have taken the necessary steps toprotect personal information. Only 32 percent ofrespondents have produced an inventory of infor-mation assets covered by privacy requirements,and an even fewer number (26 percent) have con-

ducted an assessment of the personal data lifecycle (gathering, using, storing and disposing).

Our 2009 survey shows that companiesand information security leaders are facing anenvironment of change; escalating levels ofrisk, new challenges and increasing regulatorycomplexity are now driving information securi-ty decisions. Companies are also struggling toleverage new technologies – to get the most ben-efit and cost savings possible – while understand-ing the potential security impact to theorganisation. Our survey also revealed that manyorganisations continue to be challenged by a lackof skilled information security resources and in-adequate budgets. These challenges have beenidentified in our previous surveys, but this year,they have become more significant, driven by

heightened economic uncertainty. To address therisks and challenges of the changing environ-ment, information security leaders are abandon-ing the old paradigms and taking a moreinformation-centric view of security. It is a moreflexible, risk-based approach that is focused onprotecting the organisation’s critical information,and more suited to supporting a connected busi-ness model and today’s increasingly mobile andglobal workforce. By leveraging the informationin this survey and taking action on the sugges-tions for improvement, organisations can achievemore effective information security and contin-ue to outpace change.n

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Visit www.ey.com/lessons-from-change to learn moreabout Ernst & Young’s recent research and the resultingeight performance goals that companies are, or shouldbe, adopting to prepare for the rebound.


INDUSTRYINSIGHT

In a time of economic restraint, IT organi-sations are under pressure to do more,with less. Budgets are flat – or falling – andcompanies are forced to look carefully at

their network infrastructure and ask if it providestoo much, at too great a cost? The need to cut ex-penditure and be more efficient has resulted inmany organisations reassessing traditional ap-proaches to networking: Ethernet to every desk-top has been the mainstay of enterprisenetworking for over 20 years, but it is increasing-ly looking like a technology that is fast approach-ing its ‘best before’ date.

High-speed Wi-Fi (known as 802.11n) onlybecame a standard in 2009 but already accounts fornearly a quarter of all enterprise wireless sales.Improvements in signaling and a much higher datathroughput means it offers not just a far more reli-able and faster connection than 802.11a/b/g wire-less networks, but it can be used as an alternative totraditional wired networks. An alternative that ismuch lower cost to install and operate.

A modern wireless network based on802.11n offers:

• A reduction in power consumption of 90-95percent compared to an equivalent wired so-lution

• Price per megabit is 30 percent cheaper thantraditional wireless solutions

• The opportunity to create a ‘blended edge’ net-work – a network offering wired and wirelessconnectivity at 50 percent of the cost of a wirednetwork

Migrating to a ‘blended edge’ of wireless andwired networking is now a well-established busi-ness practice; wireless networks are very secure,they meet the needs of a workforce that expectsmobility within the office, and they can save con-siderable budget even when used to supplementan existing wireless network – a process known asRightsizing. The experience of organisations

which have deployed wireless networks is thatusers readily switch over from wired to wirelessconnections. Microsoft operates one of the largestwireless networks worldwide, with over 11,000Aruba wireless LAN access points. It recognisesthat three-quarters of their employees use thewireless LAN every day – and 70 percent of em-ployees believe that the WLAN saves them at leastfive hours of work time a week.

In a telling sign, more CEOs are now direct-ing their respective IT organisations to investigateall, or mostly wireless access techniques whenmoving to new offices. The experiences of con-sultants KPMG is a salutary lesson to organisa-tions planning to deploy ‘wired only’ networks.Their plan to move 2800 employees into a newpurpose-built 60,000 square metre office nearAmsterdam called for 55 wired switch chassiswith 260x 48-port switch cards and 18,000 ca-bles at a total cost of €4 million. Instead, theyadopted a new rightsized network edge, halvingthe size of their wired network and deploying apervasive wireless LAN with 240x 802.11nAruba access points. The firm realised a €1.4million saving, and expects an estimated€530,000 drop in recurring operational costseach year. The savings in operational costs weremore than enough to cover the costs of the newwireless LAN.

Even those organisations that already havea wired infrastructure in place can benefit fromrightsizing and see savings in operational ex-penditures. Companies benefit from significantreductions in annual maintenance costs fromstopping support on unused switch ports(some 20-40 percent of access ports are typical-ly not used day to day, and every 48 ports can cost€1400 per annum in maintenance fees).Organisations also benefit because they no longerhave to budget €1000 or more for each employeemove, addition or change. The benefits of WLANtechnology are well understood; users havedemonstrated an affinity for the technology, andclearly prefer it over wired networking infra-structure. The pressure for efficiency and savingsin today’s economic environment makes the de-ployment of wireless networks an imperative fororganisations of all sizes. n

Rightsizing the networkEnterprise Wi-Fi networks can radically alter the ways organisations deliver

information to their employees, explains Roger Hockaday.

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Roger Hockaday is the Director of Marketing for ArubaNetworks, EMEA. The author of numerous articles onwireless networking, and a well-known speaker, hecombines extensive experience of wireless (and wired)networking with the application to real world business.

“The pressure forefficiency and savingsin today’s economicenvironment makesthe deployment of

wireless networks animperative for

organisations of all sizes”

Roger Hockaday

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The phenomenal rise of the internet means that it has become one of the most popular methods in the world for circulating information.

Consequently, even traditional media such as TV, radio, etc, have undergone signifi cant change. Th erefore, today, for most enterprises, internet-based business models have become a communication enabler. Th e increasing dependency of organisations on information technology to manage inter-fi rm relationships is also a consequence of the way the business communication landscape has evolved. Users are embracing the social and collaborative dimension of the web, with the need to access information anywhere, anytime or on any device. Also with the need to network with peers, prospects and friends, collaboration has come to the forefront through the usage of blogs, IM and various other means.

Web 2.0Within this increasingly digitised world,

the concept of Web 2.0 tools has emerged and its use is only growing. A large number of organisations are using collaborative tech-nologies such as blogs, podcasts and wikis to communicate with internal employees and also customers. Because of this, we are witnessing a shift from traditional media to social media. Platforms such as Facebook, Twitter and YouTube, have transformed the way enterprises communicate today. With vanishing perimeters and the obvious ad-vantages that these interactive technologies bring, the imperative to be informed of the security challenges and threat vectors enter-prises can be exposed to is also very high. Phishing, spyware and data leaks risking cor-

Spinning the security webEkta Aggarwal of Frost & Sullivan on why the internet has ushered in a new era of security threats for businesses.

WEBSECURITY

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external expertise can be leveraged. With this, the market is likely to see an increase in trac-tion in OPEX-based solution models. Hence, an increasing number of vendors in the web security landscape, are off ering SaaS-based solution models today.

Conclusion It is evident that the web is fast becoming

a tool through which threats can permeate and pose danger to confi dential data. And the emergence of Web 2.0 technology with its open content sharing environment, besides al-tering the business communications scene, has undoubtedly changed the threat landscape. While the greater interactivity off ered by Web

2.0 has resulted in positive benefi ts for enter-prises, it has also led to the exposure of more security loopholes. Not only do organisations need to fi ght the threats but also to grapple with the changing threat landscape. New and sophisticated forms of attack targeting new technologies such as VoIP, online social networks, etc are continuously changing the face of the threat landscape. Proactive and not reactive web fi ltering measures can only help enterprises keep up with the changing con-tent. Hence, there exists a greater need than ever before for enterprises to view and practice security more as a continuous process than a one time investment.

Ekta Aggarwal is Senior Industry Analyst for Information and Communication Technology at Frost & Sullivan’s South Asia and Middle East practice. For feedback/ enquiries contact [email protected].

undesired sites. However, today, the trend has extended towards inbound content fi ltering as well. Th e integrity of data traveling within an enterprise which is exposed to inbound threats such as viruses, malware and spyware can no longer be ignored.

Deployment of security merely at the perimeter level or pure web fi lters has failed to protect businesses from the fast evolving web-based threats and therefore, is no longer regarded as suffi cient. Conventional antivirus soft ware is no longer suffi cient when it comes to protecting against evolving Web threats. Hence, both inbound and outbound protec-tion has become necessary. Moreover, a multi layered approach is required to address the web

threats. Th is encompasses deploying security at three layers: in the cloud, at the internet gateway and at the end point.

Market growthDue to increased awareness about the dis-

ruption that the web can cause to an organisa-tion, it is expected that the global web security market will register a double-digit growth rate in the next few years. With regards to the de-ployment of web security solutions by product type, the market for soft ware products contin-ues to maintain its dominant position.

Under the growing pressure to reduce costs and maximise resources, organisations are choosing to transition to SaaS web secu-rity solutions and leave the management of the complex networks to service providers where

porate data security are just a few examples. Th e availability of stored information at just one click has created additional risks, leading to possible data loss. In addition, the growing number of remote workers, either working from home or locations away from the offi ce can make corporate networks vulnerable to security breaches, hence making the secu-rity of intellectual property, a prime concern. Companies need to look at ways to control the content that is being posted on the web by employees, especially in the light of growing social networking sites and the focus on the protection of intellectual property. Industry reports also indicate an increasing number of security incidents reported every year, emphasising the need for enterprises to draw attention to web security.

With this increase in the adoption of Web 2.0 technology and escalating security issues, enterprises today are facing challenges from the ever increasing complexity of security threats. Th is has been a major driver for the adoption of web content security solutions. Enterprises are espousing web content secu-rity solutions to help them determine and limit the entry of the information that is harmful for their corporate networks.

Complex networksBesides the changing business communi-

cation landscape, the growing complexity of networks is compelling the need for web content fi ltering. Th e IT network infrastructure is no longer eff ortless with the large number of PCs, servers, routers and switches that need to be dealt with, increasingly by the system admin-istrator. Moreover, the network architecture is also undergoing a lot of change due to chang-ing business models. Th is compound network environment is also bringing increasingly complex threats to the forefront. To tackle this increasing complexity of threats, web content fi ltering solutions provide an excellent match for the corporate need to prevent information and data leakage. However, the continuous evolution of security threats means that or-ganisations need to keep upgrading their secu-rity mechanisms to safeguard themselves. Th e current threat landscape and demands have also changed the role of IT security. Histori-cally, web security was more outward focused for example, URL fi ltering to prevent access to

“Conventional antivirus soft ware is no longer suffi cient when it comes to protecting against evolving web threats. Hence, both

inbound and outbound protection has become

necessary”

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For companies with critical information assets suchas customer data, intellectual property, trade se-crets, and proprietary corporate data, the risk of adata breach is now higher than ever before. In fact,

more electronic records were breached in 2008 than in the pre-vious four years combined. In a world where data is every-where, it has become harder than ever for organisations toprotect confidential information. Complex, heterogeneous ITenvironments make data protection and threat response verydifficult. Yet today’s businesses depend upon their securityteams to ensure that information collaboration and sharing byan increasingly mobile workforce remains safe and secure.

While the continuing onslaught of data breaches is well-documented, what is far less understood is why data breach-es happen and what can be done to prevent them. In order toget ahead of the data breach challenge, it is essential to un-derstand why they occur. Third-party research into the rootcauses of data breaches, including data from the VerizonBusiness Risk Team and the Open Security Foundation, re-veals three main types: well-meaning insiders, targeted at-tacks and malicious insiders.

Well-meaning insiders who inadvertently violate datasecurity policies continue to represent a major factor in theoccurrence of data breaches. In a 2008 survey of 43 organi-sations that had experienced a data breach, the PonemonInstitute found that over 88 percent of all cases involved in-cidents resulting from negligence. Driven by the rising tideof organised cyber-crime, targeted attacks are increasinglyaimed at stealing information for the purpose of identitytheft. More than 90 percent of records breached in 2008 in-volved groups identified by law enforcement as organisedcriminals. Such attacks are often automated using maliciouscode that can penetrate into an organisation undetected andexport data to hacker sites.

Malicious insiders constitute a growing segment ofbreach drivers, and a proportionately greater portion of thecost to business of data breaches. The Ponemon study foundthat data breaches involving negligence cost €138 per recordwhile those caused by malicious acts cost €156 per record.

With the regularity of data breaches making news head-lines, it might seem reasonable to regard data breaches as aninevitable by-product of our connected world, a cost of doingbusiness that we must simply learn to live with. A closer viewof the facts, however, suggests that this is not necessarily thecase. Symantec’s security expertise, global intelligence net-

work and real-world experience with customers combine toinform a more confident perspective.

How to stop breachesBy following a risk-based and content-aware information

security strategy that incorporates multiple solutions workingtogether in concert, data breaches are preventable. Here are sixsteps that any organisation can take to significantly reduce therisk of a data breach using proven solutions:

• Proactively protect information with a unified data lossprevention solution.

• Automate the review of entitlements to sensitive data.• Identify threats by correlating real-time alerts with global

security intelligence.• Deploy a multi-layered combination of security solutions

to stop incursion by targeted attacks.

• Establish network defenses to detect and block data exfil-tration.

• Integrate prevention and response strategies into securityoperations.

Getting startedFor many organisations, the process begins with a data

breach workshop. The Symantec Data Breach Workshophelps organisations to quickly identify their confidential in-formation and accurately identify and quantify their risk ofa data breach. To schedule a Data Breach Workshop or to seea full copy of the ‘Anatomy of a Data Breach’ whitepaper,contact Symantec at http://go.symantec.com/one-breach. n

82 www.bme.eu.com

ASK THEEXPERT

The anatomy of a data breachSarah Whipp on why data breaches happen and how toprevent them occurring.

Sarah Whipp is VP of Marketing for EMEA at Symantec. She joinedSymantec in July 2009 after nine years at McAfee, most recently as VPof EMEA Marketing. Symantec is the world’s fourth-largest softwarecompany and a global leader in providing security, storage andsystems management solutions.

“Well-meaning insiders whoinadvertently violate datasecurity policies continue torepresent a major factor in theoccurrence of data breaches”

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On December 11, 2009 at 6am, it was precisely four years since the Buncefi eld disaster start-ed. On that fateful day in 2005, the explosions were heard some 125 miles away and win-dows reverberated as millions of gallons of jet fuel exploded and went up in roaring fl ames. Four years on and the business owners hit by

the disaster are still suff ering sleepless nights, with many still fi ghting for compensation for both insured and uninsured losses. Even when the material damage claims are done and dusted, there is still an ongoing battle over business interruption and loss of profi t claims.

It can be a shock to many, having worked late into the night every night, called in favours and leaned on credit agreements to return to

trading, to fi nd that a battle remains to receive fair and reasonable com-pensation. Real speculation can be involved in guessing when and how much compensation a company will receive. Sadly, it is becoming the norm that cases such as this drag on for years.

Traditionally, an insurance company would evaluate and pay ap-propriate compensation fairly quickly. But the principle of subrogation, whereby the insurer will launch proceedings against whomsoever it deems liable for the accident, almost inverts this. Insurers are now oft en reluctant to pay out in the fi rst place if receiving compensation for itself looks unlikely. Th is adds to the diffi culties of winning this battle for in-sured losses; however for uninsured losses, the trials are in a diff erent league, so much so that oft en the aff ected company and its insurer join together and sue the party considered to be liable for the loss.

DISASTER RECOVERY

Business, interruptedShock disasters such as fi res and fl oods can prompt a lengthy compensation battle for both insured and uninsured losses. Forensic Accountant Jeffrey Nedas and Loss Assessor Stewart Dymant offer their advice for best dealing with these sensitive situations.

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www.bme.eu.com 85

ruption. Before the event, and as a day-to-day rule, ensure you have a suffi ciently long indemnity period. Companies with a 12-month period. invariably fi nd this is too short. If you need to keep the premium down,

discuss increasing the excess on the policy, and remember that insurance premiums qualify for Corporation Tax relief.

Also ensure that up-to-date management accounts records, evidence explaining good/bad months and

details of contracts you expect to win are kept. And be ready to provide evidence of the size and likelihood of winning bids in progress.

A company’s greatest chance to strengthen its case, and shorten the legal action, comes in the

fi rst 24 hours following the incident – in fact these hours are critical to your claim, so treat the site as

you would a crime scene, and freeze the scene as long as possible in order to gather data and get as many pho-

tographs and witnesses recorded as possible. Doing so will give you the best chance of surviving a Buncefi eld situation. It

also helps to bring in a specialist loss assessor to liaise with the insurance company. Th ey can oft en assist with big issues, such as setting up new premises and sorting out issues with the insurer quickly and will prepare and negotiate claims with insurers and loss adjusters.

Finally, aft er the event, continue to monitor your marketplace, as well as who won the contracts that you have lost as a result of the inter-ruption. Tallying this information against the successes of those compa-nies will help build your case. And remember, never write a ‘quick win’ into your cash fl ow – it can take several years to get everything you are owed, even when you have a strong case.

When shock interruptions to business happen, companies suddenly need to learn the strange realities of compensation, or else their future trading, as well as their present, can be damaged irreparably. If busi-nesses only ensure they are well protected before, well-informed during and ready to act aft er such incidents happen, they will be able to survive and succeed in practically anything.

And the knock-on eff ect oft en means that uninsured losses can be more substantial. For example, a company may be compensated for a site being inoperable for 12 months as an insured loss. But a fi re at a facility that feeds through to other locations can not only grind your logistics to a halt, but can cause the loss of contracts you expected to win or grow. Potential customers suddenly worry that you cannot cope with demand. And the eff ect of this may go well beyond your policy’s indemnity period.

Such was the case for one company aff ected by Buncefi eld. With a major contract almost in its grasp, the prospect pulled out, fearing the company would be unable to cope with their demands. Th at prospect has since ex-panded greatly, and the contract clearly would have done so proportionally. With this in mind, the real loss incurred was actually around fi ve times that of its insured losses alone. Any companies work-ing in high-growth markets face similar battles to regain their losses, particularly if they cannot prove their case.

Be preparedTh ere are certain activities that can help prevent the

worst-case scenario, before, during and aft er a business inter-

Jeffrey Nedas is a Forensic Accountant at Jeffrey Neads & Co, and Stewart Dymant is a Loss Assessor for Harris Balcombe LLP.

Saving data

Recording more data before and after an accident means a better chance of recovering insured and uninsured losses. Keep up-to-date records of:

• Relationships with all new business prospects and clients

• Company accounts and any data accumulated since

• All emails held by the organisation

• Everything you have had to spend since the interruption occurred

The circle of subrogation

Subrogation means the aftershocks of an accident can be felt for years. For example:

• Company A suffers a fi re, and receives compensation from its insurer

• The insurer sues the landlord to recover the payment, claiming it was his responsibility under the lease to provide working sprinklers

• The landlord sues the facilities company, as it paid them to maintain the sprinkler system

• The facilities company sues the manufacturer, claiming the sprinklers were faulty, and so the circle continues

A company’s greatest

chance to win compensation

is in the fi rst 24 hours aft er an

incident

“A fi re at a facility that feeds through to other locations can not only grind your logistics to a halt, but can cause the loss of contracts you expected to win or grow”

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Today, business owners and managersface a serious issue caused by thegrowing use of laptops by their em-ployees. The issue is, of course, theft.

Laptop theft, is a much bigger concern than justthe cost of the replacement hardware. There’salso the responsibility to all company stake-holders for the loss of what could be highlyvaluable and confidential information. Wehave all heard the stories in the media ofprominent government individuals with lap-tops, containing critical information, that havemysteriously gone missing. For organisationsthere is also the cost in time, of missed workand setting up the new laptop. The cost of los-ing just one laptop can easily add up to a con-siderable amount of cost and pain for the userand IT manager.

Nearly all businesses today use laptops. Welove their flexibility and transportability.They’re also easy to lose. It’s a fact that 90 per-cent of UK businesses have experienced laptoptheft. Most laptop theft is opportunistic.Someone leaves their laptop unguarded on a

desk, meeting room table, conference chair orin a hotel room – just for a few minutes. Andwhen they return it has gone. The chances of see-ing it again are minimal. So, what can we doabout it?

EducationOne of the main barriers to laptop security

is a cultural one. We estimate that 95 percent oflaptops are sold without a lock. So we don’t au-tomatically associate the two items. Often a lap-

top theft takes place in what seems like a safeenvironment. And if you haven’t experienced itbefore, you may not be expecting it happen. It’sinteresting to consider whether, if you owned abicycle worth over €1000, you would leave itanywhere unlocked? Probably not. And a lap-top is even more valuable, when you considerits vital role at work.

At Kensington we want to help businessesto secure their laptops and to protect their or-ganisations from unnecessary costs, loss of rev-enue as well as valuable data. Our mantra to allbusinesses is, ‘log-on, lock-on’. Every day whenpeople log-on to their office network we’re en-couraging them to lock-on at the same time.We’ll help you change the culture in your com-pany to take security seriously and avoid therisks of theft.

The right choice Kensington is the perfect business partner

for laptop security because we invented it.We’ve developed a range of innovative laptoplocks suitable for all types of business. Ourproducts include:

Laptop locks: Our award winning MicroSaversrange features super strong carbon tempered steelcables to keep your laptops on your desks.

Portable locks: Today’s mobile workforce isputting organisations at risk everyday. That’s whywe have designed a range of popular portablelocks for use on the move.

Custom Keyed locks: Because we know that allbusinesses are different, we have a range of cus-tom lock solutions. This means you can orderyour set of locks with an individual ‘master’ keyfor each lock, ‘like’ keys that open all the locks ora ‘single keyed’ solution.

Service and support: We’re on hand to helpwith issues like lost keys and forgotten combi-nations. We also supply internal marketingposters, adverts and information to spread themessage to your employees. Remember to ‘log-on, lock-on’. n

UNDER LOCK AND KEYStephen Hoare takes a closer look at the oftenoverlooked issue of laptop security.

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Stephen Hoare, Security Business Development Directorat Kensington Security, has developed a deepunderstanding of the challenges that faceorganisations. He positions Kensington as a partnerrather than a supplier, offering value added serviceswhich help businesses with bespoke physical protectionsolutions, deployment and compliance measuresunique to their requirements.

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stored and shared in compliance with local lawsand industry.

Manage complianceThe regulatory complexities are enormouswhen doing business in multiple nations: somegovernments regulate the physical locations ofthe servers where organisations keep their data.Leaders cannot expect their cloud providers to‘be compliant’ for them. But they must expectthem to provide what is needed to help achievecompliance.

Help strengthen continuityWhat happens if something ‘breaks’ while in thecloud? How is the data owner notified, and howquickly? How is the data recovered? These are thebasics of best practices in business continuity, andthey apply just as much to cloud computing as toany IT outsourcing arrangement.

Educate, communicateTrain employees on security policies and proce-dures and be very clear about how those policiesand procedures relate to the cloud. For example,employees must adhere to corporate IT securitypolicies when exploring cloud services for work-related activities, such as testing a new IT serviceor storing data.

At this point, what is needed in the channeland beyond is a rebuilding of trust as well as a re-newed sense of perspective – a realisation that aswith any other technology development, cloudcomputing initiatives come with their ownunique set of risks and rewards. But the cloudmust not be treated as an unknown to be wary of.Implemented and managed properly, it shouldnot add risk. Ideally, it should do the opposite.The fundamental question is one of balance –weighing, as accurately and in as much detail aspossible, the risks of a data security breach againstthe power of the cloud to directly address manyof today’s most pressing business issues. �

While the economy showssome signs of strengthen-ing, executives are stillpressured to cut costs butcontinue tol deliver busi-

ness-critical functions and solutions. One of thekey trends that Accenture sees is increased inter-est in cloud computing as an opportunity to re-duce both capital and operating expenditures.

Although there is growing recognition ofcloud computing’s benefits, progress is snaggedon concerns about IT security. The threats in-clude the very real dangers of data theft and com-promise, loss of service and phishing incursions.

Four major security concerns worry busi-nesses, which channel partners must address inorder to capitalise on opportunities around cloudcomputing. First, they struggle to trust new andunfamiliar cloud providers as part of their ex-tended enterprises. Will providers treat customerdata with the same care? Where exactly is the databeing stored? Second, they question whethercloud providers have enough infrastructure secu-rity to ward off cyber attacks. Third, do cloudproviders have the mechanisms to manage, mea-sure and report on industry regulations? And canthey be accountable if they fail to comply? Lastly,who will be held responsible for service level guar-antees and business continuity?

There are several actions that make sense forchannel partners to follow right now to addressthese issues. Accenture’s empirical IT securitywork over many years with a wide range of organ-isations, shows that the following fundamentalsapply to cloud computing initiatives:

Carry out a cloud risk assessmentBusiness and IT leaders must weigh the criticalityof applications and data and decide what is ‘cloudappropriate’. Gauge what risks they are willing totake – for example, whether to move new productdata or customer data to the cloud – in context ofthe benefits and the laws and regulations that applyto where the data physically resides.

Get to know key cloud providersAs with any outsourcing arrangement, carry outdetailed due diligence on providers’ performance,including their financial performance. Confirmthat they meet key standards. For example, regu-lations, standards, guidelines and codes of prac-tice such as ISO 27001.

Analyse the data flowThis calls for charting the lifecycle of the relevantdata assets, from development to their destruc-tion. IT managers must know where data is at alltimes so they can help confirm that it is being

HEAD IN THECLOUDS

ASK THEEXPERT

Floris van den Dool is theExecutive Director responsiblefor Accenture’s TechnologyConsulting-Security business inEurope, Africa andLatin America (EALA). He has 20years of IT and IT securityexperience and assists manyAccenture clients with theimplementation of securityfrom a business, technologyand process point of view.

Cloud computing is thebuzzword on every IT

leader’s lips, but despiteits benefits the cloud

throws up its ownsecurity concerns saysFloris van den Dool.

Accenture ATE_7:4August 25/1/10 11:01 Page 88

iStrategy Europe 5th-6th October 2010London, UK At a 5 star venue TBCTransforming the Enterprise with Digital Expertise

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VIRTUALISATION

Optimisation through virtualisation

Saumya Upadhyaya of Frost & Sullivan explains how companies can get the best out of virtualisation technology.

Enterprise computing is expected to do the same amount of work, if not more, irrespective of the business environment that the enterprise oper-ates in. However, with budgets on a downslide, enterprises are exploring means to improve the utilisation levels of their current technology assets and cater to their mounting infrastructure needs.

Enterprises across the world are aiming to transform their rigid data centres into agile environments, which can provide rapid scaling and sharing of infrastructure resources. Over the years, enterprises have built up silos in infrastructure, oft en leading to over provisioned, un-manageable infrastructural components. Virtualisation enables these enterprises to benefi t through better use of existing resources, achieve agility in deploying new environments, maintain a signifi cantly smaller hardware footprint, and a reduce in the cost of computing in-frastructure resources. It assists IT administrators to optimally exploit resources and achieve signifi cant costs and business benefi ts.

Virtualisation in actionGlobally, virtualisation has long been portrayed as a technology

that would change the dynamics of enterprise infrastructure. Virtu-

alisation is shaping up to be one of the major trends that infl uence the end-to-end infrastructure of an enterprise, namely server, storage, net-work, application, desktop and so on. Th e ability to consolidate dispa-

rate infrastructure elements, increase utilisation levels and minimise the mounting space and power expenditures are a few of the key drivers for the adoption of virtualisation solutions. Enterprises with a large computing infrastructure are the fi rst to adopt virtualisation owing to the benefi ts that consolidation brings to space, power and cooling expenditures. Server virtualisation is the forerunner in the adoption of virtualisation, primarily because of the visible benefi ts of consolida-

“Enterprises across the world are aiming to transform their rigid data centres into agile environments, which can provide rapid scaling and sharing of infrastructure resources.”

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tion, reduced operating expenditure, and limited impact to user opera-tions. Since its introduction, server virtualisation has been growing at a rapid pace. Enterprises with large server farms are expected to increase adoption and benefi t the most out of server virtualisation. When imple-mented the right way, virtualisation has a proven record of providing considerable reductions in direct infrastructure costs, indirect costs such as optimised IT infrastructure performance, business continu-ity and stability, as well as capacity management. For instance, power consumed by servers and cooling systems could be reduced by between 60 to 70 percent and the space requirements reduced by a factor of the number of virtualised servers per physical server.

Similar to server provisioning, storage infrastructures across en-terprises are over provisioned due to storage silos created by diff erent business units within the same organisation. As a result, enterprises typically buy almost double the amount of storage they actually need. Storage virtualisation would help organisations achieve a more effi -cient centralised management for their storage and data replication needs along with enhanced security of enterprise data. Storage virtualisation solutions enable enterprises to increase their storage effi cien-cies from 25 to 30 percent, to almost 80 percent. With such an increased utilisation rate, organisations can delay the purchase of additional storage hardware by using existing storage to meet increasing data demands and consolidate IT assets.

Barriers to wider adoptionIn-spite of its benefi ts, virtualisation is not nec-

essarily easy to adopt. Concentrated risk, increased infrastructure complexity and migration challenges to a virtualised environment are a few of the key restraints for adoption of the virtualisation solution. While a well-executed virtualisation strategy can bring signifi cant benefi ts to the organisation, an unplanned strategy could create man-ageability issues. Organisations need, therefore, to have the right net-worked infrastructure to extract the true benefi ts of the technology. A holistic view of all the organisational assets is required as implementa-tion of virtualisation impacts organisational business and operational processes. Virtualisation should be viewed not merely as an IT decision but as a strategic decision, the benefi ts of which can be accrued over a period. Th e implementation planning should start with a thorough assessment of technology assets and IT infrastructure along with the supported business processes and then calibrate Key Performance In-dicators (KPIs) to track the benefi ts.

A big bang approach to virtualisation can easily be a recipe for disaster. Organisations typically start with virtualisation of single infrastructure components such as only servers, only storage, only ap-plication and so on. While this provides organisations with fl exibility of upgrading systematically to a completely virtualised environment, virtualisation at diff erent levels of the IT infrastructure also poses a manageability issue. Virtualised applications may suff er from lack of resources due to outages, while multiple levels of virtualisation make it diffi cult to isolate the problem to a certain level of virtualisation in

Saumya Upadhyaya is Industry Analyst, Information and Communication Technologies at Frost & Sullivan. For more information, contact: [email protected].

the scope of the entire infrastructure. As a result, organisations require clear planning of their virtualisation upgrade strategy to enable end-to-end management of their virtualised infrastructure. End-to-end virtualisation orchestrates various levels of virtualisation providing the ability to recover from failures within minutes, thereby achieving high effi ciency, productivity and cost savings. End-to-end virtualisa-tion helps in eliminating virtualisation silos and uses end-to-end fail-ure automation practices to detect failure and recover from the outage by fi xing or replacing the aff ected device from the network.

Consolidating infrastructuresInfrastructure consolidation, followed by virtualisation, is a key

trend currently witnessed in the market. With controlled capital ex-penditure across the board and virtualisation solutions becoming increasingly aff ordable, virtualisation is set to become a mainstream technology in the coming years. As virtualisation enablers such

as hypervisors become increasingly commoditised, virtualisation management solutions and end-to-end virtualisation solutions are increasingly becoming a key focus area for a number of enterprises and vendors. With enterprise focus moving from a capital expenditure model to an operational expenditure model, virtualisation serves as an enabler for cloud computing. Th is enables everything from IT in-frastructure to soft ware to be provided as a service. Enterprises could choose between internal clouds with sharing across business units or external clouds that facilitate the pay-per-use model. Virtualisation is the building block of any robust, fl exible, scalable and cost-effi cient cloud service. Without virtualisation at server, storage, and network levels, infrastructure sharing and cloud computing would be a distant reality. In essence, virtualisation spanning across the organisation’s IT infrastructure, that is, from the data centre to the desktop, enables enterprises to create a dynamic IT environment capable of catering to the rapid scaling of enterprise computing requirements. In addition, the benefi ts accrued on the total cost of ownership of the enterprise IT infrastructure make virtualisation an appealing investment for enter-prise decision makers.

“Since its introduction, server virtualisation has been growing at a rapid pace. Enterprises with large server farms are expected to increase adoption and benefi t the most out of server virtualisation”

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benchmarks prove that the most demand-ing, mission-critical applications run better on Red Hat Enterprise Linux. Security is improved. Red Hat solutions operate in some of the world’s most exacting, security-driven environments. Red Hat Enterprise Linux has also been rigorously tested and certifi ed by the US government’s National Security Agency. Th e Red Hat partner ecosystem off ers a huge range of choice. Companies seeking to maximise hard-pressed budgets can choose from well over 1000 hardware platforms, while over 3500 soft ware products are certi-fi ed to run on Red Hat Enterprise Linux.

Some of the most successful and most ambitious companies in Europe are using Red Hat Enterprise Linux. NYSE Euronext, operator of the world’s leading and most liquid exchange group, safeguards the reli-ability, performance and security of its mission-critical fi nancial trading platform, having migrated 830 of its European stores from Microsoft Windows. Specsavers, the UK’s most trusted optician, enjoys freedom from vendor lock-in and simpler application maintenance. SNCF, the national railway of France, benefi ts from a secure standards-based platform, capable of adapting with

great fl exibility to regional requirements. ImmobilienScout24, one of Europe’s most successful real estate listing companies with over three million visitors a month, dra-matically reduced energy consumption and operating costs. Meanwhile Statoil, one of the world’s largest operators of off shore oil and gas activities, has achieved more effi cient management of IT operations and strength-ened its bottom line.

Find out more, please contact 00800 7334 2835 or visit www.europe.redhat.com

Support and stabilityIn taking the strategic decision to adopt

open source, companies naturally put a high value on support and stability, both of the un-derlying technology and the provider behind it. Red Hat, which has a strong 15-year track record in the industry, has emerged with a winning formula of outstanding technology backed by professional, real-time operational support. While cost-cutting is undoubtedly a key motivator, moving to Red Hat Enterprise Linux, the world’s leading platform for open source computing, brings other advantages:

It is easy to purchase, deploy and manage. Red Hat Enterprise Linux is a robust, commer-cially viable solution that comes with lower acquisition and on-going costs. World-class training and support ensure fast ROI, while Red Hat Network, an easy-to-use, web-based systems management platform, provides ef-fective infrastructure management. It deliv-ers record-breaking performance. Day-to-day data centre operation and industry-standard

In today’s tough economic climate IT departments are being tasked with fi nd-ing ways to squeeze more value out of already stretched budgets. Th e prospect

of lower soft ware acquisition and operational costs means companies are turning to open source soft ware as the alternative to proprie-tary products, such as Microsoft Windows. As IDC has noted, “economic downturns have a tendency to accelerate emerging technologies, boost the adoption of eff ective solutions, and punish solutions that are not cost-competitive or that are out of synch with industry trends.”

Open source off ers signifi cant savings at the point of purchase and over the lifetime of the soft ware. Technology-neutral, it gives users the freedom to run their soft ware on low-cost hardware platforms and to switch provider at any time. It’s also licence-free, with a pay-as-you-go subscription model replacing tradi-tional upfront licensing costs. No wonder the migration to open source has been one of the last decade’s unstoppable technology trends.

Geert Jansen on the factors that have prompted companies to migrate their mission-critical applications to open source software platforms.

A revolution of choice

Geert Jansen, Product Marketing Manager EMEA at Red Hat, is responsible for Red Hat's infrastructure products in Europe, Middle East and Africa (EMEA). Before joining Red Hat, he spent fi ve years at Royal Dutch Shell and prior to this he was software engineer at an internet search engine company.

INDUSTRYINSIGHT

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Fujitsu is a pioneer in virtualisation. What is the company’s virtualisation strategy? Joseph Reger. We view virtualisation as a key technology. Our strategy for the IT infrastruc-ture is based largely on virtualisation as an enabler. We have built a global infrastructure portfolio of products, services and alternative delivery models (such as Infrastructure-as-a-Service, IaaS) called Dynamic Infrastructures, based on virtualisation as the enabler of the dy-namic aspects of the data centre. Th e competi-tiveness of the new, cloud-like, off erings such as IaaS, depends on our ability to utilise the latest virtualisation technologies in novel ways. Fu-jitsu is a staunch supporter of standardisation eff orts in virtualisation. We believe that virtu-alisation will penetrate all current and future IT stacks. We do our own development but also support open source eff orts and partner with the key players in the industry to advance the cause of virtualisation.

What trends and opportunities does Fujitsu see in the future for virtualisation and what will be the main challenges?

JR. Virtualisation will become more signifi cant, even though the technology might become less visible as it penetrates all levels of all stacks. We will be dealing with solutions (such as resource orchestration and automation) based on virtu-alisation technologies, rather than with the technologies themselves. Th e main chal-lenge will be the unifi cation of all virtualisation technologies (e.g. server, storage and net-working virtualisation) and their concerted management. Single console management and automatic virtualisation of all components will be an attractive opportunity and an important lever to increase overall effi ciency. Needless to say, it will be the major techni-cal challenge.

Fujitsu recently announced its IaaS for server offering. What are the underlying technologies behind this and how does this offering help customers? JR. As I said, the most important enabler is

virtualisation. We use Fujitsu’s own technologies (e.g. server and stor-

age technologies, system soft -ware) wherever we can and

partner to off er the technology compo-

nents that we do

EXECUTIVEINTERVIEW

not have internally (e.g. networking and some storage and soft ware technologies). We deeply integrate all components used to make the customer experience a smooth one. For the success of all IaaS off erings, it is mandatory that they are well integrated and provide a simple interface for provisioning, management, bill-ing and so on. But it is equally important that they provide the highest levels of utilisation of the infrastructure. Th is objective can only be achieved if all components are part of a system-wide resource orchestration, provisioning and management scheme. With that approach, all

components are more tightly integrated and provide the highest levels of effi ciency. If we add the economies of scale we are building in our global organisation, this off ering will be diffi cult to match by individual customer installa-tions. Besides, Fujitsu will be off ering application and busi-ness services on top of its IaaA off erings, providing total IT stacks for its customers. Since these layers are integrated by design, the total off ering will be very attractive.

Is virtualisation a direct en-abler for cloud computing? JR. Virtualisation is defi -nitely one of the two most

important direct technology enablers, the other one is the internet (and its associated technologies). Th e success of cloud computing hinges on our ability to share the underlying components, such as infrastructure. Sharing is essential for cloud computing to become a successful business model. Th e easiest, most eff ective way to accomplish sharing is by vir-tualisation; in particular by virtual machine technology. I expect that virtualisation in general will continue to play a prominent role in enabling sharing. Virtual machine tech-nology as we know it today may give way to other technologies, such as application con-tainer-based solutions. Th ese are, however, by nature, virtualisation technologies, too. Th us I am very confi dent that virtualisation will retain its role as one of the main engines of cloud computing.

Making virtualisation a realityTo get the lowdown on virtualisation trends at the world’s fourth largest vendor, Business Management catches up with Dr Joseph Reger, CTO of Fujitsu Technology Solutions GMBH.

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Dr Joseph Reger, CTO of Fujitsu Technology Solutions GMBH, is responsible for understanding and predicting IT trends that will benefi t customers most, as well as for their implementation in the company’s strategy. A renowned industry expert, Reger has steered the company and customers in real-life implementations of dynamic IT and mobility topics.

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CLOUDCOMPUTING

With cloud computing promising so much for organisations it is little wonder that the technol-ogy is on the lips of most IT chiefs and tech vendors. For those of you who’ve been ma-rooned on a desert island for the past few years, this means

that computing will increasingly be available as a service over the in-ternet. Your documents, email and multimedia will be held online in a virtual cloud and will be accessible from any computer or internet-enabled mobile device.

According to a report from analyst fi rm AMI-Partners, small and medium businesses (SMBs) are fl ocking to use these new IT services. Around 31 percent of midsize companies currently use cloud computing as a soft ware service, double the uptake of those in 2004. So why has cloud computing become such a valuable business proposition to SMBs? Agatha Poon, Senior Analyst in Yankee Group’s Anywhere Enterprise research group, believes a big driving factor is around cost saving, particularly with the economy in its current state. “Cost saving is the value proposition for

a lot of providers,” says Poon. “It is defi nitely one of the strongest benefi ts areas, but interestingly we also see that some SMBs consider cloud com-puting as a method for disaster recovery. Th is makes sense if you consider that many SMBs have a basic infrastructure in place for keeping serv-ers and data, however, not so many have the practice to backup data or maintain a redundancy because it is very costly to keep one server in one location and another one as a backup in an alternate location.”

Poon goes on to explain that a small number of SMBs will con-sider the fl exibility and scalability of cloud computing as a further value proposition for the business. “Typically they are very business driven

“A lot of cloud providers are focusing on the downturn and saying that it’s in their favour because in this economy, it’s a cost saving”

On cloud nineThe buzz around cloud technology is reaching fever pitch, with both multinationals and SMBs

embracing its potential. But is it the future of computing or just a fl ash in the pan? Business Management’s Gerhart trüb puts his head in the clouds and takes a closer look.

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and don’t want to invest a lot of money up front. Th ey want an appropriate budget for growth, but as the business grows of course they would like to have access to resources that can help them scale, which cloud computing can help them do.”

Doug Menefee is one such CIO that has ad-opted cloud computing. Th e Schumacher Group provides emergency department physicians to 150 hospitals across the US, and because it is a medium size business, Menefee is charged with leveraging IT processes in order to drive effi -ciency in the emergency room in which the group operates. Over the past fi ve years he has deployed a multimillion-dollar technology initiative to upgrade or replace every enterprise system in the company. He explains that he has essentially worked to automate the entire recruiting offi ce, credentialing processes, utilising soft ware and building our custom applications.

As Menefee was looking to redefi ne and re-deploy new applications, he chose to leverage a cloud solution.“By leveraging the cloud solution we had multiple instances of our data that were being hosted either on the east or west coast or both, that were inside a multimillion dollar data centre with full-time technical support,” explains Menefee. “A big driver for us was business con-tinuity purposes – knowing that out data would be accessible 24 hours a day, seven days a week, anywhere that we could fi nd an internet connec-tion. We realised that we would no longer have to rely so heavily on our own data centre to keep operations going.”

Since deploying cloud computing technol-ogy, Menefee has been able to leverage a range of custom options, including platform and hardware services. “On the platform side, we do develop-ment on top of salesforce.com and then inside we have a hosted solution in PeopleSoft where they simply have the hardware at their location and they maintain all of the soft ware for us and then we do the development on top of that. Th e custom work that we do inside of salesforce.com is typi-cally because the application doesn’t provide an out of the box solution for us, so we go and write a custom solution using Apex code. From here we can develop anywhere from three to four times faster in that environment than if we were developing in any other platform,” explains Menefee.

Th ere are a number of benefi ts around being able to design a custom range of options. In Menefee’s case it means that he is able to deliver prod-ucts faster to internal customers so that they are received within a matter of hours, days or weeks depending on the individual case. “Th e solutions that are housed inside of our data centre, such as patient billing operations and paperless charts will take me a couple of weeks to a couple of months to deploy, whereas with our cloud services it takes a couple of hours to

a couple of weeks. So the cloud solutions, in a programming world, are much more agile and a faster application development environment.”

Concerns But while there are many reasons to embrace cloud computing there

is also an area of concern that is potentially keeping SMBs from using the technology, namely IT security, which is the number one concern cited by IT managers when they think about implementing the technology in their business.

Menefee has no such concerns; he believes that as a medium sized business he is able to ensure that he actually boosts the security of the Schumacher Group as there are more people looking out for the business. “I’m always concerned with security inside our enterprise,” he says. “As


Cloud computing is an invisible technology for users but an actual digital cloud is being considered as the centrepiece of London’s Olympic Village. The cloud would 'fl oat' over London's skyline and would be made up of 120-metre towers holding a series of interconnected plastic bubbles that would display images and data. It would also be used as an observation deck and a park. The unique structure has come from the minds of an international team of architects, artists and engineers and due to its 'fl exible nature', the design team are planning to raise funds for the scheme by asking for micro-donations from millions. “It's really about people coming together to raise the Cloud," Carlo Ratti, one of the architects behind the design from the Massachusetts Institute of Technology (MIT) told BBC News. "We can build our cloud with UK£5m or UK£50m. The fl exibility of the structural system will allow us to tune the size of the cloud to the level of funding that is reached.”The Mayor of London, Boris Johnson, has said he is committed to building a tourist attraction in the Olympic Park “with a legacy for the East End [of London]" and thus far, the cloud is on the short list. Despite no decision yet being reached, the cloud's team have decided to release details, no doubt in a bid to drum up debate and attention for their idea. The towers that would support the spheres would be similar to those used in Japanese skyscrapers to resist earthquakes, which would prevent the towers being buffeted by the wind.

Environmental impactIn keeping with the Olympic Committee's desire to make

the 2012 Olympics a 'green Olympics', the cloud will also be a 'harvesting effort'. According to Alex Haw, digital designer for the project, "people can choose to ascend the cloud on foot or bicycle; the energy that it would take to descend the cloud is converted, on the way down, into electricity through elevators with regenerative breaking, similar to those that are present in hybrid cars. The people's energy coupled with solar energy collected through on-site and off-site photovoltaic cells and various energy-saving strategies will allow us to reach carbon neutrality, whereby the cloud produces all the energy it uses." With the power used, the spheres would also light up at night, creating a spatial, 3D informational display over the skies of London.

FROM VIRTUAL TO REALITY The London 2012 Olympic Games get set for an actual digital cloud.

98 www.bme.eu.com

a midsized business with about 30 individuals inside information technology, I can ensure that one or two of those individuals are primarily focused on security, and that’s what we do for the pro-tection of our database. However, when I use a cloud computing solution I get the same benefi ts as every one of the enterprise level, publicly traded companies that are also customers of the cloud computing solution. So salesforce.com or Workday for instance, has literally an army of individuals and their only job is to protect and secure the data that’s inside their systems. Being a midsized business I can’t keep that individual or individuals busy for that amount of time.”

And it is true that instead of pressurising a small team of IT staff to perform at a level consistent with larger competitors, it is possible for SMBs to access enterprise-class capabilities with an initial low investment and the chance to scale. However, for those that remain concerned about the privacy and security of their cloud, Poon advises working with a transparent provider who is able to provide documentation and demonstrate the level of secu-rity in place. “Typically many cloud providers will have the classic SOA programme in place, but any enterprise users, from SMBs to one large enterprise, need to read the fi ne print in their service level agreements and be ready to really negotiate for a stronger security programme,” she says.

Laurie McCabe, Partner at Hurwitz & Associates, agrees that it is important to go with a reputable provider and recommends noting a checklist of points that need to be in place with that pro-vider to ensure the data is protected and secure as well as available at any time. “Even though SMBs are very busy and are trying to install a million diff erent things at once, it does pay to evaluate at least a couple of diff erent services,” says McCabe. “Check it out a little bit, search around, fi nd at least a couple of providers that might fi t your needs before doing free trials and evaluating exactly what best works for your specifi c needs.”

Poon goes on to explain that on the supply side, aside from security or service availability, is another potential barrier to adoption that may play a part in whether it will help drive market uptake or not, namely whether the vendor is sustainable. She says that there are many small cloud providers quickly jumping into the market and their fi nancial health could make an impact in terms of infrastructure requirements and whether or not it will help drive market uptake.

Financial situationTh e fi nancial health of vendors will no doubt play a part in

whether or not we continue to see increased adoption of cloud computing, as does the current economic crisis. As one of the main drivers, cost saving is key in the current market as many companies are able to recognise the clear value of implementing the technol-ogy. “A lot of cloud providers are focusing on the downturn and saying that it’s in their favour because in this economy, it’s a cost saving and through this they are able to facilitate, if not drive, sales,” explains Poon. “But if you look at it the other way round the situation is actually forcing companies to become more innovative.


www.bme.eu.com 99

Cloud computing refers to the idea of making massively scalable IT capabilities available to anyone who would want to use them, on a pay-as-you-go basis. It means

highly reliable IT components can be used by startups, midsized and very large enterprises alike, to provide an environment in which developers or engineers no longer have to worry about managing physical resources.

Instead, they can use these resources as a service over the internet, and that will have a major effect on how applications are built. Applications will become more reliable, secure, and cost-effective.

There are a number of benefi ts. Just look at the amount of time that businesses currently waste on managing physical resources: companies both large and small invest an enormous amount of manpower on just getting their infrastructure off the ground; factor in the cost of maintaining that infrastructure so that it is highly reliable and performing in such a way that customers can actually make use of it, and that’s a big commitment. Companies are investing a lot in managing a physical infrastructure when it doesn’t actually help them build a better product for their customers. So at Amazon, given that we had to invest in these technologies and build them at very large scale for our own operation, we are now looking at using them to help other companies also become more reliable, cost-effective and productive – without having the massive cost of actually building and maintaining those technologies themselves.

THE SILVER LINING TO CLOUD COMPUTING

We can help companies become more reliable and more secure than they are now, at a much lower price point. Plus the pay-as-you-go model means that you only pay for those resources that you use. If you look at starting a typical new enterprise product, then often you have to get a large budget upfront to make sure you have the physical resources to execute on. By using web services, there is no upfront investment, and only if your product becomes successful will you carry the cost for the resources that you’ve been using. So that’s a shift from a capital expense model to an operational expense model, which at the same time lowers the risks for enterprises to do new product innovation. There are no boundaries any more for any company in any country to access these resources. In some ways, cloud computing provides the democratisation of business creation. You no longer need access to huge sums of money to get access to physical computing resources in order to get your business or product off the ground.

I think technology development will shift – from actually having to manage physical resources and having multiple system administrators in order to keep your service going, towards building better applications for your customers. That’s where the focus will be. Cloud computing will trigger a whole new range of application building that wasn’t possible before because we were so focused on just getting the basics right. And we will see that applications become more available with better performance, because there will be more automation in terms of keeping these enterprise applications running – under all circumstances – in the cloud.

Th ey have to look for technologies that can help them cut costs while maintaining the perfor-mance, so typically the classic cloud computing model is in demand.”

So, what about the future of cloud comput-ing, how should we expect to see the technol-ogy develop? Poon is a little reserved in her evaluation of the future of cloud computing. She believes that while there is no doubt as to the value that cloud computing can bring, adop-tion depends on how useful the technology is to a particular business. “If you are looking at a retailer for example, they have the seasonal sales for their store and they can pick times such as Christmas or Valentine’s Day where they know they are going to see a traffi c peak. Th erefore they need a lot of processing power and capacity in order to keep their website running quickly and effi ciently and cloud computing will be very

useful to them in that sense,” says Poon. “How-ever, there are companies that will simply need to update their website information occasion-ally and don’t have a need to store data in a cloud because they know that traffi c will be regular, they just need minimal support.”

It seems cloud computing for SMBs will ultimately depend on whether it is possible to articulate the value of cloud computing to the market of potential users of the technology. Despite the solution being in place, it is only those who require it that will in fact adopt it. And, while there is no doubt that cloud computing is still in the very early stages of development and it is hard to say just how the capabilities and benefi ts will change, it is certain that it will indeed evolve to become a much more sophisticated solution as time goes on.

CLOUD SERVICES TRENDS IN THE FINANCIAL SECTOR

• 83 percent of fi rms surveyed are making private clouds their fi rst priority with the majority planning to increase their investment in grid and high performance computing in the next 12 months

• 43 percent are choosing virtualisation as their main infrastructure priority in 2010

• Security is now the biggest worry

for those looking to invest in the cloud, a major development on the concerns that existed a year ago

Source: Platform Security survey

Werner Vogels, CIO of online retail behemoth Amazon, offers his take on harnessing the power of this revolutionary development.


ASK THEEXPERT

Arecessionary 2009 saw many enter-prises moving to the managed in-frastructure model to reduceCAPEX and costs whilst increasing

business flexibility. 2010 will see that trend con-tinue, with a growth in blending cloud infrastruc-ture into other managed infrastructure servicesfor business applications. Many enterprises willengage in their first cloud projects and start toshift budgets from conventional IT refresh cyclesinto cloud purchasing models.

This shift will mark the beginning of cloudbecoming pervasive within UK enterprise. Those‘in the know’ now understand that cloud is tran-scending the early hype and delivering real value.Developments in security and resource allocationsystems mean that enterprises can now trust thecloud with mission critical applications and en-terprise cloud adoption is likely to start in earnestlate this year.

Defining the cloudBeyond the buzzwords and mixed defini-

tions, cloud computing is a system of deliveringdata centre resources as price-elastic services overan enterprise network, to control costs and deliv-er scalability through automation. However, it isimportant to differentiate between enterprisecloud and ‘consumer clouds’. Developmentteams that have been using cloud systems ‘semiofficially’ for application prototypes will be forcedto formalise these environments within the ap-proved enterprise architecture. Many nascent en-vironments will shift from publicly accessible‘consumer clouds’ to full enterprise-grade cloudsystems in 2010, to bring them into full compli-ance with their organisation’s policies.

Clear benefitsAdvancements in virtualisation technology,

growing network bandwidth and faster hardwareperformance have all contributed to the emer-gence of flexible enterprise cloud offerings. Cloud

computing providers allow firms to cut costsquickly and flexibly, while scaling in alignmentwith current business needs. By aligning IT costswith changing business cycles, companies canachieve just-in-time IT supply without having toover-purchase IT inventory. It also allows com-panies to reap the numerous advantages of out-sourcing whilst retaining control over IT –thereby freeing up staff to focus on developingdifferentiating applications.

Adoption considerationsCompanies should now evaluate their sys-

tems to assess where migration to managedand/or cloud services would deliver optimal ben-efit. They should then pursue a gradual migrationpath in conjunction with other managed servicesto ensure optimum return. Gradual immersioninto this new services delivery model can be doneby application type – for example, moving all

marketing micro-sites to a cloud service model toaddress spikes in demand. Cloud migration canalso be aligned to the software development life-cycle such as starting new application develop-ment in the cloud and promoting to productionafter quality testing is complete.

Enterprise cloud migrations must also beplanned in line with state-of-the-art practices andregulatory compliance. Many companies see thebenefits of adopting a cloud model that does notrequire alterations to traffic routing and securitycontrols. In order to maximise the benefits ofcloud, its governance needs to be closely alignedwith existing enterprise architectures that are al-ready proven to work for the business. Having as-sessed the potential of cloud whilst keeping theseconcerns in mind, you can then evaluate poten-tial cloud suppliers on the basis of their ability totransition your IT infrastructure whilst maintain-ing the vital security norms. A trusted suppliershould also be willing to examine the optimummigration roadmap for your business, addressingcost and resource factors in addition to compli-ance and security challenges.

A tool for recoveryNow is definitely the time to seriously con-

sider the cloud model for your enterprise. Byevaluating where the added flexibility of cloudcan enable your business to be more respon-sive, you can closely align IT costs to revenuestreams in a way that was previously impossi-ble. By tightly coupling these costs throughflexible provisioning, you will be able to scaleup to meet demand and downgrade for lulls inactivity or business downturn. This alignmentof business drivers will enable you to seize theopportunities presented by a stronger economyin 2010. n

The only way is upHow your enterprise should navigate the path to the cloud.

By Brian Klingbeil.

100 www.bme.eu.com

Brian Klingbeil is the EMEA MD of Savvis, a global leaderin IT infrastructure services and cloud computing for theenterprise and public sector. Prior to this, he served as VPof Finance and Strategic Planning for Savvis in the US forfive years and has also held key positions at GTSTelecommunications & Qwest Communications.

“Many companies see the benefits of adopting a cloud model that doesnot require alterations to traffic routing and

security controls”

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Fredrick Taylor pointed out the lack ofknowledge when it came to labour effi-ciency in the late 19th century. Todaywe run into that kind of employment

drilling in service centres, line production, fast-food chains or telephone sale organisations. Theemployee is regarded as a minute delivering assetthat is as cheap and easy to replace as any cog-wheel. Organisations that have built their busi-ness upon such working methods are gettingsmaller and smaller margins due to offshore out-sourcing, for instance. Companies that cherishaccumulated company knowledge tend to havebetter return on innovation. In the industry, thisknowledge sharing was usually represented by apost box where the employees could drop ideasfor the management to evaluate. These functionsare more commonly presented via intranet andother business supporting systems today.

Something Taylor failed to fit into his scien-tific management was the essence of science –people’s brainpower. By turning the hierarchalpyramid upside down we soon understand thepower of systems such as Wikipedia and othercrowd sourcing projects. Feeding these systemswith brainpower and making them the engine inyour company. That’s what Web 2.0 is all about.

We are facilitating systems based on commu-nication and user generated content to enhance

knowledge sharing. By demanding that the em-ployees are responsible for their own networks andrelationships within the organisation, you can havecommunity control over behaviour. Having a clearstrategy of how to deal with over-engaged employ-ees is also of importance. Usually when imple-menting this kind of knowledge sharing system theproblem is seldom that the employees start dis-cussing sensitive issues. Particularly coming froma culture where keeping quiet is equal to doingyour job and maintaining your network in thecompany as a thing you do in kick-offs. In the newera sharing of knowledge, it becomes a very valu-able asset for the company instead of informationkeeping for personal management advantages.

Company culturesAs I indicated, the transformation is not only

about introducing a new tool. It’s a combinationof cultural change in close relationship with theproper technology to benefit from this. So in away you need to think big, but act small.Designing the foundation of how you want to in-teract in line with your culture will be the basis.Select a pilot and start learning by doing, moti-vating your staff to participate in aligning withyour business goals. And you should participateyourself by enjoying interacting with your cus-tomers and your staff.

Don’t forget that the journey has alreadystarted in the consumer based applications suchas Facebook and Twitter. Your employees are al-ready “employees 2.0” and have been so for awhile now. What needs to change now is leader-ship and management. So, start with manage-ment courses to form your leaders and turn theminto “petrol tanks” to your brain powered en-gines, instead of empowerment guardians.

Leadership toolsIf you believe that your organisation’s op-

portunities to survive in the future depend on itsaccumulated knowledge, innovation capacity andpower to change, you need to change the bonussystems. By adapting Web 2.0 solutions into yourorganisation and also giving the management theright leadership tools, your leaders will be able tolead in a more coaching manner. Give bonuses tothe informal leaders who are critical to your busi-ness or they will abandon you.

I’m not saying that we should all throw ourbalance sheets in the garbage can, but once amonth we can start looking over the knowledgeprocesses and quality enhancements in our or-ganisations. Regarding the massive request for so-lutions we see in this area, our hardest job rightnow is staffing up. We are preparing for a para-digm shift where the fuel for the company enginehas dramatically changed. n

Leading from the frontFredrik Ring lifts the lid on how social networkingis transforming business leadership.

102 www.bme.eu.com

ASK THEEXPERT

Fredrik Ring has worked as an advisor, analyst and projectmanager in major ECM-related IT projects since the early1990s. He is currently in charge of ECM at the LogicaGroup, which has 2000 consultants and a number oflarger business partners within ECM.

“Companies that cherishaccumulated companyknowledge tend to have

better return oninnovation”

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SwitchingchannelsAs the world’s biggest broadcaster the BBC is spearheading the digital transformation of the television industry. Diana Milne meets the corporation’s Chief Technology Offi cer, former Yahoo exec John Linwood, to fi nd out what the man behind the iPlayer really thinks about the future of broadcasting.

One such example that Linwood is particularly concerned about is the 2012 Olympics, which the BBC has exclusive rights to distrib-ute in the UK and which Linwood says is likely to be viewed mainly online because of the timing of the games: “One example that is keep-ing me awake at night is the 2012 Olympics. We know that people will be accessing it from their PCs or their phones because it will be on in the daytime so the BBC is going to have to build up a huge amount of infrastructure to support that.” BBC iPlayer has also greatly increased the complexity of the BBC’s IT infrastructure as it plugs into so many of its diff erent systems such as scheduling, live stream and metadata systems, all of which feed data into the site. Costs too are an issue as the broadcaster must meet the increased demand for its online technol-ogy but without the luxury of being able to increase its budget, as a private sector counterpart would, through revenue from increased use of the service: “Traditionally, if the BBC broadcast to 10 million people for a particular show, it didn’t actually cost any more than if only one million people watched that show. In the on-demand interactive world that is no longer true. However, the BBC is a fi xed earnings company, we don’t get any additional revenue if we get more users so we have to be really clever about how we deliver those services without incurring substantial extra costs.”

Th e phenomenal success of iPlayer is just the beginning of the BBC’s foray into digital media, says Linwood, who reveals that it is currently looking at ways to deliver its content via social networking media. Th is is subject however, to a detailed assessment of which programmes are best suited for social networking websites: “Clearly the BBC is looking at ways to reach its audience all the time. Part of our mission statement

When John Linwood left the US search engine giant Yahoo to join the BBC earlier this year, he experienced something of a culture shock. Having spearheaded the develop-ment of some of Yahoo’s most successful social networking products, African-born

Linwood found himself in a very British institution with a very British ap-proach to making changes: “Clearly American companies have a slightly diff erent culture in terms of their approach to delivering things. In the BBC there’s a lot more governance because we’re spending public money so we have to be squeaky clean about how we use it. Sometimes in the BBC people are slightly more cautious. Th ey don’t have that American jump in feet fi rst attitude.” It soon became clear to Linwood however that the pace of change underway at the BBC would not leave him standing still for long. His arrival coincided with a period of massive transition for the broadcaster in the wake of a digital revolution, which has transformed the way viewers access television content.

Entertainment on-demandTh e most signifi cant development has been the launch of BBC iP-

layer, the broadcaster’s on-demand online television channel which has been a phenomenal success, attracting over 100 million requests in its fi rst year; around 700,000 a day on average. Th is, says Linwood, places heavy demands on the BBC’s IT infrastructure: “One of the challenges we share with many other suppliers on the internet is that user demand on the systems changes. For instance, if we have a very popular show on iPlayer we get a huge peak in demand.”

MEDIA

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www.bme.eu.com 105

but when you’re looking at emerging and leading edge technologies, very oft en it’s the small companies that are the most creative. If you’re looking for stability, strength and guaranteed delivery you want to go with a large organisation. For instance for our desktop management I’m certainly going to go with a large, substantial organisation. But if, for example, we want to break new ground in terms of how we handle digital fi les coming out of new generation tapeless cameras, we would look at smaller organisations to pilot and innovate a solution.”

Linwood says the biggest technical challenge the BBC will be look-ing to external vendors to solve will be the new demands placed

on its corporate network, which now handles not just email and printing as it once did, but also telephony,

video conferencing and broadcast media fi les. Th is means the corporation is reviewing its entire corporate networking strategy: “We’re putting a whole raft of demands on the corporate network that it was never intended or designed for origi-nally,” says Linwood. “It has changed radically in

the past few years and it will continue to change radically in the coming three to fi ve years.” He is

also involved in reviewing the BBC’s storage and data centre strategy following the corporation’s move to IP-

based networking and the fact that it is now moving digital fi les that have reached the terabyte level in terms of size. Linwood reveals that over the next three years, the BBC will need seven petabytes of additional storage, which creates massive technical challenges in terms of how it moves and stores that data.

100MILLION

Number of requests the iPlayer received

in its fi rst year

is; inform, educate and entertain. So that means social networking can be the right mechanism with which to reach the audience. We’re look-ing at where our audiences actually are. If you want to reach Radio 1 listeners you’re looking at social networking sites like Facebook or Twitter. But if you want to reach Radio 3 listeners there are obviously not so many on Twitter.”

Outside interventionAlthough the BBC, traditionally, has developed its own home-

grown technology, the increased complexity it now faces means it is also working closely with outside vendors to fi nd solu-tions to the challenges posed by the digital media world. Linwood has recently instigated a new open technol-ogy strategy, which aims to make the tendering pro-cess simpler by providing potential vendors with more information about the details and technical specifi cations, which the corporation requires. He says he hopes this will encourage tendering from smaller technology companies, which could poten-tially provide more innovative and scalable solutions than the larger packaged solutions provided by major international vendors: “Historically we’ve worked with large vendors, which is great, because they have all the capabil-ity we need,” says Linwood. “But one of the areas I’m focused on is how we drive greater innovation for the BBC in terms of our products and services. And part of that strategy is how the BBC can engage with small companies. Of course, large organisations can be creative as well,


106 www.bme.eu.com

requests for TV programmes(highest number to date)

53.2millionrequests for Radio programmes

26.1millionrequests for the month of October

70million

How the iPlayer is being used

requests from computers85%

requests fromiPhone/iPod Touch

7%requests fromPS3 applications

6%requests fromother sources

2%

The make-up of the requests

for streams97%

for downloads3%

for on-demand service96%

for livesimulcast

4%

TV Radio

for liveprogrammes

67% for on-demand catch-up

33%

The amount of traffic to the iPlayer (Oct 2009)

of data per second12.5gigabytes

of data transfered per month7petabytes

or about 11million DVDs

of video encoded per week400hours

equal to

acrossdual Quad Core Intel Xeon machines60servers

Tapepre-recordedprogrammes

+Off-air

digital satellite linkslive news + sport

simultaneousincomingprogrammes

24of data per secondof incoming video

1Gigabytes around 25Gigabytes per hour of incoming videoencoded at over 50Mbps

The amount of data processed by iPlayer

The top five episodes for OctMost requested episode per series

TV

Radio

Question Time - 22/10/09928,000 Life - Ep1

664,000 Russell Howard’sGood News - Ep 1

410,000 Mock the WeekSeries 6 - Ep 1

371,000Never Mind the BuzzcocksSeries 23 - Ep 2

362,000

Ukraine vs England10/10/09

151,000 The Chris Moyles Show13/10/09

94,000Man Utd vs S’land03/10/09

79,000The News QuizSeries 69 - Ep 5

74,000Cricket02/10/09

74,000

Sources: BBC | Cnet

iPlayer – the next generationiPlayer was fi rst launched in 2007 and is a service that allows viewers to catch up with radio and television programmes from the past week. It is currently available on Windows, Macs, Linux, Playstation 3, Nintendo Wii and iPhones. The next generation iPlayer was launched last June with a new single interface, which fully integrates both radio and television.

Question Time is among the most popular programmes on the iplayer


www.bme.eu.com 107

A moveable feastTh is complexity is increasing as the

BBC becomes more divided across dif-ferent locations – including the transfer of around 2500 staff from London to Manchester’s state-of-the-art MediaCity complex in the Salford Quays develop-ment. Linwood describes some of the technical challenges this will create: “Th ere are massive challenges around how we store data and how we move that data about. For instance the sports team can at times have around 100 live feeds coming in a day. We need to fi nd ways that we can carry those live feeds across our network to Manchester.” Th e corporation is also moving staff into a new high tech facility it is developing as part of its current Broad-casting House headquarters off London’s Regent Street. It hopes to complete the project by 2012 and the move was one of the reasons behind the restructuring of the Broadcast and Enterprise Technology area within the BBC’s Future Media & Technol-ogy Division spearheaded by Linwood. He describes the changes he has made and how these will fi t in with relocating staff to the new facility: “We looked at the overall delivery of technology services within the BBC and decided there was a number of things we could do. Th e fi rst was rationalisation. We’ve put the broadcast support operation teams from news, audio, music and world service together to drive effi ciency and reduce management overhead. Th is gives us greater fl exibility because we can train those engineers up to work across all divisions so when people are ill or there is a peak in demand we can move those resources around. Part of the restructuring I did was ahead of the move [to the new Broadcasting House facility] because to deliver new technology services into that facility I need to support news, world service and audio music who will all be based there.”

As well as 1100 IT staff based within the BBC, Linwood works closely with the many organisations to which the BBC outsources IT functions. He says that a “huge amount” of the corporation’s IT is currently out-sourced, for instance its playout services, all the distribution of content out to antenna and internal business systems, which are managed by Siemens. Linwood says he is currently carrying out a review of the corporation’s outsourcing strategy to ensure it receives the best value and the highest quality services from its outsource partners: “What I’m looking at there is how to be smarter about how we outsource. It’s very important to under-stand the criteria that drives outsourcing. We’re refi ning that and trying to understand how the BBC will benefi t from outsourcing. If there is a technical area that we don’t have the skills for internally then it’s better to outsource that to a technology specialist that really understands the technology. But one of the things we’ve learnt is that when you outsource you need to retain knowledge within the organisation of the service you’ve

About the BBCThe BBC is the world’s largest broadcaster. It

was established by a Royal Charter and is funded by a licence fee paid for by UK households. It provides services to eight national TV channels plus regional programming, 10 national radio stations, 40 local radio stations and to the bbc.co.uk website. BBC World Service broadcasts on radio, TV and online in 32 languages. It is funded by a government grant.

The BBC has a commercial arm, BBC Worldwide, which operates businesses selling books, DVDs and merchandise. The corporation is governed by the BBC Trust which sets its overall strategy and represents the interests of licence fee payers. Its Chairman is Sir Michael Lyons.

John Linwood took up the role of Chief Technology Offi cer at the BBC in April 2009. In the role he is responsible for delivering the BBC’s technology strategy and delivering and managing the broadcast and enterprise technology infrastructure behind all of the BBC’s output. He joined the BBC from Yahoo where he was Senior Vice President of International Engineering where he oversaw a team of 1600 staff located across 22 countries with responsibility for the development, deployment and delivery of all the company’s services outside the US. There he developed some of Yahoo’s most successful consumer products, including social networking, social media and user-generated content. Prior to Yahoo he spent 11 years at Microsoft starting as an Architectural Consultant in 1993 before progressing to several senior roles.

outsourced. Th at’s about being a smart customer. You can’t outsource some-thing that you don’t understand your-self. It’s also about whether we use small companies versus big companies. So we have an overall review underway of our outsourcing strategies and how we take those forward.”

Forward thinkingAs part of Linwood’s drive to

increase effi ciency within the organi-sation and to support an increasingly complex IT network, he is driving the standardisation of IT processes across the corporation and the development of an infrastructure that allows for the sharing of technology across multiple divisions and platforms. “Th e goal is to standardise as much as possible. We’re also looking for opportunities to build platforms that are pan systems plat-forms and a service based architecture so that we can allow many diff erent sys-tems to use the same back-end services.” Cloud computing would, says Linwood, answer many of the BBC’s technology requirements in that sense, particularly

when it comes to the BBC’s own internal business systems: “We’re looking at cloud for our internal systems because we believe that would enable a number of things for us. First of all we’re looking at more fl exible working for our employees in terms of how and where they do their jobs and how they access the systems. Cloud is a good way of doing that because it allows us to push the system beyond the bounds of the BBC so that somebody who is working from home or in a café can access all the systems they need to get the job done.”

As a technology pioneer in so many areas, the BBC will stop at noth-ing to stay ahead of the curve when it comes to digital media. And Lin-wood says there’s no better time to be at the helm of an organisation that is going through such dramatic changes behind the scenes: “I think, for me, the time has come when technology and media are really coming closer together. Th e BBC and the media industry as a whole is going through a huge transition as technology becomes more and more important in everything we do, and for me the huge excitement of the BBC is that it’s the world’s largest media organisation and where better to be when you’re going through a transition like that.”


108 www.bme.eu.com

They say that hindsight is 20/20. Certainly, the economic crisis hit many companies out of the blue. Was the writing on the wall

simply obscured from our view, or were we just too blind to see it? And more impor-tantly, has our vision cleared enough now to recognise the signs next time, before it’s too late? Th is is a time of refl ection for many companies, pondering the “could of, would of, and should of”. While we must all look to the past and learn from it, we must also look forward. Where do we go from here? What processes need to be in place to prevent this from happening again? Th ese slower times provide opportunities for companies across all industries to review their processes in preparation for the upswing and learn how to identify future downturns more quickly.

Several companies have a major lag be-tween the time they realise demand has slowed and the time it takes to adjust. Most common-ly, I fi nd this is due to disconnected and siloed information across the enterprise. Th e recent slowdown has led to the discovery of a break-down in communication and data sharing between sales, production and fi nance. Th is lack of accurate and timely data sharing leads to delayed reactions and limits the fl exibility to proactively respond. Th e cause of this is mostly a horrible reliance on disparate systems of in-formation across the enterprise that must be manually consolidated. Companies of all sizes are prone to this and many still rely on what I call a time-lagged, stagnant collaboration, otherwise known as Microsoft Excel. Th is data is static, based on the moment in time it was pulled from the system. By the time it is passed

from department to department, the informa-tion could be weeks old and full of errors from manually re-entering the information as it climbed the corporate chain.

It’s time to start learning properly from the past and revolutionising this process. No one can argue it has certainly been a rough road and some dark days still loom on the horizon, but companies should stop second-guessing the decisions of the past. Most businesses have put as much attention on cost-cutting eff orts as they need to and now is the time to focus on developing the processes that can help spur growth. If this recession has taught us anything, it is that we must be forever vigilant and that we cannot always simply accept the information placed in front of us unless we understand how it was derived. Just because something works, it does not mean that it should be left alone or is more benefi cial than another process. Status quo is not always best.

Stringently evaluating business processes and making the necessary changes in corpo-rate strategy and behaviour, combined with investing in new technology, can help posi-tion companies to capitalise on new opportu-nities the eventual economic resurgence will bring. Th ese changes can also help companies

INDUSTRYINSIGHT

prepare for the next downturn. As we move through this period of refl ection, take notice of the warning signs pertinent to your com-pany. Th ese signs are not the macro indica-tors, but the micro eff ects of a forthcoming downturn specifi c to your company.

Visibility is knowledge, and knowledge provides the power to act. Organisations must gain greater visibility across the enterprise by scrapping manual, disparate spreadsheets in favour of integrated performance manage-ment solutions based on an enterprise-wide database. Th is empowers organisations to utilise data to accurately evaluate current performance and pinpoint the underlying factors that aff ect it.

Furthermore, by aligning valuable re-sources with corporate objectives, executives are in a position to act on this information, making real-time adjustments to actual, budget or forecasting processes given the existing market climate. Furthermore, com-panies benefi t from enhanced fi nancial and operational planning, fl exible budgeting and realistic forecasting. When organisations can combine meaningful reporting with analysis, they are able to better monitor and control performance that leads to improved decision-making. It’s time to start learning.

Christina McKeon, Director of Product Marketing and Performance Management (PM) at Infor, is responsible for driving Infor’s global PM strategy. McKeon works with users, managers and executives within organisations to understand market drivers for PM. She has more than 17 years’ experience including working for manufacturers of power management devices and pulp and paper products.

The roadmap to economic recoveryInfor’s Christina McKeon offers her own insight into how organisations can ride out the economic uncertainty by streamlining operations and reviewing processes.

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One of the most common ques-tions that I am asked is how cancompanies leverage and improvetheir CRM practices during the

recession. How can they weather the storm andkeep their most valuable asset – the customer –during this time and continue to add new busi-ness to their customer base. I start off answer-ing the question by using the analogy of theyellow caution flag in a Formula 1 race wherethe flag signifies a hazard and all cars must slowdown and hold their position until it is safe toresume the race.

Holding the position is one thing but there isa lot to be gained during that time especially dur-ing a pit stop. My point is that what you do dur-ing this slow down will affect how you willproceed when the green flag signifies the end ofthe slowdown. Companies need to take a look attheir CRM strategies during the pit stops of thisslow down and make adjustments that will allowprospects and customers to engage with youmore efficiently and effectively.

I have heard that 80 percent of your businessrevenue is from the top 20 percent of your cus-tomer base. If this is true then reaching out to thetop 20 percent is where you should focus yourtime. Take the time to pull them in and get theirinput and feedback. They too are struggling dur-ing this time and acknowledging this by dis-cussing ways your company and solution canhelp them weather the storm will earn their loyal-ty and advocacy. This open collaboration andconversation will set the stage for future trustedcommunications. There are two major areas toaddress that will position your company in a pos-itive light during this recession: focusing on thesocial customer, and understanding that the so-cial customer is a mobile customer.

The social customerCompanies that have been speeding along at

a steady pace will slow down to find that a lot haschanged. The need for foundational CRM strate-gies will always be there but customers andprospects are now in the driver’s seat in their in-

teractions with you. Companies will now have toengage with them on their terms. The customersare now in control and are known as social cus-tomers. A new strategy called social CRM willneed to be in place to meet them on their terms.

Paul Greenberg, bestselling author of CRMat the Speed of Light defines the social CRM cus-tomer this way: “CRM is a philosophy and a busi-ness strategy, supported by a technologyplatform, business rules, workflow, processes &social characteristics, designed to engage the cus-tomer in a collaborative conversation in order toprovide mutually beneficial value in a trusted andtransparent business environment. It’s the com-pany’s response to the customer’s ownership ofthe conversation.”

The “ownership of the conversation” gives thepower to the customer because they have the toolsto express themselves in ways that can hurt as wellas help your company’s image. Another compo-nent focuses on the way prospects find out aboutyou. It usually begins with a search and the abilityto show up in a favourable way in the search resultswill set the pace of how and if they will engage withyou. Social tools such as blogs, social networkingsites and Twitter are some of the tools of choice forcustomers to spread the good, bad or indifferentabout your company. These same tools can be usedby companies to open up new lines of communi-cation with the audience.

I will use the three components of CRM toaddress some social CRM practices companiesshould implement to engage their audience:

Marketing: SEO (Search Engine Optimisation)plays a major role here. Adding a social channelto your marketing efforts may be as easy as set-ting up a Twitter account or Facebook group tostart out with, but the key is to have activityaround your company and brand that peoplecan find. In addition to adding this channel isthe ability to monitor what is being said aboutyour brand, utilising something as simple asGoogle Alerts as well as other listening platformssuch as Radian6 to monitor those conversationsin order to engage or diffuse effectively and

quickly. Do you have a ‘follow me’ tab for socialmedia avenues in place? Sales: Once your company and products arefound, how are you engaging with the prospectto make sure lead scoring strategies are in placeto route to the proper sales person or to makesure they go to the shopping cart? Do you knowthe right behaviour, web clicks and actions tokeep their interests to entice them to buy? Thiscould be as simple as tracking what they arelooking at and if there is an area on your sitewhere people can comment and rate your prod-uct. Taking the time to monitor this behaviourwill assist in integrating the action into your leadgeneration processes. Is your sales team onboard and interacting with their prospects withsocial media tools? Service: This is one of the key areas to addresswith social media because customers are knownfor expressing their opinions and frustrationsover the web. Having a method to address theirconcerns early will prevent bad informationfrom spreading quickly. Monitoring Twitter andengaging with customers on updates, solutions,new features and other pertinent informationwill keep them in the loop and give them theconfidence that you are aware of what is beingdiscussed.

The mobile customerWhile addressing the social media compo-

nent of CRM, it is equally important to under-stand that the social customer is also a mobilecustomer. The understanding that they aresearching, interacting and doing business withyou most likely will be from a mobile phone orsmartphone. Your company’s communicationswill need to be flexible in order to reach theirdesktop or mobile device. Giving them practicaloptions of engagement will make it easy to com-municate and do business with you. Now is thetime to embrace this new median and put socialCRM practices into play. You will have to adaptto your customer or face losing them. n

A social approachMichael Thomas offers his opinion on using the recessionto add social CRM practices to your CRM strategy.

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CUSTOMERFOCUS

Michael Thomas is National President and National BoardMember of the CRM Association.

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EXECUTIVEINTERVIEW

How is CRM technology helping companies toretain customer loyalty in these difficult fi-nancial times? Mark Creasey. Customer confidence and secur-ing new leads within new mar-kets is hard to achieve duringtough times. Executives tell usthat when times were good, theywere “maxed out,” meaning thatthey were fully staffed, and leadswere generated primarily byword of mouth. Now, they re-quire more insight. They want towork smarter at finding newleads and collaborate more onexisting opportunities. A goodCRM system helps companiesbetter understand their owncustomers. It gives them visibil-ity into customer interactionsso pockets of missed or new op-portunities are identified andquickly acted upon. Sales, mar-keting, customer support andexecutives gain information that was previous-ly hidden away on individual laptops, Excel

spread sheets, emails and other different loca-tions and make that centralised for easy accessand viewing. A successful CRM gets teams anddepartments sharing information so customers

are better served.

What are the top three fea-tures companies should lookfor in a CRM system?MC. The first feature companiesshould look for is ease of use.Today, nearly everyone worksfrom their email inbox so it’s logi-cal to operate the CRM system di-rectly from that inbox. Ease of usealso impacts user adoption, and inturn, return on investment. Thegoal is to help employees workmore efficiently and effectively andachieve their targets; CRM shouldnot be something imposed bymanagement strictly for analyticalpurposes.

Flexibility is the secondfeature companies should seek out. Companiesneed to think about what their most widely

used functions are today, and what the needsare for the future. How broad is the functional-ity? Can it grow with you? Are you locked intoonly one deployment model such as software asa service or on premise? Companies often over-look these details and end up suffering whendeployment begins.

The last feature to consider is mobile ac-cess. Eventually, most companies will arrive atthe intersection where they have multipleBlackBerry and iPhones and need to maximisethose devices and air time investments, and getgreater usage from their existing CRM. Mostexecutives want to make their employees’ liveseasier, and help them with productivity. If anemployee needs to check if a deal has beenclosed, he should be able to do that within sec-onds from a customer site.

How can companies ensure that they are a cus-tomer-centric organisation and what pitfalls canbe made when trying to achieve this status? MC. Customer centricity starts with a mindsetand needs to be cultivated from the top down.One of the biggest pitfalls that companies en-counter is they feel they can buy a piece of tech-nology and that solves all issues. You need to dosome soul searching and pinpoint what are in-deed your top priorities, whittle them down, andbuild a strategy and processes to ensure that thosepriorities are met. The system must support thebusiness strategy, not lead it.

The most successful companies come in witha plan, and backfill. They say we want 20 per-cent growth next year, so what are our peoplegoing to do to get us there? We know if we landa certain number of leads, retain a certain per-centage of customers, and conduct marketingcampaigns that we can measure progress monthover month, we will get on track. If that visionis not there, the CRM system cannot give you 20percent growth.

What emerging CRM technology trends willshape the way companies deal with theircustomers in the future?MC. I would most certainly keep an eye on mo-bility. We are a mobile workforce and typically al-ways on. With the BlackBerry or iPhone,everything takes just seconds to access so you arefree to carry out the tasks rather than searchingfor information. By marrying CRM with mobiledevices, customer issues can be resolved faster. n

Putting your customers first Mark Creasey, Managing Director for iEnterprises Europe,discusses the importance of CRM, especially during theworst recession for decades.

112 www.bme.eu.com

Mark Creasey is ManagingDirector of iEnterprises Europe, aglobal provider of flexibledesktop and web-based CRMsoftware, and wirelesssolutions for the BlackBerryand iPhone. With over 20 yearsof business technologyexperience, Creasey advisesclients on CRM and wirelessstrategy, implementation andbest practices.

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FINANCIALSERVICES

Edinburgh-based Standard Life has witnessed many ups and downs in the fi nancial arena during its 185-year history. To fi nd out how the IT side of the business has been affected by the recession and just why tech staff love working for the company so much, Julian Rogers catches up with outgoing CIO Keith Young.

Staying one step ahead

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There is a perception, rightly or wrongly, that IT is a particularly fi ckle industry with technology profes-sionals swapping jobs with almost the same frequency

as they change their socks. Indeed, a statistic sometimes banded about is how even CIOs are thought to spend only around four years in a job before upping sticks and moving on. Keith Young, however, is the exception to this philosophy, having notched up nine years in the top tech seat at Standard Life. Altogether his career at the Scottish fi rm spans 22 years, having worked his way up the IT ladder and various management roles. Likewise, Standard Life’s outgoing CEO, Sir Sandy Crombie, joined the company’s embryonic IT department back in the 1960s, programming code that is still in use nowadays. Around 1000 of the 10,000-strong workforce based in the UK, Europe, North America and Asia are involved in IT and their average length of service is just over 13 years – an impressive stat in anyone’s book. Perhaps more surprising is the fact that man-agement near the summit of Standard Life’s IT hierarchy have an average of 20 years’ experi-ence each at the company. “IT professionals tend to move around quite a lot, and that seems to be a fairly typical model in the industry, but we are defi nitely atypical,” Young reveals in a distinct Scottish brogue.

Many of his long serving IT professionals were recruited as trainees, brought through the ranks to management and have chosen to stick with the company. “Th e way you keep hold of your most experienced and best ones is by making them feel valued,” Young explains. “You have to spend time with them, you have to make their opinions count and you have to give them careers that play to their strengths.” Of course, not everyone earmarked for man-agement fulfi ls their potential; others feel re-moved from the job they originally trained to do. In order to address this “technical streams” were established to allow staff who excelled at perhaps development, design or analysis to specialise in their area of expertise. “We allowed the very best staff to rise into senior management positions with their divisions so that they didn’t have to move away from their specialism in order to have a valuable career with us.” Allowing staff to move up the ladder

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and still hang onto their technical expertise and experi-ence is fairly unique but one that seems to work here.

Although Young still casts his net outside Stan-dard Life’s four walls when looking to recruit, his preferred option is to promote from within. Aft er all, internal staff have the knowledge of what the company is all about and have absorbed its culture. Young says choosing to favour hiring non-Standard Life people damages morale and means risking losing key staff . “If you regularly recruit staff into senior levels rather than promot-ing from within, the message you send to your staff is that they’re not valuable and, therefore, you will encour-age them to look elsewhere for opportunities.” Young also has a trainee programme in place that takes junior IT professionals on board every year and invests in their development. Th ey go through rigorous tests to make sure they are the right candidates and great team players with the ability to collaborate eff ectively. Being an intellectual individual is not what Young is looking for. Next year Standard’s IT numbers will have to swell to cope with the injection of some serious money into the department as the business and the industry as a whole emerges from the deepest recession in decades. Young and his management team will be on the hunt for experienced people, especially project managers and senior analysts. “Th ere’s always business cycles – kind of boom and bust situations – and you need to make sure you’re in good shape actually going into any of these storms.”

Handling a crisisWhen Young mentions a storm he is, of course, referring to the hur-

ricane of the past couple of years with the meltdown in the banking sector and subsequent credit crisis and recession. Unlike some CIOs, Young is quick to dismiss any notion that he is being asked to do more with less. On the contrary, it’s been pretty much business as usual for the IT side of Standard Life, although he fully expects increased legislation for the fi nancial institutions in the wake of the industry’s economic meltdown last year. “Th e economic problems of the last 18 months didn’t result in us making major cuts in IT,” he asserts. “In fact, our running costs in investment in IT for 2009 is pretty much the same as it was in 2008 and that investment is actually going to be increased in 2010 to prepare us for coming out of the recession.” He adds: “Although it was business as usual in 2009, we kept an eye on what was happening in the markets to be aware that we might have to make cuts should things get any worse than they turned out to be.” With turmoil in the fi nancial sector and the recession aff ecting most businesses, Young issues a note of caution about making snap decisions based on the short-term outlook rather than a long-term forecast. “You need to invest for the long-term because this isn’t like selling commodities where one time the market will be very high and then the market falls and you have a big programme of cuts to deal with it. We tend to have a more consistent approach to investment because you are dealing with the long term as you ride out the storms.”

Earlier this year a drive for operational excellence was announced in order to be as “effi cient and eff ective as possible”. It was also about reducing silos across Standard Life globally as well as developing and

challenging talented people. A key component of the IT strategy is the group’s service-orientated architecture

(SOA) which has saved around €26 million to date by replacing legacy systems like the customer da-

tabase application and reducing the complexity of developing other applications. Th e amount saved is based on what it would have cost for Standard Life to build each unique business

service every time an application was developed. Altogether Standard Life has written a catalogue

of 500 business services and the leading ones are used in more than 50 applications. “If you architect

it properly and you write the business service once, then it can be used across many applications.” Although Standard

Life doesn’t have as many legacy systems as its peers due to a low level of M&A activity, some legacy programmes needed to be refurbished and others re-written. “Th ey decay over time simply because business changes or the systems start to get used for functions that they were never designed to be used for, and that’s where some of the problems come,” he warns.

Some of the legacy programmes had been altered so many times that they were destined to become impossible to maintain unless steps were taken. “We took them and eff ectively redesigned and rewrote them before putting them back in place.” Young likens the situation to a railway with lines criss-crossing the network. “Some programmes are used by almost everything, and they become key programmes, and it’s these ones that we took out, redesigned, recoded and put back into production. It means that our legacy systems are more manageable than they would be if you just allowed them to decay.”

As well as the refurbishment, the strategy also provides consistency across all channels, which means information sent out to the customer, passed to a call centre operator or uploaded to the website uses the same business service. “Th e results that you get when we write to you or if you contact us over the phone or the net will always be the same and consistent,” Young explains. On top of this, Young and his team has shrunk the data centre and slashed its carbon footprint by more than 70 percent through virtualisation. In fact, the overall cost of Standard Life’s all-important IT has reduced by over 75 percent since 2004 – the year the group demutualised.

Evolution over time With his career at the institution stretching back to 1987 when

he arrived as an analyst, Young has seen IT evolve from a back-offi ce function into a real ‘game-changer’ and business enabler. Back then the IT function was a very much inward-facing component compared with today’s customer-facing outlook. Indeed, in one way or another the IT department is oft en the only contact Standard Life’s 6.5 million global customers have with the business, which off ers life assurance, pensions, investment management, banking and healthcare insurance products. “We didn’t used to have any direct contact with customers but that changed signifi cantly and is continuing to change with the growth of the internet and services being provided over it,” Young notes. “Twenty-odd years ago most of the contact with customers was

Around 1000 of Standard Life’s 10,000-strong workforce is

dedicated to IT


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rectly into the IT function, no other staff are touching that on the way, so it means you need to be secure, reliable, always there and give them the information they need fi rst time.”

Looking backYoung, who is gearing up for his retirement at the end of the year –

a period of his life he is “very much looking forward to”, says excellent leadership skills have been the most important aspect of his job. He admits, however, that it is a challenge maintaining regular contact with 1000 staff and getting his message across and explaining his strategies. Nevertheless, Young holds face-to-face meetings with employees and regularly attends team meetings. He’s even produced a DVD of himself delivering important messages and has used the media to get his opin-ion across. “What I need to concern myself with is making sure they understand what they are supposed to be doing and the things that are important, but I don’t have to worry about their technical competence.” So is he a ‘hands on’ boss? “I wouldn’t say I was and I don’t think my staff would describe me as this either, although it is necessary to get involved in some specifi c issues to some detail. You also need to recog-nise that some things could potentially cause trouble but these are few and far between.”

via paper, then it moved to and is still predominantly the telephone, and now it’s increasingly moving towards the internet.”

Being able to capitalise on the internet as a way of serving your customers can prove invaluable in retaining customers and cutting costs in other areas. “If you can take advantage of the web you can do two things: you can give your customers a great service, and you can cut your costs because you don’t require big call centres handling customers’ calls.” With the advent of better technology the back-offi ce function has switched to the front in some respect, as Young explains. “When the customer contacts us over the web and they’re coming di-

Keith Young

“Th ere’s always business cycles – kind of boom and bust situations – and you need to make sure you’re in good shape actually going into any of these storms”


ASK THEEXPERT

An IT department was once relativelysimple. A server, a few computers,perhaps some firewalls, an internetconnection and a help desk. Staff

came to work to write documents, make phonecalls and not much more. Today, work is sup-ported by computing at almost every step of theway. In turn, IT departments vary in size, budgetand platform but have come to share one strikingelement – complexity. As businesses have becomeever more reliant on technology, so IT has builtan intricate jigsaw puzzle of technologies.

A typical scenario is that no business in itsright mind is going to install a hugely expensiveinfrastructure without taking steps to ensure itworks properly. So another system has to be in-stalled to ensure the first one is performing. Thislayering of systems to monitor the solutions hasspiralled out of control. Our recent research in theUK found that three-quarters of businesses admitthey are blinded by the complexity of their ITmanagement set up.

But what surprised us more is the estimatedcost. Almost two thirds of respondents admittedthat complex and ineffective IT management iscosting their company €5.3 million each year indowntime and staff time, on average. So how hasit come to this? It is partly because there is noholistic, end-to-end picture of IT that its man-agers need; CIOs have been forced to take a seg-mented approach to performance management

by implementing partial solutions that monitorindividual technology silos. We found that almostone fifth of companies were using more than fivetools to monitor the performance of IT.

Support This partial approach is financially draining

and does not give businesses the support they re-quire. For example, when a performance issue hitsonline banking, often the first time the IT depart-ment knows about it is when customer complaintsflood in. In spite of the five monitoring tools, pin-pointing the problem will still be like trying to finda needle in a haystack – or multiple haystacks.Industry analyst group Enterprise ManagementAssociates estimates that more down time (54 per-cent) is spent finding problems than fixing them.

In seeking to protect investments and ensurethey deliver, IT departments have ended up withinformation overload that hinders resolution ef-forts. What businesses need is for their IT depart-ments to be able to assess quickly where theproblems are, and avoid them.

IT is made up of many applications and sys-tems each performing small tasks to get user trans-actions completed. By generating visibility into thesetransactions IT management can be simplified. Eachtransaction from a user ‘travels’ through the system.By capturing and tracking all transactions, across allIT tiers, all the time, organisations can see the impactthat transactions have on the business. But most im-portantly, each business transaction provides clearevidence to how an application is performing and ifthere is trouble on the horizon.

CostsAnother advantage is that transactions also

tell the cost side of the IT story; they make it easyto identify and resolve performance problems

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MAKE THE CHANGEColin Rowland offers his thoughts on de-clutteringyour organisation’s IT.

Colin Rowland is Senior VP Worldwide Sales at OpTier.Prior to OpTier, Rowland was SVP of Operations forEMEA at Opsware, a data centre automation softwarecompany (since acquired by HP). Before this, he wasresponsible for building Mercury Interactive'sApplication Performance Management business unit inEMEA through its high growth phase.

swiftly but also to optimise the cost of performingthose transactions.

An approach that was fit for purpose 10 yearsago, simply no longer cuts the mustard. Businesseshave to be leaner and meaner – they cannot affordto have a reactive technology infrastructure wherethe systems manage the business rather than theother way around. Simplifying IT management is,in many ways, akin to clearing out yourwardrobe. It might be painful to part with that tanleather jacket from the 1980s but you know it hasto be done. n

“Businesses have to be leaner and

meaner – they cannotafford to have a

reactive technologyinfrastructure ”

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How would you describe the concept of enterprise capture?Thomas S. Senger. Document capture has evolved far beyond its roots in simply scanning to archives. In parallel, traditional centralised capture processes or fragmented capture implementations within large enterprises, where localised departmental solutions have been focusing on specifi c types of documents, turn out to be a thing of the past. Today, we see a growing trend towards combining basic document capture with data capture at the earliest possible moment: right then, when documents of all formats are initially received in an organisations through multiple contact points in order to feed and initiate transac-tional and time-sensitive business processes. Th is combination of document capture and data capture in distributed environments is what is called “enterprise capture”. It’s a solution approach, that is literally exploding in all transaction-heavy industries like the fi nancial services sector with its hundreds of thousands of payables, receivables and claims that need to be processed on a daily base.

Where do you see the main benefi ts of this approach?TS. Th e key advantage of taking an enterprise approach to document capture is the ability to

immediately deliver extracted and transformed data directly into business systems. Moving from “scan-to-archive” to “scan-to-process” has profoundly changed the strategic importance of capture as an enterprise standard. Th e resulting increase of speed, productivity and accuracy translates directly into competitive advantages. By capturing business-critical data at this early stage and by feed-ing the won information into an enterprise’s various back-end systems, employees in all departments have immediate access to this data and can initi-ate the respective business case as soon as possible. At the same time, document preparation and transportation costs asso-ciated with capture get reduced signifi cantly. Besides these benefi ts related to effi ciency, compliance is also a driver for enter-prise capture adoption. Operating a common capture platform helps to facilitate records management and e-discovery processes and documents can be controlled more effi ciently.

What should companies take into account when they plan to invest into an enterprise capture solution?

EXECUTIVEINTERVIEW

TS. Th e fi rst step in establishing an enter-prise-based approach to document capture is to carefully review the types and formats of information that is entering an organisation. Wherever paper-based information is pres-ent, both front-offi ce and back-offi ce opera-tions should have ready access to document scanning tools rated for their peak volumes. Ease-of-use is critical for front-offi ce staff to ensure that converting paper to electronic form becomes routine. A clear understand-ing of what data is needed by various business processes will help when selecting the right classifi cation and extraction tools that can be used to further automate manual handling and reduce bottlenecks. It’s important to have each department in a transactional workfl ow represented when making these decisions, as information that is critical to one area may be of little signifi cance to another department. However, the key question is probably: is the new system aff ordable and can it provide a good return on investment?

Kofax has become the leading provider of document driven business process auto-mation solutions. What specifi cally makes Kofax enterprise level solutions so suc-

cessful?TS. Well, because we can answer all the questions above with yes. With now over 20 years’ experience dedicated solely to docu-ment capture, we are able to provide a single, unifi ed platform for enterprise capture which strictly adheres to a scalable, stan-dards-based, consistent architecture that easily integrates with the largest variety of existing systems.

Our solutions deliver a ROI typically within the fi rst 12 months – an argument that gets even more convincing in the fi erce economic climate we’re facing these days.

Thomas S. Senger is Kofax’s SVP of Applications Software & Services EMEA. Senger oversees all customer-facing sales and services functions in alignment with the company’s newly-introduced hybrid go-to-market model, which supports both direct customer engagements and indirect sales through channel and with alliances partners.

Business Management sits down with Thomas S. Senger of Kofax to discover the tangible benefi ts of enterprise capture.

Capture the moment

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Domino’s Pizza has left no stone unturned in its battle to conquer the European online fast food market. Business Management meets its IT Director JANE KIMBERLIN, the brains behind the newly launched Domino’s iPhone application and online pizza tracker service.

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HOSPITALITY

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TAKEAWAYTECHNOLOGY“We had a look at our customers’ technology and saw that 85 percent of our customers use Windows, the next percentage up use Mac, then around 4.2 percent are on the iPhone, so we thought we must do something for them”

There’s nothing new about pizza delivery. But thanks to an aggressive technology and mar-keting strategy, Domino’s Pizza has taken the concept to a new level. No longer content to provide telephone and online ordering facili-ties, Domino’s now allows customers to order their pizza over their iPhones and even track how long it will be before the food is deliv-

ered. Th e brains behind this takeaway technology is Jane Kimberlin, Domino’s Pizza’s UK IT Director. Speaking on the eve of the 10th anni-versary of Domino’s’ online launch, she describes how strong demand is from customers ordering pizzas from its website: “Online ordering has been increasing over the last four years from 10 percent, 15 percent, 20 percent then 25 percent. We had a mega week two weeks ago, which broke every single record so far, at 34 percent. Demand is growing all the time and it’s obviously helped by broadband which means greater use of the website. Word of mouth, but also the whole digital marketing arena, are very important.”

Online orderingAlthough the majority of customers still order their pizzas by

telephone, Kimberlin says she predicts that proportion will eventually drop in favour of online ordering instead. In the meantime the com-pany has launched a bid to target even more customers with its iPhone applications. Kimberlin describes the thinking behind the launch of the technology: “We had a look at our customers’ technology and saw that 85 percent of our customers use Windows, the next percentage up use Mac, then around 4.2 percent are on the iPhone, so we thought we must do something for them. It’s taken off very well indeed. We’re delighted with the numbers – we’ve had thousands of orders through already on the URL.” She goes on to say that the application was de-signed to match as far as possible other iPhone applications in terms of functionality and appearance: “You go straight into a website that has been enhanced for the iPhone and it deliberately looks very ‘iPhoney’. It’s very intuitive to use and very advanced. It has all the functionality of our normal site – the deals are there and you can still customise your pizza.” Despite having made pizza ordering a much more techni-

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cally advanced process, Kimberlin says the company is keen for this not to impact on the job of Domino’s’ frontline staff . So it has designed the system so that all orders appear the same on the in-store system, regardless of what channel they came through: “Th e back offi ce side of our stores is the point of sale system and all orders simply integrate into that regardless of whether they are iPhone orders, or whatever. All orders go straight through to the point of sale system and appear there. Our staff are fantastic and good customer service is about making pizzas and delivering them. We don’t want them to be distracted into dealing with technology.”

It’s a long way from the online ordering system that was fi rst launched 10 years ago when orders were delivered to the various stores by fax. But, says Kimberlin, there is still room for improvement in the way the system is run: “IT is constantly evolving at Domino’s Pizza. We invest in it all the time. Every time we have a record event on the website we go back and look at where the pinch points were, whether we had the right levels of connectivity, if the right fi rewalls and servers were in place and if we had the right pipes to the internet.”

Behind the scenesKimberlin is also involved in the IT that goes into running

Domino’s as a business and says there are various major projects in the pipeline, including the possible introduction of cloud computing and new CRM technology. Regarding the latter, she says: “I think that is certainly within our arena. We know where you live and we know all about you and your eating habits. But CRM is more about how good your customer experience is and what we can do to make that better.” Th is increased amount of customer data, which is highly valuable to Domino’s when putting together its marketing strategies, means it runs a large and complex data storage system: “We have a massive data warehouse for every single imaginable statistic that we can mea-sure. We’re always adding to and enhancing that system.” One of the enhancements the team has made is to ensure the data is available to the managers of its 570 stores – wherever they are in the UK: “We’re a franchised system and most of our franchisees have more than one store. You can’t be in two places at the same time so what we have is a facility which allows them to look at all sorts of information in real time on their Blackberry or PDA or whatever mobile device they have. It’s a simple URL link from wherever they are. So if you are a franchisee for 10 stores for example, you can see how many orders you’ve had that day, whether that is up or down versus the previous week and even your service staff ’s out of the door times. And it’s refreshed regularly so minute by minute the information is updated.”

Kimberlin says Domino’s is keen to explore the possible benefi ts of cloud computing for the or-ganisation, however she says the company, though normally ahead of the pack when it comes to technology, is taking a more cautious approach to this particular branch of IT: “We won’t be an early adopter in this arena but it’s more about looking at

what benefi ts there will be and how they will be delivered. We will be looking at it from a potential disaster point of view, and in terms of cost of ownership. Everybody’s talking about it so let’s have a look at what it can do.” She goes on to say that her team is also looking into the possible adoption of VoIP within the Domino’s headquarters however, VoIP within the stores themselves is at least two years off . Where the team will be focussing serious eff orts however will be in the area of social media, which the company is already capitalising on heavily to market its products: “Th e whole social media and the mobile arena in particular are two of the areas that we’re very focussed on. It’s really all about looking at our customer profi le and where they are. Some of our stores individually, for example, have a Facebook page. We also take advantage of things like Google Ad words and SEO opportunities. We don’t want to just be about selling people pizza, we want to be part of

their lifestyle.” Th is wish to connect with customers has extended to getting them involved in tracking the pizza making process. Domino’s in the UK has recently launched Pizza Tracker – an application which has been available in the US since January 2008. It allows online customers to track exactly what stage the pizza making process is at and how close the food is from delivery. Kimberlin admits she could not have predicted how high demand for the application would be in the UK: “We were inspired by the US on this one, because when the application fi rst came out we just thought ‘this is a bit sad actually. Who’s going to sit and watch the tracker for 20 minutes?’. But we’ve had amaz-ing success from it.” She goes on to reveal that on average 34 percent of customers that order pizzas online use the pizza tracker facility. She says this is no surprise given the number of customers that

High fl ierWhen she’s not deploying new technology at Domino’s Pizza, there’s nothing Jane Kimberlin likes more than to take to the skies with her pilot’s license.“I probably fl y about once a fortnight, generally locally around the area, maybe just to a little airfi eld. I do it for fun in the evenings. Sometimes I say to my colleagues ‘Let’s go for a quick trip’. But for longer trips I’ll go with a fellow pilot and just a small overnight bag. It’s a great way to unwind because you have to 100 percent concentrate when you’re fl ying. Nothing can get into your thought process to interfere with that.” The active CIO recently organised a charity challenge to coincide with her 50th birthday – organising for 50 people to ride 50 miles each to raise money for Macmillan Cancer Support. To fi nd out more log onto: www.justgiving.com/bike50miles.

Jane Kimberlin

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would phone the stores to fi nd out what time their pizza would be de-livered prior to Pizza Tracker being launched: “I spoke to my colleagues in the US and they said people use it more for feedback and assurance. Th ey were surprised themselves by how well it has taken off .”

Domino’s is not the only European pizza delivery company that is investing in online and social media technology to grow market share but Kimberlin says that as the leader in the fi eld, Domino’s still remains ahead of the pack: “One or two of our competitors do online sales and we monitor that carefully. What we believe is that we have a far better product than them because we use fresh dough, fresh cheese and fresh sauce. We stole the march on this technology and it’s hard for others to catch up now. We feel we off er an all-round better experience.” And despite working in an environment where she is surrounded by pizza every day, Kimberlin says she still regularly indulges in a slice or two: “At Domino’s we’re obsessed with pizza. It’s absolutely what we think about the whole time. I do love pizza. It’s unlike chocolate where if you have the chance to eat as much as you want, you do eventually stop. With pizza it never feels like that. Pizza is part of my balanced diet.”

Everything you ever wanted to know about pizza…

Pizza is a €23 billion per year industry.

Domino’s delivered 400 million pizzas last year – that’s a pizza (and a slice) for every man, woman and child in the United States.

Domino’s World’s Fastest Pizza Maker Dennis Tran makes three large pizzas in just 46.4 seconds.

Domino’s drivers cover nine million miles each week in the US alone. (That’s 37 trips to the moon every week!)

About Domino’s pizzaThe Domino’s brand was founded in the US in 1960 by Tom Monaghan. Since then, that business has grown into a global network of over 8700 stores in more than 60 countries, employing around 180,000 staff and involving over 2000 franchisees. DPG is the master franchisee of Domino’s Pizza in the UK and Ireland. Since the business was purchased from DPII in 1993, it has developed to become the leading UK home delivery pizza brand. Since the fi rst store opened in the UK in 1985 and in Ireland in 1991, the group has expanded to 583 stores (as at 27 September 2009) in the UK and Ireland. Of these stores, 456 are located in England, 45 in Scotland, 22 in Wales, 14 in Northern Ireland, 45 in Ireland and one mobile unit. The group’s total annual system sales for the 52 weeks ended 28 December 2008 amounted to €392.8 million, representing growth of 18.4 percent over prior year sales. The Group’s operating profi ts from continuing operations increased from €20.5 million to €25.6 million over the same period.

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What drives the mobile payments market, and makes it such an important growth op-portunity?Thomas Bostrøm Jørgensen. Signifi cant opportunities for cost savings and increased revenue drive the market. Innovative mobile payment strategies enable organisations to transform the way fi nancial services are deliv-ered by introducing a new mobile channel. Th e statistics prove the importance of the market, showing the explosion of mobile phone usage and concluding that the mobile payments market could be worth as much as €414 billion by 2013. In developing countries mobile bank-ing services even support a paradigm shift in fi nancial transactions by bringing banking services to ‘unbanked’ populations. Mobile payments solutions providers such as Luup give access to new business models and ser-vice off erings including branchless banking, mobile payroll solutions and money transfers.

What benefi ts and competitive advantages can organisations gain by rolling out mobile payments strategies?TBJ. Let me reply by asking back: would the readers of this article like to access new cus-tomers and revenue streams, reduce costs and increase operational effi ciencies? I am sure the answer is yes. And with mobile payments solu-tions, organisations will gain clear competi-tive advantages. Th ey can, for example, better service their customers with faster, more con-venient services, increasing satisfaction. Th is in turn contributes to retention, up-sell and cross-sell opportunities. Moreover, cutting-edge branded mobile platforms appeal to new target markets enabling brand diff erentiation, customer acquisition and new revenue.

Could you outline Luup’s credentials and your approach to servicing customers?TBJ. Luup has been developing and operat-ing mobile payment solutions since 2002 and was the fi rst company to hold a full European e-money license. We know how to meet chal-

lenging fi nancial services regulations and sup-port our customers with innovative strategies. Our customers chose us because we off er the

most eff ective combination of credentials to be successful: a highly experienced team, innova-tive technology, neutrality as we are not tied to specifi c mobile networks and a convincing security model. Our responsive, customer-centric approach allows for tailored, white label applications development. Customers can also leverage Luup’s remittance and payments gateway across networks and geographies.

What are critical factors to success? TBJ. Th ere are many, but as we operate in an in-novative, at times challenging market, it is cru-cial to help organisations participate as smoothly as possible. Luup’s modular portfolio of capabilities for example can easily be selected and combined to create the most effi cient, fastest possible market rollout. Full compliance with fi nancial regulations and the highest standards are criti-cal too to gain end-user buy-in for rollouts. Th at is why Luup’s unique credentials in the fi nan-cial sector are vital and we focus on customers with a fi nancial services license or fi nancially regulated partnership models.

Can you give examples of how Luup has enabled or-ganisations to establish a mobile payments strategy?

EXECUTIVEINTERVIEW

TBJ. Luup devised strategies for fi nancial insti-tutions such as Deutsche Bank Global Trans-action Banking, MoneyGram International and leading UAE bank, the National Bank of Abu Dhabi (NBAD). With NBAD we devel-oped a SMS-cash-service that was the fi rst of its kind, enabling mobile money transfers and ATM cash-out to anyone, whether an NBAD customer or not. Person-to-person mobile money transfer and person-to-merchant bill

payments are up and running and soon we are adding a mobile remittance service. With Deutsche Bank on the other hand we are planning instant and secure mobile payments services to client banks and corporations in 80 countries.

Which businesses other than fi nancial insti-tutions can benefi t from mobile payments solutions?TBJ. A wide range of businesses and organisa-tions can reap benefi ts from Luup’s comprehen-sive portfolio of solutions. Corporates and their treasurers, remittance networks, governments

as well as not-for-profi t or-ganisations, all can achieve signifi cant operational effi -ciencies and cost savings. We are, for example, pioneering a proposition for corporates with large supply chain dis-tribution networks, which enables treasurers to trans-form B2B processes and cash management. Corporate end-users can make and receive payments, authorise invoices and remotely initi-ate payments using a compa-ny mobile. So new solutions off er real-time payments collection, convenience and the opportunity to reduce operational costs.

It pays to go mobileThe mobile payments market is set to explode into a €400 billion industry by 2013, as expert Thomas Bostrøm Jørgensen explains.

"In developing countries mobile banking services even support a paradigm shift in fi nancial transactions by bringing banking services to ‘unbanked’ populations"

Thomas Bostrøm Jørgensen is CEO for global mobile payments solutions provider LUUP. He is an expert on innovative mobile payments solutions and business strategies that enable organisations to securely transform the way fi nancial services are delivered. Under his leadership, Luup devised mobile payments strategies for a number of global institutions.

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And with Luup’s mobile payments strategies you can take advantage of innovative opportu-nities and our experience.

Experience counts. Luup was the fi rst mobile payments solutions provider to operate with a full e-money license. So we know how to meet the challenging regulations you face. And with proven, real life deployment experience gained in multiple markets, Luup is a partner you can rely on. In fact, we are celebrating 10 years in the mobile payments industry this year.

(C) 2010 Luup International Ltd.

Gain more insights, please contact us at www.luup.com or +44 207 802 5062

Would you like to reduce cost and access new revenue?

We are sure your answer is yes!

Mobile Payments Solutions

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The EU has set the target of 20 percent renewable energy by 2020. Whatis the likelihood that all 27 member states will be able to achieve this tar-get by the deadline? What will happen if any of the EU members fail toreach the target and in what ways is the EU supporting the efforts of theindividual nation states?Andris Piebalgs. The 2020 national renewable energy targets set by the newdirective are not political objectives, but legally binding targets. Based on a de-tailed assessment of the European Commission, these are achievable, and weassume that they will be realised, as member states have a legal obligation.

The Commission has provided assistance to member states in the prepa-ration of the National Renewable Energy Action Plans. We will also assist withthe monitoring and follow up of implementation. In addition to that there areseveral community programmes (7th framework Programme for Research,dissemination activities in the framework of Intelligent Energy for Europeprogramme) that are also supporting member states in the implementationof the directive.

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EU Energy Commissioner Andris Piebalgs talks to Stacey Sheppard about the progressEurope is making in its pursuit of sustainable, competitive and secure energy supplies.

ACTION ON ENERGY

What is the Intelligent Energy Europe programme?AP. The Intelligent Energy Europe (IEE) programme supports the deploymentof sustainable energy and contributes to the achievement of the general goalsof environmental protection, security of supply and competitiveness. The pro-gramme stands for the removal of market barriers and the creation of a morefavourable business environment with the aim of increasing energy efficien-cy and strengthening renewable energy markets (including clean transport).The IEE programme also seeks to raise awareness and change behaviourthereby fostering the understanding and better implementation of EU ener-gy policy in Europe’s cities and regions.

Intelligent Energy Europe (2007-2013), with a total budget of €730 mil-lion, builds on the experience gained from its predecessor, the first IntelligentEnergy Europe (2003-2006) Programme. Since 2007, Intelligent EnergyEurope has been included in the overall Competitiveness and InnovationFramework Programme (CIP) in order to tackle EU energy policy objectivesand to execute the Lisbon Agenda.

ENERGYPOLICY

AndrisPiebalgs ed_18nov 25/01/2010 11:36 Page 128

Specific actions eligible for IEE co-funding are detailed in the annual IEEwork programmes adopted annually by the Commission after opinion of theprogramme committee and scrutiny of the European Parliament. The oper-ational objectives and the priorities set out in the annual work programmestie in with the most recent EU energy policy developments.

The implementation of the IEE programme is largely based on twomeans: grants (call for proposals) and procurement (calls for tenders). Untilnow, the largest share of the IEE budget was allocated to small-scale projects(around €500K). Projects are selected and managed on behalf of theCommission by EACI (the Executive Agency for Competitiveness andInnovation).

One of the main criticisms of renewable energy sources, such as solarand wind energy, is the fact that production is unreliable, supply is notparticularly secure and it is very difficult to store the energy. What is theCommission doing to help overcome these challenges and appease thedoubts of the critics?AP. The new directive requires member states to improve their energy in-frastructure and the operation of it with the view to accommodatinghigher shares of renewable energy sources in the energy mix.Reinforcements, intelligent network solutions, new storage capacities,new interconnections, and revision of operational and market rules willall support this objective. It is true that certain sources are variable, butthe difficulties can be overcome as we can see in the Danish and Spanishwind integration experience.

In what ways is the Commission working to improve the regulatoryframework with a view to ensuring that the EU can benefit from a lib-eralisation of the internal market in terms of secure, competitively pricedand sustainable energy?AP. The third liberalisation package adopted this summer is a big step in provid-ing a proper regulatory framework for the EU electricity and gas markets. Firstly,the national regulatory authorities will become more independent from the mem-ber states’ governments and their powers will be enhanced. This is the backbonefor the energy market regulation in Europe. Secondly, for the cooperation of reg-ulators at the European level a regulatory agency will be created. This agency willhave the important tasks of monitoring how the markets work, giving opinionson the work of transmission system operators and making binding decisions onEuropean infrastructure. The agency will rely on its own staff as well as the re-sources of the national regulators. Finally, the third package provides a system tomake detailed legally binding rules for the European energy markets.

The Internal Energy Market increases the interdependence of memberstates in energy supply. In what ways would the development of a trulypan-European electricity super highway help to ensure solidarity be-tween member states in the event of an energy crisis?AP. It is true that there is an interdependence of member states in energy sup-ply in the Internal Energy Market. Interdependence means that a countrydoes not take energy decisions in isolation but takes the opportunities pro-vided by other member states into account. This is where huge welfare gainshave already been reached and can further be developed. In electricity, an effi-

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“The goal of theCommission’s SET Plan is tostep in and support thetechnologies’ R&D and theirdeployment until thismaturity is reached”


AP. The diversification of energy sources, transport routes and suppliers is cru-cial for ensuring energy security; its importance has been underlined by thegas crisis in January 2009, but it was recognised also before the crisis. In theSecond Strategic Energy Review ‘An EU Security and Solidarity Action Plan’adopted by the Commission on November 13, 2008, the Commission pro-posed a number of initiatives aimed at increasing EU energy security.

Despite the fact that at the EU level, gas supply is reasonably well diver-sified; at a national level, a number of member states rely on a single supplierfor 100 percent of their gas needs and a number of others on just a few sup-pliers. Diversification is thus important to spread and reduce individual risk,as well as to fully benefit from an integrated and interconnected market-basedsystem.

The first of the five priorities of the Second Strategic Energy Review was‘Infrastructure needs and the diversification of energy supply’. Within this pri-ority, concrete actions have been proposed at EU level, including: the inter-connection of isolated energy markets (including a Baltic InterconnectionPlan covering gas and electricity), the development of the Southern GasCorridors, the increasing of the capacity of gas storage and LNG to ensure suf-

ficient liquidity and diversity of EU gas markets, and the developmentof North-South gas interconnections within Central and South-

East Europe. A Communication on the Mediterranean Ringhas also been announced for 2010.

By 2020, it is estimated that the necessary capacityexpansion for power generation will amount to ap-proximately 360 GW, which corresponds to about

half of the current installed capacity. As renewable en-ergy will only account for 20 percent by 2020, this obvi-

ously leaves 80 percent of power generation fromalternative sources. What are the main priorities for the EU in

terms of capacity expansion outside of the renewable energy sector? AP. Fostering the transition towards a low carbon power generation system isa high priority for the European Union. The massive deployment of renew-able energy in the electricity sector will require a lot of investment, both inpower generation capacities and in transmission networks. By 2020, accord-ing to the scenarios prepared by the Commission in 2008, renewable energyshould represent 33 percent to 58 percent of the total power generation ca-pacity necessary to meet the future demand and to replace ageing facilities.Appropriate policies are needed to support this deployment. National plansfor the promotion of renewables – to be adopted by member states in 2010 –will be crucial. Any investment or choice of technology contributing to de-carbonising the electricity sector will be relevant.

Renewable energy is currently quite a costly investment. What role willtechnology play in reducing the cost of renewable energy and how is theCommission helping to support research and innovation in technology?AP. Renewable energy sources have traditionally gained the reputation ofbeing a costly investment. In the 1990s, this was true, as the oil price was low.It is however important to realise that costliness is relative to the alternatives.As the oil price rose, even in the years before the financial crisis, renewable en-ergy sources became more and more attractive.

Another important factor is the price of carbon and its meaning. Carbonallowances are issued to or bought by those who emit greenhouse gases. This

cient transmission system is vital for reaching these welfare gains. In the his-tory of electricity transmission the evolution has been to use higher and high-er voltages in overhead transmissions lines. Currently it is the 400kV networkthat provides the backbone for electricity transmission. New transmissionchallenges are coming from integration of wind energy, in particular offshorewind, which needs to be transported long distances to the customers. Similarchallenges face projects such as bringing solar electricity from North Africato Europe. As these new transmission needs include transporting electricityin seas, cables using direct current technology seem suitable for this purpose.Some people think that direct current could also be interesting on land. As aresult, a meshed direct current network could become a new pan-Europeanelectricity super highway, ensuring our renewable energy goals and enablingsolidarity between member states.

European transmission infrastructure is currently unable to maximisethe benefits of renewable energy resources. What improvements needto be made to our infrastructure and how will this be funded?AP. Our electricity system has to be adapted to the new circumstances: more dis-tributed generation, more variable generation, more large-scale distant(and variable) generation. The electricity transmission and dis-tribution infrastructure has to be reinforced and new lineshave to be built, incorporating intelligent solutions, build-ing new interconnections, using operational measures.

By means of the Economic Recovery Plan, the EUhas designated community funds for interconnectionsand offshore wind energy and other electricity links. Thefuture financing of European energy infrastructure is alsobeing discussed in the framework of the Trans-EuropeanEnergy Networks (TEN-E) revision.

Which of the member states are demonstrating the highest com-mitment to increased generation of renewable energy and improve-ments in transmission infrastructure and how can they help thosemember states that are currently lagging behind to come up to the stan-dards required to meet the EU targets? AP. I mentioned before the Danish and Spanish experience in wind energy in-tegration. The two cases are different: Denmark is strongly interconnectedwith other Scandinavian countries, making use of their hydro capacity in bal-ancing power. On the other hand, Spain can be considered as an island fromthe point of view of electricity infrastructure.

But there is something common: they both have transmission system op-erators (TSO) strongly committed to finding solutions and adequate answersto the challenges they face. They can serve as models, and the active partici-pation of these TSOs in the European Network of Transmission SystemOperators for Electricity (ENSTO-E) in European research programmes, cer-tainly gives an opportunity to make others aware of these activities. TheCommission is also planning to launch a concerted action with the memberstates on the implementation of the renewable energy directive, which will en-courage exchange of experiences between member states.

In light of the gas crisis that we experienced last winter, how importantis it that EU member states promote diversity of energy sources, suppli-ers and transport routes?

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33-58%of total capacity

By 2020 renewableenergy should

represent


means we place a price on emissions. Conversely, renewable energy sourceshave low or no emissions at all and therefore do not carry with them the priceof carbon, as no allowances have to be bought.

Technology is nowadays helping to reduce the production costs ofequipment used to generate renewable energy sources. Productionprocesses become mature and their costs are lower, while raw materialsmeet an increasing demand and factors of scale are reducing their marketprice. As a result, these types of product become commonplace, with moreproducers and a growing market putting pressure on price.

We are, for instance, seeing this chain of maturity have its effect in thewind sector and some biomass areas. Solar photovoltaics are also likely toapproach this level of maturity soon. The goal of the Commission’s SET(Strategic Energy Technologies) Plan is to step in and support the tech-nologies’ R&D and their deployment until this maturity is reached. Assuch, we will be able to cover the cost-gap to traditional generation op-tions until renewable energy sources are fully competitive, thereby miti-gating the risk for market entrants.

Today, we see the need to accelerate our work on technology. This

implies an increase of the R&D budget level. In the Communication onInvesting in Low Carbon Technologies adopted by the Commission onOctober 7, 2009, we set out the needs and technology roadmaps that cantake us there. We estimate that we will need to spend €8 billion perannum, by public and private sectors combined, on the technologies iden-tified in these roadmaps during the next 10 years. The debate on this is justbeginning. Mobilising these resources will make a crucial contribution toachieving our 2020 objectives. n

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Electricity from renewable sources

EU-27

BE

BG

CZ

DK

DE

EE

IE

EL

ES

FR

IT

CY

LV

LT

LU

HU

MT

NL

AT

PL

PT

RO

SI

SK

FI

SE

UK

0 10 20 30 40 50 60 70 80

2010 OBJECTIVE

2006 TOTAL SHARE

EU-27 OBJECTIVE

Share of electricity from renewable energy sources in totalelectricity consumption (%) – EU27


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How can a well managed EH&S programme bring a company cost savings?Chris Methven. A company’s ability to achieve cost savings depends upon its ability to collect, manage and report on a broad range of EH&S and sustainability information. High performing companies are leveraging integrated enterprise-level EH&S soft ware platforms and content services to uncover opportunities to reduce costs with emission-reducing process improvements. Th ey look to eliminate redundant legacy systems and reduce labour costs to streamline delivery of emission and compliance reports, reduce emissions fees, waste disposal fees, monitor-ing and less frequent inspections. Our clients have documented major cost-savings through the use of integrated EH&S soft ware plat-forms. For example, Dow Chemical eliminat-ed over €1.4 million in redundant emissions reporting systems, with the potential to save an additional €1.4 million over time. Reduc-ing the risk of fi nes potentially avoids signifi -cant increases in operating costs and helps to assure accurate compliance with auditable and verifi able reporting.

Oil and gas companies are now under increased pressure to comply with EH&S guidelines. How high a priority has this become at board-level within these com-panies?CM. Th is issue has become a very high pri-ority, stemming from both regulatory and corporate drivers, resulting in widespread reporting and compliance initiatives. Key emerging regulatory drivers include the Eu-ropean Union Emission Trading System (EU ETS), Registration, Evaluation, Authorisa-tion and Restriction of Chemicals (REACH) and the UN’s Globally Harmonised System of Classifi cation and Labelling of Chemicals (GHS). For example, under Phase III of the EU ETS, regulators will tighten the emissions

cap and they’ll be handing out fewer allow-ances to emitters aft er 2012.

Th ere are also corporate business drivers such as profi tability, liability and innovation. Th ese business drivers include EH&S topics including how emissions portfolios impact strategic asset and GHG cap and trade deci-sions, how management of hazardous materials manifests and minimises EH&S exposure, and the creative use of green solutions to preserve and build brand reputation. Finally we have corporate responsibility or sustainability driv-ers such as shareholder initiatives for greater environmental transparency to become more energy and natural resource effi cient.

Why would gaps in a company’s health and safety strategy lead to loss of revenue?CM. Businesses that achieve zero work-related injuries can realise several operational benefi ts including business growth, cost avoidance, and responsive risk manage-ment. An eff ective EH&S strategy can support busi-ness growth through smart sourcing, for example, where worker safety performance is reviewed before determining which vendor to commis-sion for outsourced tasks. In having policy compliance, organisations can ensure that vendors with high ‘expe-rience modifi cation rates’ are not selected, and companies with excellent worker safety performance get the com-petitive advantage with high productivity. Cost avoidance can be realised through elimination of lost produc-tion time and fi nes/penalties, employee health and benefi t premium infl ation and po-

EXECUTIVEINTERVIEW

tentially equipment and facilities damages and associated repair or replacement costs.

An integrated enterprise-level EH&S soft ware platform can signifi cantly strengthen your company’s ability to assure worker safety and productivity. Another of our clients, Hunter Douglas, achieved a 50 percent reduc-tion in injuries and compensation costs and an 80 percent drop in lost work days. Greater health and safety information transparency and insight enables decision makers to select or reject improvement investments based on risk impact and probability relative to potential recurrence. Compliance risks are mitigated, which improves a company’s reputation with investors, community and employees. Com-panies can also mitigate fi nancial risk and the lost revenue by returning to full operations quickly if a disruption occurs.

How can your company help companies to create a successful EH&S strategy?CM. IHS off ers complete and proven information manage-ment solutions to meet the needs of evolving EH&S pro-grammes. Our EH&S solu-tions team works closely with our clients to address their specifi c challenges and devel-op a suggested set of soft ware, content and services to ad-dress critical EH&S business issues and deliver on EH&S improvement goals. Because each customer is unique, the IHS solution packages are designed to be tailored to specifi c requirements.

For additional information about the IHS Environmental solutions, please visit. www.ihs.com/environment

In safe hands An effective Environmental Health and Safety (EH&S) strategy can reap huge dividends for organisations across all verticals, says Chris Methven, Environment Director at IHS EMEA.

As Environment Director of IHS EMEA, Chris Methven is responsible for European environmental business development. Prior to joining IHS he spent four years with ABeam Consulting (formerly Deloitte Touche Tohmatsu Consulting) where he served as a Senior Consultant and Account Director in the European Utility Practice, focusing on technology enabled business transformation projects.

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HOSPITALITY

Are you beingserved?How important in your view is the hospitality industry as a back-bone of the EU economy?Maguerite Sequaris. As one of the major players in the European tour-ism industry, the hospitality sector certainly plays a signifi cant role in the EU economy, both in terms of employment and GDP. According to data quoted in a recent study by the European Commission, in 2006 the sector consisted of over 1.6 million enterprises, accounting for approxi-mately nine million employees in the EU. In the same year, the turnover of the industry reached €440 billion. To put these fi gures in perspective, in 2006 the automotive sector, such as production, sales and servicing, employed 6.3 million people. Th is simple comparison gives us an idea of the importance of the hospitality industry, a highly labour intensive service sector, in the EU economy and society. Nevertheless, the extent of the contribution by the hospitality industry to the EU economy is not as visible as in other sectors because our industry is highly fragmented compared to others such as utilities, energy, etc. As we always stress in our discussions with EU policy makers, 92 percent of hospitality enter-prises are micro-businesses employing less than 10 people and over 99 percent are small businesses, employing fewer than 50 people.

Your organisation is involved in monitoring and assessing the impact of EU legislation on the EU hospitality industry. What leg-islation would you say is having the biggest impact on the indus-try?

MS. Th ere are undoubtedly many EU regulations that impact the industry. Too many, I would say. HOTREC has just issued a publication outlining some 60 key EU measures that are in place or under discussion which directly or indirectly aff ect the activities of hospitality enterprises. And these 60 measures are just the tip of the iceberg. Th e current proposal for a regulation on food information to consumers is a clear example of how the competitiveness of the European hospitality industry can be severely aff ected by a legislation that simply ignores its specifi cities. If adopted as it stands, this regulation would require restaurants to indicate for each item on their menus: the list of ingredients, the quantity of the food, the aller-gens as well as a nutrition declaration. In other words, the legislation would require restaurants to provide the same information as displayed on the labels of pre-packed food sold in shops. Let’s be realistic. Complying with this regulation would not only impose heavy burdens and costs on the in-dustry, it would simply be unworkable for traditional restaurants and cafés. Staying in business would only be possible by reducing and standardising the menu-off er, using ready-made and pre-labelled foods instead of fresh products. At the moment this proposal is surely our greatest concern.

Is there a need for greater standardisation of regulations governing the hospitality industry across the EU?MS. Th is is not a question to which I can give you a straightforward answer. Depending on the topics and issues at stake, our answer can be yes or no. Th e services provided by hospitality businesses are as varied as the issues

As one of Europe’s most profi table industries, the hospitality sector plays a crucial role in propping up the economy. And HOTREC, the trade association representing hotels, restaurants and cafés in Europe ensures its member’s interests are protected. Business Management meets HOTREC CEO Maguerite Sequaris to fi nd out the issues it will be campaigning on this year.

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About HOTREC

HOTREC is the umbrella organisation representing 30 national hospitality associations in 24 countries across Europe. According to HOTREC the European hospitality industry is made up of around 1.6 million different organisations which employ nine million people. HOTREC’s main role is to monitor EU policies that have an impact on the EU hospitality industry. For more information log onto www.hotrec.org.

and challenges they are facing. Inevitably, the answer to this question depends on the context. In certain policy areas, HOTREC opposes legisla-tive harmonisation at EU level, while in others we consider that it could bring benefi ts to the industry. For example, as regards the issues related to lifestyles such as smoking, alcohol policy, nutrition, etc. Our answer is that one-size-fi ts-all solutions at EU level do not work and national rules are more appropriate, because they can better take into account local condi-tions and specifi cations. On the other hand, in policy areas such as VAT, payment services or the collective management of copyright, harmonised solutions at EU level can play a positive role. Of course, the reply to this question as well as the views of the industry on these issues may vary de-pending on the countries and the players concerned.

What changes do you think could be made to EU legislation to sup-port the growth of the industry?MS. I am convinced that the key words are better regulation and sim-plifi cation. Th e EU institutions have to do more to fulfi l their promise of cutting red tape and simplifying the regulatory environment that our businesses have to comply with. EU legislation must be simple, under-standable, eff ective and enforceable. It has to provide a level playing fi eld without adding unnecessary burdens, in order to enable our enterprises to grow and compete in the global market place. In particular, impact assessments accompanying any new piece of EU legislation should better take into account the impact on the hospitality sector in terms of admin-istrative costs. As CEO of HOTREC, I have been insisting fi ercely on this point with the European Commission on several occasions. For example, in relation to the proposed requirement of food labelling in restaurants, HOTREC was particularly shocked to read that the commission’s impact assessment acknowledged that no systematic research answered the question of how much such a provision would cost. In the midst of the current economic turmoil, a favourable regulatory environment is more than ever needed to provide oxygen to the European tourism industry. Th e top priority for policy makers at all levels should be to ensure a sus-tainable framework for business. Better impact assessments, balanced legislation, reduction of red tape, improved access to fi nance and lower taxation are the main ingredients of a recipe for speedy recovery.

What are the biggest challenges currently facing the EU hospitality industry?MS. Besides the economic crisis, the biggest challenge is probably the increasing competition from tourist destinations in non-EU countries with lower labour costs and less administrative burdens. Th e tough com-petition from emerging destinations is testifi ed by the fact that Europe is constantly losing market share in the global tourism market. On average, over the period between 2004 and 2007 international tourist arrivals increased only by fi ve percent in Europe while they increased by seven percent in the world. Of course, another big challenge for the hospitality industry, as well as for all other businesses, is environmental sustainability. Th is issue will continue to be very high on the agenda of EU policy makers over the next few years.

How have your members been affected by the economic crisis of the past two years?MS. Th e current fi nancial and economic crisis directly aff ected our industry. Th e economic slowdown implied less business travellers as companies cut down on business meetings and seminars. As unem-ployment was rising, the purchasing power of European households was reducing, with a direct impact on private outings as well as pri-vate trips. In parallel, the fi nancial situation has made it much more diffi cult for both consumers and industry to obtain loans. As a result, many investment projects in the hospitality sector were cancelled or postponed. At the last HOTREC General Assembly in November 2009 the majority of our members reported negative business trends in their countries and considered that the recovery is not yet in sight. Just to give you a few but striking examples, in Ireland the situation was catastrophic as restaurants witnessed a decrease of 30 percent in their revenues, while bankruptcies rose from 10 percent to 15 percent. In Latvia and Lithuania, occupancy rates in hotels fell by up to 40 percent, depending on the areas. In the UK, up to 52 pubs were closed per week in 2009. In Spain, over the last 12 months, employment rates in hotels dropped by 7.4 percent.

In what parts of the EU do you see the hospital-ity industry particularly developing in the coming year?MS. My impression is that there is still an untapped potential for growth in many of the East and Central European countries that have joined the EU since 2004, as well as in the new candidate-countries. I think that they are good opportunities for the hospitality indus-try, although the global economic crisis has hit hard and slowed down business development projects.

You have many years of experience in the EU hospi-tality industry. How would you say the industry has changed to meet customers’ changing needs in the past decade?MS. Customers are of utmost importance to the indus-

try and they are certainly the driving forces for all changes. However, these changes are decided by the entrepreneurs and HOTREC does not intervene in operational matters.

Maguerite Sequaris

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AboutSt Petersburg was established on the site of a swamp by the emperor

Peter the Great, who then declared it the new capital of the Russian Empire. It remained the capital for more than 200 years until the 1917 Russian Revolution. Today it remains Russia’s second largest city and is home to six million people. As well as being a major European cultural city it is also a strategically important Russian port on the Baltic Sea and oft en described as the most Western City in Europe. Th e city attracts visi-tors to its myriad cultural attractions all year round but the summer is a particularly popular time to visit, as this is when St Petersburg’s White Nights occur. On these occasions the sun shines for almost 24 hours a day and city life continues around the clock. What could be more bizarre than a walk along the city’s canals in bright sunlight at midnight?

Getting aroundSt Petersburg has Russia’s second largest airport and is well con-

nected from Europe and the former Soviet Union. Travellers from Asia, Australasia or the Americas may have to arrive via Moscow however. When you reach St Petersburg there is an extensive public transport net-

CITY GUIDE138

TOURIST TIPS• Don’t travel to St Petersburg on a tight budget. The city

is the second most expensive in Russia and the 12th most expensive in Europe, putting it ahead of Paris, Singapore and New York. Cheap accommodation is hard to fi nd but public transport offers a way to save the pennies.

• Don’t forget that all visitors to Russia require a visa. This is usually only issued to travellers with fully booked and confi rmed travel arrangements. The processing of visa applications can take anything from 10 working days so arrange this well in advance.

• Contact your doctor or a travel clinic for up to date information on vaccines before you travel to Russia. Generally travellers are recommended to be vaccinated for diphtheria, polio and tetanus. Food and waterborne diseases are common so typhoid and hepatitis A vaccinations are also recommended.

Church of the Resurrection of Christ Catherine Palace

Souvenir Russian nesting dolls

St PetersburgTime: + 3hrs GMT | Currency: Russian Ruble | Language: Russian | Population: Six million

St Petersburg may have lost its crown as the Capital city of Russia after the Russian revolution, but vistors to this cultural landmark will enjoy an experience that parallels any trip to Moscow. Business Management gives you a whistle stop tour of Russia’s most diverse city.

l ll

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work including suburban trains running to most destinations within 100km or 200km of the city centre. Buses run within the city and as far afi eld as Moscow and the Baltics. Cars are available to hire for around €50 a day though for newcomers to the city this is not recommended as the roads are in a poor condition and there is a distinct lack of signpost-ing. Th e most convenient way to travel however is on the St Petersburg metro, which covers a network of 58 stations. Th e entrance to each metro station is marked with a blue M and the fl at fare for all journeys is around 50 cents. Smart cards can be purchased then topped up to pay for multiple journeys over a fi xed time period.

RelaxA great way to explore the city, particularly in summer, is to tour

the canals by boat. Th e typical tour is through the Moika canal then

139

SleepKempinski Hotel Moika 22Situated only 50 metres from the Palace Square and with spectacular views of the Winter Palace from most rooms, the Kempinski is also the best value fi ve star hotel in St Petersburg. Its restaurant off ers traditional Russian haute cuisine with blinis and caviar its speciality. It also features a swimming pool and state-of-the-art gym. Guests can enjoy aft ernoon tea every day at 5pm and it has great transport links with the Nevsky Prospekt and Gostiny Dvor metro stations that are less than a 10 minute walk away. Rates: From €212 a night.

Grand Hotel EuropeTh is hotel is steeped in history having been a fi xture in St Petersburg for over 130 years. According to its website, it was where the composer Tchaikovsky spent his honeymoon and where George Bernard Shaw once dined with Maxim Gorky. It is situated on Nevsky Prospekt, one of St Petersburg’s most impressive avenues and is a stone’s throw from the city’s most prominent cultural landmarks, including the Russian Museum and the Mikhailovsky Th eatre. Th ere are fi ve restaurants to choose from and a health club that includes a gym and plunge pool.Rates: From €255 a night

EatTaelonFor a true taste of new Russia, visit this ultra exclusive restaurant, which is housed in an opulent mansion house in the city centre. Dress to impress in this glittering setting which features marble fi replaces, gilded ceilings and an adjoining private club and casino. Specialities include caviar, oven-baked partridge in coriander sauce and baked dorade with ragout of spinach and snails. Sunday brunch comes with black and red caviar, lobster and champagne. If you’re feeling fl ush enjoy a glass of cognac for €159.

Mechta MolokhovetsGourmands will delight in this intimate restaurant which has a menu based entirely on a famous 19th century Russian cookbook entitled A Gift to Young Housewives. The title of the book may be old fashioned however the menu in the restaurant is anything but. Cookingis state-of-the-art and includes dishes such as venison fi llet accompanied by baked pears fi lled with cranberries and soaked in chanterelle sauce. There are only six tables in the restaurant though so booking is highly recommended.

Grand Hotel Europe

CITY GUIDE

out along the Neva to see the Peter and Paul Fortress before returning through the Fontanka to the Mariinsky Th eatre. Th e majority of tours are in Russian and start from around €10. If the weather permits, con-sider an excursion to Pushkin, formerly the summer residence of the imperial family. Th e Catherine Palace is surrounded by lush parkland fi lled with waterfalls, boating ponds and statues. It’s the perfect place to enjoy a picnic and escape the city bustle.

SeeTh e historic centre of St Petersburg has been listed as a UNESCO

world heritage site and with good reason. Its highlight, the Winter Palace, is actually a vast museum showcasing a collection of over three million artefacts from across the world. Th e collection includes works by the likes of Rembrandt, Da Vinci, Michaelangelo and Rubens and visitors are recommended to get a tour guide to avoid missing out on the best bits. Aft er a day spent exploring the Winter Palace’s gems, no visit to St Petersburg is complete without an evening at the opera. Th e Mariinsky Th eatre, formerly the Kirov, off ers world-class performances of both ballet and opera, including those sung in English. For a more intimate experience visit the St Petersburg Opera which features just 200 audience seats and puts on cheaper performances.

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BOOK REVIEW140

On the shelfThis issue we peruse advice on how to capitalise on the recession, predictions for our working lives, and business lessons from a hip hop superstar.

The Upside of the DownturnBy Geoff Colvin

According to Colvin, Fortune’s Senior Editor-at-Large, this recession will be a defi ning period for business. Some will emerge stronger and more dominant while others will weaken and fade. Colvin is one of world’s most respected business journalists so is able to off er practical examples from the real world to illustrate which companies have got it right and which have failed – and why. He suggests savvy businesses see the downturn as a rich opportunity to restructure, reinvent and reimagine their businesses and lay the groundwork for future growth.

BM SAYS: Although just 170 pages long, this is a must read for C-Level executives looking to capital-ise on the opportunities and challenges of the recession. Highly recommended.

The 50th LawBy 50 Cent and Robert Greene

Part strategic manual and part rags-to-riches memoir, Th e 50th Law is a unique project combining rapper 50 Cent and author Robert Greene who off er unique advice on how to win in business and in life. Th e book shows how power and success can be yours if you overcome your fears and features 50 Cent’s incredible life story interwoven with practical business lessons and wisdom from history’s most remarkable fi gures, including Catherine the Great, Confucius and Napoleon.

BM SAYS: A sequel to Greene’s successful 48 Laws of Power, Th e 50th Law is a fantastic follow-up and an interesting mix of self-help and historical analysis. A thoroughly remarkable perspective from which to view both business and life.

The Future of WorkBy Richard Donkin

Th e Future of Work presents a cohesive argument for a fundamental change in attitudes to work – one that could create a healthier society capable of meeting the expectations and concerns of a developing economy. By looking at the forces shaping the future of employment, this book concentrates on seven signifi cant themes underpinning change in the modern workplace: demographics, talent, measure-ment, networks, health, age and leadership.

BM SAYS: Separating popular myths from truly transformational trends, Donkins has produced a fascinating read for anyone with responsibility for people at work. An essential guide for using tech-nology to intelligently manage your staff .

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From the people you hire to the products you sell, if you’re in business, we’ve got it covered...

Your World. COVERED

Find out more: www.bme.eu.com

Business ManagementWhat business processes work? What are the proven, successful strategies for taking advantage of domestic and international markets? Business Management is about real, daily management challenges. It is a targeted blend of leadership and learning for key decision makers in government and private enterprise.

Next Generation PharmaceuticalApproximately 50% of new drug development fails in the late stages of phase 3 – while the cost of getting a drug to market continues to rise. NGP is written by pharmaceutical experts from the discovery, technology, business, outsourcing, and manufacturing sectors. It is committed to providing information for every step of the pharmaceutical development path.Available for: EU

Find out more: www.ngpharma.com

Next Generation Power & EnergyA poll of 4000 utility executives posed the simple question: what keeps you up at night? The answers were costs, new technologies, ageing infrastructure, congested transmission and distribution, viable renewables and inadequate generation capacity. Available for: EU

Find out more: www.nextgenpe.com

Oil & GasCollaboration between Government and multinationals to ensure the energy supply is developing on two fronts. O&G is the defi nitive publication for stakeholders and service companies to read about the regional projects, technologies and strategies affecting their group.Available for: MENA, US, Russia

Find out more: www.ngoilgasmena.com

InfrastructureInfrastructure provides insight on how developers can achieve critical objectives by integrating leading-edge solutions across their operations – helping them to make informed decisions about technology and operations solutions for all of their areas of responsibility.Available for: US

Find out more: www.euinfrastructure.com

ALSO AVAILABLE FOR: US & MIDDLE EAST

Previous US Editions US EditionPrevious

Middle East Edition

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THE KNOWLEDGE142

Verbier, SwitzerlandWith its white-knuckle black runs, Verbier is not

a resort for the faint hearted, or the ski beginner. The most challenging run is the black run down

the front face of Mont-fort and there are also several off-piste routes down the steep slopes.

The resort’s FourValleys lift network covers a massive 250 miles worth of slopes and guides

are available to help you explore off-slope. The really adventurous can try a spot of heli-skiing.

Verbier has a famously vibrant nightlife, which includes 12 bars and discos, including the

famous Casbah Club. The ideal hotel for party animals is the Hotel Farinet, which is home

to the Casbah Club as well as several popular après-ski bars. It is situated in the heart of the

town overlooking the main square and features 18 rooms and four apartments.

St Anton, AustriaSt Anton may not be suitable for beginners but for seasoned skiers it provides some of the most challenging slopes in Europe. For those brave enough to venture off-piste there are miles of ski trails to explore and for the less adventurous, the powder bowls of the Valluga mountains will be enough of a challenge. There is a lively nightlife at the resort with plenty of restaurants, bars and discos but be warned, the atmosphere can get rowdy. For those wanting a more stylish stay, try the Schwarzer Adler, a luxurious, traditional Tyrolean hotel in the centre of St Anton, close to the ski lifts and featuring a spa and choice of three restaurants offering traditional Austrian cuisine.

The white stuffWhether you’re an adrenalin junkie or you just want to bask in the mountain air we bring you Europe’s best ski resorts.

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Courcheval, FranceThis resort has a reputation for being the best in the world and rightly so. It is divided into four different villages each suitable for a different level of skier with the highest being Courcheval 1850. Each village is connected by buses and ski lifts and there are superb beginner’s slopes as well as more challenging skiing higher up. For non skiers the resort offers a dedicated snowboarding park, ice skating, tobogganing, ice climbing and lots of fashionable bars for après ski drinks.

The most stylish place to lay your head after a hard day’s skiing is the Hotel Les Airelles, which is in a prime spot next to the slopes and offers an on site spa, indoor pool and hammam as well as gourmet cuisine by Pierre Gagnaire at its restaurant.

Cortina, ItalyCortina hosted the fi rst Winter Olympics in Italy and as a result has world-class facilities and well-maintained pistes. For those less keen on the action this resorts boasts one of the world’s top ski spa hotels, the fi ve-star Miramonti Majestic. The spa features a vast swimming pool, and spa centre with a sauna, jacuzzi, Turkish bath as well as massage and beauty treatments. It is surrounded by stunning natural parkland with panoramic views of the Dolomite mountains and offers bus excursions to Innsbruck, Salzburg and Venice Casino.

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OBJECTS OF DESIRE144

Technology for today’s executive<<< Google Nexus OneAft er months of speculation tech giant Google has fi nally unveiled its very own phone: the Nexus One. Manufactured by HTC, but sold by Google, could this be the smartphone to dislodge the iPhone’s crown? Th e fi rst thing to note is that it boasts a similar appearance to Apple’s device, thanks mainly to its gorgeous 3.7-inch touchscreen display with OLED technology that produces lush colours and deep blacks. Running on Android, the Nexus One is powered by a 1Ghz processor and although it is on the large side for a phone, it is just 12mm thin so will fi t most pockets. Other smartphones have fallen short of the bar the iPhone has set but with the might of Google throwing its hat into the ring, the Nexus could just be the start of something big. Desirability rating: aaaa

>>> Apple iMac 27 inchTh e fi rst thing to note about the new iMac is that it doesn’t look too dissimilar to the previous version of Apple’s sexy desktop. In essence, this is a larger, full aluminium-clad version of the 24-inch iMac but with a gorgeous 16:9 screen. Its 2560x1440 resolution is capable of producing razor sharp detail – perfect for HD footage. Th is iMac houses a powerful AMD graphics processor and comes with a Bluetooth keyboard, albeit minus an isolated numerical keypad, and the new multitouch Magic Mouse. You have the option of a duel or quad-core CPU. Th e likes of Sony and HP have recently released touchscreen units so it’s a shame the iMac doesn’t include this feature. Th at aside, this is the fi nest iMac to date and probably the best in its class too.

Desirability rating: aaaa

<<< Sony XEL-1 OLED HD TVFirst, let’s get two stomach-churning facts out of the way: this Sony TV has a distinctly puny 11-inch screen and costs a whopping €3000. Done. Once you’ve recovered from open wallet surgery and positioned yourself about two feet away from your new purchase, you will be left open-jawed by the XEL-1’s picture quality. Using OLED technology, it is capable of emitting light without using any kind of backlight. It’s supermodel thin at 3mm and has no loss in viewing quality from any angle. It also has an integrated digital tuner, a USB slot and two HDMI inputs for connecting Bluray players and HD consoles. OK, it’s ridiculously expensive for a tiny TV that will be no substitute for the plasma in your lounge, but OLED really is the future in television. Possibly a screen best suited to your bathroom or cloakroom perhaps?


>>> Denon AH-D7000 headphonesCan you ever justify shelling out €800 on a set of headphones? Denon thinks you can, which is why its premium AH-D7000s have been receiving critical acclaim from both tech experts and audiophiles. Th ese lighweight cans produce stunning sound quality across all genres, be it rock, pop, electronic, classical and metal. Users claim these headphones are the most com-fortable on the market and are easily suited to hours of continuous listening. As you would expect for a pair of headphones the price of a bespoke Saville Row suit, the build quality is sumptuous – personifi ed by the glossy mahogany enclosures and

soft leather earcups. Even the elastomer cabling is less likely to end up tangled during use and when packed away.


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