BMEU 2

PLUS Herbert Hainer, CEO, Adidas Robin Dargue, Group CIO, Royal Mail Kevin Eyres, European MD, LinkedIn

www.bme.eu.com • Q4 2009

PlayChild’s

Lego’s youthful CEO Jørgen Vig Knudstorp has made rebuilding the toy giant look easy. He explains why age is no barrier to success. PAGE 28

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BlueLock:18oct 2/10/09 10:20 Page 1

Every second a new member joinsthe networking website LinkedIn.It’s a staggering statistic, matchedonly by the kudos of the site’s elitemembership, which includes Bill

Gates, Barack Obama and Hillary Clinton. Thatthe world’s most powerful figures in business andpolitics have joined the LinkedIn club, is testimo-ny to the fact that the site offers access to a vastglobal audience and a highly effective platformfrom which to be heard by that audience. As wehear from Kevin Eyres, European MD ofLinkedIn in this issue, the site has become a pow-erful business tool that is used by executives toresearch investment opportunities and even re-cruit staff. Indeed, as a result of the rise in the useof the site as a recruitment tool, sign-ups by newmembers have increased, despite the economicdownturn. This is particularly true in countriesthat have been the worst hit, such as Spain andthe UK, where membership is up 60 percent and

train station. The campaign appeared in printand on television but it received the most atten-tion on YouTube – a whopping 14.5 million hits.

The phenomenal success of LinkedIn, evenagainst the backdrop of a global recession, showsthat online social networking is here to stay. Ascompanies emerge from the recession it is a busi-ness phenomenon they cannot afford to ignore.Instead, like Barack Obama and Bill Gates, theyshould embrace the future of online businesscommunications and harness it to their advan-tage. Those that do not keep up with the latesttrends will be left behind as the European econ-omy recovers from the gloom and enters a newbusiness era. n

Diana Milne Editor

40 percent respectively. The power of LinkedInand its counterparts in the social networkingspace, Facebook and Twitter, and the pervasive-ness of online social networking as a communi-cations tool, is certainly not lost on theadvertising industry. In this issue we also inter-view Simon Francis, CEO for EMEA at the ad-vertising giant Saatchi & Saatchi. He describeshow online social networking has transformedthe way companies communicate with their cus-tomers and that traditional “push advertising”has been overtaken by the use of networking andcontent sharing websites as a means of establish-ing a dialogue among consumers about a prod-uct. In other words, social networking has put thepower back in the hands of the consumer.Evidence of this can be seen in the advertisingcampaigns it creates for Saatchi & Saatchi clients,including a recent award-winning campaign forT-Mobile, which involved 350 people breakinginto a spontaneous dance routine at a London

“As CEO you are always a rolemodel, whether you like it ordislike it, because people lookto you and follow what youdo, both good and bad”Herbert Hainer, Chairman andCEO of Adidas (Page 34)

“Last year the wholesale curvewent up or down on average byfour percent every week. A weeklyprice change is much higher thanour margins so you have to getpricing absolutely right”Kanat Emiroglu, MD of British Gas(Page 104)

“You can have brilliant ideas,but taking them from the ideaphase to the stage where theyreally mean something for yourcustomers is much morechallenging than I anticipated”Werner Vogels, CTO of Amazon (Page 112)

FROM THE EDITOR5

The future beckonsWhy nobody can afford to ignore the onlinenetworking phenomenon.

ED NOTE_sep09 06/10/2009 10:39 Page 5

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28

From pillar to postIndustrial action, modernisationand political controversy are all in aday’s work for Robin Dargue,Group CIO of the Royal Mail, asBusiness Management reveals

42

34

48

Child’s PlayLego boss Jørgen Vig Knudstorpspeaks candidly about his company’sreversal of fortune and the challengesof being a CEO aged just 34

Faster, stronger,higherWe go behind thescenes at Adidas todiscover how bossHerbert Hainer isbeating arch rivalNike into submissionand why innovation iskey to this sportsweargiant’s future

The Missing LinkFind out from LinkedIn’s European MD Kevin Eyres why a new membersigns up to the site every second

CONTENTS7

CONTENTS bmeu2:aug09 6/10/09 10:50 Page 7

54 Place your bets nowDealing with security threats and dangers atonline betting firm bwin

60 Phish talesDavid Jevans on the growing threat fromphishing crimes

64 Meet the gatekeeperWith huge pressure on the shoulders oftoday’s security chiefs, we seek the advice ofPaul Wood, CISO at Aviva

72 Defending the realm Meet Chris Coupland, Director of the CorporateIT Office at BAE Systems, one of the world’smost complex and high technology businesses

82 Tomorrow’s communicationslandscapeWith Frost & Sullivan’s Lavanya Palani Batcha

86 A diplomatic approach to ITTechnology transition advice from TonyMather, CIO of the UK’s Foreign &Commonwealth Office (FCO)

94 Sky-high tech thinkingTaking technology to new heights withLufthansa’s Dr Christoph Klingenberg

100 IT uncoveredHear from the author of a book that sheds newlight on the realities of being a CIO

104 Feeling the heatBritish Gas Business Managing DirectorKanat Emiroglu outlines the changingenergy buying habits of Europe’s corporatecustomers

86

72104

CONTENTS8

A diplomatic approach to IT

EXECUTIVE INTERVIEW

58 Dr Artur Heil, TrustCenter 70 Brett Caine, Citrix Online 84 Philip Grannum,Cable&Wireless 108 Chris Methven, IHS128 Dave Jackson, 328 SupportServices

HEAD TO HEAD

78 Unified communications134 Hotel conferencing

INDUSTRY INSIGHT

90 Charlotte Darth, Lawson Software102 Dr Richard Sykes, Steria

Feeling the heat

Defending the realm


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54

118

CONTENTS10

Place your bets now

Loyalty beyond reason

King of the jungle

REGULARS

City guide

112 King of the jungleWhy Amazon’s CTO Werner Vogels isfocused on transforming the internetbehemoth into the world’s most customer-centric organisation

118 Loyalty beyond reasonThe key to building brand value according to CEO for EMEA at Saatchi & Saatchi Simon Francis

112

ASK THE EXPERT

68 Francesco Chicchiriccò,Everett Italia92 Fredrik Ring, Logica98 Nick Mongston,JustSystems116 Thomas S. Senger, Kofax

14 The brief 16 European news26 In my view 138 City guide 140 The knowledge 142 On theshelf 144 Objects of desire

The knowledge

124 Life after a mergerWith Stephen Archer of Spring Partnerships

130 Pillow talkUncovering the secrets of the world’s mostexclusive boutique hotels


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

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Editor DIANA MILNEManaging Editor BEN THOMPSONAssociate Editor JULIAN ROGERS

Deputy Editors NATALIE BRANDWEINER, REBECCA GOOZEE, STACEY SHEPPARD, MARIE SHIELDS, HUW THOMAS

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Associate Design Directors MICHAEL HALL, CRYSTAL MATHER, CLIFF NEWMAN

Assistant Designer CATHERINE WILSON

Online Director JAMES WESTOnline Editor JANA GRUNE

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Sales Executives AMARINDER BAJWA, TONY KENNEDY, MOHAMED ATTIA,

HELEN JACKSON, MAGGIE SCOTT

Finance Director JAMIE CANTILLON

Production Coordinators HANNAH DUFFIE, LAUREN HEAL,

RENATA OKRAJNI

Director of Business Development RICHARD OWEN

Operations Director JASON GREEN

Operations Manager BEN KELLY

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Find Out MoreContact CIO at +44 (0)2920 729 300

www.ciosummiteu.com

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

CIO EuropeSummit Spring 2010

The Park Hotel, Bremen, Germany23 - 25 February 2010

A Controlled, Professional & Focused EnvironmentThe CIO EU 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.

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

CIOEUSUMMIT

“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 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

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UPFRONTTHE BRIEF14

It’s early days yet for the cham-pagne corks to start popping inEurope’s financial districts, but aslow and fragile economic recoveryacross the region has begun.

Germany led the charge, withits economy growing 0.3 percent inthe second quarter of this year. Thenews far exceeded the expectationsof the government, which had fore-cast that the German economywould shrink by six percent thisyear. Several factors have con-tributed to its recovery, most promi-nently the €50 billion stimuluspackage launched by ChancellorAngela Merkel in February, accom-panied by the car scrappage schemewhich received over 1.7 million ap-plications. These government initia-tives have driven German exports to

their highest levels in threeyears at seven percent

growth and have alsoboosted growth inhousehold and gov-ernment expenditure.

Meanwhile, France tooexperienced 0.3 percent

economic growth in the sec-ond quarter – an upturn attributedby the government to increasedconsumer spending and strong ex-ports. Like Germany, the Frenchgovernment announced a multi-bil-lion euro stimulus package. It too ispushing for tougher financial regu-lations and signed the G20Agreement in April, which providesfor stricter controls on bankers’ payand bonuses.

In contrast to the buoyant pre-dictions of economists in Franceand Germany, the UK’s economicrecovery is expected to be slow andfragile. The CBI Business Group haspredicted that UK GDP growth willgrow by 0.3 percent between July

GREEN SHOOTSOF RECOVERY

Why cautious optimismis the order of the dayin Europe.

France experienced

economic growth in the second

quarter

0.3%

UPFRONT BM EU2:25 June 6/10/09 10:44 Page 14

UPFRONTTHE BRIEF 15

and September from the previousthree months and will rise by 0.4percent between October andDecember. The growth has beenprompted by the recovering glob-al economy, the weak pound andthe government’s quantitative eas-ing programme. However the CBIhas warned that this growth maynot continue in the long term asthere is no clear driver of robusteconomic growth. Also, unem-ployment in the country keeps ris-ing, with the number of people outof work currently at its highestlevel in 14 years at 2.47 million.

The fragility of the UK’seconomy is echoed across the re-gion, where, despite positive eco-nomic indicators and greenshoots of recovery pokingthrough, the situation remainsvolatile and without the founda-tions needed for long-termgrowth and stability. This was cer-tainly the message from the latestinterim economic forecast fromthe EU Commission whichwarned that although the signs foran economic recovery are strong,thanks to government interven-tions, the sustainability of this re-covery remains to be tested. It saidit saw signs of an imminent recov-ery, but warned that the full im-pact of the economic crisis onlabour markets and public fi-nances hasn’t yet been felt so un-certainty is rife. And despite theunexpectedly positive outlooks inFrance and Germany, the EU’soverall forecast for the region re-mains the same with GDP expect-ed to fall by four percent both inthe EU and the Eurozone this year.Much rests on consumer spendingbut while unemployment keepsrising across the region and banksremain cautious about lending de-spite having received governmentbailouts, businesses can only af-ford to be cautiously optimistic.

German Chancellor Angela Merkel inspects an Audie-tron concept car of at the Frankfurt InternationalAuto Show. Germany’s auto industry has been keyto the country’s economic recovery thus far, fuelled,in part, by the car scrappage scheme

French Prosecutor Jean Claude Marin arrives for the opening of the ‘Clearstream affair’trial in Paris. France's former prime minister and foreign minister Dominique deVillepin is suspected of orchestrating a leak in 2004 of a faked list of account holdersat the Clearstream bank, which included French president Nicolas Sarkozy’s name

A waitress carries beer glasses at the annualbeer festival ‘Oktoberfest’ in Munich,Germany. The 176th Munich Oktoberfestattracted around six million visitors

NEWS IN PICTURES

Illegal migrants stand behind a sign as they wait for the French police toevacuate and dismantle ‘The Jungle’, a makeshift tent camp set up by illegalimmigrants near Calais, Northern France

Belgian milk producers pour around threemillion litres of milk on a field in protest overa growing industrial dispute about low prices

Italian Prime Minister Silvio Berlusconi on the set of RAI 1television show Porta a Porta, in Rome. Berlusconi has beenplagued by scandals since his wife announced in May that shewould divorce him after he attended a young model’s 18thbirthday party


UPFRONT16 EUROPEAN NEWS

IRELAND

Ireland is to receive €500 million to fundinvestment into wind power from theEuropean Investment Bank. The loanwill also fund an undersea power linkwith Britain that will enable the importand export of excess wind power be-tween the two countries. Around €300million will be allocated to fund thepower link while €200 million will be al-located for wind farms. Ireland’s EnergyMinister Eamon Ryan, said: “We are wellon the way to becoming a world leader ingreen energy and the fight against cli-mate change.” The loans bring the totalamount of EIB support received byIreland to €450 million so far.

UKOnline advertising has overtaken televi-sion advertising for the first time, ac-cording to new figures from theInternet Advertising Bureau andPricewaterhouseCoopers. According tothe report, online spending grew by 4.6percent to €1.85 billion in the first halfof 2009, while TV spending shrank by16.1 percent. Overall advertising in thisperiod fell by 16 percent compared tothe previous year. It claims that the re-cession had accelerated the migrationtowards digital advertising from print,radio and television.

UK retail giant Marks and Spencer hasexperienced a stable performance for thethree months to September 26. Its UKsales dropped 0.5 percent but this was animprovement on the 1.4 percent dropexperienced in the previous quarter.Total clothing sales but increased by 2.7percent and like-for-like food sales re-mained unchanged.

FRANCE

French bank BNP Paribas is to repay theemergency funding it received from thegovernment early, by selling new sharesto existing shareholders. It received thefunding in March when the governmentbought €5.1 billion of its shares.Investors will now be allowed to buy oneshare for each of the 10 existing sharesthey own at a price of €40 per share.Following the announcement the bank’sChief Executive Baudoin Prot said:“Thanks to the state’s intervention,French banks have played an importantrole in helping the economy and theircustomers during the recession.”


17EUROPEAN NEWS

SWEDEN

The troubled Scandinavian airline SAShas signed a deal to sell off a majoritystake in its Spanair unit to a Spanish in-vestor group led by Consorci de Turismede Barcelona and Catalana d’Iniciatives.SAS also announced plans to sell its 47.2percent holding in airBaltic to the airline’smanagement for €21 million.The carrierhas suffered heavy losses in the econom-ic downturn and has lost money in everyquarter so far this year.

SPAIN

Spanish authorities have called on theEuropean Commission to ensure theplanned takeover of Opel by Magna doesnot favour German workers. It is fearedthat Opel’s Spanish plant in Zaragozacould suffer heavy losses as a result of thetakeover by the Canadian group.Meanwhile, the German governmenthas offered the Magna group loansworth €4.5 billion. This has promptedother countries with Opel factories toargue that there should be no link be-tween jobs and aid. According to detailspublished in the German media, Magnais planning to cut around 11,000 jobsfrom 45,000 in Europe.

GERMANY

Unemployment in Germany has fallenby three percentage points, according tothe country’s Federal Labour Agency.In September the jobless rate was eightpercent, down from 8.3 percent in August.A total of 3.4 million people were regis-tered unemployed – 125,000 less than theprevious month. However, Frank-JuergenWeise, the head of the Federal LabourAgency, warned that the figures weredown to the usual seasoned upturn in jobsfollowing the summer vacation and not aturnaround in the economy.

UPFRONT


According to a new survey,UK internet users are moreconcerned about the reliabilityof their internet connectionthan any other aspect of theirbroadband service. The report,compiled by the comparisonsite broadbandchoices.co.uk,stated that over two thirds ofthose asked (70 percent) citedconnection reliability as themost important factor when itcomes to their online services.In comparison, only 30 per-cent said the speed of theirconnection was the most im-portant aspect of their inter-net access, whilst 25 percentsaid that value for money waswhat influenced their deci-sion the most.

In a damning indictmentof ISPs, over a third of peoplesurveyed – 36 percent – saidtheir top broadband complaintwas poor customer service,with 55 percent of customerswho had complained feeling,that they had not reached asuccessful resolution with theirISP. The findings follow re-search published by Ofcom,the telecoms regulator, in July.

A handwritten signature is the most person-al way of authentication. It is culturally ac-cepted and a clear expression of one’s ownwill. In order to transfer these charac-teristics into the digital world, aneSignature solution shouldguarantee maximum securi-ty, not only as part of legalrequirements, but also ascustomers should fully trustsuch a solution. It shouldalso be cost efficient with re-spect to the whole process and in-frastructure involved. Finally – and thisis the key feature for the acceptance of the so-lution by users – the visual signature qualityhas to be extremely high so that the haptics ofthe surface is as close to paper as possible.

The implementation of an eSignaturesolution can speed up processes and reducesources of error. It also enhances accessibili-ty: electronic documents can be verifieddirectly and can be viewed in connec-tion with other documents with-out searching in differentbinders or archives.eSignature solutions alsosave a lot of time and moneyfor copying or sending doc-uments from a branch toheadquarters and the otherway round and make documenttransfer much quicker.

But the success of such a solution mainlydepends on its acceptance by the customer. Withits STU-500, Wacom supplies a signature tablet

that enables the capturing of authenticsignatures for internal documents

as well as for customer transac-tions, for example at cashier’sdesks, points of sale, check-outs or self-service termi-nals. The heart of this robust

tablet is a compact reflectivefive-inch TFT LC display. Users

sign directly on the display with acordless, battery-free pen – exactly as they

would on paper. This is enabled by a real-time vi-sualisation of the signature screen and a paper-like surface of the screen. The reflective displayhas a high contrast likenormal paper.

FAST FACT

Average basic salaryof a blue chip

company executive

€861,000

eSIGNATURE SOLUTIONS– SAVING COSTS & ENHANCING SECURITYRE

LIABL

E CHO

ICES

With its

Wacom supplies a signature tablet thatenables the capturing

of authentic signatures

STU-500

Source: Guardian newspaper

UPFRONTCOMPANY NEWS18

On the Business Management website (www.bme.eu.com) weasked: which industry will recover from the recession first?” These are the results:

THE RESULTS ARE IN

AUTOMOTIVE

CONSTRUCTION

BANKING

RETAIL

MANUFACTURING

2%

23%

48%

23%

3%


UPFRONTCOMPANY NEWS 19

With stability creeping closer in Iraq, the Middle East edition of BusinessManagement took a closer look at the business opportunities in this resource-richand battle-scarred Arab state. “Working in Iraq comes down to the risk versus ben-efit calculation for many company bosses...but there is a window open for all in-ternational companies,” says TIMOTHY MILLS, former President of the AmericanChamber of Commerce and practising international lawyer

To read more go to www.busmanagementme.com

The number of people out ofwork in the UK has risen again toits highest level in 14 years, offi-cial figures have shown. Thisis now the highest levelsince May 1995. In the

three months to July, unemploy-ment increased by 210,000 to 2.47million, which takes the jobless

rate to 7.9 percent, accord-ing to the Office forNational Statistics.

JOBLESS RATE CONTINUES TO SOAR

GLOBAL PERSPECTIVE

NEW SERVICES ACCELERATE E-INVOICING

Basware, the leading provider ofpurchase to pay solutions, haslaunched further additions to itsBusiness Transactions e-invoicingservice, allowing instantaneous e-invoicing between customers andsuppliers to speed up supplier acti-vation and rapidly increase thenumber of incoming e-invoices. Senders cannow mail invoicesinstantly to theircustomers byusing their ownemail software orprint their e-invoic-es by using a Basware-configured virtual printer.The Basware Business Transactionse-invoicing service is part of theBasware Connectivity offeringwhich enable suppliers and buyersof all sizes to transact electronically.

SITA Northern Europe WasteServices (NEWS), the Dutch arm ofthe global recycling and waste man-agement company, has a clear strat-egy in driving their supplierstowards e-invoicing to reduce costsfor both SITA and the suppliers.An existing Basware BusinessTransactions customer, SITA isnow encouraging suppliers to usethe new sending options available

via the service. StruktonWorksphere, a Dutch provider ofbuilding-related technical systemsand facility management, also has asimilar strategy with their suppliers.

SITA NEWS Director ofFinancial Shared Services, Serge

Flantua, says: “SITA NEWS ismoving towards greater

use of the BaswareBusinessTransactionsservice with theaim of reducing

receipt of paperinvoices to a mini-

mum in the nextthree years. At the end of

2009 we are aiming to receive 25percent of invoices throughBasware’s e-invoicing service,whether that is directly throughtrue xml-invoices, PDF conver-sion or supplier self-service up-load through the BaswareSupplier Portal.”

Strukton Worksphere, whichalready receives 40 percent of its in-voices electronically, is aiming for asimilar goal. By using Basware’snew services, Strukton is targetinga 70 percent total e-invoice volumeafter one year of using the service.www.basware.com

Strukton Worksphere

already recieves

of its invoices electronically

40%

CYBER CRIME IS ON THE RISEThere was a 250 percent increase in 2008 in the number of comput-

er bugs used by organised criminals to attack the IT systems ofindividuals, small businesses, governments and

commercial organisations.



ONES TO WATCH: TECH STARTUPS

FAST FACT

Total cost to global governmentsof bailouts so far

€7.3 trillioncommerce

Overview: Netlog (formerly Facebox) is a social network primarily used in Europe. As of Sep 09, it had over 52m users.Founder: Lorenz Bogaert &Toon Coppens

daily visitors: 500kYouNoodle Score: 93

Overview: A social video site that offers a mix of both amateur and professional content.Founder: Benjamin Bejbaum& Olivier Poitrey

5m 86

Overview: Allows its users tomeet new people and friends in and around their local area.

Daily visitors: 250k86

Overview: Social media network for internet television and user generated content.Founder:Ibrahim Evsan

Daily visitors: 230kYouNoodle Score: 67

socia

l netw

ork

s

Overview: Application service enabling on demand streaming of music.Founder: Daniel Ek &Martin Lorentzon


music

Overview: Web-based messenger service.


im servicesDaily visitors:YouNoodle Score:

Founder:Christian Heitmeyer


Overview: First legal music search engine.Founder: Daniel Marhely Daily visitors: 100kYouNoodle Score: 79

Overview: Performance-based multi-channel commerce.

Daily visitors: 1.5mYouNoodle Score: 71

YouNoodle Score:

Source: BBC News

BRANSON GOES GREEN

in order or because we think a chal-lenge is too great to achieve.”

Talking about one product he has‘discovered’, isobutanol, he told TheTimes, “isobutanol is wonderful, itdoesn't absorb water, so you can pumpit in the same way as petrol. And youcan make it from anything. Sugar isgood. What if all the sugar that is now

turned into soft drinks wasinstead, turned into

clean fuel?” Other re-newable energysources that will besupported by theVirgin Green

Fund include bio-mass and solar power.Branson has already in-

vested €2.5 million into the CarbonWar Room, a New York environmen-tal ideas incubator. He has also led a €10million funding round in GreenRoadTechnologies –a start-up that helps re-duce car fuel usage. Then there’s theVirgin Earth Challenge, a €16 millionprize fund which aims to find com-mercially viable green technologies.

The Virgin Green Fund willbe based in London and SanFrancisco and will plough around€100 million into growing renew-able energy sectors.

Mega-rich entrepreneur RichardBranson looks as if he might beabout to turn Virgin into a mean,yet green, money-making machine.

He has started the VirginGreen Fund and has already in-vested a reported €50 million ofhis own money into the project,and has now turned his attentionto fundraising in order toadd to the €170million alreadyin the kitty.Branson’sgreen enter-prise is defyingthe global eco-nomic downturn,reaching its current totalthrough a panel of institutional in-vestors and investment fromBranson himself.

The fund will eventually beused to invest in renewable energyprojects. Critics of Branson accusehim of hypocrisy, because of the factthat he owns an airline, a so-called“dirty business”, while simultane-ously campaigning for the environ-ment. However, in responseBranson has said, “We shouldn’tstop trying just because we have notyet put our own house 100 percent

The Virgin Green Fund willplough around

into growing renewable energy

sectors

€100 million



SAVING FACE

Overview: Search engine for finding people.


search

Overview: Mobile service.Founder: Martin Smink& Evert Jaap Lugt


Overview: Mobile software portal.


mobile

Overview: Virtual doll website for children.


fash

ion

Overview: Pioneers of the personalised home page.Founder: Tariq Krim

Daily visitors: 600kYouNoddle Score: 71

Overview: Web-basedwebsite editor.


Overview: Ad server for web publishers.

Daily visitors: 6mYouNoodle Score: 63

web services

Overview: Social games for friends to play together over social platforms.


Overview: World’s largest onlinegames website.


Overview: Games service which let’s its users put up small stakes on tournaments and games with the winner taking all.


Overview: Online social strategy game.

Daily visitors: 40kYouNoddle Score: 58

gaming

Belguim

UK

France

Netherlands

Sweden Luxembourg

Germany

USA

Spain

Where the startup parent companies/head offices are located

YouNoodle is an online platform for startups, early-stage ventures and the world’s top entrepreneurship clubs and competitions. It generates a score for every startup that is run through the Startup Predictor test. The YouNoodle Score acts like a personal credit score when a lender decides whether or not to take a risk and approve a loan. Based on a scale of 1000, the score indicates the feasibility and promise of a startup based on a number of complex factors.

Everyone has heard of cigarette breaks, but howabout a Facebook break? New research has shownthat some employers in Europe are getting so fed upwith workers wasting time on social networking sitesthat they are planning to introduce allottedFacebook break slots into the working day. The planis set to be introduced after research fromEmployment Law Services showed that theEuropean economy is suffering due to workers surf-ing the social networking sites. Giles Ridgeway, aleading consultant at (ELAS) described Facebook as

a “curse”. He said: “Some companies feel some staffare failing to do the job they’re paid for becausethey’re spending too much time on such websites.”“Some have said it appears to be a habit similar tosmokers needing their fix of nicotine.” At the UK’sPortsmouth City Council for example, a ban hasbeen introduced, and has been supported by lead-ing business personalities, after finding out that staffwere continuously logging into their Facebook ac-counts up to 270,000 times per month.

Ridgeway said that social networking sites arenot a part of workers’ “legal entitlement” andtherefore it is up to bosses to take this matter in

their own hands. He added that enquiries abouthow to control what some firms have described as“a new media menace” had been growing since theturn of the year. “In days past, staff would havegathered around the office tea trolley for a quickchat. Now, they can talk to friends on the other sideof the globe from their desks,” he added. “But to re-main able to do so means committing to doing thejob they’re employed for. If they don’t and bossestake exception to what they believe to be an abuse,they could find themselves out of work and com-panies would be well within their rights to takesuch action.”

As technology develops, the average Britishworker’s day appears to be getting longer, with37 percent of Brits admitting to being a slave totheir phone. One in five BlackBerry and iPhoneusers claim they spend a minimum of 10 extraunpaid hours per week making calls, respond-ing to emails and sorting work problems in theevenings and at the weekends, according to astudy by Rightmobilephone.co.uk. It found thataround one quarter of the 1226 workers quizzedadmitted to sleeping with their mobile besidetheir bed. The research also discovered that onein three work out of hours on a weekly basis; re-plying to emails via their BlackBerry and mak-ing urgent calls. Around 20 percent claim tospend a minimum of 10 additional hours of un-paid work per week in the evenings and week-ends. Almost half consider their BlackBerry tohave made their lives less stressful but almost 20percent now feel pressurised to respond to clientand colleague emails out of office hours and 35percent claim to have had their evening or week-end ruined because of reading an email from anannoyed or de-manding client.

NO REST FOR THE WICKED



Any business manager knows that you can’t leg-islate for human error. If you employ human be-ings, mistakes will happen, and these mistakessometimes involve confidential data. Laptopsare frequently stolen and criminalsknow it’s not necessarily the com-puter that’s valuable – but thedata. So how do you protect as-sets from carelessness or mali-cious intent? Encryption shouldbe part of any layered approach tosecurity. It works well; it’s just ashame so few companies enforce its use.

Research conducted by Ponemon Institutefound that 86 percent of IT security practitionershave dealt with lost or stolen laptops. In 56 percentof those cases, the loss resulted in a data breach.Also, 50 percent of business managers polled dis-

engaged their laptop’s encryption solution. This iswhy most stolen laptops still contain unencrypt-ed information, meaning businesses need safety

nets, or technologies enabling them to remote-ly delete data from a stolen device. For

laptops stolen by opportunists inpubs, or on public transport, en-cryption protects data from pry-ing but inexpert eyes – assuming

the end user effectively engagedencryption in the first place. If the

theft is targeted, the thieves sophisti-cated enough and the information desirable,

then even well-implemented encryption can be-come shaky. To account for the ‘human factor’,managers need to be realistic and plan for when alaptop goes missing.

Accidents will happen and laptops will getstolen. When they do, it’s vital that companies

have a strategy to remotely delete sensitivedata, keeping it from falling into the wronghands. Computer theft recovery services arealso useful, allowing businesses to retrievestolen devices, determine if sensitive fileswere accessed, and contain the potential forfurther exposure. By anticipating the worst,businesses can mitigate the ill-effects of end-user negligence and arm themselves against

data theft disaster. www.absolute.com.

ALLOW FOR THE ‘HUMAN FACTOR’ IN DATA SECURITY

Along with the collapse of the world’s largest financial systems, and sub-sequent economic crisis, came substantial damage to consumer confi-dence. Shoppers put down their credit cards, sacrificed the big brandsand made-do with less expensive products such as ‘supermarket-ownbrands’. With consumers cutting back on unnecessary purchases ona scale not seen since the Great Depression, which brands suffered themost as a result? According to the Business Week/Interbrand 2009Best Global Brands Study, it is, unsurprisingly some might say, fi-nancial brands that have taken the biggest beating with some com-panies, like Citi and UBS, seeing their values halve. AmericanExpress is the most ‘successful’ financial brand in the list at No.22(having fallen from No. 15 in the past 12 months), but it still sawits value drop by 32 percent. In comparison, Citi tumbled fromNo.19 to No.36, whilst UBS dropped massively from No.41 toNo.72 after losing 50 percent of its value.

WHICH BRANDS DID THE RECESSION HURT MOST?

Number of securitychiefs who have dealtwith a lost or stolen

laptop

86%

IT Security professionals admit that they aresuffering from password fatigue when itcomes to using their mobile devices, whichleaves their data exposed to personal and cor-porate identity theft if these devices were tofall into the wrong hands. That’s according toa survey released today by endpoint data pro-tection specialists CREDANT Technologies,who conducted the ‘mobile usage survey’amongst 227 IT professionals with the ma-jority drawn from companies that employmore than 1000 people. Thirty-five percentrevealed they just don’t get around to using apassword on their business phones andsmartphones, even though they know theyshould as they contain sensitive and confi-dential information. Surprisingly, IT profes-sionals are only marginally better at usingpasswords than the general population, withthe survey discovering 40 percent of all usersdon’t bother with passwords on their mobilephones.

“It is alarming to note that the very peo-ple who are responsible for IT security arenot much better at protecting the informa-tion on their business phones than most oftheir co-workers, who don’t necessarilyknow any better,” says Andrew Kahl, AVP ofOperations and co-founder of CREDANTTechnologies.

IT CHIEFS SHOW SLACKNESS

FAST FACT

Number of European financialfirms that are now more optimisticabout the future of the economycompared to June

36%

Source: PricewaterhouseCoopers


THE LOWDOWN: BUSINESS CLASS ONLY TRAVELThe news that British Airways has launched busi-ness-class only flights from London to New York hasre-opened the debate over whether such services areprofitable. In this infographic we break down the

business class fares* currently on offer from threeEuropean operators. In recent years three businessclass-only airlines, Maxjet, Silverjet and EOS, havecollapsed after experiencing crippling low ticket sales.

IT exists to serve the business. A businesstransaction is an end-to-end service that an ITapplication provides to end-users or to otherrelated applications such as stock trade, accountlogin, a product purchase or a billing inquiry.Since businesses run on transactions, the bestway to manage IT, from a business perspective,is to manage transactions.

Business Transaction Management (BTM)provides the highest level of application perfor-mance and availability, by helping IT to assure thequick and successful execution of end-user trans-actions and prevent problems. When we presentBTM to organisations, a recurring question is,“How is BTM different than the monitoring toolswe already own?” Many remain sceptical afterhearing our value-based presentations, demos,use cases and ROI statements. However, there is amoment when prospects clearly see the powerand uniqueness of OpTier’s BTM solution. It oc-curs when IT team members first see the flow oftheir own business transactions.

OpTier’s technology delivers end-to-end vis-ibility of all business transactions, across all tiers,all the time. This unique ability allows IT applica-tions and operations teams to isolate and resolveperformance issues faster than ever before, using

TRANSACTIONS – THE LINK BETWEEN IT & BUSINESS

far fewer resources. The combined effect of trans-action visibility and problem resolution capabili-ties, simplifies the incredibly complex world of ITmanagement and reduces cost and risk. Extra vis-ibility is great, but the realisation of what BTMcan achieve wouldn’t happen if the IT infra-structure were not discovered automatically. Theadditional value of capturing the business con-text of each transaction – the roundtrip, seg-mented response times and resourceconsumption – finally leads to, “Wow, now I getit! There’s no way I can get this information today.This is the kind of view I reallyneed.” Why doIT professionalsneed to experi-ence BTM livebefore fully ap-preciating it?Because seeing isbelieving.


Over the past year we have experienced extra-ordinary changes and disruptions to the tradi-tional way financial services firms operate andinvestors function. Now more than ever, withthe markets reestablishing a sense of normalcy,it is critical to refocus efforts to protect yourbusiness. Governments and regulators have en-sured that corrective action is put in place to in-crease capital requirements and reduce risk. Itis crucial to apply this collective focus on pre-serving the continuity of trading operations.

Snow storms, floods, earthquakes, poweroutages and even the flu have directly impact-ed the financial services industry over the pastyear. Of all the technologies available to traderstoday, voice communications are probably themost critical during an emergency. Tradersneed to make fast decisions, cover their posi-tions and let customers know what’s happen-ing. Are you prepared to address these issueshead-on to protect your trading communica-tions environment?

The continued evolution of communica-tion technology at the trading desk and net-works connecting financial service firmstogether has created an emergence of newtrading floor designs and product solutions.These new designs and solutions can improvebusiness resiliency without putting a strain onIT resources and CAPEX budgets. ‘Thin-building’ and ‘Active-Active’ architecturetechniques from IPC provide resiliency fortraditional no building access or shutdownscenarios. The spread of swine flu has creat-ed the need to take a different approach. “It’smore of a mobility issue than a continuityissue,” explains Bjorn von Sydow, IPC VP ofcustomer solutions. MAXaccess 1000, a softturret solution from IPC addresses this sce-nario. MAXaccess allows traders to literallytrade from anywhere, giving them access toall their private lines as well as preservingvoice recording functionality and compli-ance. With just a PC, internet access, and atelephone, a trader can be up and running,virtually doing business as usual. While it’sdifficult to be prepared for every possible con-tingency, specific proactive solutions can ef-fectively minimise your risk.

PROTECTION IS KEY

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For more information,email [email protected] or

visit www.optier.com

* Fares displayed are for one-way journeys from London to New York



NOW IS THE TIME TO START E-SIGNING

Having a competitive advantageis key for getting more business inall markets. As the customer is thecore of all business transactions,streamlining the business processby going paperless at the Point ofSale/Service (POS) is a simple steptowards an improved bottom line.xyzmo SIGNificant’s elec-tronic, digital andbiometric signa-ture solutionssolve the chal-lenge of signingelectronic docu-ments securely,while simultaneouslyreducing the costs andlabour associated with paper-basedprocesses, hence reducing the wait-ing time at POS, which generatesmore revenue and improves cus-tomer satisfaction. The fact thatcustomers are used to signing withtheir handwritten signature, makesthis solution an intuitive onethanks to its similarity to currentpaper-based processes, resulting ina facilitated integration process. Allsigns indicate that the time has def-initely come to start embeddinghandwritten electronic signaturesolutions at POS in businesses of allsizes, as paper-based processes arerapidly being replaced by electron-

ic workflows. More and morecompanies realise that wheneverpaper is involved, a large amountof time and money is wastedand security risks increase, there-fore many of them have alreadystarted automating their businessprocesses and document workflow

procedures, leaving theapproval stage as the

only componentthat requires theneed for paper.Digital and ele-ctronic signa-

tures replace theconcept of tradi-

tional paper-based sign-ing with an electronic one.Signing the original electronicdocument saves companies theoperational overhead of paper-based processes and enablesthem to truly optimise the waythey work. Additionally, digitalsignatures safeguard electronicdocuments by allowing the au-thentication of the signatoryand verification of the originaldocument content. This cuttingedge solution enables compa-nies to take a step towards suc-cess and at the same time have achance to contribute somethingto the environment.

YOU CAN QUOTE ME ON THAT

"For years statistics have registered anincreasingly strongeconomic growthas a victory overshortage until itemerged that thisgrowth wasdestroying morethan it wascreating”French President NICOLAS SARKOZYponders the economic climate

“If we don'tmove [now]

there will bea problem. Intwo or threeyears it willbe too late”

CHRISTOPHE DE MARGERIE,CEO of French oil major

Total, warns howunderinvestment in the oil

and gas industry, due mainlyto the recession, will drive

crude oil prices up to US$100 a barrel

“Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of eurosinto the banks” European Commission President JOSE MANUEL BARROSO on the EU blueprint to overhaulhow banks and financial markets are policed

The goal is

- ready IT networkand infrastucture

virtualisation

Phishing may be down, but internet usersshouldn’t rest on their laurels, as the latest re-search shows spam is rising as we move towards

the Christmas holiday season. Symantec’slatest State of Phishing report has revealed

a 45 percent reduction in phishing at-tacks in the previous three months.However, this is likely to be a short-term

lull, reflecting the end of a particulartoolkit attack on social networking sites.

Symantec also anticipates an increase in holi-day spam campaigns as spammers start to leverage

the Halloween and Christmas holidays globally.

PHISH TALES


Xymzo AD.indd 1Xymzo AD.indd 1 30/9/09 13:38:0730/9/09 13:38:07

UPFRONTIN MY VIEW26

My first objective is to continue to build on this notion of a glob-al healthcare company, as opposed to a pharmaceutical companybased in the US and Europe. This means having an acquisition strat-egy that really builds upon those things where we already have astrong presence. I don’t think the size of the acquisition necessarilymatters. It’s a question of we all are looking to strengthen our com-panies as we face patent expiries, and some of us, like sanofi, havethings upon which we can build internally; some of us have to seekmore externally.

There will still be blockbusters, you just can’t count on them interms of timing. You’ve got to have a business model in terms ofcost structure, in terms of global presence, in terms of a broaderhealth-care offering, that doesn’t make your growth and develop-ment of your company dependent on the next blockbuster coming.I remain sceptical that we can always come up with them [block-busters]. That doesn’t mean our research and development can’tcome up with new medicines, but they may not always be block-busters. And if they’re not, then it’s not a problem.

In terms of R&D we started off a little bit behind some other com-panies, so we needed to do some catching up. With our portfolio re-view our intention was to do what a lot of other companies alreadyhave recognised, and that is that you can’t develop a new medicineunless it adds value to patients. And in so doing we’ve establishednew processes where the market is represented at the decision tableas to when we advance a product – nothing revolutionary there.

One of the reasons we’re having difficulty in discovery is that we’restill pursuing a lot of the same targets. At some point you have tobranch out and go after some non-validated targets, some new fron-tiers of science. We haven’t allowed enough of a risk profile at that levelof the organisation to branch out into new areas. If we’re all going afterthe same targets then we’re not going to get much innovation. Wehave to be willing to take on even more risk

I’m prepared to be one of the rare examples of being optimisticabout the outlook. We have such a focus on the patent cliff, butthat’s not where the future is – the future is healthcare. Certainly inour company we’ve got a lot of talented people, we’ve got a lot of fi-nancial resources and there are a lot of patients out there. We’ve gota lot of medicines and vaccines that can help them so we’re going tobe a company that grows well into the next decade. We need to getpast the blockbuster phase, but the base business that we have andour ability to partner and do acquisitions gives me an awful lot of ex-citement for the future. Health care is still something that mattersmore than anything else – there is huge unmet need out there. It’s amassive marketplace, and if we’re a little bit creative and a little bitflexible in how we go after it there are big opportunities.

CHRIS VIEHBACHER, CEO OF FRENCHPHARMA GIANT SANOFI-AVENTIS, REVEALSHIS BUSINESS STRATEGY.


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

328 Support Services 6,128,129Absolute Software 22,65Adidas 34Air France 48, 140AltaVista International 48Amazon 112Anti-Phishing Working Group 60Apeptic 41Astoria Hotel 134,137Augustine Hotel 133Aviva 66BAE Systems 72Bain Capital Ventures 48Banque LBLux 100Basware 19,27,63Bluelock 4British Airways 48, 140British Gas 104bwin 54Cable&Wireless 84, 85Capita 72Central Telecom 2Cisco 52Citrix 70, 71CNBC 48Department for Work & Pensions 86Detica 72Diageo 42Emirates Airlines 140Everett 68, 69, 122

Facebook 72Flextronics 28Foreign & Commonwealth Office 86Frost & Sullivan 60Goldman Sachs 48Google 48IHS Global 108, 109, IBCHonda 132Hotel Negresco 134, 135IBM 72IPC Information Systems 23, 67Juniper Networks 96JustSystems 98, 98Kofax 45, 116, 117Lawson 90, 91Le Meridien Al Aqah Beach Resort and Hotel 131Lego Group 28Lehman Brothers 34LinkedIn 48Logica 92, 93Lufthansa 94, 140Mars 42Meet The Boss 106Mercedes IFCMr & Mrs Smith 132Netscape 48New York Times 48NewsGator 11NHS 42Nike 34

Nokia 144Novell 9OpTier 13, 23Oracle 72, 75Panasonic 144PayPal 48Philips 144Puma 34Royal Mail 42Saatchi & Saatchi 118sanofi-aventis 26SAP Ventures 48Schneider Electric 56, OBCSequoia Capital 48Smartphones 78, 79Spring Partnerships 124Steria 102, 103Swissair 132TaylorMade 34The McGraw-Hill Companies 48Toshiba 144Transcend Executive Search 127TrustCenter 58, 59Unilever 132Vmware 110VoipSwitch 47Wacom 18, 61Warner Bros. 28Wyless 78, 81Xyzmo 24, 25

FEELING THE HEAT British Gas MD KanatEmiroglu discusses howhe is spearheading changeto support companiesthrough turbulent times

A DIPLOMATICAPPROACH TO ITHow UK Foreign &Commonwealth Office CIOTony Mathermanages ITtransition for this globallydispersed organisation

DON’T MISS...

130

86

104

COMPANY INDEX Q4 2009

PILLOW TALKMr and Mrs Smith co-founder James Lohanreveals why everyboutique hotel wants aspot in his esteemed guide

CFOS IGNORING SUPPLY CHAIN RISKS AS COST CUTTING TIGHTENSChief Financial Officers (CFOs) in organisations across theglobe are shunning risk management in favour of cost cut-ting, and are failing to treat supply chain dangers seriouslyenough according to a major new piece of research, The Costof Control, released by a leading academic and Basware.

Findings from the study revealed that in spite of a high-risk economic environment, CFOs are failing to recognisethe importance of closely managing supply chains throughprocurement, with just 28 percent of respondents to thestudy saying that they believe procurement has a sig-nificant impact on financial risk exposure.

Commenting on the findings, ProfessorAdrian Done of Barcelona’s IESEBusiness School said: “Businessestoday are defined by their supplychains and some of the highprofile business failures of thelast 12 months point tothis as a root cause.Finance departmentsacross the globe havebeen guilty of ignoringthe real value thattheir procurementteams can bring for

decades now, so there is real truth in the suggestion thatCFOs aren’t making the most of what can be an invaluableasset in the fight against the recession. The subsequentfinding that only 46 percent of financial chiefs see real in-tegration between purchasing and finance processes makesthis particularly alarming, as it represents a major break be-tween two departments that should be working closer thanever to combat the downturn,” he continued.

The Cost of Control also reveals that businessesare leaving significant levels of data and process

out in the wild, making accurate visibility ofcorporate accounting next to impossible.

CFOs surveyed admitted that only 42percent of indirect spending was

being captured by their or-ganisations, and that only50 percent of purchasing

processes were automated.

For more information visitwww.basware.com

UPFRONTCOMPANY INDEX 27


28 www.bme.eu.com

COVER STORY

Since 1932 Lego has entertained generations of children and was run as a tightly knit family fi rm. But when the company came close to collapse it took an outsider to save it from fi nancial ruin. Diana Milne meets the company’s CEO and saviour Jørgen Vig Knudstorp.

PlayChild’s

JURGEN VIG KNUDSTORP ED P28-33.indd 28JURGEN VIG KNUDSTORP ED P28-33.indd 28 6/10/09 09:43:406/10/09 09:43:40

www.bme.eu.com 29

Despite having been responsible for his company’s dramatic reversal of fortune aged just 34, Lego CEO Jørgen Vig Knudstorp is disarmingly modest. “I don’t need to brag,” he says. “I’m not the kind of CEO that boasts about how well we’ve done because I’ve learnt that it’s other people who do the majority of the work to get there anyway.” It’s not the kind of admission you’d expect from the head of one of Europe’s biggest toy makers. But then Knundstorp is not your typical CEO.

He came to the role in 2004 with no previous CEO experience, having graduated with a PhD in business in 1998. At the time his appointment was greeted with scepticism by the press and Lego employees alike. Indeed, Knudstorp says that even he doubted his own credentials: “Six years aft er graduating I became CEO of one of the biggest companies in Denmark. Since I felt I was slightly underqualifi ed for the job, I took a humble approach to the team, the organisation and the customers. I said to them ‘Look, I’m not going to pretend I have all the answers, so why don’t you help me out’. And that, in fact, has become a trademark of the way I run the business.” By 2008 that low-key approach, combined with Knudstorp’s sharp business acumen, had more than made up for his lack of management experience and produced results, which soon silenced his critics.

Reversal of fortuneAt the time Knudstorp took up the role, Lego was in the midst

of the biggest crisis in its history and close to complete collapse. Th e previous CEO, Kjeld Kirk Kristiansen, who is also the owner of the company, relinquished his post and took a gamble by employing a young, gift ed business graduate in the hope that he would see a light at the end of the tunnel where others had failed. Describing the company he inherited, Knudstorp says: “In 2003 we pretty much lost 30 percent of our turnover in just one year. Th e decline contin-ued in 2004 with another fall of 10 percent. So one year into the job, the company had lost 40 percent of its sales. And of course we were producing record high losses and cash fl ows were negative. My job was to look at how to stop the bleeding, how to stabilise sales and how to cut costs dramatically to deal with the new reality of selling 40 percent less than we did two years earlier. On top of that the US dollar had declined dramatically in value, which is a key currency for us. We had too much capacity, it was sitting in the wrong countries, our products weren’t sharp enough and the retailers were very unhappy.” Knudstorp set about creating a seven-year strategy for the company called Shared Vision, to restructure and sta-bilise the business, boost sales and reduce debt. “To describe what we did we use the slogan, ‘We changed everything but the brand’,” says Knudstorp. “We really revamped the business and the product portfolio, and we dramatically increased

www.bme.eu.com 29

two years y currency ts weren’t

“My job was to look at how to stop the bleeding, how to stabilise sales and how to cut costs dramatically to deal with the new reality of selling 40 percent less than we did two years earlier”


30 www.bme.eu.com

Lego’s profi tability.” By 2008, Knudstorp’s eff orts had paid off . Lego grew at 20 percent, and in the fi rst half of this year it had increased its sales by 23 percent over the previous year, achieving profi t of €124 million.

Lego’s achievements are all the more impressive given the tough global economic conditions and the fact that the toy market is currently suff ering heavy losses. Knudstorp believes that the fact that Lego’s own fi nancial crisis preceded the credit crunch meant that it was in a far better condition to weather the storm than many of its competitors: “I think we were extremely lucky to get our fi nancial crisis at a time when it was possible to go through restructuring. We restructured the debt and sold off assets such as businesses and properties. And of course at that time we sold [properties] at the top of the market. It would have been a

lot harder to sell commercial properties today. So I think we were fortunate that we got that crisis and it sharpened our senses

of how to operate the business.” He goes on to say that the long-term decline of the world toy market means that Lego and its competitors

are not hit as hard by the downturn as companies in other industries: “Th e toy market over the last 10 years has been fl at to declining by one or two percent. And we’re talking about an IMF forecast for the world economy this year to decline by 1.3 percent. In that sense we can say to the world economy, ‘Welcome to our world’, because we are used to operating in a declining industry.”

Sentimental valueWhere Lego diff ers from many of its competitors in a declining

market however, is in the strength of its brand. Th e Lego Group has ex-isted for 77 years, since Ole Kirk Kristiansen started his wooden toy busi-ness in 1932. Although the toys have evolved considerably – in particular recently to embrace robotics and computer technology – the iconic Lego bricks are still enjoyed by generations of children around the world. Th is continuity, in terms of Lego’s products and brand values, gives it an even greater advantage in times of economic uncertainty, says Knudstorp: “A brand like Lego is very iconic, but also nostalgic and well established and it’s something that the consumers understand. Th ey also understand the play value – the number of play hours associated with the toy – is very high. And I think that in times of crisis we hark back to something we know has a lasting value.” Knudstorp’s original strategy of changing

sold off assettime we sold

lot hafo

of how todecline o

are not hi“Th e toy maor two perce

“I think we missed out a bit on transistors and microchips and computers when that emerged. But we’re not going to miss out on digitalisation. I’m committed to bringing this business into the 21st century”


www.bme.eu.com 31

everything about the company but the Lego brand itself refl ects the fact that its traditional product lines have retained their popularity despite the introduction of many new product lines, including the Power Miners, Bionicle and Racers ranges. Indeed, during the fi rst half of this year it was the classic product lines, such as Lego City and Lego Star Wars, that remained the best-sellers, says Knudstorp. “Th ese two product lines represent two very classic patterns of play,” he explains. “Lego City is all about the real world and your role in it. You can pretend to be a hero such as a policeman or a fi reman and it’s a familiar environment where you create your own towns and so on. Th at is an evergreen of children‘s and especially boy’s, play. Star Wars is what I would describe as a modern day fairy tale. It is so iconic in the way it portrays the confl ict between good and evil. Th ere’s an immense number of fantastic characters in it and Darth Vader in particular is a classic modern character.” He goes

on to say, however, that the company is keen for its toys not to glorify violence or warfare: “Th e Lego of my child-

hood was the one that appeared to be more naive and containing less violence and confl ict. Today we’re defi nitely trying to break some barriers in how far we’re willing to go in terms of the characters being evil and having weaponry. We still have a view that we don’t want to glorify warfare and we don’t make any war toys.”

Striking a balance between making its products relevant to the modern child and retain-

ing the look, feel and simplicity of Lego’s traditional toys has been an important part of Lego’s business strategy, says Knudstorp. It has achieved great success in this area through its collaboration with Warner Bros. on the launch of the Lego Star Wars video games, which,

Happy daysHappy daysBeing the CEO of Lego may be hard work,

but according to Knudstorp the joys of

running Europe’s favourite toy maker far

outweigh the downsides:

“Lego is one of those brands where you tell

people what you do and instantaneously most

of them say to me, ‘Wow you must be so happy.’

They smile when they hear about the brand and

they share the experiences they’ve had with

Lego in their childhood or with their children.

And it’s great for me, because truth be told it’s

not always fun. Sometimes it’s just plain hard

work and there are a lot of issues to address

on a daily basis. But it makes me happy to

hear people say ‘wow you’re so lucky’. And I

think yes I actually am and I cannot think of

any other job I would dream of having. In this

day and age we all want a job we can be proud of

where we’re not manufacturing something we feel

bad about and that has a bad environmental impact

or is making people ill. I truly feel that the more

we sell, the more we do for the world, because we

teach children how to think creatively so that they

all believe they have opportunities in life, that they

can all invent something. And we teach them how to

think in a very structured mathematical fashion. So

I’m very happy in my job.”


32 www.bme.eu.com

says Knudstorp, are currently the best selling video games globally. Th is foray into the digital world, was done with trepidation by Lego, according to Knudstorp, who says the company was concerned that its traditional product portfolio could be put at risk by the move: “I have to admit that we had our fears that the video games could cannibalise the

physical play experience,” says Knudstorp. In the event, however, the video games have boosted physical toy product sales and vice versa: “With boys of that age there’s a strong synergy between the gaming experience we off er and the physical play experienced. We have learned that just as children still want to read books and not just watch movies they still want to have that physical Lego building experience that cannot be replaced by digital play.”

Growth strategyAs well as diversifying its product port-

folio, a major cornerstone of Lego’s Shared Vision strategy has been to re-examine its core markets and consequently re-think the location of its production facilities. In terms of its global markets, although the North American and Central and Eastern European markets recorded the strongest growth in the fi rst half of 2008, it still experienced its strongest demand from Continental Europe. Th e Euro-pean markets are where it hopes to

achieve stronger growth, including Southern Europe, the UK and Ireland. “We have invested a lot in strengthening our op-eration, our retailer relationships and our marketing in those markets and that seems to be paying off very strongly,” says Knudstorp. “Now I think it’s a matter of us catching up to a more natural share of these markets where we have, for various reasons,

Lego has featured in video games and even has its own dedicated amusement parks, and now it is hitting the silver screen. The Lego movie is being made by Warner Bros. and will be a mix of live action and animation. The script is being written by Dan and Kevin Hageman, who wrote the forthcoming Hotel Transylvania feature. Lego joins the likes of Transformers and GI Joe as the latest toy to be the star of its own fi lm. Other toys believed to be heading to the silver screen include He-Man and the Masters of the Universe, Monopoly, Candyland, Battleship, Stretch Armstrong, View-Master and Max Steel.

it still d

s,


www.bme.eu.com 33

been underpenetrated in the last 10 to 15 years.” Th e US, however, is the place where Lego most hopes to grow its market share, and in the last three to four years, it has succeeded in doubling the size of its business there: “I think the big creature we have in our minds is the US market just because that is the world’s biggest toy market and Lego has a very strong brand in the US. We believe that from here onwards we will aim for a growth of at least seven to 10 percent a year.” With these strategies in mind Lego re-evaluated its manufacturing footprint four years ago and set up new production facilities in Mexico, the Czech Republic and Hungary, close to the markets it was targeting. To cut costs, last year it phased out an existing outsourcing agreement with the manufacturing fi rm Flextronics and decided to focus instead on internal production, at its Mexican and Hungarian facilities.

Th e sweeping changes enacted by Knudstorp are all the more im-pressive given the fact he came to Lego, an organisation that had been exclusively family-run for 75 years, as an outsider. Th e previous CEO was the grandson of Lego founder Ole Kirk Kristiansen and had been in place for 25 years. Luckily, says Knudstorp, he supported the changes that were necessary to ensure the Lego heritage could continue: “I was fortunate enough to have an extremely supportive and patient owner, which was quite amazing because he had been the CEO for 25 years before that and it was his business. A lot of people imagined it (the Shared Vision strategy) was a revolution against the way that he had been running the business. But the truth is it could not have happened without his very direct support. Th is was also the case in terms of long-term employees who know him and would not have followed my proposals unless they knew that he was supporting them. So in fact it has not been a case of contradiction and fi ghting each other. It’s been a

matter of actually supporting each other along the journey.”But despite having successfully turned his company from an

outdated and loss-making business into a profi table global toy maker, Knudstorp says this journey is by no means over. In a

typical show of modesty he says he is still some way off from tackling the company’s two biggest challenges: globalisa-

tion and digitalisation: “If I’m a little bit blunt, I’d say we are a traditional toy manufacturer with a strong base

in Europe that’s really starting to drive its exports to the US. Th at would hurt some feelings in the

company but that’s the truth. I’m talking about how little we sell in Asia or South Ameri-

ca and about expanding in the US. Th at seems a little late for a lot of companies to start

thinking about. And I’m talking about the fact that we are just starting to become a player in the digital space, or on the internet. Th is company was founded on wooden toys then moved to plastics aft er the Second World War. I think we missed out a bit on transistors and microchips and computers when that emerged. But we’re not going to miss out on digitalisation. I’m committed to bringing this business into the 21st century by globalising it and bringing in digital technologies.”

And judging by the high-profi le achievements of this low-key CEO so far, Lego’s future is in very safe hands.

proposals unless they knew has not been a case of contra

matter of actually supporBut despite having

outdated and loss-mamaker, Knudstorp s

typical show of mtackling the com

tion and digitare a traditi

in Europeto the U

comphow

caThl

Toy storyToy storyKnudstorp describes how his childhood memories of playing with Lego helped to inspire his career:

“As a child I had a big Lego collection. My dad was an engineer with Shell Oil and he was a very structured and systematic person and my mother was a kindergarten teacher who was very creative and emphasised all my creative skills. They both loved Lego; my father liked it because it suited the mindset of an engineer and involved constructing stuff in a very systematic fashion; my mother liked it because it offered the freedom of creative expression. This combination of systematics and creativity still inspires me today. I truly believe it’s the foundation of problem solving that on the one hand you have the hard skills of science and maths and logic but on the other hand you also have the soft skills of story telling, role playing, creativity and critical thinking. I really think that is what Lego is all about.”


34 www.bme.eu.com

Its iconic triumvirate of perfectly parallel stripes have been synonymouswith sport for decades. But with profits tumbling in the year Adidascelebrates its 60th birthday, Chairman and CEO Herbert Hainer talkscandidly about trimming the fat, beating archrival Nike into submissionand why innovation is key to this sportswear giant’s future.

By Julian Rogers & Adam Burns

FASTER,STRONGER, HIGHER

When Barcelona FC’s playmak-er Lionel Messi put his sidetwo-nil up in this May’sUEFA Champions Leaguefinal you could say thediminutive Argentinean toreup the celebration rulebook.There was to be no acrobatic

back flip, no belly-flop slide across the turf and no John Travolta-esque hip wiggling against the corner flag. Instead, in front of 72,000fans packed inside Rome’s Stadio Olimpico, and millions watchingaround the world on TV, he removed one of his glossy blue boots andpressed it against his lips in an actions-speak-louder-than-words sealof approval. A few days earlier those very same F50i boots were per-sonally presented by Herbert Hainer to Messi when he dropped by atAdidas HQ in Herzogenaurach, Germany. Whether the kiss by ar-guably the world’s finest player was impromptu or planned is irrele-vant to Adidas because the boot’s sales shot through the roof afterBarcelona’s victory. It was a marketing masterstroke.

MANUFACTURING

Addidas ed viz2:4August 6/10/09 09:48 Page 34

“It’s about being fasterand not your size, otherwisethe dinosaurs would

be still alive and all the

little animals dead. It’s the fastest one who

will win the race”


36 www.bme.eu.com

Adidas boss Herbert Hainer and Puma CEO Jochen Zeitz square upbefore a football match between employees of both companies, endinga 60-year feud between the two firms.


Ever since Hainer took control eight years ago he has refused to let thecompany rest on its laurels. The 55-year-old, who describes himself as ag-gressive in business and impatient to get things done, pushes Adidas, whichproduces 200 million pairs of shoes and 400 items of apparel a year, to per-form like a lean, mean athlete. “In 2001 we had a great success story behindus and four or five good years after the stock market flotation but we had be-come a little bit too self-complacent, a bit too self-confident,” he recalls witha tinge of annoyance in his voice. “We were not aggressive anymore, theprocesses were not harmonised and our lack of innovation was shiningthrough.” Hainer says his remit in the top job was to “revolutionise” the com-pany and the Adidas brand.

RestructuringAs part of this transformation he offloaded mountain sports company

Salomon, although Hainer opted to hang on to the TaylorMade golf brand.“Golf is a natural sport for Adidas,” Hainer explains. “We began 35 years agowhen we made golf shoes for Bernhard Langer and for Sandy Lyle.” In 2005,

Messi is the latest in a long list of sports super-stars to don ‘the three stripes’ – stretching back to theearly days when the company was founded by the lateAdolf (Adi) Dassler (Das). The bedrock of Dassler’sbusiness strategy more than half a century ago, was to en-gage with the athletes and pick their brains in order to man-ufacture and refine performance-enhancing and comfortablesportswear. It’s an uncomplicated ideology that has stood the test of time, ac-cording to Hainer. “Just a few months ago we re-launched the so-called AdiDassler standards and we tried to educate everybody to go the way he did it,”Hainer reveals. “Adi Dassler spoke to the athletes when he brought in new andinnovative products and tried to make improvements. We have to make the bestproducts for the athletes and this is only possible if you are permanently in di-alogue with the athletes, if you listen to them and work together.”

Hainer, who joined the company as a sales director back in 1987 beforerising through the ranks to Chairman and CEO 14 years later, refrains fromdescribing the Adi Dassler standards as a back-to-basics approach. Instead,he says it encapsulates that constant strive to manufacture better and moreinnovative products for today’s sportsmen and sportswomen. This is espe-cially true in today’s competitive and fickle sports apparel market withtrends evaporating just as quickly as they emerge. Adidas and market leaderNike still battle to see who is top dog, although the likes of Puma – Adidas’domestic rival – and specialist sportswear and equipment manufacturers aresnapping at their heels.

www.bme.eu.com 37

Hainer on heritage:“Since we acquired Reebok we

repositioned it after identifying that oneof the key pillars for this brand was the women’s

business. Reebok has an extremely good reputation withthe female consumer and was the company that

founded step aerobics 20 years ago, which created acompletely new way of fitness. So this is a

heritage that Reebok still has in the mind of alot of consumers. The first success that wealready see with the new Reebok is thewomen’s category. We have a new shoe,EasyTone, which is the bestselling shoe in the

industry at the moment. So, therefore, heritagecan definitely be a very positive tool to guide you

into the future, providing you use it right.”

200million

Number of pairs of shoes

Adidas producesevery year


football championships and the Beijing Olympic Games. He says highermanufacturing costs and devaluation of currencies like the Russian rouble,UK pound and Argentinean peso had an impact. Adidas also shelled out€100 million on restructuring measures. “Compared to the rest of the worldand compared to other industries, I think we are still doing very well.”

Adidas holds meetings with employees every six months to update themon developments, but during the downturn this has been stepped up to everyquarter. Dialogue is paramount in this situation, Hainer discloses. “I want tokeep communication with the people going because everyday they hear neg-ative things in the news and then rumours start. If you don’t talk to people

then you never know what kind of rumours they have just heard andyou cannot correct them if they are wrong.”

In a similar fashion to how he shaved expenditure andre-moulded the company in the first half of the decade,

Hainer says the crisis opened up opportunities to againtrim excess fat. “This crisis gives you a lot of chancesto cut out the dead wood or cut out the fat that wegathered over the last eight years. When you are per-

manently running from one success to the next andfrom one successful or record year to the next, you are

gaining fat. You are not as aggressive anymore and you’renot as strict anymore on cost controlling and process im-

provement. So we took the opportunity to cut through, to changethe way how we do business to a certain extent, to define new processes, toget faster, to get leaner and to get more efficient.”

Shortly following the cataclysmic collapse of investment bank LehmanBrothers last year Hainer says he instigated a policy dubbed ‘divest and invest’.On the one hand they had to slash costs, such as putting a freeze on hiring, butcontinue to invest for the future, including the announcement of increased foot-ball sponsorship and investment in company ambassadors. “We have to do thehard and dirty work and to save costs and lose some people to make us leaner,but on the other hand we take this money and we invest it into the future of thecompany.” Adidas has dabbled in a bit of shopping too, picking up two smallcompanies – Ashworth (golf apparel) and Textronics (chips and sensors). The

US-based Reebok was aquired for €3.1 billion in order to strengthen theAdidas group and challenge Nike. Hainer also recognised that R&D was to bethe cornerstone of the company’s future success. Eight years ago R&D, whichemployed 30 staff, operated with a management tier between itself and theboard. So Hainer put measures in place to ensure they reported directly to thehead of marketing on the board. He also ploughed more money into the re-search facility and doubled the team to 60. “This showed the importance wegave to the R&D department within the organisation.” R&D was also divid-ed into separate units – one facility in Germany and one in the US geared to-wards the lucrative American sports market.

At his first press conference Hainer recalls how he placed a majoremphasis on innovation. He vowed to release one innovative prod-uct every season – a completely new product and not just achange of colour. This pro-active approach to change andambitious vision has made Adidas a different animal. “Idefinitely do believe that we are today much faster,” he an-nounces, “much more proactive in how we cater to themarket, how we talk to our consumers, how we bringproducts and concepts to market, as well as how fast wecan react to certain trends. We are permanently bringingnew, innovative products to the market, and I think this is oneof the key success factors for us.” He also sees speed rather thanthe size of a company being a game winner: “It’s about being faster andnot your size, otherwise the dinosaurs would be still alive and all the little an-imals dead. It’s the fastest one who will win the race.”

Uphill battle The dinosaurs eventually became extinct. In today’s marketplace it is

very much a case of survival of the fittest since the economic global melt-down and subsequent recession. In August, Adidas reported a massive 95percent plunge in profits as consumer spending dried up. Sales grew in theAmericas but shrunk in Europe and Asia. It was a headline-grabbing down-turn in fortunes for the sportswear titan but Hainer argues that this figureneeds to be put into context, especially in the year succeeding the European

38,982Number of

Adidas groupemployees at the

end of 2008

1949Adidas is registeredas a company,named after itsfounder: 'Adi' fromAdolf and 'Das'from Dassler

1954 Germany’s footballteam battle Hungarywith a competitiveadvantage. They arewearing Adidassoccer boots that forthe first time featureremovable studs

60 YEARS IN THE MAKING1960s ‘Fringe sports’ likeathletics sees trackand field starsdonning ‘the threestripes

1970s Franz Beckenbauerlifts the World Cup invictory salute.Germany had justbeaten Holland 2-1 inthe 1974 final

1980sAfter Adi Dassler'sdeath, Adi's wifeKäthe, his son Horst,and his daughterscarry on the business


latter will boost efforts to implement technology into products for runners andperformance athletes. In these tough times Hainer, however, is quick to stressthat Adidas won’t be cutting back on innovation and product development, es-pecially with a lucrative football world cup in South Africa on the horizon.Indeed, Hainer describes the world cup productsin the pipeline as “fantastic” because “football isin our DNA.”

Ideas factory The shift in emphasis toward the creative

side has made a tangible difference to the Adidasproducts, even just on an aesthetic level, “Itdoesn’t help if the product is good but looks ter-rible,” he says. Of course, new durable and lightermaterials are constantly improving products and,ultimately, the athlete’s performance. Take thehumble football boot, for instance. Forty yearsago it was a distinctly unattractive chunky blackleather shoe with half a dozen studs protrudingfrom the sole. Today’s boots come in a wide arrayof colours, are fashioned from tough, lightweightsynthetic materials and don’t absorb water like aroll of kitchen towel, á la the previous generationof boot. It probably explains why Messi was sokeen to publicly smooch with his F50i. “A bootused to weigh around 400 grams but today it’s200 grams, so it’s 50 percent lighter and, ofcourse, if you don’t have to carry so much weighton your foot you can run faster or you can runlonger,” says Hainer, a semi-professional foot-baller in his youth. “Today a football player runs 13 to 14 kilometres in a gamebut it was seven to eight kilometres 20 or 25 years ago. You can’t do it in 400-gram leather boot sucking in water. The new materials offer functionality, sta-bility and cushioning.”

Perhaps anticipating the next question, he’s quick to dispel the notionthat sports equipment can magically transform a Sunday morning footballerinto a professional. It’s the same with golf. “A new golf club cannot make an am-ateur a professional, but it definitely can improve the game of a normal golf

player from a handicap of 25 down to handicap15, because he has the ability to play better withthe club.” Adidas strives to make sport easier andmore fun by introducing groundbreaking prod-ucts, a case in point being a golf driver releasedearlier this year – the R9 sporting an adjustableankle. Within a week of hitting the shelves it wasthe highest selling driver on the marker. It’s asimilar story with the Reebok EasyTone runningshoe with its in-built balance pods that create in-stability, much like the feeling of walking on asandy beach. EasyTone, which encourages ton-ing in three areas of the wearer’s leg, has proved ahuge hit with people looking to work out.“Therefore, in my opinion, innovation is the keyto success,” the boss acknowledges.

R&D at Adidas adopts short-term and long-term vision simultaneously. One part is dedicat-ed to improving existing products or producingproducts for new seasons based on existing tech-nologies; the other is about starting from scratchwith less time pressures to find that next bigthing. Being able to steal a march on the likes ofNike with a groundbreaking trainer, sweatshirt orfootball can prove invaluable in the tussle for su-premacy. For example, Hainer notes how his

company was the first to roll out the ‘intelligent’ trainer two years ago. The shoecould automatic adjust the cushioning by measuring the wearer’s weight andanalysing the hardness of the ground. “Developments like that take longer,” heremarks. “It’s a complicated process to put a microchip into a shoe, ensure it

1995The company floats onthe Frankfurt and ParisStock Exchange

1996At the Olympic Games inAtlanta Adidas equips6000 athletes from 33countries. Thesecompetitors scoop 220medals, including 70golds. Apparel salesincrease 50 percent

1997Salomon Group with thebrands Salomon,TaylorMade, Mavic andBonfire is acquired

2000 The European FootballChampionships andswimmer Ian Thorpe’sthree gold medals at theSydney Olympic Gamesboost sales. Thefollowing year HerbertHeiner is appointedChairman and CEO

2005Adidas snaps up US rival Reebok.Hainer describes it as a “majorstrategic milestone”

2009Lionel Messi shows off his bootafter scoring in the UEFAChampions League final,sending F50i sales into orbit

Business goalsWhen footballing heavyweights Germanyand Spain locked horns in the final ofEuro 2008 in Vienna, Austria, HerbertHeiner says he found himself in sportingnirvana. However, this overwhelmingfeeling of satisfaction wasn’t just becausehis beloved German side were withintouching distance of being crownedEuropean champions. No, the pragmaticbusinessman inside him was rejoicingbecause the eyes of the world were focusedon 22 players decked out in Adidas


works, and glue together different components likemetal and polyurethane.”

Whilst Adidas keeps a watchful eye on what the com-petition is up to in terms new products, technologies andsponsorships, the company’s priority is focused solely on itsown work and the brand. “First and foremost, we look to ourselves,what our mission and where we want to be as a company in the future,”Hainer says. “Of course, we monitor our competitors quite closely, and this isnot only Nike; you have a lot of other competitors who are good in several in-dividual categories, so you have good running brands, good tennis brands,good golf brands, and so on.” He adds: “If we have to adjust our strategy thenwe do it, but on the whole we stay in the direction that we think is right forour company and for our brand.”

Not all products, though, are hot sellers, he admits with a chuckle. Thecompany has hundreds of staff dedicated to marketing so Hainer chooses to keephis distance when judging whether a potential product will be a hit. “I’m far awayfrom looking at every product and saying, ‘this is right or this is wrong, and thiscolour I do like or I don’t like this colour,’ because I’m not the target group. Somost probably if I like it then it might be not too good for the market or the otherway around. I give the responsibility to the experts and they can work in silenceand I keep a distance.”

Despite his reticence to get involved with product development, he recog-nises the importance of being seen as an inspirational figure for his staff. It alsomeans practising what you preach. “As a CEO you are always a role model,whether you like it or you dislike it, because people look to you and follow what-ever you do, good or bad.” Hainer offers up an example of this philosophy: “If asa CEO you talk permanently about sport and how people should be active butyou don’t do any sport, then they will see it and they will not believe you, and thisapplies to whatever you do. There is a saying in Germany, ‘The fish always thinksfrom the head,’ so your employees believe in what you make them do.” Perhapsunsurprisingly, Hainer is an advocate of team sports at Adidas – not just because

40 www.bme.eu.com

Q. With your products being manufactured in Indiaand Indonesia there is a perception Adidas is puttingprofits before the wellbeing of the workers. What’syour reaction to this accusation?

Herbert Heiner. “We completely outsourced ourproduction 15 years ago but this does not mean

that we are losing responsibility for theproduction process and for the people whoare working in the production facilities.Around 10 years ago we started to work inclose cooperation with our suppliers to

ensure that the people are treated well. Wehave a social and environmental department

to take care of this, and we publish an annualreport that clearly gives targets and objectives of

what we want to achieve in cooperation with oursuppliers. This ensures no child or forced labour, fair wages,sanitary installations and pregnant women are treatedfairly and it puts a restriction on how many hours theywork a week or per month. I do believe that we are one ofthe leaders in our industry, and I do believe that this ishighly appreciated by the worker and by the consumer. Igo out at least once a year for a tour of between seven and10 days and visit the key suppliers in the Far East, talk tothem, explain about new programmes, and ways we canimprove. And I let our suppliers know as well what we areexpecting from them.”

Adidas group has 792

concept stores and381 factory

outlets

it’s his industry but because it keeps in touch with his employees. “I play sportwith our people, we play football and run together which gives you the feelingthat you are one of them and they can tell me what’s going on in the company.”

Aside from getting sweaty in competitive football matches with his staff,the pressing priority for this boss is to put the disappointing results of 2009behind him and steer Adidas back into positive territory. This he hopes toachieve “as fast as possible” by exploiting new markets. “There is still a lot ofopportunity for us out there, be it individual categories or in certain regionsof the world. India will be one of the next big emerging markets and I see plen-ty of other growth potential for us in the years to come, which is what we aretrying to harvest.” In the mean time the race for sportswear dominance con-tinues to rage. �


Adeptic Ad.indd 1Adeptic Ad.indd 1 2/10/09 09:07:422/10/09 09:07:42

LOGISTICS

FROM PILLAR T

ROBIN DARGUE_4August 06/10/2009 09:52 Page 42

www.bme.eu.com 43

For a man at the helm of an organisation facing thebiggest crisis in its history, Robin Dargue, CIO of RoyalMail Group, is remarkably upbeat. We meet as thou-sands of postal workers are mounting industrial actionacross the country to protest against modernisationplans. It’s familiar territory for Dargue and his team. Inrecent months Royal Mail has rarely been out of the

newspaper headlines in the UK, with political controversy dogging effortsto modernise the service in the face of plummeting mail volumes and fiercecompetition from private operators. Dargue, however, cannot afford tolose his cool. Behind the scenes of the drama unfolding in public he andhis team are tasked with delivering the technology to support a raft of costsavings and service improvements.

Describing why the modernisation is crucial to Royal Mail’s survival,he says: “We clearly operate in a market of falling mail volumes. We’relosing out to other forms of communications, be it email or text messag-

ing. And we’re certainly operating in a market where there is competition. Sowhat’s the transformation project all about? Well one is to get a cost base thatis appropriate to falling mail volumes. Angle B is that we’re creating new prod-ucts and services for our customers to replace falling revenue so that we areoffering an edge against the competition.”

A 21st century challengeThe transformation project covers supply chain visibility, mobile tech-

nology for front line staff and people systems and includes new products andinnovations to improve customer relations, interoperability and the techni-cal capabilities of physical products. The precariousness of Royal Mail’s situ-ation means that it cannot afford to wait to replace its core IT infrastructurebefore new products and services can be put in place. Dargue describes there-fore how it is delivering new core business processes using its legacy infra-structure while simultaneously replacing its core IT foundations to build thenew set of products and to replace its entire e-business environment: “We’rekeeping the ship afloat by delivering some cost savings and some new prod-ucts now. That’s bought us time to replace those core foundations. Then we’vegot the right platforms and foundations to deliver the next set of products on.”

He admits the process is one of “orchestrated chaos”, particularly due tothe need to speedily invest in the business following a delayed agreement withthe government over funding for the modernisation project.

The delay means there is a tight time frame in which the project must bedelivered: “It’s an issue in that everything has to be done at once versus if we’d

Efforts to modernise the UK’sRoyal Mail Group have promptedcrippling industrial action andpolitical controversy. But for theman charged with making thechanges, CIO Robin Dargue, theshow must go on.

O POST


got it [the funding] a year earlier. We could have phased it a bit more. It’s notan issue about the funding per se. It’s just that the projects got stuck on thedocket and then magically, they all need doing at once. Well, that’s not reallya world that holds much credence. You could call it orchestrated chaos. We’retrying to do in three to five years what most companies have had the luxuryof 10 years to do.”

On the front lineThe challenge was made tougher by the fact, that historically, little money

was available within Royal Mail to modernise services, meaning that whenDargue took on the role last year, having previously headed up IT for Diageo,he inherited a department that was operating with virtually no resources atall: “It wasn’t necessarily that investment in IT was low and everything elsewas high. There was no money in the corporation at all, so no investment any-where. We had a phenomenally good IT function that was about ensuring thesystems were stable and they operated everyday. And they did that in an en-vironment where we had no money to invest. And I think they did a superla-tive job. They kept a €9.8 billion corporation going for next to nothing.” It was

a far cry from the global corporations Dargue had been accustomed to work-ing for and a situation that meant the CIO had some tough decisions to make.Across the board Royal Mail has made around 40,000 job cuts. Within the ITdepartment, says Dargue, this meant refreshing the skills base available tocarry out the modernisation project: “In terms of making these tough deci-sions it was in recognition of the fact that the world we were entering was dif-ferent to the one we were in before. So we needed new skills aroundarchitecting, information security, business analysis, programme and projectdelivery. So was that a hard choice? Well it’s always a hard choice when peo-ple’s livelihoods are in the balance but the business direction was clear. Wejust had to make sure we had the new skills for the challenge.”

Luckily for Dargue, when it comes to making these changes and in se-curing the necessary resources to carry out the modernisation processes, hewas backed up by the Royal Mail management, which he says place IT at thetop of their agenda: “In this company IT sits on the Group Executive Board,the Letters Executive and the Post Office Executive board. It’s got the rightseat at the table and it’s now got the right money in the plan.” Part of the rea-son for this is that IT has become core to Royal Mail realising its objective of

Royal Mail is a letters and packages business, covering the whole of the UK.Each working day it collects items directly from 113,000 post boxes, 14,300 PostOffice branches and 87,000 businesses. There is a network of 70 mail centres,eight regional distribution centres and 3000 delivery offices. Royal Mail has afleet of over 30,000 red vehicles and 33,000 bicycles.

General Logistics Systems (GLS) is Royal Mail’s Europeanparcels business and Parcelforce Worldwide is its UK partner.Based at GLS head office in the Netherlands, it has 14,500employees and handles over one million parcels a day, throughits network of 667 depots, 29 central transhipment points,16,000 delivery vehicles and 1700 long distance trucks. Its coreoperation is business-to-business parcel deliveries and it has220,000 customers across Europe.

ROYAL MAIL GROUP BRANDS

Post Office Ltd is a separate company within and partof the Royal Mail Group, which runs its 14,300 PostOffice branches across the UK. It is the largest retailand financial services chain in the UK. The Post Office’srural network relies on €170 million funding from thegovernment but it continues to make a loss on itsoperations of around €2.2 million a week.

Parcelforce Worldwide

is Royal Mail Group’sexpress parcels business.It delivers around150,000 parcels a day. Inthe last few yearsParcelforce Worldwidehas turned around itsbusiness and is now akey player in thecompetitive, unregulated,express parcels market. Ithas cut its losses fromoperations andintroduced serviceimprovements.


Kofax AD.indd 1Kofax AD.indd 1 30/9/09 13:53:1630/9/09 13:53:16

ducing new technology into a traditionally paper-based organisation is thefact that the workforce has such different technology skills levels: “There is avery large working population at Royal Mail but actually before we put PDAsout to the frontline staff, their interaction on a day-to-day basis with technol-ogy was very low. Within the organisation we have everything from the superusers in departments like finance that are using complex technology, to thefrontline staff using PDAs.”

Daunting prospectGiven the scale of the challenge Dargue admits it’s not always easy to re-

cruit staff to his department and that many are scared off by newspaper sto-ries depicting a chaotic state of affairs at Royal Mail: “I’m very clear. I tellpeople how large the challenge is and how broken our foundations are. But I in-vite them to be part of the challenge so they can say they were there and theyturned this company around. Some people are honest; they read the newspaperstories, whether it’s government, industrial action, or the network closure pro-gramme, and some of these things put people off. However, other people lookat it and say they are attracted to the challenge and it’s people that are attractedto the challenge that we want to talk to.”

Dargue himself wasn’t put off by the challenge either, and left a lucrativeposition as CIO of the world’s biggest drinks company Diageo, a role he as-sumed aged just 36, to take up his position at Royal Mail. At the time, he saidthe fact that he was joining an organisation that had such large challenges, wasactually an attraction: “I was attracted by the scale of the challenge. I alsojoined, very simply, because IT sits at the table here and is core to the strate-gy of the company.” And what keeps him going, he says, despite the organi-sation’s ongoing, high profile struggles, is a passionate belief in the heritage ofthis embattled institution and a determination that its legacy should contin-ue for future generations: “I actually am motivated each and every day by thefact that the Royal Mail Group has been going for about 360 years and I don’taccept that we should fail to future generations. Every single day I’m doingmy utmost to ensure we improve our revenue, our position, our products andour services. I see it as the duty of every single senior manager here to be-queath a better company to future generations.” n

introducing high tech services that compete with those of its competitors.These include the rolling out of 27,000 PDAs to frontline staff which requiredit to build the UK’s largest wireless network to receive software downloads tothe mobile devices. The company has also introduced Tracked Plus, which al-lows customers to track the progress of their deliveries online.

It has also branched out to extend its offers in marketing to small tomedium enterprises and has launched mailshots online – a service which al-lows companies to design a direct marketing campaign online which is thensent out using address lists from the Royal Mail.

Cultural clashThe introduction of these high-tech products and services as well as

changes to working practices also mean a change in working culture at RoyalMail. The key to ensuring that the workforce embraces the changes the man-agement is introducing is to stress the benefits it offers to them, says Dargue:“This is like change management in any company. There’s good ways of doingit and bad ways of doing it. With any change we have to make sure that we areclear about the benefits they bring to individuals. For instance, with the PDAswe’ve introduced two functions to help workers. One is that we’ve enabled thevoice call facility so if you have a problem like an accident, you can use yourPDA to call for help and raise the alarm. We’ve also put in satellite navigationfunctionalities. You’ve got to make it a win/win situation. Any successfulchange is usually routed on that premise.”

And Dargue has a very large workforce to win over. Royal Mail employsa massive 180,000 people across the UK, which constitutes around one per-cent of the whole UK workforce, making it the second largest employer in thecountry after the NHS. And he says one of the biggest challenges of intro-

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The Postal Services Act 2000 established Postcomm, thePostal Services Commission, as the regulator of postalservices providers in the UK. The Act requires Postcomm

to ensure the provision of a universal postal service, at auniform price, throughout the UK. Postcomm is also chargedwith promoting effective competition between postaloperators where it is in the interest of customers. Allcompanies or individuals that convey letters weighing lessthan 350 grams require a Licence from Postcomm. ByDecember 2005 Licences had been granted to 15 companies,including Royal Mail Group.

Each licence is legally binding. Licensees are authorised toconvey letters in the UK, subject to compliance with theconditions laid down in their licence. The conditions includethe requirement to abide by postal services’ codes of practice,to provide information to Postcomm and to establish systemsfor handling complaints.

HOW THE UK POSTAL SERVICE IS REGULATED

Robin Dargue


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SOCIAL NETWORKING

The

What do Barack Obama, SirRichard Branson and BillGates all have in common?They are all members of theworld’s fastest growing club,LinkedIn. Diana Milne meetsEuropean MD Kevin Eyres

and finds out why a newmember joins the networkingwebsite every second.

missing link

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Kevin Eyres ED 2:4August 6/10/09 09:58 Page 48

When the most powerful man on the planet joinsyour social network you know you’ve made itbig. For the founders of LinkedIn, signing upPresident Barack Obama to their vast globalmembership was another chapter in a successstory that has continued unbroken since the

launch of the website in 2003. Even in the early days it quickly become clearthat LinkedIn was destined for great things. The original five LinkedIn pio-neers launched it from co-founder Reid Hoffman’s living room with 350 oftheir contacts. Within just one month it had 4500 members and by the end ofthe year 81,000 had signed up – half of which came from outside the US.Today a new member joins the website every second and it gains a millionnew members every two weeks. But it’s the pedigree of those members that isat the core of the website’s value as Kevin Eyres, LinkedIn’s European MD tellsme at the company’s offices in London: “Typicallythe professionals on the site are affluent higher ed-ucated professionals whose average age is 40 and

income is €80,000. Around 80 percent of themare university educated and they are the

world’s decision makers.”

Talent recruitmentThis elite membership, which includes

Bill Gates and Sir Richard Branson, hasmade the site hugely attractive to job

hunters and recruiters alike. Over 40 per-cent of Fortune 100 companies pay to use the

site to recruit talent from amongst its mem-bers. This, says Eyres, is behind the rise in

LinkedIn membership across Europe despite therecession. In countries experiencing some of theworst economic turbulence, activity has beengreatest, with membership up 60 percent in Spainand 40 percent in the UK, since the start of the re-cession. “Our members are the movers and shak-ers of industry,” says Eyres. “There are a lot ofcompanies that are looking for these types of peo-ple in order to help them navigate through times like this. Even in times whenhiring is down from what it was in previous years, we see that people still needto hire the right people. And the more people that are looking for LinkedInmembers to employ them, the more people are joining LinkedIn.”

However, while talent searching may have emerged as one of the mosthigh profile LinkedIn activities during the recession, Eyres is keen to stressthat it is by no means the site’s raison d’etre. Indeed he says that a closer ex-amination of user behaviour reveals that recruitment “doesn’t even come closeto being dominant”. In fact he says the biggest reason why people use LinkedInis for knowledge gathering. Members of the site have access to a huge skills andknowledge base that they can call on to solve business dilemmas – a toolLinkedIn’s team regularly uses to help devise its own business strategy: “Thebiggest use of LinkedIn is really around how to get knowledge and information.For instance we’re looking for knowledge and information about expanding intoother countries. We’re trying to find some insight into how some of the differ-ent markets work. One of the ways we have found information is by postingsome questions on the site or contacting some members of the site who are out-side our immediate network that have expertise in a particular area. I have sucha diverse network that I know I’ll find people who have the answers.”

A political animalThe fact that LinkedIn provides instant access to an audience of the

world’s top business people means that it has even become a political tool.Eyres describes how both President Obama and the Prime Minister of

Holland Jan Peter Balkenende have used the site to canvass public opinionson their reform proposals using the LinkedIn Answers tool which providesa forum for political candidates and campaigns to communicate with highlevel audiences: “The Prime Minister of Holland and Barack Obama areusing it to engage with their audience. It’s amazing. Barack Obama is usingit to ask people in the US about, for instance, healthcare reform, asking themwhat they think about the healthcare plan. It’s on the White House websitewith links to LinkedIn.”

The use of LinkedIn to canvass popular option means that it is alsoemerging as a popular tool for research firms. Several of the world’s largest re-

www.bme.eu.com 49

Kevin Eyres is focused ondeveloping, leading anddelivering the company’sstrategy and growthinitiatives in Europe. Prior toLinkedIn he was EuropeanManaging Director atSideStep, General Manager ofAltaVista International, priorto the acquisition by Overtureand a Director atShopping.com. Eyres startedhis career as an engineer atCompaq Computers where hespent 10 years leadingdevelopment teams. He holdsa BS in Mathematics andComputer Science from theUniversity of Texas in SanAntonio and has six patents.


wouldn’t want to advertise to a mass audience. They advertise that to the typesof individuals, based on company size and title, that they believe would havea higher propensity to buy these tickets. CXOs and people in the finance in-dustry typically would be buying those fares so they can advertise to them di-rectly on LinkedIn.”

LinkedIn’s money making potential has attracted investment from thelikes of Sequoia Capital, Bain Capital Ventures, Goldman Sachs, TheMcGraw-Hill Companies and SAP Ventures as well as a host of high profileangel investors, including Peter Thiel, co-founder of PayPal and MarcAndreessen, co-founder of Netscape. Describing the attraction of the com-pany to investors, Eyres says: “Well I think it’s the one user every second sta-tistic, the revenue lines and the fact that we are growing so much. It’s also thatwe have such a balanced business model that is not dependent on any one rev-enue stream like many other internet companies. We’ve been around a longtime. We have a long history of success, not just from a membership stand-point but also from a commercial standpoint too.”

Competitive edgeLinkedIn may have been

around a long time but social net-working sites that have followedin its wake are snapping at itsheels, particularly Facebook,which is seen as its potential com-petition in the recruitment sector.Eyres does not believe however

that LinkedIn currently faces any serious competition. “We definitely seeourselves as the leader. When you’re at 46 million and growing at onemember a second, there’s a certain amount of scale that’s a real challengeto overtake. That said, we’re not sitting here saying that we don’t have any-thing to do now. We’re continually innovating. It would be really chal-lenging for another company even to build all the features and functionsthat we have on the site.” He goes on to say however that LinkedIn’s edge

is not its technology, but its members – an advantage thatmoney can’t necessarily buy: “Features are not what reallymake the site in the end,” says Eyres. “It’s those 46 million

members, 80 percent of which are univer-sity educated and it’s the fact that we

have executives from every Fortune100 company on LinkedIn.”

Currently the vast majority ofLinkedIn members work in technol-

ogy or banking – with those sectors ac-counting for 30 percent of LinkedIn’s totalEuropean membership. The predomi-

nance of technology professionals saysEyres is a by-product of the fact that

these people are generally earlyadopters of technology such associal networking sites. He goeson to say that the strength of theIT jobs market is also drivingtraffic to the site: “If we look at

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search companies havepartnered with the site in-cluding Forrester Research,

for which LinkedIn has been con-tracted to carry out the firm’s onlineBusiness Data Services surveys in2009. Media content providers too are taking a slice of the LinkedIn pie withCNBC and the New York Times having signed agreements to provide onlinecontent to LinkedIn members.

The bottom lineLinkedIn’s three main lines of revenue are premium subscriptions, cor-

porate subscriptions and advertising. As it is a private company LinkedIn doesnot disclose its revenue but Eyres says advertising is growing at a rapid paceas companies come to understand the value of being able to reach their exacttarget audience – a feat rarely achieved in print advertising. Indeedhe claims many companies are abandoning traditional printadvertising routes for the more instant gratificationthat LinkedIn offers: “One of the reasons forthat is the rich targeting you have onLinkedIn. The old saying in advertis-ing is that everybody knows that 50percent of advertising is wasted. Theproblem is you have no idea which 50percent that is. With LinkedInyou can cut down that wastageand have a very targeted expe-rience.” Giving the example ofhow this has worked for air-lines, he says: “Air France andBritish Airways are two big advertis-ers that we have. They use the site to adver-tise their business class airfares, which you

“People find great value in knowledge.People in banking and finance need tomake decisions pretty quickly across a

broad set of subjects and they useLinkedIn to find the experts they need”


professionals like that then they absolutely un-derstand the potential of LinkedIn and theywant to be part of that. It’s an unbelievable op-portunity that people see.”

To put this opportunity into perspective, ifLinkedIn’s numbers are correct then by the end ofour 25-minute interview another 1500 members will have signed up toits network. It’s success on a scale that is difficult to grasp. �

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IT professionals, typically they are the first movers when it comes to tech-nology. But also if you look at technology that’s where a lot of the jobs are aswell and this cuts across every industry.” Meanwhile banking and financeprofessionals rely on the site as a valuable source of information to drawupon when making investment decisions: “People find great value in knowl-edge. People in banking and finance need to make decisions pretty quicklyacross a broad set of subjects and they use LinkedIn to find the experts theyneed with which to discuss, for instance, investment opportunities or if theyare evaluating a new sector.” This thirst for knowledge is currently driving in-creasing numbers of professionals from the renewable energy sector toLinkedIn. In France alone there has been a 55 percent increase in membersfrom the environment and renewable energy sector and Eyres believes this willbe a huge growth area for the site in the future: “If you look at our fastest grow-ing areas that’s where green energy comes into play. These people are lookingto solve some really tough problems that are not local they are global. And howdo you do that? By finding like minded people, wherever they are.”

The language of successWhile LinkedIn is very much a global online community, the company

has been keen not to neglect non-English speaking professionals so haslaunched French, German and Spanish language platforms for the site – all ofwhich have been immediate successes: French sign-ups to LinkedIn increasedby 200 percent after the introduction of the platform in November last yearand within two months of the Spanish launch 200,000 new members hadsigned up: “Language specific sites have been very successful for us,” saysEyres. “We see engagement levels increase after people switch to their locallanguage. Communication is much more effective and natural for people intheir native language.” These innovations are typical of LinkedIn’s innova-tive and adaptive approach to business; last year also saw the launch of theLinkedIn Intelligent Applications platform, which enables companies to de-velop professional applications for LinkedIn members. Applications nowavailable to members including Amazon, Box.net, Google, Tripit andWordPress. It’s no surprise then, given LinkedIn’s forward thinking ap-proach to business, to hear that it’s a great place to work. Describing themissionary zeal of the LinkedIn team, Eyres says: “All the people who cometo LinkedIn are passionate about whatthey do whether it be sales, marketing,or product engineering or operations.And we really do see that we are chang-ing the way that people work. It’s a placewhere you dedicate a lot of your time andyour effort and your thoughts because it’sa challenging environment. It’s a very col-laborative culture with people who aregenuinely dedicated to the overall missionof the company.” He goes on to say that thequality of the talent LinkedIn has attractedis testimony to this, with the likes ofGoogle’s former Head of Operations LloydTaylor, former Google executive DipchandNishar and Patrick Crane, Yahoo’s VP ofMarketing among its recent senior appoint-ments: “If we’re able to attract high quality


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GAMINGSECURITY

With the threats from hackers to high profi le websites becoming ever-more prevalent, we catch up with Oliver Eckel, Head of Corporate Security at Austrian-based online betting site bwin, which processes 70,000 transactions a day.

PLACE YOUR BETS NOW

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How do you strive to keep transactions safe and secure from hackers when just one security breach can have a serious effect on the busi-ness’ integrity, along with damage to reputation? And does being such a high-profi le company increase your chances of being targeted? Oliver Eckel. Online gaming is all about being high profi le. Th e brand and the reputation are very important in our industry. On the one hand our profi le perhaps increases the chances of being targeted, as the fi rst gaming company that comes to a hacker’s mind is probably bwin. Th en again, due to our size, we are in a position to invest more money and eff ort into securing our systems. bwin operates under a detailed, rigorous information security policy designed to protect the integrity and confi dentiality of our fi nancial transactions. Security measures include, but are not limited to, the implementation of state of the art anti-virus protection on all computers, sophisticated fi rewalls to block unauthorised access to the bwin network, intrusion detection systems to spot suspicious behaviour and highly secure encryption systems to ensure that transmitted and stored information remains confi dential. In order to ensure the integrity of our systems, all changes are man-aged and need to be approved. Additionally, periodic audits of infra-structure, application and access rights are performed to ensure that systems are secure. For our source code audits, we use Fortify to make sure that potential vulnerabilities in the developed soft ware are identi-fi ed and fi xed before deployment.

A few years ago many of the major betting companies, mostly in the UK, were bombarded by ongoing Denial of Service (DoS) attacks that crippled their websites. The hackers said they would stop the DoS threats in return for hefty ransoms. Was bwin affected by this and would you ever give into ransom demands like this?

OE. Occasionally, bwin is the target of DoS attacks. However, giving into ransom demands would mean that bwin is not able to set effi cient counter-measures and doesn’t have the necessary controls in place, which is defi -nitely not the case. As part of bwin’s risk management strategy, a layered defence strategy was adopted to mitigate the eff ects of service degradation pertaining to types of DoS attacks on applications, platforms and network service infrastructure. Dynamic monitoring allows automated spotting and analysing of anomalies, whereas in case of a DoS detection defensive measures are activated. Applications and infrastructure are regularly audited to detect systems prone to DoS attacks so that potential vulner-abilities can be fi xed before they can be exploited. Redundant systems and load balancers increase reliability and availability to act as a buff er in case of successful DoS on single machines.

What would you say are the biggest challenges that you face as Head of Corporate Security? Is following strict compliance regula-tions one of them?OE. Assuring compliance is certainly one of the main challenges for me as Head of Corporate Security, as it includes more or less all other security-related challenges. As an international online gaming opera-tor, bwin is subject to a wide range of laws, standards and regulations. Th erefore, compliance assurance is a major factor of our business con-tinuity management. If we were to fail to comply with the requirements of our gaming licenses for example, we would be out of business in no time. Beside the regulatory requirements, we are also striving to comply with various industry and governance best practice standards and frameworks. Th is is extremely important for the development of our organisation. It helps us to raise the maturity of our processes and therefore improve the quality of our services, which gives us the edge


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over our competitors in an extremely dynamic market. On top of that, assuring compliance with several security standards, such as PCI DSS or ISO 27001, makes my life as Head of Corporate Security a whole lot easier, as I can rely on state-of-the-art security measures and processes being in place. So even the operational side and the daily security busi-ness is directly linked to our compliance eff orts.

Sometimes the most serious security threat you face is from within. How do you go about trying to prevent a rogue employee from steal-ing customer information or leaving bwin offi ces with confi dential data possibly stored on a small memory stick?OE. Th ere is no doubt that the highest security risks for organisations can be internal ones, not external ones. Our strategy is to prevent data theft from happening in the fi rst place. We use state of the art access right audit tools and our back offi ce application logs relevant events. Log fi les are collected and evaluated centrally by Corporate Security. Our dedicated Data Protection Offi cer ensures that access to data is kept to a need-to-know basis. Security awareness is constantly raised and every-one with access to sensitive data is informed about the consequences of a potential disclosure. With all these measures in place, we are confi dent that data theft at bwin is unlikely. In general, we feel that we are also handling the soft factor of data theft prevention well. So why are people tempted to steal data? Well, most of the time, they are unhappy with their job or their employer. At bwin, employees feel that each and every one is contributing to the big picture, which is nothing less than the

best online gaming platform in the world. We have lots of teambuilding events and there’s defi nitely a strong spirit within our organisation.

You have signed a deal with Fortify Software. How will it strengthen your security?OE. We wanted to emphasise security awareness within the development de-partment to make it a top priority. But we were aware that technology alone wouldn’t guarantee security. Other factors such as training and metrics were required, too. A concerted eff ort to introduce security procedures and technology at the earliest possible phase of development and throughout the lifecycle of the application helped us identify and fi x security vulnerabilities at the very beginning of the soft ware development lifecycle.

Th e integration of Fortify into the soft ware development process — es-pecially in our nightly builds — helps to actively manage application secu-rity risk. As for PCI-DSS compliance, the automated scans and the reports generated by Fortify are crucial for passing the strict audits. Compliance, especially compliance with PCI-DSS, is a complex task and the more sup-port you can get by deploying tools, the easier it gets. Th e most important benefi t from deploying Fortify, however, is the general improvement of the development process with regard to security. Installing, deploying and deal-ing with Fortify’s results helps the company see application security in a new way. Development systematically weeds out vulnerabilities and executives receive detailed risk reports on a regular basis. Security is now a part of our corporate DNA like never before. Ultimately, bwin is able to deliver highly secure applications to our customers, which is critical in our business.


Why should a company implement email signature and encryption?Artur Heil. Within the hyper-competitive marketplace of the global economycompanies are challenged to keep pace with the market and strengthen thetrust of their customers. Nowadays remote or mobile workforces are forcedto use email communication for business-critical transactions like short-termsubmissions of proposals or approval processes. Only digital email signaturesprovide the necessary non-repudiation and tamper protection for those trans-actions. And no business wants to see details of a new product published priorto the product launch or sensitive customer data stolen by fraudsters.Therefore, the encryption of confidential content is also mandated by bestbusiness practices or just common sense.

Are there any legal requirements to implement email signature and en-cryption?AH. An increasing number of new guidelines and laws define the legal frame-work for secure processing, storing and archiving of business emails. An ex-ample is the EU Directive 95/46/EC on the protection of individuals withregard to the processing and free movement of personal data. So far only a fewof them dictate the signing or encryption of emails, however some industries,such as utilities or pharmaceuticals, have already defined such requirements.

What have been the drivers for your customers to sign and encrypt theiremails?AH. Most of our customers are driven by the explicit demands of their cus-tomers. Although you would think that today every user is well informed onhow to recognise fraudulent emails, there are still a large number of cases offraud using phishing emails. The resulting damage for the companies con-cerned due to the loss of image or the loss of trust by their customers can hard-ly be expressed in numbers. The best reassurance for customers is a high-qualitydigital signature on emails. It confirms without a doubt that the email in factcomes from his bank, internet service provider or online service provider.

What are the critical success factors of an email security project?AH. A high degree of user friendliness and low administrative and supportoverhead. These are at the top of the list of the criteria most often named bycustomers. It is a must that established business processes should not be hin-

dered, for example with regard to rules for employee substitution during leaveor when connecting mobile employees by using web mail.

Also the option to centrally implement a corporate-wide policy to ensurebase-line protection for regular communication and to individually protectcritical departments like research or development is of essential importancewhen selecting email security solutions.

What is the benefit of globally accepted certificates to an email-securi-ty solution?AH. The benefit is increased user comfort and reliability. Email signatures andencryption can be achieved with any valid certificate. But with a self-issuedcertificate a recipient will be alienated by an alert telling him that the certifi-cate used is not trusted. With a preconfigured root certificate in the emailclient, the validation of a globally trusted certificate is done transparently forthe recipient and the certificate can be trusted without double-checking as itis issued following strict rules during the vetting process. So, if binding com-munication with external business partners is a priority, the use of externallyrecognised certificates is mandatory.

What is the differentiator of TC TrustCenter's approach to email signa-ture and encryption?AH. The TC Gateway solution provides the maximum level of automationand transparency for the user. The secure email gateway manages a compa-ny's entire email communication process centrally and automatically executesall necessary cryptographic processes in accordance with corporate policies.The certificate rollout is carried out via an automatic interface already inte-grated as standard in many email gateways. Globally trusted certificates areissued on demand within minutes when a new user is registered. Our uniqueOn-Demand PKI platform ensures rapid implementations and scalable pric-ing models whilst maintaining the highest security standards. n

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As fraudsters’ bogus emails continue tobombard our inboxes, we get the insidetrack on the use of email signature andencryption from Dr Artur Heil.

EXECUTIVEINTERVIEW

Sign on the dotted line

Dr Artur Heil is DirectorMarketing & Sales (EMEA) forTC TrustCenter GmbH. Heil hasmany years of managementexperience in sales andmarketing at leading softwarecompanies, among themSymantec, AXENT Technologies,PassGo Technologies andCybertrust. He has occupied hiscurrent role since 2007.

“Although you would think that todayevery user is well informed on how to

recognise fraudulent emails, there are stilla large number of cases of fraud using

phishing emails”

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SECURITY

W hen I founded the Anti-Phishing Working Group in 2003, I thought that we would have eliminated

phishing by mid-2004. How wrong I was.Th e Anti-Phishing Working Group

(APWG) was founded to bring together the diverse communities of banks, ISPs, e-com-merce companies, security vendors and law enforcement agencies. Our core philosophy was to create a forum where these diverse players could talk frankly and honestly about the evolving phishing attack situation, without fear that these conversations would become public. Th is format proved to be im-mensely successful, and the APWG now has over 1500 member companies and govern-ment agencies.

In 2003, phishing attacks spread from attacks against eBay and PayPal customers to a wave of coordinated attacks against the cus-tomers of Australian fi nancial institutions. In the summer of 2003, these attacks were then aimed against customers of UK fi nancial insti-tutions and in late 2003 US banking customers began to be targeted.

Th is global pattern indicated that cyber criminals were becoming just as organised as traditional crime gangs. Th ey were testing new techniques in smaller markets like Australia, where users are easily targeted by their network address and because there are a smaller number of fi nancial institutions. Th e model was then perfected and expanded in the UK, where there were still a small number of institutions, and an easily targeted customer base. Th e scam was then scaled up to the US market, particularly targeting customers of the top few banks.

It became clear that one particular group could not solve the phishing problem on their own. It would require cross-industry collabo-ration. Th us the APWG was formed.

As phishing scams became ever more so-phisticated and professional, members of the APWG were able to discuss the evolving tactics and best practices for detecting these attacks, shutting down the phishing sites and tracking and reducing losses. In closed-door APWG meetings, members were able to discuss the indirect fi nancial losses from phishing attacks; for example, the costs of call centres receiving tens of thousands of phone calls from consum-

David Jevans discusses the challenges of fi ghting a global war on phishing and crimeware during the fi nancial crisis.

Phish tales

ers when a major attack was launched.Th e APWG publishes monthly reports

that track phishing statistics around the globe. Th ese statistics allowed us to see pat-terns where some fi nancial institutions would be attacked with much more intensity than others. Eventually it became clear that one signifi cant factor in the number of attacks that an institution faced was related to how easily criminals could transfer funds out of compromised customer accounts. We also began to see cross-channel fraud, where account numbers and PINs were used to create ‘white plastic’ ATM and debit cards. Financial institutions started to realise that the phishing problem spanned all types of fraud, and was involved in ATM, debit card, cheque card, wire transfer, ACH and account opening fraud. More recently we have been seeing the telephone banking channel used as an attack vector, where phishers send out emails requesting customers to call a fake call centre, where the IVR system is used to collect account numbers and PINs from customers without them ever having to visit a spoofed bank website.

The cyber criminals fi ght back

Th rough 2005 and 2006 the security community began to develop anti-phishing technologies and service off erings, such as outsourced takedown services, to get spoofed websites shut down in a timely fashion. Th e phishers responded by increasingly hosting their spoofed websites in foreign countries, making takedowns very time consuming, re-quiring foreign language skills and extended working hours to deal with sites hosted in varying time zones.

For every defensive measure that is put in place by the industry, the criminals react with a creative new approach to continue their fraudulent activities. For example, the security and web browser community began to track known phishing sites and share those web addresses as a block-list, which would allow browsers and email servers to prevent users from receiving known phishing emails or vis-iting known phishing sites. One of the promi-nent phishing gangs, known as the ‘Rock Phish Gang’, responded by using tens of thousands of sub-domains on their phishing sites, thus overwhelming the block-lists.

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A very disturbing trend over the last year has been the use of social networks to spread crimeware and phishing. Th ere have been at-tacks against users of MySpace and LinkedIn that have infected tens of thousands, and in some instances up to a million users in a very

short time frame. Th ese attacks do not rely on traditional email, as they spread inside the social networks using their internal web-based messaging systems. Th is can make these at-tacks very diffi cult to track and profi le.

2009 and beyond We expect that the current global fi nan-

cial crisis will continue to give phishers new ways to create believable social engineering attacks to steal account credentials and to spread crimeware. In the fourth quarter of 2008 there were numerous attacks against customers of major fi nancial institutions that were being acquired or were in the news as re-ceiving government aid. In 2009 we can expect

Another example of escalation in the war against cyber fraud was the invention of fast-fl ux technology by the leading phishing gangs. Fast-fl ux is a DNS technique used by botnets to hide phishing and malware delivery sites behind an ever-changing network of compromised

hosts acting as proxies. A sophisticated type of fast-fl ux is when multiple nodes in the fraud network register and de-register their addresses as part of the DNS record list for the DNS zone. Th is makes taking down phishing and crime-ware sites extremely diffi cult, as they are hosted on many machines with changing IP addresses. Th e APWG and our members have been work-ing with ICANN, the Internet Corporation for Assigned Names and Numbers, to create poli-cies for rapid takedowns of fraudulent domain names that are being used to host phishing and fast-fl ux sites. Th is has been a multi-year eff ort, and there is still much work to do with policy and education among the registrar and registry communities.

David Jevans is the Chairman of the Anti-Phishing Working Group. For more information, please visit www.antiphishing.org

Over the last several years we have seen phishing augmented by the spread of malicious software that is designed to steal online account details. This malicious software that is designed for electronic

crime has been dubbed ‘crimeware’. The crimeware wave seems to have started in Brazil in 2003, and has spread around the world. Crimeware variants are merged with remotely controlled malicious software to create networks of hundreds of thousands of compromised home computers (botnets) that are used by cyber criminals to launch phishing, crimeware and spam attacks. The botnet explosion since 2006 has infected millions of personal computers around the world that are being used by criminals without the knowledge of the person who owns the computer.

Recent activity in the crimeware landscape is the evolution of targeted crimeware that is designed to get on to the computer of a targeted employee in a large corporation or government agency. Once that person’s computer is infected, the criminals can upgrade the crimeware to add new functionality to compromise other computers, steal

intellectual property, create backdoor access paths into the corporate network, or even to run customised software to generate transactions inside the company network. This represents the ultimate professionalism of the cyber crime industry, where crime gangs plot attacks for many months, and using highly sophisticated crimeware and targeted social engineering to get it into corporate networks. This is called ‘spear phishing’.

CRIMEWARE ESCALATION

an increase in money mule recruitment scams, where criminals recruit unemployed consum-ers to act as online funds transfer agents, or to reship goods that were purchased using stolen credit card numbers.

Th e rapid and continuous evolution and expansion of online fi nancial fraud through phishing, crimeware and social engineering is something that requires a coordinated global response from the fi nancial services industry, ISPs, security vendors, e-commerce merchants and law enforcement agencies. Th e APWG and our members have been working to expand our systems and tools for secure collaboration and data sharing. We have facilitated the sharing of phishing site URLs between members, and are expanding this to allow fi nancial institutions and security researchers to share information about fraudulent websites and IP addresses of known and suspected cyber criminals.

In these challenging fi nancial times, it is more important than ever for the fi nancial services industry, the security industry, ISPs and law enforcement to work together to share information and pool our resources to keep our customers safe, and to secure our assets. Come and join us.

“We expect that the current global fi nancial crisis will continue to give phishers new ways to create believable social engineering attacks”

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Information security is vital to almost every department within or-ganisations today. What would you say are your biggest issues and challenges when it comes to protecting the business from security breaches?Paul Wood. Th e issue today is around data loss more than anything else. It is the thing that is in consumers’ minds as much as it is in the minds of organisations. Th e other issue aligned with this is the potential for fi nancial crime and the exploiting of personal data. Th e main challenge, however, is making sure that once something happens we are able to react to it appropriately, realistically and pragmatically. Oft en the issue becomes much worse if the incident response plan is not done in the proper and robust manner. It is about how we assess what that particular incident or breach was and how we risk assess what the impact became to the business. If it involved customer data then you have to assess the potential of that exposure for the customer. You need to see how you will limit that exposure, learn lessons from a particular mistake or error and how you will manage everyone’s expectation.

In the UK we have seen some pretty serious security breaches and confi dential data going ‘missing’, even within government depart-ments. From your experience what would you say are the common mistakes that organisations make when handling, storing and moving data?PW. Understanding where data is at any one point in time is probably one of the biggest challenges organisations have. Also, getting the indi-viduals inside businesses to understand the true value of information is a challenge in itself. So, a company may not adopt the appropriate security measures to reduce the potential for the risk of exposure of the data if it does become lost. Th is could mean not adopting sensible encryption mea-sures, looking at how to stop or control data leaving systems or the area of mobile computing and how people use these devices. Th ey may think it’s just a toy they have been given and don’t understand the powerful nature of what that particular device might contain.

In most organisations people are the biggest risk. In presentations I have given on security I talk about there being no patch for stupidity,

Meet the gatekeeperWith the potential for data leaks to infl ict serious fi nancial and reputational damage on organisations, BM seeks the advice of information security afi cionado and Aviva’s CISO Paul Wood.

IT SECURITY

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How do you weigh up the risks versus the reward of introducing new technology for Aviva em-ployees? For instance, a technology may allow for greater productivity from staff but is a risky proposition from a security standpoint.PW. We look at a new technology, conduct a risk assessment to see where the weak points are and the counter-measures we can introduce, and arrive at a position where we are all comfortable. Th at may mean that for a period of time we don’t get the full benefi ts of that productivity if we feel the risk is too high. Equally, it may mean that we live with it [the security concern] but we look to try and mitigate it as the new technology develops. Mobile devices were a good example of this be-cause in the early stages everybody wanted them but the levels of controls that you could position on those devices have only developed and grown over time. But we shouldn’t shy away from these things because technology enables business. What we have got to do is fi nd cost-eff ective and prag-matic ways of reducing the risk from using these new tools.

When it comes to investing in new security technologies, bosses can fi nd it hard to quan-tify how IT security benefi ts the business. You spend money but you see nothing much in return because it is there to purely protect the business. How do you ‘persuade’ management

to invest in security?PW. Th e days when people thought this was a ‘nice to have’ and we did it because it was the right thing to do have done. People understand that customers, clients and partners all expect there to be a level of security that they are going to have to work through and expend to make sure the data that people entrust to us is protected in a pragmatic and sensible way. What we have turned around is to make sure that security is built in at the beginning of a project and not retrospectively. Management also need to accept that security is part of a project’s lifecycle and it happens as a matter of course.

which is about the ‘people risk.’ Oft en it is not de-liberate but human error and mistakes or people trying to do the right thing but it goes wrong. However, there is the potential of the disgruntled employee or there is the chance for someone who wants to steal corporate data because they want to take it with them to a new organisation. Th e risks are split about 80-20 percent. By this, I mean there is an 80 percent risk of theft internally and 20 percent externally. Lots of people talk about hackers and threats from the outside world but the risks are much greater internally for any organi-sation. Staff already have access to your systems, they understand your management processes and controls that you have in place and know how to work their way around them. Th e only thing you can do is to have good security education aware-ness, ensure people know that sensitive data theft and corruption of data – be it through planting malware or Trojans – is unacceptable. If you go back and look at the disgruntled ‘mal-intended’ events of the past you can nearly always predict that the event was a possible. Th e individual will have either exaggerated signs of bad behaviour or will have been disgruntled by the way they have been treated or will have been not happy with their pay review. But people then continue to let them have access to systems instead of realising this could be a problem child and there is a need to limit this individual’s access.

If you choose to outsource, again you struggle to defi ne and protect the perimeter. What’s your advice in this area?PW. I think the issue is about protecting the data and not the perimeter. It doesn’t matter how the data is being processed and what mechanism is being used to access the data because it’s about ensuring that the mea-sures you put in place to protect the data are correct. It doesn’t matter if it is a laptop or desktop or a portable device – it’s about making sure you have the appropriate level of encryption, controls around access and that you are regularly reviewing that the people using these devices have the right level of access. You also need to educate people about not sharing passwords and log in details but if you do discover this to be the case you need to deal with it eff ectively and promptly in line with your policies.

At Aviva we outsource a fair amount of our call centre and back-offi ce processes and a bit of IT development. We do very thorough due diligence over selecting the partner we are going to do business with because we have to make sure that the negotiations and discussions over security parameters are very clear. It’s important that they understand that this is a two-way undertaking and that we want them to operate as if they were part of our organisation and apply the same rules and pro-cesses. It’s a partnership approach to make sure we get to where we want to be so in reality it’s no diff erent than the outsource company actually working inside Aviva.

Paul Wood

“Th ere is an 80 percent risk of theft internally and 20

percent externally. Lots of people talk about hackers and threats

from the outside world but the risks are much greater internally for

any organisation”

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ASK THEEXPERT

L'Osservatore Romano has been theHoly See's newspaper and broadcastingmedium to the outside world since1861. Today it is published daily in the

Italian language and weekly in English, French,Spanish, Portuguese and German, with a month-ly magazine in Polish. In India a publication of aMalayalam version began in July 2008, the first innon-Latin characters.

It was the Pope himself, His HolinessBenedict XVI, who requested to further enhancethe paper's reach by asking the L'OsservatoreRomano team to improve its world dimension.This is particularly important for expressing thetrue reality of the universal Church, through thepossibilities offered today by its presence ‘online’.The key challenge was to evolve from the current,manually updated website to a real web 2.0 pub-lishing system and portal solution. With the cur-rent system, everything was stuck in a typical ‘90s’format: content authors had to know someHTML, to manage every single page's content,appearance and correct linkage. There was noworkflow process in place, nor support from theexisting system with regards to publication rights.

Furthermore, articles could not be searched norbe designated as classified.

Everett’s Italian branch start-ed the contacts with L'OsservatoreRomano by conducting a work-shop together with the staff of theinternet office of the Pope, whichwas followed by a feasibility study.From that, the development of theinternet version of L’OsservatoreRomano started. All the require-ments expressed by L’OsservatoreRomano lead to new processesand systems, including processesthat involve all members of thedocumentation team and supportthe online subscription. Systemsthat consist of well-establishedtechnologies are highly scalableand offer strong solutions for theonline subscription. An enterpriseCMS was introduced, which isable to scale a huge number ofdocuments and which caters to anenterprise-class level of control on the document

workflow and production. In addition, as the goalis to reach people across the world, proper accessmanagement has been addressed. All this result-ed in a modern website or ‘portal’ allowing read-ers to browse news and the newspaper's archiveand enabling online subscription.

The chosen solution is based on provenOpen Source technologies like Hippo CMS andcommercial off-the-shelf products such as SunJava System Access Manager and their SystemPortal Server. Everett's successful ‘EVOLVE’methodology is used to facilitate the interactiveand iterative (‘agile’) development of the solutionand supporting components. The software prod-ucts of Hippo and Sun Microsystems were select-ed based on their fit with functional andnon-functional requirements. Requirements in-cluded the need to structure, manage and archivea vast amount of content for historical importance,

given the fact that L’OsservatoreRomano is almost a century and ahalf old, as well as ensuring that re-cent content will be easy to find andaccessible for a global readership.But also the expressed needs forproven technology, ease of customi-sation and compliancy to a set ofwell-established standards, tech-nologies and Open Source projects.

Piero Di Domenicantonio,Managing Layout Editor atL’Osservatore Romano, stated:“From the collaboration with aspecialised partner as qualified asEverett comes the portal ofL’Osservatore Romano: a strategicinstrument for a newspaper withan international reach, which is anews service and, at the sametime, a means of communion anddialogue among the Christians

spread across every continent.” �

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Francesco Chicchiriccò isthe Delivery Manager ofEverett Italia. Currentlyleading Everett’s CMS-related projects, for thepast eight years he had thechance to contribute tomany key Open Sourceprojects and to work ininternationalenvironments. Everett islocated in the Netherlands,the UK, Italy and India. Visitwww.everett.nl for moreinformation.

A 21st century media transformation Francesco Chicchiriccò explains how L'Osservatore Romano,the Holy See's Journal, will extend its reach to the entire worldby introducing an internet version of its newspaper

“Systems that consist of well-established technologies arehighly scalable and offerstrong solutions for theonline subscription”

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Why is web conferencing becoming morepopular?Brett Caine. Web conferencing offers busi-nesses an ideal way to keep in touch withemployees, customers and prospects, quick-ly, easily, frequently and affordably. It’s es-pecially attractive to businesses that want toavoid spiralling travel costs, while enhanc-ing their productivity and competitiveness.This is especially significant today as theeconomy is forcing many companies, espe-cially smaller organisations, to rethink theeconomics of their business and how theycan solve different problems and issues.Travel costs and environmental impacts areforcing companies to take a new look at howto collaborate and provide a competitive po-sition in a way that makes them stand out.And this will continue to be important as weemerge from the recession.

Can web conferencing replace face-to-facemeetings?BC. Arguably face-to-face contact can be vitalin certain scenarios, but online meetings areincreasingly being used for many business in-teractions. With online meetings, businessescan easily deliver sales presentations, conductcustomer training sessions, collaborate ondocuments and streamline projects with re-mote teams. In fact, many businesses arefinding that using online meetings to com-municate with customers, prospects and employees is actually more produc-tive. For example, in the UK, Devon County Council is making significantcost savings by using webinars to provide staff with training and profession-al development following budget cuts and an internal restructuring. Thecouncil has saved an estimated UK£100 per person for their 50-person staffin a six-week period by reducing travel, venue and refreshment costs.

How can I make web conferencing work for my business?BC. I believe that businesses of any size, from individual professionals tolarge organisations, can benefit from web conferencing. Businesses shouldfirst identify their business objectives and the challenges they’re trying to

solve so they can find the technology that’sright for them. For the majority of SMEs,simple, affordable online tools in the soft-ware-as-a-service (SaaS) model will enablethem to innovate and increase their compet-itiveness. I encourage businesses – especiallysmall businesses – to look for the ‘simpler isbetter’ approach. Ones that are the easiest toset up and use, that don’t require training andthat offer a free trial, because this will makeadoption much easier and they will realise theimmediate economic and productivity ad-vantages.

Can web conferencing really save memoney?BC. There are several ways that web confer-encing can deliver cost benefits back to yourbusiness. First, by cutting travel expenses byreducing the number of visits made to clients,suppliers or new business prospects. If youconsider what the average cost of airline trav-el for business is and compare that to the costof online collaboration services such asGoToMeeting (from €27 per month) for asmany meetings as you like, and then factorthe huge productivity benefits achieved bynot having to travel, the savings are substan-tial. The more advanced web conferencingtools also enable VoIP, which doesn’t costanything for participants, and it lets them jointhe meeting the instant they start the session,

reducing time spent dialling telephone numbers and passcodes. And there are infrastructure savings. With SaaS-based web conferenc-

ing services, there are no upfront investments for servers, software or ITmanagement. Most services are offered on a subscription basis, with dis-counts for annual plans enabling businesses to pay as they go, which is ahuge advantage. Be sure to look for flat-fee pricing that lets users hold asmany meetings as they want, of any length, without any extra charges. Thiswill help keep budgets in check. n

Virtual reality

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With businesses looking to slash costs in these tough economic times,we hear from Brett Caine on how web conferencing solutions help

people to work smarter and more efficiently.

EXECUTIVEINTERVIEW

Brett Caine joined Citrix Online in 2003. As President, he has inspired the company toadopt a strong customer-centric focus that penetrates all aspects of the business. Hisvision is to consistently deliver simpler, better ways to help people connect andcollaborate online using the company’s expanding line of software-as-a-service solutions.

“Many businesses are findingthat using online meetings tocommunicate with customers,

prospects and employees isactually more productive”

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DEFENCE&SECURITY

Can you give me an idea of the scope of BAE Systems’ work and what makes the organisation so complex? Chris Coupland. We’re a global business with a €40 billion order book and a workforce of 105,000. We operate in over 100 countries and we diff erentiate ourselves from other companies in the defence security and aerospace industry by our home market strategy. We look and feel local in the markets that we operate in, those home markets being the UK, the US, Australia, Saudi Arabia, Sweden, South Africa and India. So you can see a fair geographic spread there, but with a large proportion of our people in the UK and in the US. We are quite an interesting and complex business delivering a full range of products and services for air, land and naval forces as well as advanced electronics, security and infor-mation technology solutions. We deal with a complex variety of systems and subsystems, as well as systems integrations and we’re a consulting business as well.

With operations spanning fi ve continents and a 105,000-strong global workforce, defence giant BAE Systems’ IT infrastructure must be robust enough to support a highly complex business. Diana Milne meets Chris Coupland, Director of the Corporate IT Offi ce at BAE Systems, to fi nd out how he gets the job done.

DEFENDING the REALM

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How challenging is to keep up with the IT upgrades needed to sup-port BAE Systems’ growing and continually evolving business – par-ticularly as it is made up of so many different divisions?CC. We are always upgrading our systems and keeping them reasonably current, both in terms of hardware and systems. Th ere’s a lot of focus on how we share and interact with information because that’s the glue between the various diff erent systems.

A business like ours has many diff erent types of businesses, on very diff erent scales – with many diff erent types of demands. For instance major engineering projects require PLM and ERP systems. Diff erent platforms are needed for instance for our shipbuilding business in the UK and our land business in South Africa. So our challenge is to make sure that we can take designed intellectual property that we’ve developed in South Africa, for example, on mine-protected vehicles, and ensure that we can incorporate that product in North America and in Australia.

Th at’s what we mean when we talk about leveraging our global capability.

What challenges does it pose that BAE Systems has such a global presence? CC. Moving IT and manufacturing around the world means we have to deal with challenges such as na-tional boundaries, national security, export control and multiple systems on diff erent continents with diff erent ways of dealing with information. We have to ask questions like: how do we protect the informa-tion? How do we protect the systems? How do we allow people to have access to the information? How do we move it around in consistent formats? We also need to have the right support arrangements in place

across the diff erent time zones so people can work together eff ectively.

BAE Systems works in the defence arena with highly sensitive data. How are you ensuring that the IT security systems are robust enough to protect this?CC. We obviously deal with nationally secure data. We deal with people’s personal data – although perhaps not to the degree that credit card

Chris Coupland

You are in charge of internal IT at BAE Systems but how has the company also branched out into providing IT services to outside organisations with which BAE Systems has contracts? CC. Interestingly over the last fi ve to eight years, I suppose, IT has become a BAE Systems business in its own right. I represent internal IT which means that I support the business in its operations. But in those operations we have a lot of engineers and analysts working with IT staff that are running IT departments for federal agencies in the US. More broadly, we are very much moving from being a products to a services company. Th e business is complex and we’ll always have products and services, but for instance in the way we contract for our aircraft , we are moving from building and designing an aircraft and manufacturing it, to actually saying to the Ministry of Defence, ‘We will guarantee the availability of how many hours that machine will fl y for and we will do everything for you, providing the machine, potentially training the pilots, doing all the logistics work and making sure that it is on the tarmac ready to fl y’.

How are the IT projects you are working on chang-ing as a result of the different products and ser-vices BAE Systems is now providing?CC. I think there are basically two big things in partic-ular that are changing IT. We’re doing a lot of work on autonomous systems. A much higher IT-type content is required when, for instance, you’re trying to fl y an unmanned aircraft in Afghanistan from Florida or from the UK. And we’re not just doing that in the air; we’re doing that underwater and on land as well. Th e security market is also increasingly about cyber secu-rity, which is about protecting people from online threats. What we do is also aff ected by shift s the company is making towards strengthening its global business. So we’re trying to enable the business to be global and to partner, while protecting and securing the business.

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companies do. We deal with lots of our own intellectual property (IP) as well, and other people’s intellectual property that we need to protect, because we partner with people as well as compete and collaborate with them. Historically, IT departments have taken a very belt and braces approach towards protecting data. Th ey’ve built the medieval walls and they’ve built the moats and the battlements and the turrets and then they’ve built bigger turrets and towers and thicker walls and so forth. Th e persistent threat we have to deal with is people trying to hack into systems to steal intellectual property or to be malicious. Th ere’s obvi-ously all the stuff you would see on the internet that is being thrown at our fi rewalls everyday. We’re keeping abreast of those threats. In certain parts of the world or in certain businesses that we’ve acquired, we obvi-ously need to bring them up to the BAE Systems operational standard. We have a long history in the UK of running restricted networks, which are classifi ed government networks that run to certain standards. We also deal with things like encryption of laptop hard drives, encryption of memory sticks, and control of who’s writing what onto and off the network. In terms of information management, we’re working to put in a whole new set of identity and digital rights management processes and systems that will further protect information.

The human element is often described as the most complex chal-lenge to tackle when it comes to information security. Would you agree?CC. Yes, that’s always a challenge, and we are having a big debate at the moment about social networking in the workplace. Th ere are diff erent rules across diff erent bits of the business, depending on the security clas-sifi cations of the networks we run in the US versus the UK but in the UK specifi cally we’ve been very locked-down. We don’t let people access certain websites and we block Facebook and webmail. Historically, the

reason we’ve done that is that those particular areas of the internet are full of malware and other threats. Now we’ve put in a lot more controls in those areas, and we think that now, with the IT solutions we’ve got, we’ve got a greater ability to monitor, understand and manage that threat.

So to the IT community we’re now saying, ‘While traditionally we’ve been very locked-down, we can now enable you to do a number of other things’. We feel more confi dent about being able to do that. Th e organisa-tion has had to look at what the business value is of being on Facebook, and whether employees should be able to access it. And of course there’s a big debate about Generation Y and whether they’re going to come through the door and want to work for a company that doesn’t let them access Facebook.

BAE Systems has embraced online tools and electronic trading to im-prove the way it does business with its partners. How do you foresee BAE Systems’ internet use in the future? CC. Th e world is moving, and I don’t think that the model now will be the same model for us fi ve or 10 years down the line. We will still be operating private systems. We will be operating our own private cloud services, and even today we have an embryonic version of that private cloud. And, over time, we will almost certainly move to selectively using parts of the public cloud infrastructure. Th rough that we’ll get the scale and cost advantages that public networks are bringing people. Th is will give us the agility and speed to be able to do things in terms of tapping into that massive global infrastructure that’s outside my little IT shop for 105,000 people.

BAE Systems acquired the IT security fi rm Detica last year. How will this acquisition benefi t the company?CC. Acquiring Detica in September last year means we are able to acceler-ate the implementation of our strategy to develop a world-class security

BAE Systems provides air, land and sea defence equipment


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business across our home markets. Detica has the specifi c role of winning and developing business in the security market. Th e Detica acquisition is a good example of where we have potential to access new opportunities in one market, develop our off ering through experience, and use that expertise to win new business in other markets. As I mentioned earlier, we are working on our information systems across the company and doing essentially a pretty rigorous self-assessment that is being externally referenced and benchmarked, and we are using Detica’s internal expertise to help us in that.

Can you describe the multi vendor outsourcing approach that BAE Systems has adopted?CC. We are in the process of building more of a framework and a structure around a multi-vendor model with per-haps a bit more strategy and intent than we’ve had. Today, we are largely insourced in North America, Australia and Sweden and outsourced in the UK and Saudi Arabia. Clearly we need to co-ordinate between insourced and outsourced operations. We’ve been reasonably successful in doing that, but further governance will recognise more of that multi-vendor framework and put in some hardened rules and lines and clarify responsibility in a few areas. Ultimately, we’re now starting to think more in a diff erentiated way about the capability that we need in IT, and starting to think, ‘Well, this particular partner is better at that, and this particular partner is better at this’. Inter-nally also we have this capability anyway, so we probably ought to be leveraging that and look at whether it’s a fair fi ght in the marketplace or whether we say, ‘Well that’s our IP, let’s use that’. Ten years ago we were very heavily outsourced. Today we’ve outsourced about 45 percent of the whole business. While I don’t really see that dropping to less than 25 percent, I think we will be a bit more diff erentiated about the partners we’ll use.

Historically, we’ve had three big partners. Obviously Com-puter Science Corporation (CSC) is by far our biggest partner in terms of size of share, and indeed in terms of the number of years we have used them to supply our services, and that’s been a very successful and sustainable partnership. We’ve renewed that rela-tionship on a number of occasions. In addition, Accenture and Capita provide us with some services in the UK as well, and in Saudi Arabia we have a growing partnership with International Systems Engineering (ISE).

What improvements have been made to the running of BAE Systems through the adoption of an ERP platform?CC. In our business we’ve got people making improvements on major systems all the time across the world, so we’ve got a number of people improving ERP platforms. We’re working on improv-ing the supply chain area in terms of supply chain, in terms of the repair loop supply chain. We’ve got new capabilities in those sorts of areas and we’ve always got upgrades going on ERP systems. We just upgraded the main shared services fi nance system and platform last year, and we created a bit more back offi ce common-


www.bme.eu.com 77

About BAE SystemsBAE Systems is a global defence, security and aerospace company delivering

a full range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and customer support services. BAE Systems’ sales exceeded €23 billion in 2008.

ality there and moved towards more of a shared services model in the UK. Our North American land business has upgraded its Oracle system recently, to provide increased business intelligence around the electronic supply chain type interactions, and around supporting the repair loop.

Has the global economic downturn affected investment in BAE’s IT systems? CC. It’s actually a great environment to be doing deals in and driving costs down and it’s very competitive out there in terms of vendors. So we are looking at costs. Have I personally torn up 15 diff erent business plans this year and seen the IT budget go down by 40 percent or worse than that? No. Have I been working at looking at some cost savings ideas? Absolutely yes. But we haven’t had the sort of major challenge that says, ‘you’ve got to halve your IT cost base’. And I’m seeing that our investment in the areas you’ve talked about is largely sustained. We’re in our budgeting process for the next fi ve years at the moment and I’m not

seeing signifi cant cuts in the areas of the business that we are committed to growing. We’re seeing we’ve got to justify why we’re spending the money but as long as the business is supporting it that’s fi ne, and we’ve still very much got a growth outlook.

You sound like a man who is very passionate about his job. Would you agree?CC. I’m passionate about the job, because it’s a big organisation and you have to be passionate in a big organisation because it’s not all about com-mand or control. It’s about being out there and being ahead of the game, having the ideas, persuading people that this is the way to go, and you don’t do that from being not passionate about the job. And it’s an excit-ing job and there are great people who work in the company. Coming to BAE Systems has been fantastic and there are brilliant people working there. Th e business has grown tremendously in the last eight years and it off ers a great set of opportunities.

BAE Systems is currently embroiled in what the BBC’s Business Editor Robert Peston has described as “the most explosive investigation into a British company that I have ever encountered”. It centres around an investigation by the Serious Fraud Offi ce into alleged bribery. According to the BBC, this relates to contracts in countries including Tanzania, South Africa, Romania and the Czech Republic. BAE Systems has said it is fully co-operating with the inquiry. A BAE spokesman told the BBC the fi rm was working with regulators to help bring the investigation to an end and that it was “providing access to people, information and premises whenever requested”.

Meanwhile, the company has announced plans to cut 1116 jobs and to close an aircraft factory in Cheshire in the UK at the end of 2012. This would lead to the loss of 630 jobs and a further 205 positions are set to be cut at the company’s Samlesbury site and 170 at its Warton facility in Lancashire. Around 111 positions are set to go from its Farnborough plant with the company stating that it is conducting “a detailed review of its current and future business levels”.

Controversy


HEAD TOHEAD

What is driving the communications market and how is technology playing its part in aiding companies and people to work smarter?Beck Knut. All organisations are today completely dependent on ef-fective voice and data communication services. We are used to com-municating wherever we are and whenever we need to. Since we get used to more fl exible and more effi cient communication services all the time, we also expect immediate responses from our communication partners. We expect an answer there and then. Th is further drives the need for more eff ective communication services. New communica-tion technologies are emerging. In addition to voice and mail services, ‘new’ types of communications like SMS and IM have proven fast and eff ective. Th ose services allow for communication by mobile devices wherever you are located geographically. UC (unifi ed communica-tions) will integrate communication services into one user interface and provide the users with the current status (presence) of their com-munication partners, and give the user a choice of the most appropriate communication service available. New technology, like Mobile Device Management (MDM), provides the company’s IT-administrator with functionality to quickly confi gure mobile devices and set them up with relevant applications for the workforce on the move. It is no longer necessary to visit your IT administrator’s offi ce to set up your phone and download relevant applications. Everything happens OTA (over the air), wherever and whenever.

Rami Avidan. A key factor that is driving the need for eff ective data communications is the need to be able to take operational data that could be in a robot or a mobile electronic point-of-sale (EPOS) and ‘enable it’ to be accessible to other parts of the business. One of the large changes that we see is that companies are looking for more managed services from their suppliers on a ‘glocal’ level. Th is is the ability to be able to easily link their assets into their global network and achieve visibility and control through a platform that is easily integrated through Application Pro-gramming Interfaces (APIs) and to be able to securely manage it over the internet. It is clear that reducing the time to get information, to respond to market needs and to make decisions can all have a signifi cant impact on a company’s business performance.

What are the common mistakes that businesses make when it comes to their communications and enterprise mobility? RA. Our experience shows that many companies underestimated the cost and complexity of implementing global M2M Solutions. For example, the requirement to deal with multiple operators or develop, manage and support their own wireless infrastructure, receiving an invoice from each of these operators, a diff erent support number for each operator and no visibility of their remote devices. Consumers and businesses are

ever more keen to take advantage of the benefi ts of remote working and to monitor and control their devices and assets. Th e face of wireless com-munications is changing rapidly as the business benefi ts become clearer; it is becoming an open platform for a connected world. Companies are now looking to outsource the deployment and management of their network to companies such as Wyless. Outsourcing these activities is an ideal solution for companies to ensure the global wireless data network is deployed and managed as quickly and eff ectively as possible.

BK. Most companies have good strategies and policies on the IT area, but very oft en lack strategy and policy on the mobile device area. Mobile de-vices make up an increasingly larger share of the corporate IT platform. Mobile devices are more computers than telephones, but are not handled

“A key factor that is driving the need for eff ective data communications

is the need to be able to take operational data that could be in a robot or a mobile electronic point-

of-sale (EPOS) and ‘enable it’ to be accessible to other parts of the

business”

Effective voice and data communication is paramount for organisations today. We speak to two experts in this fi eld to discover how to better utilise communications tools for the benefi t of

your business.

Staying in touch

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Rami Avidan is co-founder of Wyless and has been the CEO since September 2008. His business driven strategy is to bring managed services to the M2M market and demonstrate how this can dramatically improve ROI and TCO to customers and partners.

Knut Beck is Director for International Operations at Norway-based Smartphones. Previously, he held senior roles at Touch Mobility Telenor Consumer, Telenor Telecom Solutions, Telenor Multicom and Telenor Datacom.

as computers. Th is implies ineff ective and unsafe operation of the com-pany’s mobile fl eet. Lack of standardisation and lack of device manage-ment (MDM) oft en leads to problems and challenges with mobile devices. A lot of time is wasted for the user with troubleshooting his mobile device instead of using the time available to ordinary business activities. It is also

a waste of time for the IT administrator to carry out himself. If the com-pany doesn’t have any defi ned security policy they are extremely vulner-able if their mobile devices are missed or stolen. Because of the use of mail and other applications, the mobile devices are very oft en fully loaded with information (even sensitive). Modern MDM services have remote lock and remote wipe (OTA) as standard functionality.

How can advanced voice and data com-munications help businesses to cut costs in these diffi cult times, as well as improve their green credentials?BK. Advanced voice and data communica-tion services make it possible to work when you want and from where you want. Th is implies that the employees save travel time and travel cost. At the same time, the trans-port demand is reduced which in turn leads to less pollution. More effi cient IT-admin-istration management tools make the need for manual IT resources less. Th e workforce also gets more effi cient because you get IT help where you are when you need it. You also avoid having to spend time for trans-portation and shipping of equipment to be set up manually.

New management tools for mobile devices, enables faster setup of mobile de-vices, quicker operation and maintenance of mobile devices and effi cient handling of missed and stolen mobile devices. Th is saves time and cost, and signifi cantly reduces the need for transportation.

RA. Th e business driven strategy of Wyless as a global network enabler (GNE) is to bring managed services to the M2M market and demonstrate how this can dramatically improve ROI and total cost of ownership (TCO).

“New management tools for mobile devices, enables faster setup of mobile devices, quicker operation and maintenance of mobile devices and effi cient handling of missed and stolen mobile devices”

Wyless Managed Services takes the cost and complexity out of implement-ing our customers’ and partners’ critical business solutions across the globe. Th e ability to provide ‘plug-and-play’ applications enables greater deployment and faster ROI for them. Th ere is no investment in adminis-tration, supporting and managing a global network infrastructure result-ing in lower TCO. Th e Wyless Managed Services also enable our customers and partners to create new revenue streams and go ‘green’. Examples include remote diagnostics, so less visits to the remote devices, environ-mental monitoring in two well-known supermarket chains across the UK and improved driver behaviour resulting in reduced CO2 emissions and a 70 percent decrease in unnecessary driving manoeuvres.

Could you give an example of where your solutions and products aided a client?RA. I would like to give two examples. ABB Robotics is a leader in power and automation technologies. Its objective was to expand and improve its product and service off erings, but its innovative ideas were constrained by the prospect of managing a global wireless network with little exper-tise. Th e industrial robots can be shipped anywhere in the world. Wyless provides the company with a worldwide wireless data network and an internet-based management platform to provide real-time control and vis-ibility of its network and connections, all day, every day.

RSI Video Technologies, manufacturer of the world’s fi rst wireless video alarm, wanted to bring its Videofi ed product to market ‘pre-enabled’

and network ready. It required a partner to work with so that it could provide a ‘plug-and-play’ product to its dealers that can be quickly and easily deployed. Wyless enabled the company to rapidly build its dealer channel and provide ca-pabilities for its dealers to be able to off er a variety of value-added services, giving it improved ROI and the opportunity to create additional revenue streams.

BK. Our solutions have helped many of our customers, including a municipal-ity in Norway (Municipality of Arendal). In this case, home care personnel are equipped with smartphones, applications for visitor route, applications for data reg-istration at home visits, medical encyclo-pedia and so on. Our MDM services allow IT administrators to set up and confi gure the employees’ mobile devices, download the needed fi eld applications, take remote control of devices if problems arise and perform any security function needed. All this is OTA from the head offi ce while the

users are on the road. Arendal Municipality has been a pioneer in this area, and has been very eff ective. It has saved a lot of time and costs, and has also reduced transportations. We have helped hundreds of other customers as well with the same tools, including Deloitte and FMC.

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The unifi ed communications landscape is dynamic and continuously developing. Market participants such as vendors endeavour to grow their product and service off erings, depending on the current or anticipated state of the market. Pure hardware vendors are now looking to diversify into adding soft ware-based prod-

ucts into their portfolio, thereby bringing forth a more comprehensive unifi ed communications solution. It is imperative that the enterprise end user understands, identifi es and makes decisions pertaining to trends that could shape the enterprise communications scenario in the future. Elaborated below are three signifi cant developing trends to look out for in the coming years.

Service-Oriented Architecture: Today unifi ed communications is widely understood to encapsulate voice, video, and data applications via a range of devices such as desktop PC, desk phone, mobile device and

Lavanya Palani Batcha of Frost & Sullivan paints a picture of the future of unifi ed communications technology.

TOMORROW’SCOMMUNICATIONS LANDSCAPE

UNIFIEDCOMMUNICATIONS

the like. However, there is an increasing momentum towards enhanced service off erings such as Service Oriented Architecture (SOA), which can bring additional benefi ts to an enterprise that has already implemented unifi ed communications. Solutions based on SOA, facilitated applica-tions such as real-time identifi cation/tracking embedded within the unifi ed communications platform have promising potential in industry verticals such as hospitality, aviation, and healthcare amongst others. It is anticipated that as this avenue develops further in the future, there would be myriad enterprise-centric business processes that can be inte-grated via SOA and unifi ed communications.

Interoperability: Th e world of unifi ed communications involves a plethora of devices, applications, solutions and services, with the majority being built on closed, proprietary architectures that deny any interoperability between OEMs. Th is presents a challenge, especially in the case of an enterprise with multiple locations possessing proprietary

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even amongst traditional rivals. Vendors such as Microsoft and IBM have been major unifi ed communications competitors: However, there have been announcements regarding these vendors working towards interoperability of their unifi ed communications solutions. One sig-nifi cant and positive development towards achieving interoperability is the growing importance of Session Initiation Protocol (SIP) as a widely accepted standard for multimedia communications. Th is can help to-wards a semblance of interoperability, if devices and solutions are built based on the SIP standard. However, the industry is witnessing diff er-ences in terms of SIP implementation by vendors. Th is could pose even more problems with several third party solutions being available. To counter such a problem, vendors would need to develop highly specifi c interoperability solutions.

Hosted and managed unifi ed communications services: Th e hosted and managed services model has been slowly gaining traction. Enterprises have started to lay more emphasis vis-à-vis focusing on their core competencies and leaving the routine business processes to be han-dled by skilled third-party service providers. Services-based models also serve to reduce the capital expenditure required on hardware and equip-ment. Unifi ed communications is no exception. Vendors and system in-tegrators are looking at various business models that would enable them to deploy hosted or managed UC services such as IP telephony, confer-encing and collaboration and so on. Th e Soft ware-as-a-Service (SaaS) model for unifi ed communications has been quietly emerging into the forefront. Although the services-based model is suitable for all manner of enterprises, the most signifi cant market could potentially be Small and Medium Enterprises (SMEs). Besides the cost savings involved, the SME customer can look forward to experiencing at least a partial implementation of unifi ed communications within the enterprise. Th e infrastructure required for on-premise unifi ed communications would entail having a sizeable number of skilled support and maintenance staff , which may not be feasible, especially for an SME. In the case of a service-based model, the service provider saves the enterprise from the hassle of support and maintenance. An example of the SaaS-based model is that of the Cisco WebEx Connect platform that provides the capabilities for audio and video conferencing, presence integration and messaging. With additional support for document and task management, this platform serves as a collaborative unifi ed communications tool.

In conclusion: Despite setbacks about the adoption of unifi ed com-munications due to recent economic trends, the future looks promising with signifi cant potential for this market to grow steadily. Th ese key technological trends have the power to shape the market landscape and further augment it, by simplifying existing solutions and ensuring that the needs of enterprise end users are served.

communications products from a host of OEMs at each of these sites. Th e networking and unifi cation of these divergent products in order to streamline communications within the enterprise can be a daunting and cumbersome task, not to mention the existing hindrance of propri-etary products and solutions. Adding to the complexity, if the said en-terprise were to look at adopting unifi ed communications, they would be left with no further option other than to undertake a complete fork-lift operation. Th is would essentially involve discarding all legacy pro-prietary products thereby sinking signifi cant initial capital investment on the equipment. Th erefore, as greater numbers of enterprises display interest in the unifi ed communications solution, the need for funda-mental interoperability between products from diff erent vendors is of the essence. Given the current prominence of collaborative environ-ments in the unifi ed communications arena, interoperability becomes especially relevant. Such a scenario has prompted several alliances and partnerships amongst unifi ed communications market participants,

Lavanya Palani Batcha is Senior Research Analyst- Information and Communication Technology Practice- South Asia and Middle East at Frost & Sullivan. For feedback or enquiries email: [email protected]

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Demand for Managed Video Conferencing solutions has grown exponentially despite the economic downturn. Why is this?Philip Grannum. In an economic downturn, more and more businesses are focused on cost reduction and this has become the primary ob-jective for using this technology, over and above reducing carbon emissions. A large number of organisations have put severe restrictions on international travel – some companies are even clamping down on car journeys, train journeys and anything that involves an overnight stay. MVC has enabled organisations to reduce travel, but still maintain the kind of face-to-face interaction that they can’t get from using stan-dard teleconferencing. Next generation high defi nition video conferencing and telepresence is a technology shift that allows participants to experience the non-verbal communication, such as body language, which makes face-to-face meetings so much more productive.

How has the technology evolved and what can purchasers of the solution now expect from it in terms of features and services?PG. Simplicity, of features and functionality, is the key. Users want to be able to schedule a meeting as if they were making a call – simple and point-to-point. Th is easy-to-use approach is the only way that video will be adopted across the enterprise. Users want it to happen when they walk in the door and to have a proper, trouble free almost face-to-face experience when the meeting is taking place. Th e advent of high-defi nition video combined with a simple user experience has transformed video confer-encing. Th e other major concern for companies is to ensure that investment in previous systems is not wasted and that there is interoperability between the old and new systems.

How do you expect the technology to de-velop in the future?PG. I think the technology will hit a bit of a plateau. Telepresence solutions have revolutionised the video experience. Now I

think the focus will be in evolving the ser-vice route and the expanded community. At the moment if you have video conferencing based on an IP network, you can work very ef-fectively intra-company. But it is diffi cult to work with your wider stakeholders. So this is where the big shift going forward will be. Th e networks will continue to be secure, but they will open out to trusted customers, suppli-ers, key investors and banking organisations so you can start collaborating and working with those organisations, as simply and eff ectively as with someone in your own organisation.

What makes the Cable&Wireless MVC solution unique?PG. It’s three fundamental areas. Firstly, it’s the user experience – getting the user up and running straight away in real time, as soon as they enter the room.

Secondly, it is the way that we approach the solution. It’s easy to focus on the equip-ment alone, but we recognise that there are key elements that need to work together for you to get the best experience – these are the network

EXECUTIVEINTERVIEW

Philip Grannum became Managing Director of Enterprise for Cable&Wireless Worldwide in November 2008. In his previous role, Director of Product Management, he was responsible for launching Cable&Wireless’ next generation network and Fixed Mobile Convergence. Grannum has over 13 years of experience within telecommunications, having previously worked at Energis and AT&T.

MANAGING SUCCESSSUCCESSPhilip Grannum, Managing Director of Enterprise at Cable&Wireless Worldwide discusses the burgeoning Managed Video Conferencing (MVC) market.

the solution runs across; the integration of the solution with existing assets; the wide range

of equipment from multiple vendors from telepresence suites to desktop solutions; and our range of managed service off erings.

Finally our joint initia-tive with Regus, the world’s largest provider of fl exible workplace solutions, will facilitate the implementa-tion of market leading high-defi nition video con-ferencing suites at Regus’ premier global business centres. Th is has enabled us to put in the most advanced high defi nition video con-ferencing solution across multiple geographies around the world. You can fi ll a room with people and have a virtual face-to-face meet-

ing from New York to Moscow to Tokyo. Th e capital expenditure required to buy this latest technology is quite substantial, but we off er a pay-as-you-use solution that can be used across the globe. Costing as little as €228 an hour, our off ering will totally revolutionise the way people adopt this technology.

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GOVERNMENT

Tony Mather ed:4August 6/10/09 09:19 Page 86

The Foreign & Commonwealth Office (FCO) has a net-work of 260 diplomatic posts, including embassies andHigh Commissions, scattered all over the world. These‘little pieces of Britain’ represent the UK interests over-seas and can be found anywhere from the ultra-modernmetropolises of New York City and Tokyo to far-flungand dangerous outposts like Basra in southern Iraq and

Afghanistan’s Helmand Province. Overseeing global IT support for the FCO’s16,000 staff is the job of CIO Tony Mather. The FCO is a 200-year-old insti-tution and Mather, a mechanical engineer by training, is its first ever CIO – asignal of intention by the powers that be that IT is an indispensable cog intoday’s cooperations. “The role was created because technology was becom-ing critical in FCO achieving its goals,” explains Mather, who joined in 2007from the industrial gases group BOC. “Also, there was a government drive toget professionals into certain areas and IT is one of these – people used to ro-tate around so you would have a generalist doing a specialist job.”

With this global IT responsibility comes a fair share of travel opportuni-ties for Mather. Indeed, just prior to Business Management’s meeting withhim at the FCO’s Westminster headquarters, he had jetted in from Delhi,India, although he is typically tight-lipped as a government chief on what histrip entailed, merely revealing that it was “very productive”. It transpires thatMather was there to assess better cross-departmental working, alongside re-placing the overseas network next year. Despite his initial reticence, Matherwaxes lyrical when quizzed about how the hugely complex Future Firecrestproject is panning out. This multi-million pound plan involves replacing oldhardwire and desktops along with dated back-office technology throughoutthe FCO’s posts. It’s hoped that Future Firecrest will revolutionise how FCOstaff go about their business all over the world.

Apart from a physical systems upgrade, Mather envisions the move pro-viding a catalyst for a change in working practices. “Future Firecrest will allowpeople to work in different ways and a mobility dimension that they havenever had before. It will give people flexibility around where and how they

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Government IT projects are notoriously hugein scale and complexity, not to mentionbudget-heavy. Julian Rogers travels to the UKForeign & Commonwealth Office to find outhow CIO Tony Mather is managing aparticularly complex IT transition for thisglobally dispersed organisation.

A diplomaticapproach to IT


the corridors of Whitehall but Mather insists staff weren’t allowed to runamok when let off the leash. “It isn’t about being wild – there is a benefit frombeing on a secure and available platform but Unclassified Embassy was wellreceived and sent out the message that we will try new things.”

Balancing the books A pleasant surprise, especially for UK tax payers in this era of belt-tight-

ening, is the fact that Future Firecrest is on course to be ahead of schedule andwithin budget – an exception to the rule with cumbersome IT projects in the

public sector. In 2006 when the project was rubber-stamped it was expectedto cost UK£450 million. When Mather joined in 2007 a new timeline was setwith the FCO’s technology partner HP, partly due to new security arrange-ments following Home Office guidelines. “We are currently aiming to bringthe programme to conclusion around April or May next year, which is aheadof the August 2010 deadline that was originally set,” Mather explains. Andthere’s more reason for good cheer. “We have also taken about UK£30 mil-

work, so it will help us from a diversity point of view, and it will also help usto better handle our information and make sure we use information to gen-erate knowledge.” Mather suggests it is all about seeing the long-term bene-fits of the project. “I said to my boss that if at the end of the programme all wehave done is replace technology, then I would see it as a big failure. We haveto start realising the benefits of new ways of working, collaboration and gain-ing knowledge.” It will also help the FCO to leverage global teams – both vir-tual and multi-departmental – and collaborate outside of a physical location,which has proved a particularly tricky obstacle in the past.

As an extension of Future Firecrest, Matherorchestrated an experiment last year where threediplomatic posts went ‘off line’. Dubbed‘Unclassified Embassy’, the test saw the posts cutfree from the FCO network, allowing staff greaterflexible working; the opportunity to work fromhome, use laptops away from their desks and ac-cess email on BlackBerrys. The flipside of thisflexibility was being kept in the dark when it cameto internal FCO news. “When they went off our system we gave them rulesabout how their work had to be truly unclassified so that they weren’t break-ing any of the information assurance rules. We ran this for just over a year andlearned some fantastic stuff – both the advantages as well as the disadvantagesof being outside of the wire because it was good to hear about how peoplemissed having information that is within the FCO or government communi-ty and not the public domain.” This radical idea may have raised eyebrows in

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“You are always under pressure in the publicsector…in the private sector it is easy to hide thethings that haven’t gone so well.”

The FCO’s London headquarters


lion out of the overall spend base, so it’s ahead of schedule and we are tryingto create value for money and reduce costs where we can.”

Value for money is key in these lean times but there is a perception thatpublic sector projects fall under the full glare of the media spotlight.Particularly when things go wrong and IT chiefs’ shortcomings or incorrectdecisions will be open to scrutiny and ridicule. “You are always under pres-sure in the public sector,” Mather concedes, “I agree with this idea of morevisibility because in the private sector it is easy to hide the things that haven’tgone so well. However, I don’t think it drives the wrong behaviour. I wouldrather make sure that my pressure is because I know what we needto do and that’s what drives the focus on delivering thosethings. It’s just one of those things you live with.”

The reason for the lion’s share of project overspendsand delays is due to their size and complexity, as well asthe large-scale nature of today’s public organisations.“It’s a factor that private companies rarely have to con-tend with and people sometimes forget about the scale in-volved,” says Mather. “For instance, the Department forWork and Pensions (DWP) is a huge organisation and youwould struggle to find many companies in the private sectorthat match it in terms of scale.” Mather also highlights that strictprocurement policies hamper projects.

Naturally, the FCO needs to offer flexibility but protection of internal in-formation – whether classified or not – will still be a top priority. ForMather, the most significant risk around information assurance is ensur-ing that information isn’t shared needlessly. “We need to make sure thatwe can safely share information so we have to educate people and makesure the processes are in the right place,” he suggests. “It’s not a bar thatyou set – it’s a journey that you go on in terms of the maturity and con-stantly increasing your corporate capability around information assurance.

Some of this is through process but a lot of it is through people and givingthem the proper training.” And the larger and more scattered an organisa-tion is, the greater the chance of leaks emerging in defences. And althoughthe FCO is an organisation that understands data classification and hasprocesses in place to protect classified information, Mather describes geo-graphic dispersion as something that he “just has to live with”.

Making the switch At this point in our discussion Mather glances furtively towards his wrist-

watch. With a bulging inbox to plough through after his India trip,his PA pre-warned me his time is in short supply. Nevertheless,

he continues to answer a question about making the leapfrom private companies to government-run organisations.Before dipping his toe in the public sector Mather, whosays he has always been interested in the impact of IT, asopposed to the technology in its own right, worked forestablished brands like AstraZeneca, Jaguar and Philips.

However, he says his arrival at FCO was a “real eye-open-er” and adds that he could never have imagined exactly what

the job would be like and the challenges ahead of him. “I don’tthink I could have worked out what it was going to be like, but I

spoke to a few people with the FCO beforehand to get a pulse on things. Evennow I find that each time I make a trip to a post – be it an embassy or a HighCommission – I find out the different things that FCO people are doing.” Healso found his preconceptions that the private sector is where the talent liesquickly evaporated. “I always thought that if people were good they would bein the private sector because that is where the money is, but I have been pleas-antly surprised by the amount of talent in the public sector at the moment. Iam working with some fantastic people so the whole idea about there being notalent in the public sector is an absolute myth.” �

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16,000FCO’s totalworkforce

A meeting of mindsAs well as being CIO of the FCO, Tony Mather also

sits on the Chief Information Officer Council. Formed in2005, the council brings together tech chiefs from across section of the public sector to discuss and addresscommon issues. It also aims to utilise IT in order totransform government to deliver modern publicservices effectively and formulate ways to make costsavings across the public sector. Mather says: “We allleave our departmental agendas at the door and speakabout cross departmental opportunities and discussthe long-term IT strategy for government. There are bigsavings to be made if this is done properly and somebig opportunities so the council is about how we canachieve better value for the public. It is also about theimpact we can make by raising the quality of the ITprofession throughout government.”


INDUSTRYINSIGHT

Remember when you were too busymaking money to look at yourprocesses and deploy new technolo-gy? The current economy is very dif-

ferent and the focus now is on survival. Arecession does not last forever; it is time to gear upfor growth. It sounds radical, but this is perhapsthe best time to consider process improvementsand the deployment of new technology. Sales rev-enues are slowing, margins are getting squeezed, soyour immediate reaction is to stop projects andpostpone investments. But is this really the rightthing to do or a knee jerk reaction? When does thesmart money invest in the stock exchange?Likewise, manufacturers and distributors shouldthink about the opportunities that the current slow-down offers. There is no magic solution to drivingcosts down – you need to take tough decisions andinvest in cost reduction to get a return.

Action planAny investment you make needs to provide

a good return. You need to identify improvementprojects that can provide a rapid and significantpayback. If you have the money in the bank it iseasier, but whatever your situation you need tofocus on improving efficiency and growing yourbusiness as the market recovers. One of the fun-damental steps you need to take is to automateyour processes to drive operational costs down.This involves deploying best practice processesand supporting these with the right business ap-plication to improve efficiencies and cut costs.You need a clear picture of exactly which process-es and technology can deliver the most value andthe largest cost saving to your business. Lawsonoffers a service that uses a unique tool,Opportunity Analyzer, to help you map, targetand plan improvement projects. We can deliver aquantified and ranked list of opportunities so thatyou know exactly what economic effect eachprocess improvement can bring.

So what happens when the economy picksup? Will you end up back knowing that you need

to review business practices and invest in newtechnology to support your long-term growth as-pirations? A leadership position can be lostthrough not investing – the cost of not doingsomething now may actually be far higher thanthe cost of investing now. Think how much moreeffective and efficient you might be in the futureif you had a single view of your cus-tomers, a clear picture of de-mand, better visibility

of the orders and inventory in your supply chain,up-to-date financial information on costs andmargins for decision-making and staff that couldfocus on managing exceptions as opposed tofirefighting? A few small percentage improve-ments that reduce operational costs can quick-ly aggregate up to a major difference in bottomline performance, both in the short-term and asyour business starts to grow again. Some com-panies that have deployed integrated enterpriseresource planning systems report improve-ments such as operational costs 20 percentlower and working capital tied up in inventorydown 25 percent.

The cost of doing nothingIt might seem that doing nothing is the low

cost option, but can you afford it – and, how highis the true cost of doing nothing? Also, compa-nies are under pressure to deliver positive re-sults to shareholders expecting real value oftheir investment as well as some form of regulardividend or payment. Think what reducingyour operational costs by 10 percent couldmean for your bottom line and your ability tooutgrow your competitors. According toAberdeen Group, Lawson clients averaged a22.9 percent performance improvement. Startby identifying pain points and non-valueadding tasks that simply add time, cost andcomplexity. Evaluate and quantify the potentialreturn improving your processes could makeand compare with the cost of implementing thechange. You may well find you cannot affordnot to be investing in process improvements andnew technology. �

Charlotte Darth is the Marketing Director ofManufacturing & Distribution Industries at LawsonSoftware. Dearth has spent 15 years in the enterprisesoftware industry in different sales and marketingmanagement roles. Prior to joining Lawson in 2008, sheheaded marketing for Syncron International and had alsoworked for 10 years at SAP.

Survival – then what?Organisations emerging from the global economic malaiseneed to gear up for growth, says Charlotte Darth.

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“Any investment youmake needs to provide

a good return. Youneed to identify

improvement projectsthat can provide a

rapid and significantpayback”

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ASK THEEXPERT

At the moment ECM is one of thefastest growing segments withinEnterprise Applications in the com-pany. The quantity of emails and

documents is growing so rapidly that the infor-mation flow risks collapsing from a heart attack.Far too much time is spent locating the right in-formation. The information mountain has exist-ed for a long time but the situation is now socritical that it is crucial for the business to rectifythe situation. Another reason is companies’ re-quirements for greater efficiency. Fewer staffmust achieve the same or better. Then we havethe transfer of competence as older employees re-tire and the younger generation takes over.

Amongst other things, ECM is about greaterautomation and efficiency in processes wherepeople handle unstructured information; in somebranches a very large proportion of the issues canbe handled automatically. It is also about taskssuch as finding documents easily, traceability ofdocuments, collaboration and enabling cus-tomers to help themselves – thereby reducing thecompany’s costs.

Customer activityThere is a lot of talk about customers be-

coming more and more active in companies’

work and the internet makes this possible. Wehave the classic example of internet banks wherecustomers do almost all the work themselves.What we see now and elsewhere ishow social networks are growingin significance and are strengthen-ing companies’ brands. The morecustomers interact; the more loyal-ty increases. For example, networksare being created where customershelp one another – by Twitter andFacebook or via Wikis. You caneven allow customers to have blogsin the company’s name. We helpcompanies to build up these typesof networks.

We also feel that ECM canhelp the financial sector, taking intomind that the current financial cri-sis was partly triggered by unregu-lated financial activity, ECM canhelp to restore faith in the industrythrough document handling thatproves that regulations are being followed andwhich enables traceability of who took which deci-sion, when and why. Furthermore, the financialsector has a lot to gain from ECM purely throughgaining greater efficiency.

ECM can lower costs through automationand processes but how does this work with newforms of business partnerships and collaboration?It’s clear that collaboration is becoming ever moreimportant; at its core is the sharing of informationsensibly. This could be via blogs, thorough shar-ing documents and unstructured informationhandled via collaborative tools, which saves trav-elling time and money.

Cost savingsCompanies can save money by making their

ECM more efficient from a technical viewpoint.A case in point is that one of our customers has250 different websites due to be consolidated intoone website with one operating unit, which willresult in a significant cost reduction and one sat-isfied customer. Another common problem iswhen companies find themselves with many dif-ferent applications in different countries or de-partments and the information is locked in like an

island. This can be case handlingsystems for marketing, for humanresources or for product informa-tion – but collaboration is impossi-ble as different departments havedifferent ECM systems. One com-mon platform will pay dividends insuch cases. Other ways of reducingcosts are through allowing the sup-plier to provide infrastructure, soft-ware and operation – known asSoftware as a Service (SaaS) – andvia blended delivery, when the sup-plier provides an offshore-organi-sation with a lower price.

What are the long-termprospects of ECM? A first step iscreating structure and informationorder and that paves the way formore collaboration, compliance,

automation, accessibility, greater efficiency and soon. Also long term, I see a trend where closer tieswill be forged with business partners and cus-tomers through inserting them in your companystructure in extended digital enterprises. �

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At a time when many IT-related investments have cooled offbecause of the economic downturn, Enterprise ContentManagement (ECM) keeps getting hotter. Logica’s Fredrik

Ring explains why.

Putting ECM to work

Fredrik Ring has worked asan advisor, analyst andproject manager in majorECM-related IT projectssince the early 1990s. He iscurrently in charge of ECMin the Logica Group whichhas 2000 consultants and anumber of larger businesspartners within ECM.

“Closer ties will be forgedwith business partners and

customers throughinserting them in your

company structure”

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Although he has a computer science background, he joins a growing list of business executives being handed top tech jobs across Europe. It seems that having a purely IT career is not always a golden ticket to the best CIO and CTO roles out there as organisations seek out business savvy individuals who can carry over their skills and experience to the world of technology. And with Klingenberg having worn various hats during his 13 years at Luft hansa, this no doubt furnishes him with a greater holistic overview of the airline’s operations.

Klingenberg also reveals that while it is certainly “tempting” to become a very much hands-on technology chief, he foresees the role being much more about steering the IT function in the right direc-tion. “It’s about setting the IT strategy and setting the rules for an architecture so you know what the systems we employ will look like in five to 10 years time. It’s also about the path we take to get a more consistent computer and architecture landscape, as well as what gov-ernance rules we should establish to arrive at that plan.”

Dr Christoph Klingenberg has only been behind his new desk as Lufthansa’s Passenger Airline’s IT chief since April but his in-tray is already overf lowing. With his predecessor Christoph Ganswindt swapping Lufthansa

for Deutsche Telekom, Klingenberg is busy getting to grips with overseeing a huge IT infrastructure migration project amid prob-ably the toughest economic period ever seen for the airline industry. Nevertheless, a buoyant Klingenberg has a clear vision of his role ahead. “The expectation is that I can strenghen the bridge between the various functions and the IT people,” he remarks calmly. “It is certainly too early to judge whether I have achieved this but it is certainly my aspiration.”

Prior to his latest appointment he was Luft hansa’s Senior Vice President of Direct Services for four years, responsible for the plan-ning and operation of all Luft hansa domestic and European direct fl ights not routed through the company’s Frankfurt and Munich hubs.

SKY-HIGH TEC With German national carrier Lufthansa on target for a mammoth technology overhaul, we hear from Dr Christoph Klingenberg, the new Head of Information Management and CIO of the airline’s passenger business.

AVIATION

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users travelling with diff erent status levels.” CITP will also enable the 21 full Star Alliance members to better respond to market conditions and change class usage or schedules quickly to improve yield.

Like many of the legacy carriers dominating the skies, Luft hansa’s IT systems, especially those that handle departure control and check-in functionalities, need to be switched in the long run. Indeed, some of its older systems are between 15 and 30 years old, which creates mainte-nance and upgrade problems amongst other challenges. Luft hansa was one of the fi rst Star Alliance partners to shift its inventory system to

the CITP, which was a deliberate move according to Klingenberg. “Instead of being a late follower of developments that we

could not shape, we thought it would be a good idea to shape this development and partner with Amadeus

in order to get a system that would suit our needs. We can exert a lot of infl uence to get our functions and processes into the new system, but of course this is much easier to get done if you are the fi rst company to migrate rather than the 25th.”

As well as CITP, Klingenberg is also busy with the self-service check in functionality, designed to

make life easier for passengers, as well as improve effi -

IT migration Th e bulk of his work (as it was with his predecessor Ganswindt) is

focused on the mammoth Common IT Platform Initiative (CITP) – a multi-million euro project powered by Amadeus to migrate Star Alliance partners’ loosely connected IT infrastructures to a common platform. Th e goal of the CITP is to better serve customers, slash IT costs and boost the speed of launching new products to market. Th e switch over has been carved into three key parts, with the fi rst achieved 18 months ago when the old inventory systems were migrated. Th is fi rst stage alone reduces Luft hansa’s IT-costs considerably. “Th e ticketing function will be moved over in November 2010,” Klingenberg explains, “and one or two years later we plan to migrate the whole of the departure control systems, such as check-in and fl ight handling at the airport.”

For this IT chief the benefi ts have been clearly visible thus far: “It has already been a huge economic benefi t to migrate the fi rst step,” says Klingenberg. “Th e other steps will bring lots of new functions, such as being able to accommodate customers much faster at the airport or off er, for example, dovetailed services to the diff erent frequent fl yer programme

H THINKING

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ciencies and cut costs for the airline. In Frankfurt, manual check-in capac-ities have been reduced for economy class passengers as they can check in using the internet, their mobile phones or the kiosks at the airport, which has created “big value” for customers and the airline, according to Klin-genberg. He adds: “Th e customer can be master of his own destiny and it creates value for us because we can free up resources at the airport reduc-ing those manual check-in functions.” So how has the response been from customers? “Generally, it has been very positive,” he notes. “It has been an especially positive response from those who are checking in and reserv-ing their seats using their internet-enabled phones whilst on the move.” To keep Luft hansa operating smoothly the passenger airline wing of the group is powered by some 200 systems managed by 400 staff . Luft hansa opts not to do programming and coding in house; instead these functions are outsourced to the likes of IBM, Amadeus and Luft hansa Systems.

Haircutting Th e CITP transition and other new technology implementations

coincide with a period where the airline industry is sustaining a severe battering from the turbulent economic conditions of the past two years. Th e re-cession and cuts in corporate travel, com-bined with extremely volatile fuel prices have grounded some carriers and left the likes of British Airways with mounting losses and staff layoff s. Like any indus-try the airlines need to cut costs where necessary, and Luft hansa is no diff er-ent in that regard. “Our [IT] budget has had a haircut of 10 percent, which means we are mainly cutting external expenses,” the CIO remarks. “All the IT projects have to jump some tough economic hurdles, and the payback has to be within a couple of years but we identifi ed some projects that we could postpone without much harm to the business. And we feel it is valuable to have the know how, especially when it comes to supporting all the big proj-ects we have here.”

In these lean times where every euro counts, IT can sometime feel the force of budget cuts as a prudent CFO takes a tight hold of the company’s purse strings. Without technol-ogy, however, the airline industry would be crippled. “You won’t fi nd a manager in the airline business who tells you that IT is an unnecessary expense,” Klingenberg states. “Our CEO has been a huge promoter of the CITP, for example. He sees it as an enabler for consolidation.

“Every airline has its own IT system and they don’t really talk to each other. So problems can be overcome once we migrate a lot of air-lines to the new Amadeus system. I would say it has been rather easy to convince top management to free the funds to support this project,” Klingenberg concludes.

urse strings. Without technol-b l d “ ’ fi d

Dr Michael Klingenberg’s CV

Age: 48

Position: C IO of Lufthansa Passenger AirlinesPrevious roles: SVP of Non-hub Sevices at Lufthansa, as well as Head of Corporate Organisation and later SVP of Corporate Development and Organisation. He was also the airline’s EVP for Group Infrastructure and in charge of the ‘Operational Excellence’ project. Prior to Lufthansa, he was a consultant for McKinsey & Company.

Education: Mathematics at Hamburg, Princeton and Bonn universities


98 www.bme.eu.com

A traditional content man-agement solution is where a company uses a desktop publishing tool and a fi ling system or basic database to

create and manage their content. However, in my experience there are two main problem areas in managing content in this way. From an organisational perspective the biggest issue for enterprise customers is the lack of focus that they put on authored content from a reuse and localisation perspective. I think that very oft en organisations undervalue the contribution that good content creation and management processes can off er. Th is leads to problems in eff ectively messaging and deliver-ing their company’s value proposition. From a more technical standpoint the inability to reuse content and access and reuse legacy data is oft en experienced due to a lack of appropri-ate tools.

In order to resolve these issues they can identify in the enterprise where there is value in the management of content, for example they can fi nd bottlenecks in their content cre-ation process. Th is tends to be any area where

there is the creation of lots of similar documents – a good example of which would be proposal writing in the sales function or user guides in the technical documentation department. Another thing they can do is defi ne the value adding activities for a busi-ness function and then look for ways to reduce the cost of non-value adding activities. For example, the value adding activities for a sales person are identifying and converting opportunities, not in creating contracts and proposal docu-ments. Companies should look to see how they can reduce the cost and time, and increase the ac-curacy of these ancillary processes. One way to do this is to use an XML-based content cre-ation/management system.

To be clear, XML stands for Extensible Markup Language. Th e core concept of XML in an authoring environment is to author once and deploy many times, and to do this across a number of diff erent output formats.

In an environment where you are creating a lot of similar documents that require minor changes, XML authoring allows you to make updates and changes without rewriting or copy and pasting any content that does not need changing. Th is makes the process faster and creates signifi cantly less errors, while enabling you to ensure that all of your documents look exactly the way that you want them to. In ad-dition to this it allows you to output to many diff erent formats using the same content. For

example, the same piece of content used for boiler plate information used in a sales proposal can also be used on your website or in your user guides, which leads to well-structured content that is the way you want it to be, and that is created very effi ciently and accurately.

Th e whole of enterprise content management is geared up to off er two major benefi ts: time and cost sav-

ings. What I am suggesting will certainly further these goals, however there are other benefi ts which are not as obvious. If content only has to be created once then you can aff ord to operate rigorous quality control during that process and you can be sure that the quality of your content will always remain exceptional. Also, you can drastically reduce the duplica-tion of reviewing eff ort that we see so oft en in departments that have any kind of content creation function.

One of the greatest barriers to the imple-mentation of XML authoring systems is the adoption of a new authoring tool with which casual authors may not be comfortable. Our tool addresses that barrier to entry by provid-ing a graphical user interface that would be instantly familiar to anyone who has used one of the more traditional word processing soft -ware packages, and at the same time produces high quality structured content without the need for authors to understand the underlying programming language.

Fixing the pain pointsNick Mongston explains how an XML authoring system can realise signifi cant cost and time savings for your organisation.

Nick Mongston brings over 20 years of business leadership experience to JustSystems. He has experience working in both North America and Europe. He held senior management positions at Gestetner, Olympia AEG, Bayer/Agfa, SoftQuad Software,and Polycom. He is currently operating as the Sales and Marketing Director for JustSystems EMEA, Ltd. www.justsystems.com

Nick Mongston

ASK THEEXPERT

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After 22 years spent running the IT departments of some ofEurope’s biggest banks Claude Roeltgen knows a thing or twoabout what goes on behind the scenes. Now he has put pen topaper and written a book designed to be the CIO’s bible – an

overview of the key issues they face today including the pitfalls of failing tobridge the gap between the business and the IT department. Roeltgen says IT’sHidden Face is written in a style that will appeal to professionals at all levels ofa business particularly “if you are a business manager who needs to work suc-cessfully with IT or a professional who needs to be able to explain why some-thing can indeed be installed in 10 minutes but that success demands manymore steps before or after that”.

Reality bitesRoeltgen admits that it was the many obstacles that he has faced in his job

that inspired him to write the book. He says one of the biggest challenges isthe lack of understanding by other parts of the business of the task faced bythe IT department. He hopes the book will help to break down some of thosecommunication barriers: “I’ve been a CIO now for 22 years and I’ve always had

to deal with situations such as failing projects,crashing software, delays, not meeting bud-gets, all this sort of stuff. Our users alwayswonder why this is the case. We are very badat explaining to them why our world is theway it is. So I thought that rather than ex-plaining it all the time I would put the issuestogether in a book that everybody can under-stand, even those who are not IT guys.”

Roeltgen claims that it took him threemonths to put the book together and that hespent just one month compiling the materialto put it together.

He drew inspiration from his own posi-tion as CIO of Luxembourg-based privatebanking firm Banque LBLux, which he says,like all companies, faces the problem thatoften the software it adopts is fraught withproblems. This leads to frustration from ITusers who cannot understand why it takes solong to install the new software. He says: “Themain problem is that we are dealing with anindustry, that is far from being mature. Whenwe introduce new software we get somethingthat is basically not working in most cases.We have faulty software. We have providerswho don’t have quality assurance processes inplace. The software packages we use in bank-ing are very big and include hundreds of mil-lions of lines of code but also thousands oferrors. It is not getting better over time. Notat all. We don’t see the problems at the be-ginning of the process and so the expectationsof the business are totally different to what wecan actually keep as a promise.” He hopes

IT’s Hidden Face will help to address this problem: “I have tried to build a bridgebetween those two worlds. I cannot change our world but I can explain ourworld. I can make the business user aware of the difficulties we are fighting with.”

Roeltgen says the CIOs of financial institutions face particularly big chal-lenges because of the constantly changing nature of the industry and the typesof applications and processes that are used to process financial transactions:

“I think the difficulty is predicting where the banking industry will be in12 months from now. We don’t know what mergers there will be and what fi-nancial products we will continue to offer and which ones not. So trying tounderstand the whole industry is a real challenge.”

One of Roeltgen’s key aims when writing the book was to use languagethat could be understood by all parts of the business and to avoid overly tech-nical terms. However he says he believes that in general CIOs have improvedgreatly in the way they communicate with the rest of the business: “I think wehave the language problem maybe much less now than we did 10 years ago.We have people now in IT who talk the business language and who can dis-cuss issues with them in more or less open ways. So the times when we hadthose nerd programmers explaining what a programme is are finished. But

Have you ever wanted to know what really goes in the ITdepartments of Europe’s biggest banks? Well now you can find outthanks to IT’s Hidden Face, a book dubbed the essential guide forevery CIO. Business Management meets its author Claude Roeltgen.

BANKING

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we are still very bad at explaining the framework of IT and explaining the diffi-culties that we face.” Roeltgen goes on to say that given the key role IT nowplays in helping businesses to meet their business objectives, clear channels ofcommunication between the CIO and the boardroom are crucial. This is par-ticularly the case, as he has experienced, within the banking industry:“Without IT you cannot achieve any business goals today. But it depends a biton what industry you are in. In the banking industry every topic that comesin is an IT topic because of the sheer mass of transactions you put through. Inother industries it might be different but I don’t have that experience.”

Hard timesBecause of the big role that IT plays in running the business smoothly,

the economic downturn has had a detrimental impact on some CIOs andtheir departments, says Roeltgen: “It definitely does have an impact becauseyou have cost cutting exercises almost everywhere and the biggest cost blockis normally IT and staff. IT departments tend to employ a lot of staff so theyare touched two times really. It makes our life much more difficult.” He saysthis situation becomes particularly difficult when the company has a long-term contract with an IT software provider that it can no longer honour be-cause its IT budget has been cut. “There are running contracts where costs arefixed so you cannot react very quickly on this. But the targets you have toreach are set in a very short time frame. And explaining to the business that itis not so easy to get out of a running contract to change to another system canbe very difficult in some places.” He says he is currently facing the problem ofslashed budgets at Banque LBLux, which has been hit by the economic down-turn. The bank is a subsidiary of BayernLB and Helaba and previously it had

performed IT services for the rest of the group. However, he says that becauseit is now reducing in size it is no longer in a position to act as an insourcer andnow has to outsource the services it once provided.

“Our situation is changing in the sense that we were a big insourcer forthe group. Our group is getting restructured very heavily which means thatthe services we offer for the group are reduced. We did services for a numberof other entities in the group. But as everything was re-sized, downsized andchanged, we basically lost our customers that we were servicing within thegroup. So we go from an insourcing strategy to an outsourcing strategy. Thisis a very painful process but also very challenging and a very different situa-tion to the one we had before.”

It’s the type of situation that Roltgen hopes to prepare his readers for inhis book. However he admits it is not always easy to practise what he preach-es: “I think most people have read the book and sometimes they confront mewhen I don’t do what I wrote in the book. But at least I try. I know it’s very dif-ficult to really have the perfect world. It’s a day to day challenge to follow whatI think is the best way to do things.” �

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An extract from the first chapter ofIT’s Hidden FaceAgain, a program has crashed. Again, the PC is frozen;not even the mouse moves. “What on earth did I dowrong?” you are asking yourself, slowly but surelybecoming frustrated. The only correct answer to thatquestion would be “Nothing,” but there is no one to tellyou this. Computers should work in all circumstances, butthey don’t, and this is almost never the user’s fault. Theonly way to avoid this situation would be to constantlyhave an IT expert available to you.

Information Technology (IT) is an impenetrable andever-growing jungle for a layman. The computersystems that are used in the business need to becompared to a fragile ecosystem. The common manlooks at an IT expert with a mix of respect andcompassion.

Most people think the world of computers istreacherous. Everything is so complicated, inscrutable,and – for some people – even menacing. Since thecomputer has become a massive part of our daily life,renouncing it would be neither possible nor desirable,so taking a discerning look behind the scenes is worthit. It’s profitable to understand why this world is soimperfect.

A gap the size of the Grand Canyon exists betweenthe computer user’s expectations and what an ITdepartment can effectively do. Business computer userslack basic knowledge about the specifics of the IT world.Electronics and computers are everywhere around us,but to talk about a high maturity grade of that industryis simply nonsense. Later in the book, I will describe thesituation as “storm-and-stress” behaviour. A renownedcolleague of mine goes even further and describes thesituation as an “infantile stadium.” It is important to meto close the massive gap between the understanding oflaymen and the expertise of IT professionals. It isobvious that IT experts need to master their ownuniverse and understand the business in the companythey work for. On the other hand, users should endeavorto understand the specifics of the IT world. That theydon’t is one of the main reasons for the comprehensionproblems that we face.

Too often, we hear from our users in the businessthat a task should be done at the “push of a button.”Many misunderstandings between IT experts and usersare based on this misjudgment. The tendency of ITexperts (who are of a rather calm nature) is to not talk alot about their world. They are doing far too little (ornone at all) marketing for their own sake. It is abouttime to change this.

“The economic downturnhas had a detrimentalimpact on some CIOsand their departments”

Claude Roeltgen ed:4August 6/10/09 11:08 Page 101

One year on from the Lehman Brothers collapse, the financialservices landscape has been significantly reshaped. Marketsremain unrelentingly competitive. And in the battle for compet-itive success, the prize goes to the business able to get to market

faster than anyone else. How quickly can a new andinnovative business service be launched, scaled upand brought to full profitability?

Gaining this early mover advantage by mobil-ising IT resources to deliver a new and innovativebusiness capability demands effective softwaretesting. Best contemporary testing practices lie atthe heart of the professional creation and deliveryof new software structures. Properly integrated intoproject management processes, they enable theproject team to cut through any testing bottlenecksto reduce software development lifecycle costs andtimescales.

One lesson stands out: effective risk manage-ment is a critical differentiator. And first and fore-most, best contemporary software testing practicesare about project risk management – ensuring thatthe new service will deliver the intended outcomeswhen it goes live.

In addition testing maintains a focus on theeffectiveness of the project team preventing problems rather than detectingthem for a later fix, keeping the team away from resource-wasting detours. Andit maintains a focus on the efficiency of the project team, ensuring that it worksits resource highly productively – but only on work that is genuinely in theproject value chain.

This leaves you confidently in control of all your resources at all times,focusing on achieving the desired objective, wasting nothing on unnecessarydetours. Because, in the words of the great Peter Drucker, ‘there is nothing asuseless as doing efficiently that which should not be done in the first place’.

The importance of testingContemporary testing practice is integral to the work of today’s project

teams, designed to help rather than hinder. It will flex with the process anddeliver even when there is fast moving business-required re-specification ofobjectives and it recognises the need for both speed and the agility demandedby a fast changing competitive landscape.

No longer the interfering back office audit or naysayer, world class testingpractices are now positioned as the front-line trusted advisor, enabling ‘go live’decisions to be made with true confidence.

Software testing has developed as a profession in its own right.Qualifications have evolved to provide a sure foundation for practitioners, ledby the ISTQB (International Software Testing Qualifications Board).Internationally recognised standards, such as BS79525, provide excellent

process models. A growing diversity of specialisttools is on offer, marked by a focus on fast and effec-tive reporting. The most important development hasbeen in the arena of test maturity models. The newTMMi model (www.tmmifoundation.org) is struc-tured to parallel the CMMi ‘5 levels of maturity’ thathas done so much to bring the quality revolution intothe heart of software creation.

A winning partnershipSteria has always put effective testing at the heart

of its software project teams, with specialist resourcesbased in its Indian operations. It has recentlyannounced a new partnership with Experimentus, aleader in contemporary testing best practice.

“Steria recognises that financial services compa-nies live or die by how quickly and cost effectivelythey can roll out innovative business capabilities withtight risk management,” says Yvonne Spalding,Managing Director, Steria Financial Services. “Our

partnership with Experimentus brings the best of contemporary softwaretesting practices to the heart of our client operations as one key element of ourcommitment to their success.”

This is affirmed by Geoff Thompson, Consultancy Director atExperimentus. “Testing is a vital component of the software developmentprocess – and contemporary testing best practice is about professionaldelivery of speed, agility and risk management to the sinews of that process.”

So take a fresh look at testing. It delivers effective risk management, busi-ness reassurance, speed to market and that much needed board confidence. �

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INDUSTRYINSIGHT

In financial services the race is on to do it fast and do it first

By Dr Richard Sykes

As Director, Services for Bloor Research, DrRichard Sykes is an advisor in the strategictransformation of technology and businessprocess sourcing, outsourcing and offshoringbusiness models. Group VP IT of chemical majorICI in the 1990s, he is an elected member of theBoard of Intellect, the UK business association ofthe IT, telecoms and electronics industries.

“Contemporary testing practice isintegral to the work of today’sproject teams, designed to helprather than hinder”

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Feeling the

Volatile market conditions have transformed the way European companies buy energy according to Kanat Emiroglu, the recently appointed Managing Director of British Gas Business. He tells Business Management how he is spearheading change to support companies through turbulent times.

In your previous role you were Director of the SME division at British Gas Business. Was this good preparation for the role of Managing Director?Kanat Emiroglu. SME is a big part of British Gas Business; it’s two thirds of the customers and it’s more than half of the revenue and the profi ts. So in terms of business dynamics I was very familiar with the business and its strategic, operational issues. But on the other side it’s a little bit diff erent when the buck stops with you. Th ere’s more senior management interaction and maybe a little bit more political awareness is needed. So there’s quite a few new things coming to the agenda.

How will you be working with business customers to help them in-crease their energy effi ciency?KE. We have six vision statements. Th e most important one is that we pro-vide complete energy solutions. And what we mean by that is an underly-ing belief that fi ve or 10 years from now nobody in the business world is going to buy energy only as a commodity because it’s such a volatile expensive commodity that infl uences businesses’ competitive advantage

in their own markets. It’s going to have to be managed. And we know from our own data that companies that use energy solutions and actually think about energy effi ciency over time can reduce their energy bills by 30 percent, through some behavioural changes and some small invest-ment. We can give plenty of advice on energy saving stuff such as how to use their heater, their freezer, their lighting, what to do about peak time etc. But advice is cheap. So what else can they do? Well there are a lot of new technologies in the energy solutions area that allow companies to track and monitor their energy usage. If companies get smarter they can, if they have multiple sites across the country, learn which sites are the most energy effi cient and compare that to the worst ones.

How have volatile energy prices and government regulations af-fected companies?KE. For almost a generation since the mid 1970s energy has been relative-ly fl at priced, in general low priced, and a not so volatile commodity. Th is was partly because the UK was surrounded by energy sources in terms of oil and gas. Th e North Sea fi nds helped them and the market here was

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the top three. It’s especially the case for SMEs and less of an issue in the corporate world where credit ratings are more followed and bills are paid much quicker. In the SME space we see quite a lot of write-off s.

How does the service you provide to large corporate companies compare to that provided to SME custom-ers?KE. If you measure by sites, we have 900,000 SMEs and 150,000 corporate sites. Each SME has an average 1.2 sites. Corporates have roughly 10 to 15 sites. Some of them have 10,000 sites with us. Some have only two or three so it’s quite a wide portfolio and we serve them quite diff erently as a result. If you are a residential customer who calls Brit-ish Gas you get put through to a call centre where a random customer service agent will answer the call. In the SME sector you have an account manager so when you call it will be your account manager you deal with. He picks up the call 50 percent of the time oth-erwise it’s one of his nine team colleagues. In the corporate world you go up one level again and you are served by hubs. Th ese are not just groups of customer service agents in a team

but also other multi-disciplinary agents sitting with the customer service agents. So there’s a debt expert, a billing expert, a technology expert and an energy solutions expert, sitting at the same table. Th e object being that we want to get to 100 percent fi rst time resolution for corporate clients. In the SME world we’re talking to a business owner, an entrepreneur.

Th ey have much less time, they value their time more in terms of euros per hour, they ask professional questions and we need to train our people up to that standard. In the corporate world you are usually talking to a buyer whose job it is to buy energy so again it goes up by one notch.

How competitive is the UK energy market currently and how chal-lenging is it to retain customers in this environment?KE. In the corporate world you have to bid for customers almost every year now. Th ere used to be two or three-year deals but because of the capital allocation and diffi cult trading environment around energy, most companies are now off ering just one-year deals and we have reduced our

relatively stable and that’s why a lot of companies didn’t spend time on this issue as a cost item. Either that cost was predictable or it was small. But that has changed. Since 2004 we have been an importing country. On gas we depend on quite far away places and so the price is highly volatile. You can pick two gas prices in the UK that are 10 times diff erent on a daily basis. So companies need to manage their energy much better. Th e second aspect aff ect-ing companies is regulation. Both governments and the public have become much more aware of what the use of excessive energy does to our climate and to our energy security. Th ere’s a plethora of regulations, trading schemes and penalties or incentives that businesses need to be aware of. If they operate in a vacuum and just ignore the energy area, especially if they are energy intensive, they could be hurt.

A recent survey by British Gas found that 54 percent of companies admit to delaying paying energy bills because of the economic downturn. How big a problem is this?KE. Th is is a big problem in the industry. Th e problem is we’re writing off a huge amount of money that is not paid to us as a debt charge in our accounts. We’re trying to reduce that because for us that’s money taken out of our existing customers so issue number one is that it’s costly. Issue number two is that people who do pay their bills pay them a bit later. So in addition to the recession we have a credit crunch which means that liquidity is lower and that causes us to use more capital. We will eventually get that money but we do need to use more capital and the amount we use in today’s markets is charged at higher rates. So that is a problem. What are we doing about it? We have introduced something called SAVE (Small business Advice and Value Expertise) because we thought that instead of robotically collecting debt from SMEs we would listen to them and understand what cash fl ow problems they are facing and develop whatever we can to alleviate those problems to fi nd win/win solutions. Th is also involves giving advice on energy consumption reduction and giving out energy saver packs to in-spire them to use less energy. Th ere’s an online assessment tool called Energy Savings Report, which goes into the specifi cs of that business and makes specifi c recommendations in that case. We give legal advice and access to lawyers for SMEs that are not aware of some of their rights. Th ere is a government initiative called Prompt Payment Initiative which helps SMEs get paid by their own suppliers. Finally we write payment plans. So instead of insisting that somebody pays 100 percent of the money on day zero, we try to spread it over time for businesses with reasonable credit ratings, so that we don’t have to squeeze them too much.

How much money is British Gas Business losing through non-pay-ment of energy bills?KE. Th is would be competitive information so I can’t give you the number but it’s quite high. It’s high enough to be one of the top three things in my management team’s agenda throughout the year. Th at is always in

“Last year, which was an especially volatile year for energy, the wholesale

curve went up or down on average by four percent every week. A weekly

price change is much higher than our margins so you have to get pricing

absolutely right”

Kamat Emiroglu

Kanat Emiroglu.indd 105Kanat Emiroglu.indd 105 6/10/09 11:20:136/10/09 11:20:13

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every year for the last four years. It has grown its revenues and its profi ts and the number of sites. British Gas Business has also made successful acquisitions and integrated them. One thing that I personally want to crack is achieving excellence in serving multi-sites. We have already achieved better customer satisfaction in multi-sites and we’re getting even more specialised in other areas and getting the right technologies.

How do you serve companies with multi-sites currently?KE. Imagine yourself as the buyer of energy in a company like Boots or McDonald’s. We come to you and we say we are going to install smart meters in your 5000 sites across the UK. And that will also include sub-meters that measure diff erent parts of your store using diff erent parts of energy. Th ree months on we can show you charts on which of your 5000 sites use energy the most effi ciently. Secondly, we can show you some insights about how you do heating, freezing or lighting in energy use versus competitors in your industry and if there are any insights coming from that. Th irdly, we can show you peak versus base usage and that can really infl uence the way you use energy. And fourthly, we can talk about clusters you have where you could produce your own energy such as micro CHP systems. Our aim to become a 21st century energy seller.”

terms also on average from two years to probably around 1.6. So every year there’s a bidding for that. It’s quite competitive. And in the SME market also, prices for business energy changes every day depending on what the market curve does. Last year, which was an especially volatile year for energy, the wholesale curve went up or down on average by four percent every week. A weekly price change is much higher than our mar-gins so you have to get pricing absolutely right. And the competition is to the last percentage point. It’s also important for companies to know when to buy the energy. So if you were buying it, for instance, in the summer of 2008, when the prices had reached peak levels and you signed a two or three-year contract then you would be using energy at a quite expensive time. It’s almost unfortunate to have bought at that peak.

What are the biggest challenges you will be tackling in the year ahead?KE. It is a challenge to deal with the volatility and the debt in this envi-ronment. But I wouldn’t call it unmanageable. I think the challenge for me is more to continue to grow our business, British Gas Business is a very successful part of Centrica our parent company. It has the highest employer engagement results and it has grown its customer satisfaction

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EXECUTIVEINTERVIEW

What has driven the need for companies tohave correct environmental procedures, dedi-cated compliance and risk solutions in place?Chris Methven. Environmental impact is a grow-ing concern when considering corporate perfor-mance and corporate risk. While consumers andinvestors increasingly expect organisations todemonstrate environmental responsibility, thereare strict regulatory requirements and compellingoperational issues at stake. In addition, the regu-latory regimes in place are evolving at a rate neverseen before, and perhaps the greatest challengethat seems to be facing IHS customers is stayingone step ahead from a compliance perspective.

Organisations tend to have multiple businessunits and departments. Why is it important toensure that your compliance covers all geo-graphic and business units in one unified report?CM. Compliance with environmental legislation isa requirement that reaches across all industries.The anticipated evolution of regulatory and re-porting requirements means many companiesare proactively addressing environmental re-form in an effort to stay one step ahead of im-pending and potentially costly legislation.Technology solutions are often seen as a way toenable repeatable, reliable, and efficient process-es to meet a growing number of environmentalmanagement demands.

What are the main environmental complianceand risk challenges that organisations arelooking to manage today?CM. Stakeholders are demanding that our annualsustainability reports are more quantitative and lessqualitative. Environmental datavolume increases annually and isbecoming difficult to report on.Developing environmental regu-lations brings the risk of increas-ing costs, especially to thosecorporations with the most sig-nificant environmental impact.Substantial fluctuations in certaincommodity prices due to scarcityor other restrictions also present aserious risk to organisations witha heavy reliance on natural re-sources. Environmental depart-ments are becoming visible tointernal customers such as financeand risk due to market-basedmechanisms for emissions man-agement. Consumer awareness andconcern regarding environmental issues is also ris-ing. Investors are now interested in greater environ-mental performance and transparency, with sociallyresponsible rating agencies, and socially responsibleinvestment indexes now having an impact on bothconsumer and investor decision-making.

Can you give examples of how your productsand services have helped organisations withtheir environmental reporting over the lastfew months?CM. IHS offers a single source of critical informa-tion and insight to support an organisation’s keydecisions related to climate change. IHS climatechange resources help with key decisions fromstrategic planning to project implementation. Theresult is a comprehensive approach for develop-ing and executing carbon strategy, and confi-dence that it reflects the fullest possibleunderstanding of a company’s emissions portfo-lio and the evolving climate change landscape.This helps ensure the transition from managingclimate change as a risk to driving opportunityand value creation.

IHS has the most comprehensive climatechange solutions in the market. Some of the areasin which we assist our clients include: helping ourclients to understand the impact of emergingpolicies on energy systems and their business;framing investment and abatement project choic-es, such as clean energy and energy efficiency; cre-ating centralised enterprise systems forgreenhouse gas (GHG) emissions; providing sys-tems to exploit cap-and-trade positions such asEU-ETS; implementing flexible systems to han-

dle changing/multiple GHG pro-tocols; advancing sustainabilityreporting to support more quan-titative information; and forecast-ing Co2 emissions and carbonprices.

In addition to our extensiveinsight and advisory expertise inthe area of climate change, IHS isthe market leader in the provi-sion of environmental manage-ment information systems.From environmental reportingand compliance to financialtracking and risk analysis ofemissions allowance portfolios,IHS’ solutions give you totalmanagement of your environ-mental programme and emis-

sions. IHS customers span all major industryverticals and all geographies; we partner withour customers to assist in achieving operationalexcellence and rising to the challenge of max-imising environmental performance across theenterprise. �

IN BUSINESS, GREEN IS GOOD Environmental compliance and risk management hasbecome a hot issue for businesses of all shapes and sizes. Wespeak to IHS’ Chris Methven to find out why.

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Chris Methven joined IHS inSeptember 2008 asEnvironment Director EMEA.He is responsible for theEuropean EnvironmentalBusiness Development atIHS. Prior to joining IHS, hespent four years with ABeamConsulting.

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VMware Ad.indd Sec1:3VMware Ad.indd Sec1:3 2/10/09 10:22:242/10/09 10:22:24

King Amazon’s CTO Werner Vogels is focused on transforming the internetbehemoth into the world’s most customer-centric organisation – andis using innovation to help him get there.

jungleBy Ben Thompson

of the

RETAIL

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The Amazon rainforest contains the largest collection of living plant and animalspecies on the planet – and like its jungle namesake, the world’s largest e-com-merce platform holds a similar wealth of weird and wonderful specimens justwaiting to be discovered. As well as everyday items such as clothing, music andconsumer electronics, the internet explorer can also unearth a huge range of rarertreasures. Want to reduce your carbon footprint? How about a 400W self-as-sembly wind turbine to help get you started. Looking for that unusual gift? Check

out the original Andy Warhol screenprints in the ‘Everything Else’ department. Fancy getting married?Try the 10x18 wooden wedding chapel, complete with front porch and steeple (sorry, bride not in-cluded). Shopping has never been this easy.

Yet while some may still think of Amazon as simply an online retailer, the reality is very different.From its bookseller origins, the company has grown to become one of the world’s biggest technologyorganisations, a platform that attracted over 615 million visitors last year and on which more than onemillion active retail partners do business worldwide. An increasing number of diverse businesses arebuilt on the Amazon.com platform – including the online operations for Target, Lacoste, Marks &Spencer and Timex Corporation – and the company’s relentless focus on innovation helps Amazonmaintain its status as a high-tech pioneer. From new hardware development to the definition of newbusiness models, from building ultra-reliable storage services to a massively scalable computing cloud,from pervasive monitoring and performance control to revolutionary efficient software architectures,Amazon is recognised as being on the bleeding edge of technology development.

“We have three different businesses,” explains the company’s CTO Werner Vogels. “One isthe retail business, and that’s the one that people are most familiar with. Then there’s the sellerbusiness, which consists of three major streams – the seller-only Amazon website, the enterpriseservices business where companies launch e-commerce operations on top of our platform, andservices such as Fulfillment by Amazon that enable businesses to take advantage of one of the mostadvanced fulfillment networks in the world. And then there’s the developer business. For all ofthose, we take the same approach: we want to be the world’s most customer-centric company.”

For Vogels, this means focusing on continuous interaction with the customer-base – gener-ating what he calls a ‘feedback loop’ – to ensure that the services Amazon provides are the rightfit for its customers. “We have a process that we call ‘working from the customer backwards’ todevelop new technologies, where we start with what the customer needs and then work back-wards from that point to make sure that the technology we implement really does what we wantit to from a customer standpoint,” he explains.

Plotting a pathTake Amazon’s popular and much-copied product review system, for example. The site had re-

views from the outset, and the idea of letting the market decide what’s hot and what’s not has played akey role in helping to make the company such a trusted seller – even non-customers admit to check-ing out the user reviews before eventually buying elsewhere. But as other retailers jumped on the userreview bandwagon, Vogels and his team decided to take the concept a stage further. By adding asimple button asking ‘Was this review helpful to you?’, Amazon prioritised the most relevant re-views – those that had helped customers make a decision over whether or not to buy a particularproduct, both positive and negative – and provided a simple way for customers themselves to reg-ulate the quality of the reviews. A recent article in Business Insider suggests the move has had sig-nificant business benefits. In 2008, Amazon brought in €13 billion, of which 70 percent came frommedia products such as books, movies and music – products that also make the best use of the re-views feature. The study suggests that promoting the most helpful reviews has increased sales inthese categories by 20 percent (one out of every five customers decides to complete the purchasebecause of the strength of the reviews) – adding a projected €19 billion to Amazon’s top line.

It is often said that the best innovations are the ones that seem so obvious. And while Vogels is atpains to stress that such developments don’t just happen without a considerable degree of effort, hedoes concede that all Amazon’s technology improvements start from a very uncomplicated concept.

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Vogels maintains that this is only possible via constant monitoring of thecustomer experience. Consider the following example. A customer wishes todownload a movie to watch on the long Paris to New York flight, and sendsAmazon an email with a question about its video-on-demand service. Not onlydoes the service team answer within the hour, they also include a link to indicatewhether the answer solves the question or not. Choosing ‘yes’ takes the customerto a ‘Thanks for your feedback’ message, which not coincidently puts them backonto the Amazon site and contains a further link to provide additional feedback.If you respond ‘no’ to the original question, you are taken to a similar page torephrase the question. This simple feedback mechanism provides a number ofimportant benefits. First, it demonstrates Amazon actually cares whether theuser’s problem is resolved satisfactorily; it allows the customer to easily submitanother question if not satisfactorily resolved; it allows you to quantify the per-formance of the service department; it identifies areas where better answers areneeded; and finally it helps identify tricky problems that can be corrected.

Such attention to the minutiae of customer service interactions helps thecompany refine its offerings and continuously improve. And while concedingthat the management team makes most of the long-term big technology bets,Vogels insists that many of the ideas actually come up through the organisa-tion. “Amazon is very flat in terms of its organisational structure and we havea tremendous focus on innovation, so we’ve got all sorts of paths in which keyinformation and ideas can travel to those who actually make the decisions,” hesays. “I think most of the technologies as you see them in Amazon – whetherit is reviews, whether it is Listmania, whether it is Gold Box – have come outof the grassroots.”

“I think you can have brilliant ideas,but taking them from the idea phase to the stagewhere they really mean something for yourcustomers is much more challengingthan I anticipated” Werner Vogels

“You have to find ways in which your customers can be more efficient at whatthey want to do,” he explains. “We have a number of high-level goals aroundhow quickly customers can find items, how easily they can browse, how theycan check out and how they can purchase things, and making that as efficientas possible for our customers is key for us.”

If you focus on the customer, continues Vogel, you take the long-termview. “You’re not looking at the next quarterly success; you’re looking at howyou can make sure that Amazon is the world’s most customer-centric com-pany over the long-term, and how you can innovate on behalf of the customerto make sure that the things you do really matter. In this sense, everythingfrom reviews to web services can be thought of as supporting tools for doingthe right thing for the customer. In terms of technology, it means seeingwhether we can take a more cost-effective approach or have better scalabilityand better reliability, or whether we can help our customers make sure theymake the right purchasing decisions.”

Of course, efficiency is one measurement of success, but there is also amore intangible quality that must be achieved for such a platform to be lovedby its user-base: ultimately, it must also provide an enjoyable experience.“Customers are very vocal with what they appreciate and what they don’t,” hecontinues. “So while our customer service is known for being excellent, cus-tomers also have the power and the tools to actually give feedback directly tothe technology teams. In terms of innovation, we make sure that all thesesmall experiments that are going on all the time with new technologies, withnew customer-facing functionality, can be continuously measured.”

Measuring valueAmazon has taken a number of steps to ensure any improvements to the

platform add real, measurable customer value, and has built a large infra-structure to ensure it can monitor and assess the impact of changes to the site.For instance, all Vogel’s teams have been given the instruction to innovate con-tinuously on behalf of the customer, constantly looking at where improve-ments can be made. What makes a particular service a best seller? Is it betterinformation, better presentation or different sources? “Our goal for customersis that they can find what they are looking for as fast as possible, in the most ef-ficient way, in the minimum number of steps,” he explains.

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neers and programme managers to build something that really works. Butthere are also legal implications, there’s an impact on tax, there’s impact onPR, on marketing – all of those functions make up a team, and you can onlybuild and deliver a product to your customers as a team.”

It is a challenge Vogels relishes. “I think you can have brilliant ideas,but taking them from the idea phase to the stage where they really meansomething for your customers is much more challenging than I antici-

pated when I was still in academia,” he continues. “Idid some startup work alongside my academicwork, but even so the path going from idea to actu-al implementation is a long journey, and when youhave to operate at the scale of Amazon that’s awhole different story again. Suddenly, issues like re-liability, performance, availability and cost-effec-tiveness play a major role in all of the decisions youmake along the way.”

And in contrast to Google, which famously en-courages developers to spend 20 percent of their time on

individual projects outside their day-to-day responsibilities, the team ethos rulesat Amazon. The motivation comes out of the idea that the things that you dohave a direct impact on the customer. “Doing things that matter to people istremendously motivating, and so most of our engineers and programme man-agers – and indeed everyone else that is working on our products – find re-markable reward in making sure that our customers have a better experience.We often have meetings where we start off with a ‘customer voice’ – a successstory, even sometimes a negative story, of a customer’s experience of buying onAmazon – and use those stories to drive our services to become better.”

Once again, it all comes back to the customer. “We don’t just want tobe the most customer-centric company on the web; we want to be themost customer-centric company on the planet, period,” concludes Vogels.“I think that if you look 10 years from now, you’ll see that many of the in-novations Amazon has implemented have had a tremendous impact onhow customer-centricity is viewed.” n

Such a meritocratic hierarchy, where the best ideas rise to the top, is es-sential to the company’s reputation as an innovator. Encouraging ideas thatadd value is a philosophy that is nurtured right through the company cul-ture, from the C-suite down to the recruitment of new hires, as Vogel elabo-rates. “In terms of our personnel, we look for a very particular individual: theyneed to be able to think in the way that the customer thinks,” he says. “It’s veryimportant to have a culture where everybody understands what the core val-ues of the company are. New starters are often sur-prised at how important focusing on the customer isto us and how good Amazon is at doing that. So hav-ing a core value throughout the company that every-body signs up to is essential.”

The importance of teamworkThe other essential trait that Amazon tries to instill

in all staff is the ability to collaborate effectively – some-thing that is particularly important in the technologyfunction, which by its nature involves small teams fo-cused on specific projects. “Our development teams talk to each other all thetime,” says Vogels. “Even though we work in very small teams, Amazon itself isa very large technology operation and it is essential that everyone co-operatesand collaborates all the time.”

According to Vogels, teamwork is key to delivering fully rounded ideasthat really work for the customer – whether that customer is internal or ex-ternal. Coming from a background in academia (prior to joining Amazonin 2004, he spent a decade as a research scientist in the Computer ScienceDepartment at Cornell University looking at scalable reliable enterprise sys-tems), Vogels admits to being energised by the way business organisationsapproach the issue of R&D. “In academia there’s a real focus on individualachievement,” he says. “Although there is some collaboration among facul-ty and there are student teams working together, the work is still rather in-dividual, as is the reward structure. In industry, however, building realtechnology is a multi-disciplinary activity. First of all, you need good engi-

Amazon.com FAST FACTS

FOUNDED: 1994

HEADQUARTERS: Seattle, Washington

AREA SERVED: Worldwide

CEO/CHAIRMAN: Jeffrey Bezos

REVENUE: €13.1 billion

OPERATING INCOME: €576 million

NET INCOME: €441 million

EMPLOYEES: 20,500

WEBSITE: Amazon.com

“10 years fromnow, you’ll see that

many Amazoninnovations

implemented havehad a tremendous

impact”

AMAZON_sep09 06/10/2009 09:46 Page 115

ASK THEEXPERT

Before making any decision to purchasea modern business process automa-tion technology, customers shouldconsider a number of key questions in

order to avoid problems, which often lead to theunnecessary failure of projects. Even the most ad-vanced technology can deliver disappointing re-sults if its investment isn’t based on clearlydefined goals, doesn’t fit into a company’s giveninfrastructure or fails to sustain employee com-mitment. From a technical perspective, the man-agement should consider the following factors:

Deployability: is the new sys-tem easy to deploy, even to re-mote locations?

Does the new hardware andsoftware follow industry stan-dards to easily integrate into anexisting system? Is the systemflexible with regards to opera-tional platforms, and can it runon hardware and operating sys-tems already familiar to the ITstaff? If desired, can a develop-ment or test system be imple-mented to allow proceduralvalidation prior to full implemen-tation? In a geographically dis-tributed system, is centraladministration available?

Compatibility and stability: isthe system compatible with exist-ing infrastructure and industrystandards? It’s important to consider, that any non-standard components would require additional ITresources for operation or maintenance. The po-tential capture system should adhere to industrystandards to maximise reliability, ensure securityand simplify integration. If you are looking to ex-pand or improve existing business processes, anynew infrastructure must be resilient so as to ensurehigh availability for business users.

‘Customisability’: can the new system be cus-tomised to meet specialised or changing businessrequirements? Business requirements are not stat-ic. Though a potential new system may offer a largevariety of customisation aids, often individual re-quirements demand for a level of customisation be-yond this offer. In this case, the new capturesolution should comprise an extensive set of pro-gramming interfaces.

Scalability: can the new system be easily scaled tomeet business demands? When expanding a busi-

ness, a scalable system that can meetfuture business needs is essential.The new system should easily allowone to expand hardware as well asany licensing requirements that im-pact production.

Maintainability: is maintenanceeasy to perform using existing ITstaff knowledge? It is not enough todeploy a compatible, stable, andscalable system. Any new solutionmust also be easy to maintain. Thenew solution should allow one toeasily implement updates and up-grades while keeping the systemat a high level of availabilitywith easy troubleshootingand data backup op-tions.

Security and useraccount manage-

ment: can IT staff members eas-ily perform system security andcontrol user accounts? Once de-ployed, system access control anduser account management be-come important. Maintaining useraccessibility and security must besimple and should follow standards.By following industry standards, IT staff

can use known procedures to manage user ac-counts. Centralised user management should beconsidered.

Affordability: is the new system affordable and canit provide a good return on investment? IT man-agers should look at implementation costs withregard to the benefits provided to the business.Often, elements such as excellent customer ser-vice, reduction in labour costs with regard to con-tent capture and management, and IT staffeffectiveness in dealing with industry standardsystems must be considered.

The human factor: remember to consider thehuman factor amongst these technical points.Without a full commitment (right from the start atthe design stage) from the employees who have todeal with the new system on a daily basis, the in-vestment will fail. Besides spending on the technol-ogy itself, thought should be given to spending ontraining and education in order to unfold the fullpotential of the new solution. �

An automatic decision Thomas S. Senger guides us through the advantages and pitfalls of implementingprocess automation technology.

116 www.bme.eu.com

Thomas S. Senger, SVP ofApplications Software SalesEMEA at Kofax, oversees allcustomer-facing sales andservices functions inalignment with thecompany's newly-introducedhybrid go-to-market model,which supports both directcustomer engagements andindirect sales through thechannel and with alliancespartners. He manages ateam of 150 sales and serviceemployees.

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LOYALTYBEYOND REASON

Saatchi & Saatchi has consistently dominated the world advertising scene and has the power to transform ordinary brands into global success stories. Diana Milne catches up with its CEO for EMEA, Simon Francis, and asks how to get ahead in advertising.

MEDIA

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He may not be a household name but Simon Francis is the brain behind some of Europe’s best-known advertising campaigns – from Pampers and Toyota to Guinness and T-Mobile. As Saatchi & Saatchi’s CEO for EMEA he has the power to make or break a brand and to create what he de-

scribes as “lovemarks” – products which attract “loyalty beyond reason” from their customers.

His fi rm has dominated the global advertising industry since the 1970s and currently employs 6000 people across the world, with 150 offi ces in 86 countries worldwide. In the past fi ve years alone it has won 3500 awards for creative work, most recently scooping six Lions at the Cannes International Advertising Festival 2009 for its T-Mobile ‘Dance’ advertisement.

Th e T-Mobile campaign featured real life footage of 350 people breaking into a spontaneous dance routine at London’s Liverpool Street station among the rush hour crowds. Th e footage was later shown across online, direct and retail channels, as well as through a specially created YouTube channel. It encompasses, says Francis, what advertising in 2009 is all about and refl ects the dramatic technological changes that are shap-ing the industry. It is no longer enough to target a captive audience on prime time television. Th e fragmentation of the media landscape and the vast array of media choices available mean advertisers must try harder than ever to engage with consumers on all fronts through digital, televi-sion and print but, most importantly, through word of mouth. “Tech-nology has completely transformed the industry,” says Francis. “It’s very challenging to go to market with push messaging right now because the audiences’ choices of media are so fragmented. Maybe 15 to 20 years ago, 34 percent of the UK population would be watching Coronation Street. You could reach 34 percent of the population in a 30-second advertising slot and talk to people of all social typologies. Now the average rating is much lower for all TV programmes because there are so many diff erent channels and shows.”

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Falling revenueTh e decline in print and television advertising in the past decade has

been well documented. According to the latest fi gures by the Advertis-ing Association, newspaper advertising fell by 12 percent last year

in the UK alone and TV advertising dropped by fi ve percent. Meanwhile, internet advertising rose by 17.3 percent. Given

these fi gures, does Francis believe there is still a future for traditional media in Europe? “We would say our primary media now is people. Th ey do the marketing work for us. Th e traditional media are still amazingly good conversation starters. And if you look at our case histories they make full use of traditional media to start

a socal networking conversation. But that is now carried on through social media, such as blogs, Twitter and Face-

book. If you have an idea that is so compelling, arresting and enjoyable then people will come to your idea and propagate it.”

Th e pressure for Francis and his team to come up with these com-pelling ideas is growing in the face of harsh economic conditions and their clients’ ever shrinking advertising budgets. “We’ve seen, on aver-age, advertising budgets shift 10 to 20 percent south depending on which market you are in and how the client is placed,” says Francis. “Clearly some market leaders are more resilient and have carried on and main-tained their expenditure. Some of the middle-ranked and smaller players have found it more challenging and they are the ones that have been the most impacted.” He goes on to say that advertising markets that have suf-fered the biggest impacts are in the UK, Spain, Italy and parts of Russia.

While he maintains that shrinking budgets have not stifl ed cre-ativity, he says that economic conditions are setting the tone of today’s advertising campaigns, with a move away from extolling the virtues of excessive spending and an emphasis on what consumers are really looking for: “Hope, joy and optimism.” Francis adds: “Creativity isn’t something that is budget related. But there’s a diff erent style emerging and clearly wanton expenditure is not in. It’s not appropriate and many people won’t be advertising in that way. But many people are looking for optimism, for hope and for humanity, and these seem to be becoming recurrent themes.” He goes on to say that with recessionary conditions, it is the products that can off er that “emotional connection” with the con-sumer which will beat the competition, even products that are off ered at a lower price with the same functionality. “In an age where there’s not much money around and times are tough, people will, of course, look to compare and contrast brands and services. Th ose brands and services that can off er an emotional reward, beyond just the functionality of the products, are the ones that get loyalty beyond reason. Th e brands that can off er hope, joy and an emotional connection to the consumer are the ones that will prosper when all the other brands will suff er.”

Creating lovemarksSaatchi & Saatchi’s belief that customers’ buying choices are made

on the basis of emotion, not rational thought, drives its creative process-es. It aims to make every brand in its portfolio a ‘lovemark’ and, when creating a new campaign, it embarks on a complex process of analysis to establish the emotional connection the product has with consumers.

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“We do extensive research on our client’s business where we look at how respected they are and how loved they are. We plot them on a map versus the competition and then we work out a plan to either increase the level of respect towards the brand or increase the amount of love it engenders among consumers. Th en we put together a plan accordingly. For many brands it’s about the emotional side of things rather than the functional side of things. It’s a very scientifi c plan constructed to build ‘lovemarks’ over a period of time.”

Increasingly, says Francis, companies must prove their moral cre-dentials in order to establish an emotional connection with an increas-ingly socially conscious consumer – with sustainability and corporate social responsibility becoming key diff erentiators between brands. With this in mind, last year the company acquired the environmental sus-tainability agency Act Now run by Adam Werbach, one of the founder members of Greenpeace and the youngest ever member of the US-based environmental organisation, the Sierra Club.

“‘Lovemarks’ are all about standing for something,” says Francis. “And increasingly many consumers will make choices and decisions

based on how well a product or service performs for them but also for the world at large. Th e advice we’d off er our clients is to align their in-ternal impact on the world to what the consumer wants and to build that into our ‘lovemarks’ thinking.”

He cites the example of how this strategy was used to create a cam-paign for Pampers, which he regards as one of Europe’s most successful ‘lovemarks’. “At Pampers we put in place a programme where every time somebody bought a pack of Pampers one euro went towards a vaccine that would save a child’s life. It was an extraordinary programme we put in place with UNICEF and it’s a great example of how a brand can change the world and off er mothers an emotional reward whilst at the same time driving the business forward.”

Great mindsIt is the job of Saatchi & Saatchi’s 2500 strong European creative

team to come up with the ideas that will build emotional connections between brands and consumers – a process which Francis says relies for its success on the team being “incredibly brutal creatively”, an approach characterised by the company’s catchphrase for the process; ‘Let’s kill some puppies’. “It’s a crude phrase but it’s true. You fall in love with your ideas and you don’t want any harm to come to them but to get ideas such as the T-Mobile campaigns, you have to be utterly brutal and use consumer testing and gut instinct to make your choices,” he explains. Describing the process he says: “We have these huge tribes where we have creatives from all over the world work for two intense days where we fi ll rooms and rooms with ideas which we will whittle down to 10 or 15. Th en through consumer research we whittle them down to one or two. We do some development work before one comes out at the end of the process. But fi rst we have to kill some puppies.”

Despite having won countless awards for his teams’ creative work, Francis says he is by nature never fully satisfi ed by the outcome of a cam-paign. “We’re incredibly proud of all our campaigns and hate them all in equal measure.” Th is uncompromising, perfectionist approach extends to Saatchi & Saatchi’s working culture, which Francis admits is not for the faint-hearted, with anybody not deemed to embody the agency’s values quickly weeded out. “It’s a tough place to be if you want to cruise. It’s a very tough place if you are not creative or you won’t put yourself at the service of an idea. For every single individual we have a peak per-formance appraisal system. We are quite brutal with people that don’t match our spirit.” Th at spirit is built on Saatchi & Saatchi’s twin pillars of philosophy: ‘Nothing is impossible’ and ‘One Team, One Dream’. Francis says the strong emphasis on good teamwork is the real key to Saatchi & Saatchi’s success in the cut-throat competitive advertising world: “In many agencies people don’t work together and egos get in the way,” he says. “Profi t and loss accounts get in the way, and reporting lines get in the way. Saatchi is unlike anywhere else I’ve worked before, where we have one team, one dream.”

“We’re incredibly proud of all our campaigns and hate them all in

equal measure”


Mergers are dominating the business headlines today,with Cadbury, Opel/Vauxhall and T-Mobile all in-volved in high profile M&A activity. But, while suchannouncements may prompt a flurry of activity byshareholders, the failure rate of such mergers is high

– despite the detailed work that goes in to preparing such deals. In this ar-ticle I shall dispel the myths behind mergers and explain the reasons whymost of them fail:

SynergiesSo often the synergies between companies are based on technical

know-how, complementary products or market access. This may besound in theory, but the execution of such synergies often fail becausethis requires extra efforts from all employees in both companies.

Meanwhile most employees feel they were giving 100 percent already andso it requires a major challenge for the companies to attain these in-creased efforts. Above all, to gain synergies, as with most gains for M&Asthere needs to be change. But, change is difficult, particularly in largecompanies and change integration for full synergistic gain can only hap-pen by creating the framework in which people can happily and practi-cally work. Even in these modern times, business leaders think thatchange and synergies can be forced through and often will say publicly“we will push this through”. Therein lays the admission that there is abarrier to overcome.

Back office savingsThere only needs to be one HR, finance, IT, manufacturing, and mar-

keting function in any newly merged company. Reports on the Orangemerger predict €600 million in back office savings. This number is not triv-ial and behind this will be vast amounts of disruption. Look what happenedwhen NTL bought Virgin or when Barclays bought Woolwich – there waschaos and immense customer frustrations as the service levels fell duringthe merging of functions. That said, the back office savings are usually themost reliable source of upside in an M&A.

Life after a mergerStephen Archer of Spring Partnerships exposesthe harsh reality behind high profile mergers.

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Strategy and growth modelsTwo businesses coming together will often have completely different

strategies and growth models. These are the fundamentals of a business,often unseen from the outside, though usually detectable. M&As often de-mand some alignment of companies’ strategies. This assumes that one ormaybe both were flawed in the first place. The result is either a new one orthe imposition of one party strategy on the other. This usually leads tosome level of failure. One only has to look at GE and its ‘blueprint’ for ac-quisitions to see how the ‘one size fits all’ approach to business strategyleads to failures. Each business, market and customer franchise is uniquein some way – no matter how small that may be. The risk is that this couldget overlooked though ignorance or arrogance.

Brand management Brands are often ignored by the M&A planners because they fail to

fully understand what elements make up brands and their equity. The sameshould not be true of the boards but none the less, how often have we seensituations in M&As where verystrong brands are swept aside bythe name of the new owner? Thiscan have disastrous conse-quences, destroying the value andalienating customers. All brandsshould be respected and investedin where they have current andfuture value.

Customer focusCustomers are too often for-

gotten in the M&A frenzy.Boards do not stop and say,“What will the customers think ifwe shift distribution and adoptcommon pricing models”? Thecustomer is the lifeblood of the business along with its cash. However,many M&As still take place with the arrogance to ignore the customer.

Management competenceIs the competence in both organisations to equal measure? If not then

how will balance be achieved? Does the acquiring company really under-stand its new acquisition? Too often the acquirer parachutes in its ownteam and fails to grasp the idiosyncrasies of the acquired company. If anew, single board is to run the new combined company then so often thisboard cannot manage the complexities of the new, larger organisation.Simple management weakness is a common trap.

Company cultureWhen P&G acquired Gillette in 2005 the cultures were quite differ-

ent. P&G understood this and eventually absorbed Gillette into its ownculture. This is so often the way and can work well. But clashing culturescan be the undoing of the deal unless a proper culture adoption, harmon-isation or a change programme is put in place. This needs to be managed

well with strong corporate champions. Culture is a great enabler but it canbe the hidden destroyer of a merger.

LeadershipOrange has outstanding, proven leadership. All too often leadership is

tested beyond its abilities when it comes to handling a bigger commercial en-terprise with integration challenges. This is one area that is more vital thanmost. For shareholders the true motivation of leadership is critical. This mustbe fully understood.

The chaos theoryIn the end, some deals take place for reasons involving too much hubris

and vanity and not enough analysis of the business case. They may also takeplace out of desperation; the desperation to grow, add products, satisfy thecravings of shareholders or because of unbridled ambition. No deal shouldbe analysed to death, but no deal should be done except in a mood of reali-ty and sanity. �

“Two businessescoming together willoften have completelydifferent strategiesand growth models.These are thefundamentals of abusiness, oftenunseen from theoutside, thoughusually detectable”

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Can businesses justify VIP/corporate aircraft in today’s economic climate?Dave Jackson. This is not really a new question, but is a question that organ-isations should be asking themselves all the time. Today’s global recession hasraised the profile of the question again, as many companies lay off employeesin a bid to restore their trading position. In this environment, any sign of afrivolous or unjustified expense is being examined, and amongst those are thecorporate aircraft.

We believe the case for efficient use of point to point or shuttle travel re-mains as strong as ever and more so as some regional operators cut back ontheir routes, forcing certain clients back to a less efficient hub-and-spoke trav-el pattern.

In the current economic climate, rapid communication with employees,clients and other interested parties is best done face to face and this can bedone efficiently and cost effectively with a corporate aircraft, especially in amulti-site/multi-location environment. Having said that, there are expensiveand less expensive ways to get from A to B to C and back to A.

New corporate aircraft are not a necessity; used aircraft or used and re-furbished aircraft offer great value. Travel within regions, such as Europe, USand the Middle East can also be achieved very cost effectively in high specifi-cation refurbished aircraft coming from the regional airline sector, such as theBAE 146, CRJ and of course the Dornier 328. These aircraft have been builtspecifically for heavy duty regional use and are well supported and reliable,with a ready stream of qualified pilots and mechanics.

An ex-regional aircraft with full size cabin and a beautifully refurbishedbespoke interior can be far more cost effective than a glamorous ‘pocket rock-et’. Given crowded airspace and tight airport slot positions, speed is not al-ways an advantage, certainly not for one-hour to two-hour flight sectors. Insummary, there is still very much a place for the corporate aircraft and it canfully justify its existence and future use.

What is the future for long haul, such as intercontinental corporate jets?DJ. This is not an area we at 328 Support Services are heavily involved in; how-ever, I can offer a personal view. Beyond the need for head of state or govern-ment delegations with particular security needs, it is hard to see how today’sfull service Business Class and First Class service offering; from the major air-lines, can be beaten on a cost per kilometre/mile basis.

The major airlines continue to support all of the most important inter-continental destinations and airlines such as Lufthansa and Emirates contin-ue to develop that network. I believe international long haul on a majorairline, perhaps complemented by a local corporate jet network such asNetJets, is probably a more cost effective solution, certainly in the case of or-ganisations with multiple travel requirements but perhaps only one or twoaircraft. Within a region, corporate aircraft can be repositioned much morequickly and cheaply; dead legs are less costly and on occasion could be dove-tailed with scheduled airlines or a ‘by the hour’ provider.

Will fractional ownership replace ‘by the hour’ usage models as the wayforward?DJ. We believe both have a place and certain advantages, dependent on specificcircumstances. As I said earlier, all forms of spend, especially if it might be clas-sified as ostentatious will be clamped down upon. No one wants to own up tobeing the guy responsible for the €25 million corporate aircraft sitting on the bal-ance sheet and doing five hours a month flying. However, there are some greatvalue propositions available now, and again there is a case for the corporate air-craft, either shared amongst geographically co-located businesses or individuals.The fractional model works especially if supplemented by ad hoc charter. The‘by the hour’ model exemplified by the likes of NetJets avoids the balance sheetchallenge, and for low-time users is probably still the best way forward. The an-swer to both points is somewhat based on what you are comparing to. If you havea low cost, well-specified or refurbished ex-regional jet it could be that over a rea-sonable lifetime it is cheaper to own or part-own than rent. n

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Despite businesses being buffeted in this period of economic turbulence,Dave Jackson says corporate air travel can reach new heights.

EXECUTIVEINTERVIEW

“No one wants to own up to being the guyresponsible for the €25 million corporateaircraft sitting on the balance sheet and

doing five hours a month flying”

Dave Jackson, Chief Executive Officer at 328 Support Services GmbH, has over 25years’ experience in the aviation industry since graduating with BA (Hons) inMarketing (Engineering) in 1984. His background has been in sales and marketingand general management, with a strong emphasis on business improvement andturnaround within global multi-division/multi-site environments, with companiessuch as Lucas Aerospace, Aviall Inc., and Hunting PLC.

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From its cryptic name to its unconventional team of inspectors, Mr and Mrs Smith has truly broken the mould when it comes to hotel guides. Managing Director James Lohan founded the company with one target market in mind – young profes-

sional couples with plenty of disposable income to spend on luxury hotel breaks. And despite having targeted such a niche audience, the company has expanded far beyond the former party organiser’s expectations, and now off ers a three tiered membership service with 75,000 subscribers, which includes a 24-hour travel booking service. It’s a great achievement for a company that was started by Lohan and his wife, Marketing Direc-tor Tamara Heber-Percy, with the sole aim of fi nding romantic places where couples like them could spend the weekend: “We had no idea it would get this big,” he admits. “It was one of those lovely hobby busi-nesses that crept up on us and had this huge initial success.”

Small is beautifulDespite having grown on a global scale the company has stuck to

its original business plan of only featuring in-dividual boutique and luxury properties – all of which have been reviewed anonymously by couples aft er spending the weekend there. “A lot of our properties are owner-run so we’re looking for that real passion that’s behind the hotel rather than the corporate giant behind it,” says Lohan. “We’re looking for hotels where the attention to detail is second to none and where there are some surprises that you wouldn’t get in other hotels. Ulti-mately it all culminates in the experience you get as a couple.” To ensure the hotels in its collection meet these specifi cations Mr and Mrs Smith handpicks its inspectors to ensure their tastes match the company’s

brand values. It’s a far cry, says Lohan, from the traditional image of hotel inspectors: “We use what we call our taste makers. We shied away for professional inspectors with huge manuals and tick boxes on how the napkins should be folded or how big the diameter on my egg yolk needs to be. Because those are the things that, frankly, don’t matter at all as far as we’re concerned. We send people away who may already have touched us in some way. We may have drunk in their bar or eaten in their res-taurant. Th ese taste makers are people who already aff ect our every day lives.” Lohan goes on to say that the company has even enlisted the help of celebrities to review hotels, including Stella McCartney and Dita Von Teese. Unfortunately, he says, since the business has expanded he only rarely gets the chance to review properties himself. “We’re also known a bit now so we have to keep the anonymity up,” he adds.

One of the most labour intensive parts of his job currently is fi lter-ing through the many requests from hotels asking to be reviewed for the guides. “We get about 400 hotels approaching us at the moment and it’s a nightmare to go through that. We have a huge queue. We’re pretty up to date. We’re not at the cutting edge of every single boutique hotel that

opens up but we’re not far behind.”

New horizonsTh is high demand, he says, is

partly due to the fact that Mr and Mrs Smith – though initially based in the UK and Europe – has now expanded

its horizons and opened offi ces in the US, Australia and Asia Pacifi c. Th e US, says Lohan, is a particularly hard nut to crack: “It’s blooming diffi cult

but we’re doing ok. We are getting some traction there and it’s growing soft ly, soft ly. Th ere is a lot to be learnt about the US. It’s a big, big place. When starting

HOSPITALITY

Mr and Mrs Smith is the guide every boutique hotel wants to be a part of. Managing Director and co-founder James Lohan tells Diana Milne about its unique appeal.

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It’s an ambitious plan in an economic downturn that has dealt a harsh blow to the global hospitality sector. While he admits his staff are having to work harder than ever to secure sales, Lohan says his company is doing “really well” despite the recession, having experienced 50 percent growth since last year. “I will say people are having to work a bit harder because some of the hotels are suff ering but we’ve got such a varied collection and we’re not just about fi ve-star hotels. We have an ever growing boutique B&B col-lection and we also represent great pubs and restaurants with rooms.”

He goes on to say that he doesn’t believe the Mr and Mrs Smith cus-tomers are prepared to give up their luxury travel treats, despite having to make other fi nancial sacrifi ces. “People are looking for deals. But they are not willing to give up their travel. I wouldn’t want to be in the new kitchens or cars business. But I think travel is the last thing to go.” Nev-ertheless the company is diversifying its off ering and branching out into more budget friendly options, such as self-catering properties. Th is, says Lohan is also due to the fact that the profi le of its customers is changing to include couples with children: “Th e average age of our customers is 35.5 and about 55 percent are female. It’s the sort of cliché cash rich, time poor urbanites, city dwellers trying to escape. But we are having a few Mr and Mrs Smith plus ones now. So we’ve actually started up a stylish self-catering section as well which is a big new trend.” But, he explains, as with everything Mr and Mrs Smith does, this is self-catering with a diff erence: “People are very willing to go for self-catering but they are not willing to sacrifi ce style and go to some chintzy, old fashioned place. We have people who bring in their own chefs and DJs, for example.” It’s all a far cry from what the average holidaymaker would expect to get from their travel agent. But then nothing about Mr and Mrs Smith could be described as average.

something in the UK if you can get London interested then the message will fi lter out to the rest of the country. In the US you have to try to get everyone interested or you have to take one city at a time, which is the strategy that we adopted.” Th e biggest challenge about the US market is its sheer size, he says: “Th e thing about America is that it’s almost like several diff erent countries in one. Th ey all have diff erent habits in the way they take their travel and in terms of their budgets, their wants and how far they will go geographically. It’s a completely diff erent animal but we’re chipping away at it.” Th ey have adopted a similar strategy in Australia, with an Australia and New Zealand focused guide coming out soon, and Southeast Asia where it hopes to launch a new offi ce this year. Once those markets have been targeted he says the company plans to tackle the Middle East and India.

A GROWING CONCERN The fi rst Mr and Mrs Smith hotel guide was launched in 2003 by Spy Publishing. The online booking service was introduced in 2005 and in 2006 the company set up an in-house reservations team. It has since developed a full three tier membership programme which includes a travel and lifestyle concierge service, and has 75,000 members.

Its latest projects include launching the Smith brand in the US, opening an offi ce in Australia and launching a 24-hour telephone booking service for luxury travel worldwide.

FAMILY FORTUNES James Lohan set up Mr and Mrs Smith with his wife Tamara Heber-Percy, the brains behind the company’s website and online activity. “It’s great, we sit at very opposite ends of the offi ce now which is quite big so we lead very different work lives then we come home together in the evenings” says Lohan. “She’s very much in charge of the website side of things and I’m very much on the marketing and branding side. So it works very well and we complement each other in terms of our skill sets.”

Lohan’s background was in events organising and he formed the London-based party organising company Atomic before founding the restaurant and member’s club The White House. Heber-Percy graduated with a degree in languages from Oxford and worked as a marketing consultant for brands such as Ericsson, Honda, Unilever, and Swissair. In 2002 she left the corporate world to set up Mr and Mrs Smith and her own introductions agency, The County Register.

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These are extremely tough economic times for organisations. What ben-efits can businesses get from arranging conferences at hotels and send-ing staff to events, even at a time when budgets are tight?Nicole Spitz. It is especially when times are tough that companies need tofocus on improving staff performance. The benefits of organising conferencesin luxury venues are numerous. First, efficiency. The various services offeredin a luxury establishment go beyond pampering, aiming to enable optimumefficiency for the participants, whether it be through flexibility and adapt-ability to last minute changes in organisation due to unforeseen changes inclients’ needs, or through the services offered through our concierge. Our en-tire staff is at the service of our clients so that they can calmly focus on the ob-jectives of the conference being organised. Another benefit is stimulation. Achange in environment has proven to be a strong stimulus to concentrationand creativity. And of course, messages that need to be communicated to staff,even the hardest, become acceptable in special places and targets can also belinked to the possibility of returning to such venues as a motivational tool.

Patrizia di Patrizio. Even in these challenging times, companies need to com-municate, incentivise and educate their clients, partners and employees in in-spirational surroundings. However, with reduced budgets, they need to workmore closely with their hotel partners to find creative and cost-effective solu-

tions. Feedback from our customers has been that they continue to want tohold events, meetings, incentives and product launches in luxury hotels; how-ever, they are looking for added value, support, creativity, flexible pricing andROI to help meet revenue and budget targets. Luxury and quality continue tobe very important for all events; for example creating the right impression topotential customers for a product launch is key. It can be short-sighted and afalse economy to step down a category when booking an event if it is spoilt bypoor service on the day, disappointing surroundings and increased stress dueto lack of support in the run-up to the event.

Apart from the recession, what are the other challenges that the hotelindustry faces when encouraging organisations to arrange conferences?PdP. I think that the environment is obviously an issue that will continue togrow and whilst hotels should do all they can to be as cost-effective as they canin their consumption of energy, the challenge is to do so without compro-mising the luxury experience that guests are paying for. Time out of the officeis something that we would like to keep to a minimum. Our 12 city centreproperties are all located in the very heart of their respective cities and are eas-ily accessible from Europe by air and rail, making travelling as efficient as pos-sible. Technology is constantly evolving and there is no doubt that video andweb conferencing are becoming increasingly efficient and possibly reducing

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Despite the proliferation of electronic communication tools, nothing quite compares to aface-to-face meeting at a conference. To discover more, we sit down with two hotel managersspecialising in conferencing facilities.

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the number of meetings required. However, leading conference and incentiveagencies and corporates agree that technology will not replace face-to-facecontact and relationship building. Staying ahead of the competition is obvi-ously key, making sure that we maintain the highest levels of customer ser-vice whilst continuing to be innovative with our product offering. Gone arethe days where people used to book meetings and events years and months in

advance. Today, we are experiencing much shorter lead times for business,which obviously impacts on hotel resources. This situation has obviously beenexacerbated by the recession.

NS. The most important challenge is to offer to these organisations an appro-priate response to their operational and technological needs; moreover, to an-ticipate them. Indeed, even if luxury hotels are luxurious and extremelycomfortable, they must respond to the technological needs of today, they haveto make it possible to use ‘the three technologies’ solutions, with easier accessfor videoconferences, and other Wi-Fi solutions. All-inclusiveeconomical solutions help to facilitate the management of theseconferences and above all, a lot of ‘listening’ is always important.In today’s market technology is in constant evolution, and com-panies are continuously integrating new advancements. Hotelsneed to follow the trends and adapt where the demand becomesincreasingly important.

Could you explain how you market your hotel to attract in-ternational business and how you distinguish yourself fromthe competition?PdP. Outstanding customer service and design are the two things that set TheRocco Forte Collection apart from the competition. Service is at the very heartof the brand, providing the highest levels of bespoke customer service, meetingthe individual needs of our guests and going that extra mile. Each of our 13 prop-erties has been designed to reflect its location. Sir Rocco Forte’s sister, OlgaPolizzi, who oversees design for The Rocco Forte Collection, ensures that localart, accessories and furniture are used, which give the hotels a real sense of place.For example, the bedrooms in one of our recently opened hotels, The Augustinein Prague, reflect the hotel’s monastic past and are decorated with a range of ac-cessories inspired by 1930s Czech cubism.

At the moment, our clients are looking for increased levels of value, sup-port, creativity and flexible pricing to help meet ROI targets. In response tothis, we are working extremely closely with meeting planners and agents todevelop innovative and cost effective solutions that demonstrate excellent ROIfor their meetings, events and incentives whilst retaining high levels of prod-uct and service. The success of many of our partnerships can be attributed to

our ability to add value to our core product offering in response to our clients’budgets and demands.

NS. The legendary name of Le Negresco is a powerful marketing tool in itself,which our sales and marketing team uses in their various actions on the in-ternational scene, consolidated by a strong presence in various press supports

all over the world. Le Negresco’s strategy is aboveall in its offering, which is unique. Its history, its in-estimable art collection, and the aura that is to befound in this hotel make it an unforgettable venuefor any event. Each of our nine meetings roomshas its own ambience, and is decorated corre-sponding to a different period in history, which al-lows our clients to choose according to their tasteas well as to their needs. In addition to the uniquedécor, we have the good fortune to have an excel-lent chef, Jean Denis Rieubland, who was awarded

one of the Best Crafstmen in France in 2007, and who is not only in charge ofour Michelin star restaurant Le Chantecler, but also our banqueting menus.

What does the future hold for hotel conferencing and how will the mar-ket evolve?NS. I hope that the future holds an increase in hotel conferencing as it is cer-tainly beneficial for companies, staff and of course the hotel industry. LeNegresco itself is evolving in its structure and has planned an important ren-ovation project to improve the solutions offered to the companies’ needs.

These works, both architectural and technical, will complete the hotel’s offer-ing to better respond to our customers’ changing needs; in order to continue torepresent excellence for all our guests. As we are still in the midst of finalisingall the details about this exciting project, I won’t elaborate on this quite yet,but do keep an eye open for upcoming press releases.

PdP. I think the future will see the boundaries pushed even further with luxu-ry meetings and event planners looking for something different for theirclients. More unusual destinations will appear on the map as new flight routesopen up. Planners will look for hotels that inspire people with their uniquesurroundings and activities will need to be even more adventurous and adren-alin-fuelled. Our new golf and spa resort, Verdura in south west Sicily, is setto be a hot destination for meetings and events in 2010. The surrounding arealends itself perfectly to a whole host of exciting activities, including water-sports, cultural and historical site visits, and vineyard and gastronomy tours.The conference centre is housed in a split-level, stand-alone building withviews of the surrounding olive groves and coastline. �

Nicole Spitz is the General Manager of Le Negresco.

“In today’s market, technology is in constantevolution, and companies are continuouslyintegrating new advancements. Hotels needto follow the trends and adapt where thedemand becomes increasingly important”

Patrizia di Patrizio is Director of UK Sales forThe Rocco Forte Collection

“Our clients are looking for increased levels of value,support, creativity and flexible pricing to help meet ROItargets. We are working extremely closely with meetingplanners to develop innovative and cost-effective solutionsthat demonstrate excellent ROI”

Hotels RT:4August 6/10/09 09:12 Page 136

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to the major hotels and stops at the beaches. Alternatively, take a regular bus or hop in a taxi, both of which provide a cheap way of seeing the city during your stay. With a taxi, make sure the meter is switched on and reset from the previous fare. Th e city also has two subway lines comprising of 42 kilometres of track and 32 stations. However, it only goes as far as Copacabana, which is not particularly convenient if you are staying in the touristy parts of Ipanema and Leblon.

RelaxCariocas like to get down to the

beach to play volleyball or just pose in skimpy swimwear at every available opportunity. Copacabana is home to the world famous four-kilometre

AboutRio de Janeiro, which translates as River of

the January, is known simply by Brazilians as Cidade Marvelosa (Marvellous City). It is also the second largest in Brazil and the whole of South America. Famed for its laid back lifestyle, Rio is a unique city with so much to discover and explore. With Rio being situated in the south-ern hemisphere, summer runs from November through to February, culminating in the atmo-sphere-soaked carnival when the locals (Ca-riocas) don extravagant feathered costumes and party the night away aboard spectacular fl oats. Rio has recently secured a sporting coup – it will be host city for the 2016 Olympic Games.

Getting aroundIf arriving by air you will usually land at the international airport

20 kilometres north of the city. An hourly shuttle bus ferries passengers

IN THE BACK138 CITY GUIDE

Time: -3hrs GMT | Currency: Real | Language: Portuguese | Population: 6 million

Rio de Janeiro

And on the eighth day God created Rio, or so the saying goes. This magical place is packed with contrasts: sandy beaches and a bustling city centre, jungle-covered peaks and a vibrant nightlife, rich and poor… Business Management takes you on a guided tour.

n

ce ised peaks uided tour.

TOURIST TIPS• This is a place where the wealthy rub shoulders

with the impoverished so crime is a problem. Never venture into a favela (shanty town) unless it’s with an organised tour and stay off Copacabana beach after dark. Take precautions with your valuables at all times.

• Try to learn some key Portuguese phrases. Not many people speak English but a little bit of effort to learn the basics will go a long way when conversing with the locals.

• Rio has the world’s largest urban forest in the world, Tijuca, so make sure you get out and explore the city’s greenery.

Rio de Janeiro carnival celebrations Christ the Redeemer Statue

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stretch of sand but Ipanema beach, just around the corner, is just as popular. It’s a great place to order a coconut drink or Brazil’s famous cocktail,

caipirinha, and people watch. If you have a head for heights then for around €100 you can soar

like a bird over the city by taking a tandem hang-gliding fl ight. A video camera attached to the hang-glider cap-

tures your bird-like descent to a quiet beach west of the city. Something you don’t always associate Rio with is a picturesque lake but Lagoa Rodrigo de Frei-tas sits behind Ipanema beach – perfect for chilling

out on a hot day. For those who like a fl utter, Rio also has its own racecourse in Leblon. Check on which days

race meetings take place when you arrive.

SeePerhaps Rio’s most iconic attraction is the giant statue of Christ,

known as Christ the Redeemer atop Corcovada mountain. Th e ascent to the summit is by train, although views of the sprawling city can be spoilt by cloud cover and bad weather so plan ahead. Another spectacular view can be had from the cable cars that whisk you to the top of Pão de Açúcar or Sugarloaf Mountain as it is more commonly known. Brazilian’s love their football and the historic and colossal Maracana stadium is a great experience, especially on match days. Tickets are fairly easy to acquire – ask at your hotel for details. In February every year the razzamatazz of the world famous carnival comes to town. Be warned though, accom-modation oft en needs to be booked months in advance. It’s a similar predicament for New Year’s Eve.

IN THE BACK139CITY GUIDE

SleepCopacabana PalaceWith its classic white façade, this is perhaps the most famous hotel in the whole of Brazil. Sitting proudly slap bang on Copacabana beach, this stunning 1920s hotel has had its fair share of notable guests, including the Rolling Stones in 2006 just prior to their performance on the beach in front of 1.3 million fans. Apart from the usual facilities, this hotel features a large outdoor pool, tennis court, health club, fi tness facility, and spa and sauna.Rates: From €280 a night.

La SuiteLocated in Joatinga, this cliff-side retreat is a boutique hotel boasts just seven stylish rooms. Its secluded and intimate nature, together with a stunning setting, makes this a real gem in Rio. As well as an infi nity pool and fully loaded iPods for guests, there is a helipad and private beach within walking distance. For €190 an ‘insiders’ tour’ of Rio will show you the sights and sounds you won’t necessarily unearth in your guidebook. Be warned though, credit cards are not accepted but pets are welcome.Rates: From €300 a night.

EatCasa da FeijoadaThe meal feijoada, a meat stew, is the national dish of Brazil and this small and cosy restaurant is the best place in the city to experience it. Traditionally served on a Sunday, the restaurant place serves up feijoada seven days a week.

Madame Butterfl yThis Asian/Pacifi c eatery is a must for Japanese food lovers, and was elected best in its category by gourmet specialists. A highlight of the menu are the fi sh with shimeji mushrooms in ginger and sake sauce, as well as a variety sushi and rolls with unusual shapes.

Copacabana Palace

Feijoada, the national dish of Brazil

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IN THE BACKTHE KNOWLEDGE

LufthansaFor those who working fl ights,

Lufthansa’s First Class cabins are ideal. The two metre long fl at beds are equipped with a lap top connection and personal monitor as well as plenty of storage space. Each First Class seat also has a socket that fi ts most plugs without a monitor. Wine lovers can enjoy an extensive selection from Lufthansa’s Vinothek Discoveries menu and onboard long haul fl ights from Germany, Japan, India, China and Singapore, chefs create meals on request for passengers.

140

<<< British AirwaysBritish Airways’ First Class cabins have been designed with country house hotel luxury in mind. Passengers are provided with hand made spa products by the British chemist and perfumer Harris and fl at beds are decked out in Egyptian cotton bed linen and velvet cushions. The menu has been created by some of the world’s fi nest chefs and a bistro selection is also available. There are over 200 in-fl ight entertainment channels on offer, including an extensive movie library.

>>> Emirates AirlineWith seven course meals served on bone china tableware on tables laid with fi ne linen and fl owers, Emirates First Class passengers soon forget they are on board a plane.

An advanced hand-held controller allows passengers to personalise every aspect of their experience and those in the A380 can enjoy the comfort of a fully fl at bed complete with massage facilities. When First Class passengers land, Emirates’ fl eet of complimentary chauffeur-driven cars are on hand to take them to their next destination.

The high lifeThis issue we bring you the lowdown on the best fi rst class air travel facilities on offer.

Knowledge.indd 140Knowledge.indd 140 6/10/09 09:29:116/10/09 09:29:11

IN THE BACK141THE KNOWLEDGE

<<< LufthansaFor those who need to work on a fl ight, Lufthansa’s First Class cabins are ideal. The two-metre long fl at beds are equipped with a laptop connection and personal monitor as well as plenty of storage space. Each First Class seat also has a socket that fi ts most plugs. Wine lovers can enjoy an extensive selection from Lufthansa’s Vinothek Discoveries menu and on long haul fl ights from Germany, Japan, India, China and Singapore, chefs create meals on request for passengers.

>>> Air France If you crave privacy on board your fl ight then fl y with Air France’s First Class service La Premiere. The cabins comprise of only four to eight seats and recent renovations have added 50 percent more personal space for passengers.

Each passenger has a 10.4-inch interactive video screen and an auto massage feature on their bed. The seats transform into two -metre long beds and passengers are provided with pillows and duvets.

Knowledge.indd 141Knowledge.indd 141 6/10/09 09:29:176/10/09 09:29:17

IN THE BACK142 IN REVIEW

Even 12 months on from the breakdown of Iceland’s economy, the scale of this tiny nation’s downfall is still hard to comprehend. Th is is a country with a population of just 300,000 that up until the 1980s was heavily reliant upon the cod fi shing industry. However, by the end of the century, it had transformed itself into a major player in world fi nance, building an international banking empire worth 12 times its GDP. As Chief Economist at Kaupthing Bank, the largest Icelandic bank before the collapse, Ásgeir Jónsson examines the country’s implosion in painstaking detail: where it all went wrong, and the pivotal role the UK played.

BM says: A well-written and in-depth account of the chain of events leading to Iceland’s collapse from an expert behind the scenes in Iceland.

Why Iceland? How one of the World’s Smallest Countries Became the Meltdown’s Biggest Casualty, by Ásgeir Jónsson

Let’s face it, most of us wish we could deliver intelligent and compelling speeches. Some business lead-ers are naturally gift ed speakers but others need a helping hand with getting their message across to the media, shareholders and the public. Th is new book by executive coach Christopher Witt, who has almost three decades of professional speaking experience, explains how real leaders speak to make a diff erence, to promote a vision, and to change the way people think, feel and act. Witt guides the reader through diff erent speaking scenarios, off ers advice on how to prepare and lists the dos and don’ts when delivering an all-important speech.

BM says: A really eye-opening book that off ers genuine tips and advice on how to engage with an audience and, crucially, get their full attention.

Real Leaders Don’t Do Powerpoint How to Speak So People Listen, by Christopher Witt with Dale Fetherling

Swedish furniture maker and brand phenomenon Ikea has changed the way we furnish homes – and even made Swedish meatballs an essential part of the shopping experience. Lewis explains where those strange furnishing names come from, why Ikea executives never stay at the Marriott, why the furniture didn’t initially prove a hit in the US and whether there is a secret route through the store for those wishing to skip the kitchen and bathroom displays. She also reveals that some one million customers visit a store every day, 28 million Billy bookcases have been sold since 1978 and that the average age of an Ikea customer is 42. Th ese are just a snippet of the detailed facts this book off ers on everything you ever needed to know about Ikea.

BM says: Copious amounts of eff ort and research have gone into Lewis’ book, which provides a fascinat-ing and amusing insight into the story behind Ikea’s dominance.

Great Ikea! A Brand for All the People, by Elen Lewis

Business Management trawls through the latest book releases and discovers advice on perfecting speeches, how a furniture maker became a global phenomenon and why an island nation’s economy collapsed 12 months ago.

On the shelf

BookReviews.indd 142BookReviews.indd 142 6/10/09 09:02:196/10/09 09:02:19

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

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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: US

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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

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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.Available for: US, Middle East, Russia

Find out more:

www.busmanagement.com

ALSO AVAILABLE FOR: US & MIDDLE EAST

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IN THE BACKOBJECTS OF DESIRE 144

Technology for today’s executiveWe cast our eye over the latest gadgets on the market.

<<< Toshiba NB200-10ZIt feels as if we are drowning in netbooks in the run up to Christmas, such is the avalanche of dinky ma-chines hitting the market from a whole host of manufacturers. Th ese fi rms have quickly cottoned on to the fact that most people only need the basics from a portable machine, although it has to be said that today’s netbooks are pushing into the realm of the fully-fl edged laptop. Toshiba’s latest eff ort ships with a good 10.1-inch screen, 1GB of RAM and an impressive 160GB hard drive. It has a great battery life of nine hours

and aesthetically, the NB200 at €350 looks the business although its faux metal keys feel a tad cheap.

Desirability rating: aaa

>>> Nokia N86In the world of mobile phones 12 months can feel like an eternity. What was a coveted piece of tech-fi lled gadgetry can soon look and feel prehistoric compared to newly released products. Not one to hesitate with a product update, Nokia’s very good N85 mobile phone has been replaced by the N86. Th is is the Finnish company’s fl agship camera phone, boasting a tasty 8MP camera. Although images are not perfect, this 149-gram handset takes the best photos seen on a phone to date. And its super-sharp 2.6-inch OLED display is excellent for reviewing shots.

Desirability rating: aaa

>>> Philips 21:9 LCD TVA few years ago we began dumping our old 4:3 ratio TVs for 16:9 widescreen models with high defi nition capabilities. Now comes a widescreen LCD TV from Philips with a 21:9 aspect ratio, which matches the movie format used by directors and means no letterbox black bars at the top and bottom of the screen. At 56 inches in diameter it may sound very large but in reality it isn’t because of its ultra widescreen frame. It also boasts Ambilight Spectra 3 and Perfect Pixel HD Engine to maximise the cinematic feeling. While this TV is perfect for high defi nition movies, watching any-thing incompatible with this new screen format produces black bars at the sides. Overall however it’s superb as a cinema screen albeit with a heft y price tag of €5000.

Desirability rating: aaaaa

<<< Panasonic HDC-TM10With most mobile phones now boasting the ability to shoot video everyone, it seems, is fi lming even the most mundane of incidents and uploading their amateur footage to the internet. However, if you are aft er vastly superior pictures and sound then you need a full HD camera. Once the preserve of professional fi lm makers, HD-quality home movies are now available to the masses. Japanese electronics fi rm Panasonic has upped the ante with the HDC-TM10 – the world’s lightest AVCHD camcorder at a feather-light 227 grams and priced around €400. It sports 8GB of built-in fl ash memory but if you slot in a 32GB SDHC card it can boost capacity to eight hours of HD footage. Th is

diminutive device houses a fl ip-out 2.7-inch LCD screen and off ers an impressive 16x optical zoom. Th e HDC-TM10 is compact, light and produces superb images for budding Steven Spielbergs.

Desirability rating: aaaa

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