IT and Business Clippings

Start-up Funding - helpful web sites

2009-09-28T20:08:00.000-07:00

http://online.wsj.com/article/SB10001424052970203440104574407252218240512.html

Web Watch

By LAURA LORBER

ORGANIZING

OneBiz

These days, small companies can get a host of services over the Web that would ordinarily require a full-blown IT team to set up and manage. One software offering, from Smart Online Inc. of Durham, N.C., combines accounting, sales, human-resources and scheduling functions all in one place. Companies can use OneBiz to track invoices and customers, as well as manage bookkeeping, banking and other tasks.

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The scheduling and contacts application is available at no charge, and there is a 30-day trial for the rest. After that, the price tag is $29.85 per month per user for the full suite.

Zapproved

Zapproved.com

This service, from Zapproved Inc. of Portland, Ore., tries to help small companies manage a single task: tracking business proposals. Like the popular online-invitation service Evite, Zapproved organizes a conversation about a proposal on a single Web page. Decision makers can travel to the page, approve or reject the project and leave comments. The page then shows a list of those decisions and comments for all invited participants to see. Decisions are also archived and searchable.

The standard service is free, and a premium version is in the works with add-ons, such as more storage capacity. It will run $12 per month for single users and $100 per month for up to 20 users.

Outright

Outright.com

Outright offers a simplified online bookkeeping service for sole practitioners, freelancers and other independent contractors. The site, which is currently free of charge, gives Schedule C filers estimates for quarterly taxes by tracking their income and expenses, and offers a clutter-free dashboard that reduces confusion. What's more, the site has partnered with invoicing and time-tracking service FreshBooks and receipt organizer Shoeboxed.com, so users can easily import data into Outright. The site also offers a free application to track transactions on eBay and other e-commerce sites.

Outright works for only federal taxes, but its owner, Bootstrap Inc. of Campbell, Calif., promises that estimates for state-tax calculations are coming soon. The service also lacks many of the features of other accounting programs, although the company says premium offerings are in the works.

START-UP FUNDING

Angelsoft

Angelsoft.net

Looking for a way to tap into angel-investor networks? Angelsoft.net, from New York's Angelsoft LLC, offers an online venue where entrepreneurs and investors can meet and get to know each other. Entrepreneurs can fill out an application that works like the Common Application for college admissions: One application works for all groups, saving time and effort.

Entrepreneurs can search through more than 1,000 angel-group and venture-firm profiles on the site. Those profiles are sortable by a host of criteria: For example, would-be applicants can look at a group's average response time, average number of applications it receives per month and how much it invests.

The site also ties into business-networking site LinkedIn, so entrepreneurs can check their networks to find connections they might have with potential investors.

The Funded

TheFunded.com

This online community of entrepreneurs offers reviews of more than 5,000 venture-capital investors, rating them on such criteria as track record and deal terms. The site's more than 12,000 members can also share the documents that spell out their venture deals and discuss how to find investors and run a business. Founded by entrepreneur Adeo Ressi, TheFunded Inc.'s site also offers venture-capital firms a voice, allowing them to post their own profiles. The site is free to company CEOs; other participants must pay a fee, ranging from $200 for six months to $1,000 for a lifetime membership.

Startable

Startable.com

For a peek into how venture capitalists work, and how company founders can navigate their world, check out this blog by former venture-capital associate Healy Jones and serial entrepreneur Prasad Thammineni. They write about pitching to VCs, how companies are valued by the industry and building a start-up team, among many other topics.

INSIGHTS

The Entrepreneurial Mind

DrJeffCornwall.com

For a look at economics and business through an entrepreneur's eyes, sample the Entrepreneurial Mind by Jeff Cornwall, director of the Center for Entrepreneurship in the College of Business Administration at Belmont University in Nashville, Tenn.

Along with being an entrepreneur himself, he advises companies on start-up and growth-related issues and has written several books on entrepreneurship. Dr. Cornwall posts frequently on public policy, economics and entrepreneurship, as well as ethics and values.

OnStartups.com

This popular blog for entrepreneurs—by Cambridge, Mass., entrepreneur Dharmesh Shah—often sparks thoughtful and lively exchanges in reader comments. While written with software start-ups in mind, OnStartups has plenty to say to entrepreneurs of all stripes.

--Ms. Lorber is a writer for DJ Ventures in New York. She can be reached at laura.lorber@dowjones.com.

Keeping Your Site Out of Hackers' Clutches

2009-09-28T18:41:00.000-07:00

http://online.wsj.com/article/SB125175147081773767.html

SMALL BUSINESS
SEPTEMBER 2, 2009, 6:50 P.M. ET

Keeping Your Site Out of Hackers' Clutches

By RIVA RICHMOND

A growing number of small companies are falling prey to hackers.

Attackers are increasingly infiltrating small businesses' Web sites and using them to quietly drop malicious programs, typically designed to steal personal financial information, onto the computers of visitors, security experts say. Some are also digging around in databases for valuable information or trying to capture e-commerce customers' credit-card numbers.

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Small businesses often assume that they are too tiny to catch hackers' attention. But the truth is that hackers don't care who you are. Most of the time, they use automated programs to exploit a flaw in some piece of common software used by millions and attack them en masse. "There's a huge incentive for them [hackers] to infect as many Web pages as they can, so they can infect as many users as possible," says Ian Fette, a product manager at Google Inc., of Mountain View, Calif. Small sites with less security expertise are often easy targets.

In the first half of this year, 61% of the Web's top 100 sites delivered something malicious to visitors because a hacker broke in and planted something nefarious, according to Websense Inc., a San Diego company known for its Web-filtering software. More than three-fourths of infected sites are legitimate sites, as opposed to sketchy operations such as spammer or file-sharing sites, the firm says.

Once hacked, sites can end up on blacklists kept by the likes of Google and Microsoft, which means customers who find you via their search engines will see scary warnings that your site is dangerous, leaving you with a black eye and potentially slashing revenue at your online store. Google listed more than 325,000 sites as containing malware in August, up from 150,000 a year ago.

An Ounce of Prevention

Luckily, a little prevention goes a long way. Most attacks are unsophisticated, says Jeremiah Grossman, founder of WhiteHat Security Inc., a Web security firm in Santa Clara, Calif. You can escape simply by being "a little more secure than the average," he says.

Here are some tips:

– Make sure your hosting company is taking care of security for you, or get one who will. Some like FireHost Inc. and Data Hosting Solutions have begun touting security as a key part of their service. Hosting costs vary depending on how big and trafficked your site is.

– Most attacks target vulnerabilities in commonly used software, such as web-server or blogging programs. If you manage your server yourself, religiously apply security updates for all software you use.

– Ferret out bugs in custom software. Bring in a security expert or use automated tools for finding flaws, known as vulnerability scanners, from companies like WhiteHat or McAfee Inc. to check your coder's work.

– Hire a hacker—a penetration tester in industry parlance—to expose any vulnerabilities from faulty site construction. Then fix any problems.

– Use strong passwords and keep them close. Attackers often steal the keys to the kingdom by simply asking for them over the phone, says Theo Schlossnagle, chief executive of OmniTI, a security-conscious design house based in Columbia, Md. Make sure your staff understands the stakes and practices good security basics.

A Pound of Cure

If you're hacked, recovery can be agonizingly slow and time-consuming. Recently, the Web site of Family Communications Inc., the non-profit Pittsburgh, Pa., production company founded in 1971 by Fred Rogers, was hacked and blacklisted by Google. It took nearly two weeks to get Mister Rogers' site clean and off the list. During that time, "hits went down notably," said Kevin Morrison, Family Communications' chief operating officer. And visitors' confidence may have sustained a longer-lasting blow.

Uncovering the extent of the problem may be tricky, though Google's Webmaster Tools, a service that provides information about the visibility of your pages on the search engine, can provide insight into which pages have been corrupted (and notify you if you're blacklisted again).

You'll need to remove the bad pages, reinstall them using clean backups (which your host can make and keep for you, among other options) and close security holes the hackers used to get in. Then you can ask Google to rescan your site. If you're clean, Google will take you off the list. If you're not, it's back to the drawing board.

A new alternative comes from Dasient Inc., of Palo Alto, Calif., a startup founded by former Google security pros that monitors sites for malicious code, quarantines it and then helps get rid of it. The service, which starts at about $50 per month, could be particularly helpful for ad-supported sites, since ad networks sometimes unwittingly serve malicious ads. This is a growing problem, so be careful what ad network you shack up with.

--Ms. Richmond is a writer in New York. She can be reached at smalltalk@wsj.com.

Entrepreneurs 'Tweet' Their Way Through Crises

2009-09-28T11:26:00.000-07:00

http://online.wsj.com/article/SB125297893340910637.html

Entrepreneurs 'Tweet' Their Way Through Crises

Twitter Helps Companies Cope With Site Crashes, Weather Delays; 'You Can't Do That With a 1-800 Number'

By SARAH E. NEEDLEMAN

Twitter has turned out to be a useful tool for some small businesses coping with customer-service or public-relations crises.

The social-media service -- where users send short "tweets" to followers who have signed up to receive the messages -- came in handy for Innovative Beverage Group Holdings Inc., whose drankbeverage.com site crashed last month after a surge in traffic following a segment on Fox News for the company's so-called relaxation beverage, which contains "calming" ingredients like valerian root and melatonin. News Corp. owns Fox News as well as The Wall Street Journal.

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Jessica Wenninger

Wine critic Gary Vaynerchuk found Twitter helpful in responding to an attack on his web site.

Innovative Beverage notified consumers on its Twitter feed that it was working to resolve the problem. The company also did a search on Twitter for mentions of the site crash, so it could respond with tweets describing its repair efforts.

Peter Bianchi, Innovative's chief executive, says the site's meltdown was devastating, since a small business rarely receives national TV coverage. But he says the 12-hour site crash didn't appear to have any lasting damage and online sales of the beverage peaked the following day to their highest level to date.

"Twitter gave us an up-to-the-minute ability to take what would normally be a crisis situation and make it just another event," says Mr. Bianchi. "You can't do that with a 1-800-number."

As of Monday, drankbeverage.com had more than 1,000 Twitter followers.

Twitter also helped wine critic Gary Vaynerchuk respond quickly after his company's Web site, Corkd.com, was hacked so that visitors were greeted with pornography.

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Catherine Smith

Scott Townsend used Twitter to contact laundry-service customers in an ice storm.

While technicians plugged away at the problem, which took about eight hours to resolve, Mr. Vaynerchuk says he shot a video of himself apologizing to customers of the wine-review site. He then posted it on a video-hosting site and linked to the footage from Twitter, where he has nearly 900,000 followers.

Mr. Vaynerchuk, who owns New-York based Cork'd LLC, also tweeted apologies to about 65 people who tweeted about the incident. "Every person that mentioned Cork'd on Twitter got a message from me and a link to the video," he says.

Mr. Vaynerchuk says his Web site saw no drop in traffic during the days that followed. He also received about 75 emails from customers complimenting him on how he handled the matter.

To be sure, Twitter can also be the root of a problem for entrepreneurs. Virginia Lawrence, a director at Ballantines PR, a boutique agency in Los Angeles, monitors Twitter daily on behalf of several small businesses for tweets that could harm their reputations.

Recently, she says she found several criticizing a client that were from a former employee the firm had fired. The dismissed worker "was saying negative things about how the company was run, as if they were doing illegal things," she says. Ms. Lawrence notified the client, who then approached the terminated employee about the matter, and soon after the scurrilous tweets stopped.

Twitter can also be an effective way to get a message across to consumers in an emergency. When an ice storm struck the Bartlesville, Okla., area last winter, United Linen & Uniform Services notified customers about the status of their orders through Twitter in addition to its Web site. Scott Townsend, marketing director for the laundry service, says many consumers today will find information about a business on Twitter before anywhere else because it's where they hang out online. "You fish where the fish are," he says.

Mr. Townsend adds that while email was also an option, entering customers' addresses would have been tedious and time-consuming.

Entrepreneurs should bear in mind that Twitter is unlikely to be of help in dealing with a problem if it isn't used regularly otherwise, says Shel Israel, author of "Twitterville: How Businesses Can Thrive in the New Global Neighborhoods."

"If you just go to Twitter when you have a crisis, you will have no followers and no credibility," he says. "The key to using Twitter effectively is to build trust with people who are relevant to your business."

Steve Fusek, owner of Fusek's True Value LLC, a hardware store in Indianapolis, now has an employee dedicated to updating the shop's Twitter profile during business hours. Mr. Fusek says consumers expect to see frequent tweets and swift responses to customer-service inquiries they post.

"You can't just sign up and leave it. You have to have someone on it," he says. "If you're not legitimate, you'll be found out quickly."

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Printed in The Wall Street Journal, page B5

How TweetPhoto used Twitter to get the company off

2009-09-28T11:05:00.000-07:00

http://online.wsj.com/article/SB10001424052970203550604574359362541707146.html

SEPTEMBER 28, 2009

MANAGING TECHNOLOGY

A Start-Up's Tale, Tweet by Tweet

How TweetPhoto used Twitter to get the company off the ground

By RIVA RICHMOND

When Sean Callahan sent a "tweet" on March 19 announcing plans to launch TweetPhoto Inc., a photo-sharing service for Twitter, he didn't have a company to speak of—just a bare-bones Web page and a plan to best TwitPic Inc., a well-established rival.

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Mr. Callahan worried that the longer he waited, the harder it would be to unseat TwitPic. So while he was wrapping up a business degree in London, Mr. Callahan plunged into designing his photo-sharing platform. He also started using Twitter, a micro-blogging site that enables users to tell the world what they are doing via short messages known as tweets, to connect with potential customers—and erect the company itself.

Over the next few months, Mr. Callahan's Twitter stream and blog documented, blow by blow, the start-up of a new business, with all of its victories and defeats. His experience suggests that wise use of social media could help speed the birth of many new ventures—not just those involved in social networking—if a business owner knows how to connect with the right people, learn from their conversations and weather the ups and downs that come with this new form of communication.

"Twitter is a digital handshake. It's one of the fastest ways you can reach out to people," says David Murray, director of social Web communications at Bivings Group, a Washington, D.C., consulting firm.

Building a Community

While Twitter provides access to a large number of people—23.6 million as of August, nearly four times more than in January, according to Web-analytics firm Compete Inc.—it is up to you to keep their attention. Your followers—those who subscribe to read your updates—discover you because you reached out to them first, or because another follower passed on, or retweeted, something valuable you had to say, or because one of your messages caught their interest during a search. You keep their attention if your tweets are informative, responsive, personal and open. But you are ignored at best and vilified at worst if your messages are boring, overly self-serving or offensive.

Mr. Callahan's first message was aimed at finding 5,000 volunteers to test a future first version of TweetPhoto, which allows users of both Twitter and Facebook to share and comment on photos. His second tweet was an invitation to Rodney Rumford, asking the social-media entrepreneur and strategist from his native San Diego to give TweetPhoto a try. Mr. Rumford did more than that—he sent a private message to Mr. Callahan suggesting they talk business. Mr. Callahan picked up the phone, and Mr. Rumford officially became TweetPhoto's co-founder a month later.

Mr. Callahan initially sought to engage people on Twitter who had expressed an interest in photography, the heart of his business. He found these people by doing keyword searches of Twitter's massive stream of messages and signed up to follow hundreds, particularly those with large followings themselves. Many followed him back, and most of the people who signed up as testers invited their followers to sign up, too.

By engaging with like-minded people, business owners become part of a community. That allows them to build relationships with potential customers, many of whom will provide ideas and feedback. It's "like an always-on focus group," says Greg Sterling, founding principal of consulting and research firm Sterling Market Intelligence. "People are quite happy and willing to provide feedback and be a part of this kind of process."

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Ray Bartkus

As March unfolded, Mr. Callahan solicited ideas and opinions about photo sharing from his followers. In April, he invited graphic artists to submit ideas for a logo and urged people to vote for their favorite designs. The winner, Raul Padilla, earned $300 for a bubble-lettered logo beside two chirping birds, heads framed in a Polaroid snap. Mr. Callahan also used Twitter to relay company news, announcing, for example, when TweetPhoto launched a tool to shorten Web links to photos, so they would fit more easily into tweets. "It's a particle accelerator to get information out there. And it's a great tool to listen," Mr. Callahan says.

Spotting Opportunities

Mr. Callahan also found that Twitter can be useful for spotting and exploiting weakness in the competition.

When TwitPic's site went down on April 15, Mr. Callahan used keyword searches to gather the Twitter names of everyone who complained about the outage and sent messages inviting them to try TweetPhoto. Several people bristled at the tactic, but more than 800 asked for beta invites and, by April 16, there were only 716 spots left ahead of TweetPhoto's April 27 launch.

"We used Twitter to listen to the conversation, not just about ourselves but about our competitors," Mr. Callahan says. TwitPic didn't return emails seeking comment.

It isn't unusual for start-ups to stumble, and TweetPhoto was no exception. But being plugged into social media means that news about your setbacks can travel quickly. With five days until beta launch, TweetPhoto encountered problems using a technology for securely interfacing with Twitter, forcing a three-day delay. After TweetPhoto went live, users inundated Mr. Callahan with tweets about emailed photos that weren't posting to the site and other problems. Mr. Callahan replied to each tweet, asking for more information or promising to fix the problem.

"You take your lumps and hear 'em and respond back and try and do the right things," Mr. Rumford says. "It's an opportunity to show your true colors of who you are as a business."

But the low point was to come. On May 19, TweetPhoto got hacked and Google urged people away from the site with scary warnings. Mr. Callahan got the malicious program removed from TweetPhoto's site within an hour, but it wasn't until the next day that TweetPhoto was off Google's blacklist. It was bad timing. That day, Twitter highlighted third-party photo-sharing services on its home page, and TweetPhoto was left out.

Attracting Partners

Around that time, Mr. Callahan began focusing on a key business objective: wooing software developers who might want to integrate TweetPhoto into their services. He sent tweets to dozens of developers, some of whom embraced him and others not. In mid-June, the Mashable blog, an Internet-news outlet, wrote about TweetPhoto's plan to share online advertising revenue with partners, a strategy TweetPhoto believes gives it a competitive edge. To date, 27 developers have signed on, and the company is in talks with 10 others. On Sept. 9, TweetPhoto displaced TwitPic as the default photo-sharing service on TweetDeck, which offers tools to help heavy Twitter users sort tweets.

While TweetPhoto continues to lean heavily on Twitter, that hasn't stopped the company from engaging in offline networking, too. In fact, Mr. Rumford's personal connections have led to talks with a large public company that he hopes will become TweetPhoto's biggest customer and a potential acquirer.

For now, TweetPhoto, which enjoyed a jump in traffic in July when Britney Spears began using it to share official concert photos, continues to trail TwitPic. It had 104,000 unique monthly visitors in August compared with 4.63 million for TwitPic, according to Compete Inc. But that number doesn't reflect a big jump in TweetPhoto's traffic after the partnership with TweetDeck and another with BlackBerry application UberTwitter.

--Ms. Richmond is a writer in New York. She can be reached at reports@wsj.com.

How to Create a Successful Web Site For Nothing (or Almost Nothing)

2009-04-12T04:25:00.000-07:00

http://online.wsj.com/article/SB121803326363016929.html?mod=psp_editors_picks

By VAUHINI VARA

Have you got eight hours and $10? Then you can build a Web site for your business.

Thanks to competition among Web-hosting providers, and the falling costs of Web storage, it's never been easier to get a Web site up and running -- from buying the domain name to building a site to setting up a payment system to tracking traffic.

But many small businesses still seem intimidated by the job. In a survey published last year, JupiterResearch LLC found that just 36% of online small businesses -- that is, businesses with fewer than 100 employees, where managers access the Web at least once a month -- have Web sites.

So, here's a guide for owners looking to make the leap online. We'll lay out all the steps you need to take to build your site, and present some expert opinion about getting it noticed and keeping track of customers -- all with no technical background required.
1. BUY A WEB ADDRESS

First, you have to buy a domain name -- e.g., YourCompany.com -- for about $10 a year. As an example, we'll show how to buy a domain using the registrar Go Daddy Group Inc., but you can shop around at others, such as Tucows Inc. and Register.com Inc.

Type the domain name you want in the search box at GoDaddy.com. If it's taken, try another. When you've settled on one, scroll to the bottom of the page and click "Proceed to Checkout." Ignore the offers for additional products and services, continue to the checkout page, enter your payment information and hit "Checkout Now."

You're now the owner of a Web address.
2. FIND A HOME

For years, companies have charged small businesses a fee to "host" sites -- store the sites' content on their computers. According to a recent survey from Jupiter, about a third of small-business executives say they pay up to $1,000 a year for Web hosting, and about another third pay more than $1,000.
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Fortunately, in the past year, a number of companies have begun providing hosting services free of charge. They often make money by charging for premium services or running ads on your Web pages.

All you need to do is visit the Web site for one of these hosting services -- such as Microsoft Corp.'s Office Live Small Business, Weebly Inc. or SynthaSite Inc. -- and enter a user name, a password and some other details. Then visit your domain-name registrar and tweak your settings so that your Web address points to the service you've chosen. The hosting service will give you instructions on how to do this.
3. BUILD YOUR SITE

Once you've got a host, you'll want to design your site. The good news: Most of the free hosting services provide tools that let you build a site quickly, without lots of technical know-how.

Among the things you'll need: a welcoming home page; an "About" page that describes you and your business; and a "Contact" page that tells people where you're located and how to reach you. The rest depends on your business. If you own a restaurant, you might include a "Menu" page. If you're selling a product, you might include a "Store" page where people can buy your wares.

Adding those things can be simple. In Weebly, for instance, click on the "Pages" tab, then choose "New Page." In Office Live, click "Web pages" in the top left-hand corner of the editor and choose "New page." In SynthaSite, click "New Page" at the top of the editor.

In each case, doing so calls up a blank page template, like opening a new document in Microsoft Word. Once you've created a page, you usually can add content simply by typing the text you want into the template and dragging and dropping graphics.

There are some downsides to these free hosting services. Each offers several dozen design templates, but you could still end up with a site that looks pretty generic, unless you have Web-design skills or hire someone who does. What's more, most of these services don't offer an easy, one-click way to add flourishes such as shopping carts or more than two columns on a page; that, too, takes some know-how. Mostly, you just arrange pictures, text and other elements, and that's it. And, sometimes, even doing that can be tricky for nontechies.

There's one more free and easy way to improve the design of your site -- using HTML programming code. Fortunately, you don't need to have programming skills to use HTML. All you need to know is that a block of HTML -- essentially, a bunch of gobbledygook words and symbols -- can add extra features to your site. And numerous third-party sites offer handy HTML blocks you can plug into your site, as easily as copying and pasting text in Microsoft Word.

Ali Shapiro, a health counselor in Philadelphia, recently found one such program -- an appointments calendar -- at Scheduly Ltd.'s site. She copied a snippet of HTML from Scheduly and pasted it into the "Contact" page at her own site, PyourNutrition.com. The result: Visitors to Ms. Shapiro's site can see a calendar with her free time slots and sign up for appointments over the Web.
4. GET PAID

Probably the easiest way to let customers pay you online is to let somebody else handle the technical work. One popular option is PayPal, from eBay Inc. The service lets people pay you by clicking a button on your Web site, which takes them to a PayPal page where they can enter payment information. You don't have to do any work to process the transaction.

The basic service is free, but you have to pay a fee each time someone pays you: 30 cents, plus 1.9% to 2.9% of the transaction. This basic service isn't fancy -- if you want to build a full-blown retail site, you'll probably want to buy special e-commerce software -- but to offer a basic payment option on your site, it's enough.

To set up an account, click on the "Business" tab at PayPal.com and follow the instructions. Once you've done this, click on the "Merchant Services" tab. Then, choose "Website Payments Standard," from the left-hand column.

You'll see three orange buttons you can place on your site: "Buy Now," "Add to Cart" and "Donate." If your customers are likely to purchase one item at a time -- say, a yoga lesson or a day-care session -- click on the link under the "Buy Now" button, which will send them directly to a page where they can pay for the item. If your customers might want to browse around your site for different types of items before paying, choose the "Add to Cart" button, which lets buyers fill a shopping cart with several items before checking out. The "Donate" option is mostly for people who aren't selling anything, like bloggers soliciting donations.

You can then follow the instructions to create a button for each item you want to sell. PayPal will give you some HTML that you can paste into your Web site to add the buttons. You should put these buttons on your "Store" page, next to a picture and description of each item.

The service has been a boon for Graydon Blair of Syracuse, Utah, who sells biodiesel supplies at UtahBiodieselSupply.com. When he started his company, MGBJ Enterprises LLC, he looked for software to add a shopping cart to his site. "All of them wanted me to pay them lots of money, and I thought their stupid shopping carts didn't look nice," he says. So, "I built my little Web site, and threw some PayPal buttons on there."

Visitors to his Web site can use a "Click here to purchase" button to add an item to their shopping cart and buy it via PayPal. Payments get sent directly to Mr. Graydon's PayPal account, minus the PayPal fee. He says he now does 100 to 150 PayPal transactions a week. He brought in $750,000 in revenue last year and is on track for more than $1 million this year.
5. GET SPONSORS

It's easy to add advertisements to your Web site to make extra cash. Every time someone clicks on an ad on your page, you get paid a small amount, which varies depending on the particulars of the ad.

One of the most popular services is Google Inc.'s AdSense. Advertisers pay Google to place ads on Web sites throughout the Internet; site owners, meanwhile, can sign up at Google.com/adsense to host those ads on their pages.

You've probably seen the ads, which often appear as blocks of text along the right-hand column of a Web site. Google scans the content of participating sites to decide which ads would work best on the pages. For instance, an ad for used cars might appear on a site with car reviews.

But you need to ask: Will ads actually improve your site? Showing the wrong ads -- or, sometimes, any ads at all -- could turn off potential customers. If you run a funeral parlor, for instance, ads could come across as distasteful. Also, you'll probably need a lot of traffic to make significant money from the ads, since you typically get just a few cents when someone clicks.

For Tim Carter, ads made a lot of sense. Mr. Carter, a former carpenter, wrote a home-improvement column running in papers across the U.S. The only problem: Publishers were paying him a pittance.

In 2004, Mr. Carter figured out how to make serious money from his work -- by tapping into AdSense. He had been posting his work on his own site, AskTheBuilder.com, for nearly a decade. Google scans his site -- which has separate pages for topics like cabinets, fences and mold -- and places appropriate ads on each page, such as pitches for kitchen cabinets and mold removal.

He has since branched out by selling other types of ads. Taken together, his ads bring in close to $2,000 a day, based on daily traffic of about 40,000 visitors. He has also branched out by hawking his own products, like a stain-removal bleach. In total, his site brought in more than $1 million in revenue last year.

"I'll tell people in my columns, 'Look, this is what you need to do.' But they're still going to need the products to do it -- and that's what they see in those ads," Mr. Carter says.

6. GET KNOWN

So, you've got your site up and running. Next, you'll want to be sure people can find it.

We asked two experts, Bruce Clay of Bruce Clay Inc. and Alan Rabinowitz of SEO Image Inc., to reveal some tricks about search-engine optimization -- moving your site to the top of search-engine results.

Start with your site itself. You should use language on the site that is associated with the business. Let's say you're a florist. Most likely, you'll show up prominently in search results if people search for the exact name of your business. But the trick is to show up when people search for complicated terms related to your business, like "wedding flower arrangements." That's because you want to attract people who might not know about your business but are looking for something that you provide.

Mr. Clay offers two shorthand ways to do this. First, ask your employees to send you a couple of words or phrases that describe what your company does and incorporate that language into your site. Second, do a Web search for terms related to your business and look at the language used in the top search results. For instance, a search for "cowboy boots" turns up several Web sites that also use the phrase "Western wear." The fact that those sites turn up so high in search results means that they're doing something right. So, if you sell cowboy boots, you should also refer to Western wear on your site to draw additional traffic.
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You should also make sure to include those phrases in your page titles -- the headings that appear in the blue bar at the top of a browser window -- since search engines pay particular attention to these. (How do you change the title bar? In Weebly, click the "Settings" tab and type in the "Site Title" field. In Office Live, click the "Page Editor" tab, then click "Page Properties" and type in the "Page title" field for each page. In SynthaSite, click the "Properties" tab and type in the "Window Title" field.)

If you primarily do business locally, there are other ways to get noticed. Start by trying this exercise: Type "Seattle spas" in Google and pay attention to the results. At the top of the page, you'll see several spa listings, with phone numbers, reviews and Web-site links, next to a map showing each spa's location.

Below that, you'll see traditional search results, but many of the links won't send you to a specific spa's Web site. Instead, they'll send you to a news or review site, like Citysearch or Yelp, that talks about area spas.

So, it's important to get into the listings at the top of the page, next to the map, as well as into the news and review sites. To do that, first register your business with Google's Local Business Center (Google.com/local/add). By entering some details, like your business's address and phone number, you can automatically be listed in Google's local results at the top of the page.

Next, the news and review sites. Say you're a spa owner in Seattle: Click on the Citysearch page that comes up in a search for "Seattle spas" and find contact information for a Citysearch editor who might want to include your spa in the site's list.

Also click on the links for review sites like Yelp, which solicit reviews from businesses' customers and often give businesses a way to list themselves. Don't review your own business on these sites (it's usually against the rules), but you can encourage your customers to post reviews, as long as you don't bribe them with freebies (also usually against the rules).

7. TRACK YOUR TRAFFIC

A bunch of companies offer free tools to help you track who visits your Web site, how they find it and what they do once they're there. This can help you tweak your Web site to attract more potential customers.

The best-known provider of tools is Google; you can find its offerings at Google Webmaster Central (Google.com/webmasters). We'll focus on one of the programs: Google Webmaster Tools (Google.com/webmasters/tools).

To set this up, follow Google's instructions for uploading a file to your Web site so that Google can track it. Once you've done this, look at a few areas on the Google Webmaster page.

In the "Statistics" area, click on "Top search queries." This shows you two things: the search queries for which your Web site turned up, and the queries from which people actually visited your Web site. If a search term appears in the first list but not in the second, it means your Web site is showing up in search results for that term, but people aren't clicking on it.

To improve your site's performance for that term, you should tailor the language in your Web site. Say your Web site shows up in searches for "experienced Seattle therapists," but nobody is clicking on it; that suggests that you might want to describe your level of experience on your site to improve your performance.

You can find another handy feature of Webmaster Tools in the "Links" area. Click on "Pages with external links" to see a list of other sites that include links to your site. This can give an insight into how others view your site. For instance, if you run a bar and see that a local hotel links to it from its own Web site, you can guess that the hotel is recommending your bar to its customers. So, you might offer special discounts to that hotel's visitors.
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—Ms. Vara is a writer in Iowa City, Iowa.

Write to Vauhini Vara at vauhini.vara@wsj.com

Highest-Paid IT Skills and Certifications During the Recession

2009-02-11T16:20:00.000-08:00

http://www.cio.com/article/478414/New_Research_Reveals_Highest_Paid_IT_Skills_and_Certifications_During_the_Recession

– Meridith Levinson, CIO

January 29, 2009

Foote Partners today released its latest research on IT skills pay. Foote Partners' IT Skills and Certifications Index shows the individual IT skills and certifications that increased and decreased in value during the final quarter of 2008. This latest data reflects for the first time the impact of the financial crisis and economic recession on IT skills and what companies pay for them.

The specific non-certified IT skills that increased in value during the fourth quarter of 2008 include:

NetWeaver Portals (SAP EP)
PHP
Apple OS X/Tiger/Leopard
ITIL
Java/J2EE, SE, ME
NetWeaver PI (SAP XI)
Master Data Management
Unified Communications/Messaging
Database Management
Microsoft SQL Server
Oracle Developer Suite
SAP Solution Manager
NetWeaver BI (SAP BW)

IT Skills that Decreased in Value

Skill
	Percent Decrease
ATM	32%
Novell Netware	30%
Tie between: Visual J++ and Perl	28.6%
SMTP	25%
Tie between C and AIX	20%
Tie between Accelerated SAP (ASAP) and SAP PM	16.7%
Tie among Windows Vista/XP, WAP, WML	14.3%
Tie among JavaBeans/EJB, RAD/Extreme Programming/Agile Programming, SIP (Session Initiation Protocol)	12.5%
Tie among Microsoft BizTalk Server, SAP KW, Tivoli	11%
Microsoft Identity Integration Server	10%
SAP FI-Travel Management	9%
Tie between SAP SEM and SAP Web Application Server	8.3%

Notably, some of the SAP skills that are among the highest-paid, such as SAP Web Application Server and SAP SEM (Strategic Enterprise Management), according to Foote Partners' research, are on the decline. Rapid application development, extreme and agile programming skills, which also rank among the highest-paid IT skills, are on the decline, too.

Highest-Paid IT Certifications

The highest-paid IT certifications that commanded pay increases in the last three months of 2008 include:

Highest-Paid IT Certifications That Increased in Value

IT Certification
	Percent Increase
Brocade Certified SAN (Fabric) Designer	42.9%
Cisco IP Telephony Design Specialist	25%
Microsoft Certified Solution Developer	25%
Microsoft Certified Trainer	25%
Cisco Certified Design Professional	25%
HP/Accredited Systems Engineer	12.5%
Planet3 Certified Wireless Security Professional	11%
Microsoft Certified Architect	10%
EMC Proven Professional Technology Architect-Expert	10%
SNIA Certified Storage Networking Expert	9%
IT Certified Architect (ITCA/Open Group)	7.7%
Certified Information Security Manager	7%
Cisco Certified Internetwork Expert	7%

Other IT certifications that aren't among the highest paid, but that saw pay increases are:

Other IT Certifications That Increased in Value

IT Certification
	Percent Increase
CompTIA Security+	46.7%
GIAC Security Essentials Certification	46.7%
Certified Ethical Hacker	40%
Planet3 Certified Wireless Network Administrator	40%
Cisco Certified Design Associate	40%
CompTIA Certified Technical Trainer	33.3%
EMC Proven Professional Technology Architect-Specialist	28.6%
RedHat Certified Technician	25%
HP/Certified Systems Administrator	20%
Brocade Certified Fabric Professional	14.3%
GIAC Certified Incident Handler	14.3%
Sun Certified Network Administrator for Solaris	14.3%
Check Point Certified Security Administrator	14.3%
Citrix Certified Enterprise Administrator	12.5%
SNIA Certified Systems Engineer	12.5%
Cisco IP Communications Express Specialist	12.5%
Security Certified Network Architect	10%
SNIA Certified Architect	10%

Among the highest-paid IT certifications, pay for Cisco Certified Voice Professional, Certified Information Systems Security Professional (CISSP) and GIAC Security Expert certifications is on the decline. Pay for those certifications declined by 9.1, 7.1 and 6.7 percent respectively.

Removing Complexity

2008-12-01T19:24:00.001-08:00

http://geekdoctor.blogspot.com/2008/10/removing-complexity.html

Tuesday, October 28, 2008

Removing Complexity

"Fools ignore complexity. Pragmatists suffer it. Geniuses remove it."
Alan Perlis (Creator of ALGOL, one of the first programming languages)

Whenever I purchase something for myself or my home, I always think about the complexity that the purchase will add to my life. Adding more stuff to my life can lead to short term gratification, but it also can lead to long term maintenance headaches.

The same can be said of information technology. Here a few examples:

1. A few years ago, I had dinner with Steve Ballmer and explained that Microsoft should produce secure, reliable products with fewer features and lower cost. Who really wants their outline reformatted by the Outline Wizard in Word? Who really wants to apply the latest emergency patch that's required because of too much code supporting too many seldom used features? He explained that I was mistaken since most people use 95% of the features in Office and the average user prioritizes new features over everything else. We agreed to disagree and he returned to Redmond to manage the creation of Vista.

2. At BIDMC, we buy and build software. Every time we buy a commercial product we need to think about interfaces from our existing systems to the new product and from the new product to our existing systems. All those interfaces add significant complexity, makes recovery from downtime more difficult and increase the cost of support. Recently, a clinician commented that one of our new software purchases really surprised her, since it added complexity, fractured workflow, and inconvenienced many users for the benefit of a few.

3. When we build software, we are often tempted to add all the bells and whistles requested by the user. For each new custom feature there is a cost of maintenance, additional training, and potential bugs that could compromise stability/reliability. I've been involved in many development projects that eventually became so complex that the software had to be rewritten to ensure usability, security and maintainability.

4. Customizing commercial packages seems like a good idea to get the buy in of stakeholders. Over my past decade as a CIO, I've found that stakeholders come and go, and when they leave, all the esoteric customizations they designed are often retired. In fact, many upgrade projects include the retirement of all the previous customizations that became an impediment to life cycle management of software, added complexity, and over the long term were more hassle than benefit.

5. Best of breed seems like a good idea when you're comparing products based on narrowly focused requirements. We did that with our email system i.e. Exchange for general email functions, Brightmail for spam protection, McAfee for virus protection, Tumbleweed for secure email transmission, SendMail for SMTP gateways etc. The end result was a feature rich system that has been too challenging to maintain and debug. Our next purchase will be an appliance from a single vendor which consolidates Spam filtering and security into a single product.

In short, complexity is generally not a good thing. What am I doing to battle complexity?

I try to use the fewest number of vendors possible - one (or at most two) storage vendors, one desktop vendor, one network vendor, and a very few application vendors. The more vendors, the greater the integration effort, the increased support and maintenance burden and the higher the cost.

I aim to avoid customizing commercial software whenever possible. My experience is that customizations are rarely worth the investment. Once customizations are in place and the users really understand the implications to workflow, cost, and impediments to future upgrades, they are no longer so enthusiastic about them.

I use enterprise-wide generalizable tools whenever possible i.e. one content management system for the web, one means of authentication/single signon, one ERP system for all fiscal/administrative functions.

How are we seeing this "removing complexity" idea play out in the industry?

People are adopting Gmail, Google Apps, and Facebook as "good enough" productivity tools.

People are adopting commodity hardware, clustered together using basic Linux operating systems, instead of proprietary niche solutions.

People are using Software as a Service offerings with thin client computers running nothing more than a browser. Even Microsoft has embraced the new reality of cloud computing, demonstrating a willingness to eliminate the complexity of its current operating system and application environment.

In the world of IT, simplicity is often more reliable, more secure, and more usable. Whenever I'm tempted to add complexity to address the needs of a few customers, I remind myself that Less is More. Per the Alan Perlis quote above, we should all strive to be geniuses!

Posted by John Halamka at 3:00 AM

Get Rid of the Performance Review!

2008-11-23T18:02:00.001-08:00

http://online.wsj.com/article/SB122426318874844933.html
http://online.wsj.com/article/SB122426318874844933.html#printMode

OCTOBER 20, 2008
Human Resources
Get Rid of the Performance Review!
It destroys morale, kills teamwork and hurts the bottom line. And that's just for starters.
By SAMUEL A. CULBERT

You can call me "dense," you can call me "iconoclastic," but I see nothing constructive about an annual pay and performance review. It's a mainstream practice that has baffled me for years.
To my way of thinking, a one-side-accountable, boss-administered review is little more than a dysfunctional pretense. It's a negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the mere knowledge that such an event will take place damages daily communications and teamwork.

Tips on Dealing with a Poor Performer4:00
UCLA professor, Samuel Culbert, shares some managerial tips on improving an employee's performance. (Oct. 20)
The alleged primary purpose of performance reviews is to enlighten subordinates about what they should be doing better or differently. But I see the primary purpose quite differently. I see it as intimidation aimed at preserving the boss's authority and power advantage. Such intimidation is unnecessary, though: The boss has the power with or without the performance review.
And yes, I have an alternative in mind that will get people and corporations a great deal more of what they actually need.
To make my case, I offer seven reasons why I find performance reviews ill-advised and bogus.
Handling a Bad Review
JOURNAL PODCAST: How should an employee deal with a negative performance review, both during and after the meeting? Samuel Culbert talks with Erin White.
Join the Discussion
JOIN THE DISCUSSION: Do you agree that performance reviews do more harm than good? What effects have you seen in your company? What would you suggest that reviews be replaced with? Share your thoughts in an online forum with Samuel Culbert.
The Journal Report

See the complete Business Insight report.
TWO PEOPLE, TWO MIND-SETS
Let's start with an obvious reason: The mind-sets held by the two participants in a performance review work at cross-purposes. The boss wants to discuss where performance needs to be improved, while the subordinate is focused on such small issues as compensation, job progression and career advancement. The boss is thinking about missed opportunities, skill limitations and relationships that could use enhancing, while the subordinate wants to put a best foot forward believing he or she is negotiating pay. All of this puts the participants at odds, talking past each other. At best, the discussion accomplishes nothing. More likely, it creates tensions that carry over to their everyday relationships.
Then there are second-order problems. A subordinate who objects to a characterization of faults runs the risk of adding another to the boss's list: "defensiveness and resistance to critique." And the boss who gets her mind turned around by a subordinate's convincing argument runs the risk of having a bigger boss think she failed to hold the line on what had been decided and budgeted. Good luck to her when she next gets evaluated.
PERFORMANCE DOESN'T DETERMINE PAY
Another bogus element is the idea that pay is a function of performance, and that the words being spoken in a performance review will affect pay. But usually they don't. I believe pay is primarily determined by market forces, with most jobs placed in a pay range prior to an employee's hiring.
Raises are then determined by the boss, and the boss's boss, largely as a result of the marketplace or the budget. The performance review is simply the place where the boss comes up with a story to justify the predetermined pay. If the raise is lower than the subordinate expects, the boss has to say, "We can work to get it higher in the future, and here are the things you need to do to get to that level." Or the boss can say, "I think you walk on water, but I got push-back from H.R. and next year we'll try again."
Ross MacDonald
In other words, too many lines spoken in a performance review are a cover story for the truth and have little to do with performance. Even when it's a positive review, the words spoken are likely to be aimed more at winning the subordinate's gratitude than at providing a candidly accurate description.
OBJECTIVITY IS SUBJECTIVE
Most performance reviews are staged as "objective" commentary, as if any two supervisors would reach the same conclusions about the merits and faults of the subordinate. But consider the well-observed fact that when people switch bosses, they often receive sharply different evaluations from the new bosses to whom they now report.
To me, this is just further proof that claiming an evaluation can be "objective" is preposterous, as if any assessment is independent of that evaluator's motives in the moment. Missing are answers to questions like, "As seen by whom?" and "Spun for what?" Implying that an evaluation is objective disregards what everyone knows: Where you stand determines what you see.
The absurdity is even more obvious when bosses -- as they so often do -- base their reviews on anonymous feedback received from others. This illogic is highlighted in the contemporary performance-reviewing fad called "360-degree feedback." Hate mail, I suppose, is similarly "objective." People are told, "I can't tell you who said this," as if the alleged truth-teller has no ax to grind and the allegation is unrelated to a specific motive or a disagreement in a relationship. Come on! Isn't "anonymous" just a slicker way for people to push what's in their political interests to establish, without having their biases and motives questioned?
What will it take for people to really understand that any critique is as much an expression of the evaluator's self-interests as it is a subordinate's attributes or imperfections? To my way of thinking, the closest one can get to "objective" feedback is making an evaluator's personal preferences, emotional biases, personal agendas and situational motives for giving feedback sufficiently explicit, so that recipients can determine what to take to heart for themselves.
ONE SIZE DOES NOT FIT ALL
Employees all come with their own characteristics, strong suits and imperfections that they orchestrate in every attempt to perform their best. Because no two people come similarly equipped, they draw upon the unique pluses and minuses they were endowed with at birth along with compensatory assets they subsequently developed.
Failing Grade
The Promise: Performance reviews are supposed to provide an objective evaluation that helps determine pay and lets employees know where they can do better.
The Problems: That's not most people's experience with performance reviews. Inevitably reviews are political and subjective, and create schisms in boss-employee relationships. The link between pay and performance is tenuous at best. And the notion of objectivity is absurd; people who switch jobs often get much different evaluations from their new bosses.
The Solution: Performance previews instead of reviews. In contrast to one-side-accountable reviews, performance previews are reciprocally accountable discussions about how boss and employee are going to work together even more effectively than they did in the past. Previews weld fates together. The boss's skin is now in the game.
And yet in a performance review, employees are supposed to be measured along some predetermined checklist. In almost every instance what's being "measured" has less to do with what an individual was focusing on in attempting to perform competently and more to do with a checklist expert's assumptions about what competent people do. This is why pleasing the boss so often becomes more important than doing a good job. Create a positive impression and the boss will score you high on any dimension presented.
Worse, bosses apply the same rating scale to people with different functions. They don't redo the checklist for every different activity. As a result, bosses reduce their global sentiments to a set of metrics that captures the unique qualities of neither the person nor the job.
Maybe, for instance, there's a guy who doesn't voice his viewpoint when he disagrees with something said. Does that mean he should be graded down for being a conflict-avoider -- as if the boss's in-your-face way of communicating is superior? He may be seen as doing a bad job based solely on an incompatibility of styles that may have little to do with actual performance.
PERSONAL DEVELOPMENT IS IMPEDED
The drive for improvement goes on in big and little ways at work. You would think that the person in the best position to help somebody improve would be his or her boss.
Yet, thanks to the performance review, the boss is often the last person an employee would turn to.
Why is that?
The No. 1 reason for that reluctance is that employees want to turn to somebody who understands their distinctive talents and way of thinking, or knows them sufficiently well to appreciate the reasons behind the unique ways they are driven to operate. By contrast, people resist help from those who they believe can't get them in proper focus, especially when they have tried on many occasions to tell them.
What's more, people don't want to pay a high price for acknowledging their need for improvement -- which is exactly what they would do if they arm the boss with the kind of personal information he or she would need to help them develop. It could all come back to haunt them in the performance review. No wonder the developmental discussions the boss wants to inject at the time of a performance review so often get categorized by subordinates as gun-to-the-head intimidation requiring false acquiescence, lip-service agreement and insincere, appearance-correcting actions.
DISRUPTION TO TEAMWORK
Managers can talk until they are blue in the face about the importance of positive team play at every level of the organization, but the team play that's most critical to ensuring that an organization runs effectively is the one-on-one relationship between a boss and each of his or her subordinates.
The performance review undermines that relationship.
That's because the performance review is so one-sided, giving the boss all the power. The boss in the performance review thinks of himself or herself as the evaluator, and doesn't engage in teamwork with the subordinate. It isn't, "How are we going to work together as a team?" It's, "How are you performing for me?" It's not our joint performance that's at issue. It's the employee's performance that's a problem.
All of which leads to inauthentic behavior, daily deception and a ubiquitous need for subordinates to spin all facts and viewpoints in directions they believe the boss will find pleasing. It defeats any chance that the boss will hear what subordinates actually think.
Here's a simple example: In a performance review, the boss cites a subordinate's missing a high-profile meeting as cause for a reduced rating. What if the reason was something personal -- perhaps a son picked up by the police -- that the employee doesn't want to reveal? Why not reveal it? Because one-way accountability inevitably creates distrust. Does the boss self-reflect and ask, "What did I do, or should I be doing, to build up the trust?" No, the boss faults the guy for secretiveness. It's a vicious cycle.
For Further Reading
See these related articles from MIT Sloan Management Review.
Building Competitive Advantage Through People
By Christopher A. Bartlett and Sumantra Ghoshal (Winter 2002) Today's scarce, sought-after strategic resource is expertise, which comes in the form of employees. http://sloanreview.mit.edu/smr/issue/2002/winter/3/
Rethinking the 'War for Talent'
By Deepak Somaya and Ian O. Williamson (Summer 2008) An implicit assumption of the "war for talent" perspective is that departing workers are lost to competitors. Yet employees also leave to join "cooperators." http://sloanreview.mit.edu/smr/issue/2008/summer/02/
How Consistent Are Performance Review Criteria?
By Peter Gwynne (Summer 2002) Managers in the same company frequently use different criteria to review their employees' work -- unless the organization has trained them to do otherwise. http://sloanreview.mit.edu/smr/issue/2002/summer/1f/
Why Leadership-Development Efforts Fail
By Douglas A. Ready and Jay A. Conger (Spring 2003) Investments in developing leaders have often failed the companies seeking to create a pipeline of leaders. http://sloanreview.mit.edu/smr/issue/2003/spring/11/
Strategies for Preventing a Knowledge-Loss Crisis
By Salvatore Parise, Rob Cross and Thomas H. Davenport (Summer 2006) When employees leave an organization, they depart with more than what they know; they also leave with critical knowledge about who they know. http://sloanreview.mit.edu/smr/issue/2006/summer/09/
IMMORALITY OF JUSTIFYING CORPORATE IMPROVEMENT
I believe it's immoral to maintain the facade that annual pay and performance reviews lead to corporate improvement, when it's clear they lead to more bogus activities than valid ones. Instead of energizing individuals, they are dispiriting and create cynicism. Instead of stimulating corporate effectiveness, they lead to just-in-case and cover-your-behind activities that reduce the amount of time that could be put to productive use. Instead of promoting directness, honesty and candor, they stimulate inauthentic conversations in which people cast self-interested pursuits as essential company activities.
The net result is a resource violation, and I think citations should be issued. If it's a publicly held company, shareholder value gets decreased. If it's a governmental organization, time is lost that could be spent in pursuit of the public good. And what participants learn in the process has more to do with how to survive than with meaningful self-development.
I've often thought that every organization should be considered partially a public entity since they exist, in part, to provide meaningful activities for the people who work in them. Skills and mind-sets acquired at work go home with people to affect family, community, culture and even the world. The more positive an atmosphere we can create at work, the more positive an impact it has at home. In short, what goes around comes around.
SO, WHAT'S THE ALTERNATIVE?
The alternative to one-side-accountable, boss-administered/subordinate-received performance reviews is two-side, reciprocally accountable, performance previews.
Let me explain.
The boss's assignment is to guide, coach, tutor, provide oversight and generally do whatever is required to assist a subordinate to perform successfully. That's why I claim that the boss-direct report team should be held jointly accountable for the quality of work the subordinate performs. I'm sick and tired of hearing about subordinates who fail and get fired, while bosses, whose job it was to ensure subordinate effectiveness, get promoted and receive raises in pay.
Holding performance previews eliminates the need for the boss to spout self-serving interpretations about what already has taken place and can't be fixed. Previews are problem-solving, not problem-creating, discussions about how we, as teammates, are going to work together even more effectively and efficiently than we've done in the past. They feature descriptive conversations about how each person is inclined to operate, using past events for illustrative purposes, and how we worked well or did not work well individually and together.
The preview structure keeps the focus on the future and what "I" need from you as "teammate and partner" in getting accomplished what we both want to see happen. It doesn't happen only annually; it takes place each time either the boss or the subordinate has the feeling that they aren't working well together.
Realistic assessment of someone's positive qualities requires replacing scores on standardized checklists with inquiry. As a result, step No. 1 in giving effective feedback almost always involves "active questioning" inquiry. Inquiry contrasts with most performance reviews, which begin with how the evaluator sees the individual and what that boss has already decided most needs enhancing. Both participants need an answer to the most significant issue at hand: "Given who I am and what I'm learning about this other individual, what's the best way for us to complement one another in getting work accomplished with excellence?" If in the process the other person decides to change and develop, so much the better.
Bosses should be asking all the questions that occur to them in inquiring about how a subordinate thinks he or she can best perform the job. Then, after they have exhausted their questions, they should ask the subordinate for what else they need to know. At a minimum, they should be asking "How will you be going about it?" and "Specifically, what help do you need from me?" Why not get it all when, at the end of the day, the boss still has the authority to play ultimate decider?
Some of you may also ask if the performance review goes away, how do we prepare the groundwork if we want to fire somebody? For the better, I'd argue: Take away the performance review, and people will find more direct ways of accomplishing that task.
Substituting performance previews for performance reviews promotes straight-talk relationships for people who are up to it. It welds fates together because the discussion will be about what the boss-subordinate team accomplishes together, which I believe is the valid unit to hold accountable. It's the boss's responsibility to find a way to work well with an imperfect individual, not to convince the individual there are critical flaws that need immediate correcting, which is all but guaranteed to lead to unproductive game playing and politically inspired back-stabbing.
There are many bosses who would like to change that game, but they feel handcuffed by the rules already in play. I'd like to believe that if given the chance, they would embrace a system that allows them just as much authority -- but in a way that promotes trust, not intimidation.
Keep in mind, of course, that improvement is each individual's own responsibility. You can only make yourself better. The best you can do for others is to develop a trusting relationship where they can ask for feedback and help when they see the need and feel sufficiently valued to take it. Getting rid of the performance review is a necessary, and affirming, step in that direction.—Dr. Culbert is a consultant, author and professor of management at the UCLA Anderson School of Management in Los Angeles. He can be reached at reports@wsj.com.

Open Innovation (good ideas coming from outside the company)

2008-11-05T12:58:00.000-08:00

http://en.wikipedia.org/wiki/Open_innovation

Open Innovation is a term promoted by Henry Chesbrough, a professor and executive director at the Center for Open Innovation at Berkeley. The concept is related to (but distinct from) user innovation, cumulative innovation and distributed innovation.

The central idea behind open innovation is that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (e.g. patents) from other companies. In addition, internal inventions not being used in a firm's business should be taken outside the company (e.g., through licensing, joint ventures, spin-offs). In contrast, closed innovation refers to processes that limit the use of internal knowledge within a company and make little or no use of external knowledge. Some companies promoting open innovation include Procter & Gamble, Innovation Exchange, NineSigma, InnoCentive, yet2.com, IBM, Philoptima, and Nerac.

Prior to World War II, closed innovation was the paradigm in which most firms operated. Most innovating companies kept their discoveries highly secret and made no attempt to assimilate information from outside their own R&D labs. However, in recent years the world has seen major advances in technology and society which have facilitated the diffusion of information. Not the least of these advances are electronic communication systems, including the internet. Today information can be transferred so easily that it seems impossible to prevent. Thus, the open innovation model states that since firms cannot stop this phenomenon, they must learn to take advantage of it.

It is the business model of the firm that determines what external information to bring inside, and what internal information to take outside.

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[edit] Open source vs. Open Innovation

While open source and open innovation might conflict on patents issues, they are not mutually exclusive, as participating companies can donate their patents to an independent organization, put them in a common pool or grant unlimited license use to anybody. Hence some open source initiatives can merge the two concepts, this is the case for instance for IBM with its Eclipse platform which IBM is advocating as a case of open innovation, where competing companies are invited to co-operate inside an open innovation network.^[1]

[edit] Difference between traditional innovation and open innovation

Open innovation needs a different mindset and company culture than traditional or closed innovation.

Closed innovation Principles	Open innovation Principles
The smart people in our field work for us.	Not all the smart people work for us. We need to work with smart people inside and outside our company.
To profit from research and development (R&D), we must discover it, develop it and ship it ourselves.	External R&D can create significant value; internal R&D is needed to claim some portion of that value.
If we discover it ourselves, we will get it to market first.	We don't have to originate the research to profit from it.
The company that gets an innovation to market first will win.	Building a better business model is better than getting to market first.
If we create the most and the best ideas in the industry, we will win.	If we make the best use of internal and external ideas, we will win.
We should control our innovation process, so that our competitors don't profit from our ideas.	We should profit from others' use of our innovation process, and we should buy others' intellectual property (IP) whenever it advances our own business model.

The Consumer is Boss - P&G

2008-11-03T05:54:00.000-08:00

http://money.cnn.com/2008/03/07/news/companies/lafley_charan.fortune/index.htm?postversion=2008031012

'The consumer is boss'

Back in 2000, P&G was stumbling; earnings, execution, and morale were all poor. Now this historic company, founded in 1837, is on a roll. How did it regain its footing? One key: getting to know its consumers better.

By A.G. Lafley and Ram Charan

(Fortune Magazine) -- In this adaptation from their forthcoming book, The Game-Changer, A.G. Lafley and management consultant Ram Charan describe the principles of innovation and give a grass-roots example of how listening to the bosses in this instance, Mexican housewives - can pay off.

The first section describes, in Lafley's own words, the difficult circumstances he faced on becoming CEO of Procter & Gamble (PG, Fortune 500) in 2000. The rest is the work of both authors.

A.G. Lafley: A few minutes before a business meeting in California on June 6, 2000, I received an unexpected phone call from John Pepper, former chairman and CEO of P&G. John got right to the point: "Are you prepared to accept the CEO job at P&G?"

I was stunned. Just the afternoon before, I had been speaking with chairman and CEO Durk Jager about our plans.

"What's happened to Durk?" I asked.

"He resigned."

"Why? What happened?"

"I don't have time to go into that now. I just need to know whether you're prepared to do the CEO job for P&G."

"Of course I am."

"Then get on a plane as soon as you can and come directly to my office when you arrive back in Cincinnati."

"Okay." I turned to my P&G colleagues and told them I had to leave.

On the plane, I considered this sudden turn of events. I tried to put first things first: What would I need to do in the next 24, 48, 72 hours? What about the first week, first month?

No question, P&G was struggling. We'd issued a big profit warning in March, and the business was still performing below expectations. We'd moved to a new global-business-unit-led strategy. We'd totally changed the organization structure. We were adjusting to more global competition, a faster-changing industry landscape, and the challenges of the Internet. In the midst of all this, we'd raised the company's goals to unprecedented levels. In hindsight, we were trying to change too much too fast.

Job one was to determine the state of P&G's business. When I began digging into the numbers, I found that we were in worse shape than I had suspected. On June 8 we issued another profit warning, and the stock fell further. We had lost more than $50 billion in market capitalization in six months.

I knew it would take another three to six months to know whether we had bottomed out. In the meantime, I had to retain key people. I talked one-on-one with each leader to come to a clear understanding of the business challenges and opportunities. I encouraged them to compete like hell externally but to collaborate like family internally. Just about everyone signed on to this vision. Proud P&Gers, we were embarrassed by recent results. To turn the company around, we focused on a few simple, powerful things.

1. We put the consumer at the center of everything we do. Three billion times a day P&G brands touch the lives of people around the world. Our goal is to delight consumers at two "moments of truth": first, when they buy a product, and second, when they use it. To achieve that, we live with our consumers and try to see the world and opportunities for new products through their eyes. At P&G the CEO is not the boss - the consumer is. In ways large and small, we were not living up to the "consumer is boss" standard - and we were paying for that lapse.

2. We opened up. Long known for a preference to do everything in-house, we began to seek out innovation from any and all sources. Innovation is all about connections, so we get everyone we can involved: P&Gers past and present, customers, suppliers, even competitors. The more connections, the more ideas; the more ideas, the more solutions. And because what gets measured gets managed, we established a goal that half of new-product and technology innovations have some contribution from outside P&G - such as licensing or buying a technology, finding a partner, or making an acquisition. We are already beyond that figure, compared with 15% in 2000.

3. We made sustainable organic growth the priority. Organic growth is less risky than acquired growth and more highly valued by investors. This strategy also suited our decision to increase the emphasis on core brands like Tide and Crest, where adding a few points in market share can mean hundreds of millions in new revenue.

4. We organized around innovation. To get organic growth, we needed to innovate. Innovation enables expansion into new categories, allows us to reframe businesses considered mature, and creates bridges into adjacent segments. By running a disciplined development, qualification, and commercialization process, we have proved that we can manage a large portfolio of innovations in various stages of development. Innovation is at the core of our business model.

5. We began thinking about innovation in new ways. We started from the premise that it is possible to run an innovation program in much the same way we run a factory. There are inputs; they go through a series of transformative processes, creating outputs. It is possible to measure the yield of each process, including the quality, the end product, and the financial and market results. We also developed tools and know-how to manage the risks of innovation.

A.G. Lafley and Ram Charan: Great innovations come from understanding the consumer's unmet needs and desires. Regardless of the market, innovation must be consumer-led. That is not the same thing as consumer-decided. As Henry Ford once put it, if he had listened to the marketplace, he would have built a faster, cheaper horse. He understood that what people really wanted was a better way to travel. Consumer insights lead to innovation opportunities. You must develop an appreciation for who your consumers are and how they live, to know their needs and also their aspirations. Only then can you figure out how to deliver a product that can improve their lives.

You might think that P&G, of all places, would know that. After all, it created the first market research department and has long been acknowledged for the almost relentless way it seeks knowledge of consumers. For a long time, though, P&G did not really see consumers as active participants in innovation. Their role was essentially passive: responding to stimuli in experiment after experiment to provide "quantitative research data." P&G was talking to a lot of people, but not listening to them. The company also tended to narrow in on only one aspect of the consumer - for example, her mouth for oral-care products, her hair for shampoo, her loads of dirty clothes for laundry detergents (most P&G consumers are women). P&G had essentially extracted the consumer (and at times a particular body part as well!) from her own life and focused on what was most important to the company - the product or the technology.

Recognizing that it needed to look at consumers more broadly, P&G has moved away from traditional behind-the-mirror focus groups to more immersive research techniques, increasing its spending on such research more than fivefold since 2000. How does it do this? Among other things, thousands of infants and toddlers crawl through the Baby Discovery Center every year as P&G researchers watch how infants interact with their mothers, how they move, how their diapers work. There are also specially designed innovation labs. One looks like a grocery store, another a drugstore, and another the different rooms in a typical middle-class American home. Consumers might be asked to come in and be given $100 to spend. By watching how they navigate the aisles and what catches their eye, the company is able to unlock deeper insights into their behavior. The Feminine Care unit once even created a club for teenage girls to get them to relax and talk about menstruation.

LEARNING FROM CARLOS AND MARTA

This kind of research is particularly important when P&G ventures outside the U.S. The most promising sources of business opportunity these days are in countries that are not yet rich but are growing fast, such as China, India, Russia, Mexico, and Brazil. P&G needs to listen to these bosses particularly closely, because it does not know them as well as its neighbors in Cincinnati.

Through a gate on a back street in Mexico City, into a courtyard, and up two flights of stairs is the modest two-bedroom apartment of Marta and Carlos. Marta, 32, is a stay-at-home mother of two basketball-crazy girls; Carlos is an accountant at a car repair shop. Their home is no larger than a good-sized hotel room, with a tiny kitchen and a dining room just big enough to hold a table and four chairs. There are no closets, so the couple has put up wooden shelving for the family's clothing. The walls are covered with family pictures; on the door is a printed prayer and two crosses. This home is truly their castle. They saved for 12 years, living with Marta's parents, to buy it. Marta takes meticulous care of every inch: Even the family toothbrushes are kept in order, snapped to attention by a device that hangs on the wall above the sink.

Marta is P&G's kind of consumer. In fact, she is a P&G consumer - Ariel laundry detergent, Downy fabric softener, and Naturella sanitary pads.

Carlos makes the equivalent of about $600 a month, making the family part of what P&G terms the lower-income consumer market - households with income between $215 and $970 a month. These families account for about 60% of the country's 106 million people. The poorest 25% of Mexicans do not have the disposable income to be much interested in what P&G has to offer; as for the top 15%, since P&G entered the country in 1948, its products have done pretty well.

But for a time the company was not as successful with the middle 60%, which is where the most population growth is. "We tend to hire from relatively high [Level A] socioeconomic classes," notes Carlos Paz Soldán, vice president of P&G Mexico and Central America, but most consumption comes from C and D household incomes. Continues Paz Soldán: "We were pretty ignorant about them in a deep way." That ignorance represented opportunities lost. "We have to win in this segment today," the P&G Mexico office concluded in an internal study. It went on to ask, "What are the business opportunities we have with them, and why?"

That was the right question, and P&G's past failure to think it through has cost it. In one case, innovation did deliver a better product - but it still flopped because it didn't deliver what consumers wanted. Launched in the late 1980s, Ariel Ultra laundry detergent was concentrated so that women needed to use only half as much detergent per load. P&G saw that as a significant benefit because most lower-income households have limited storage. Ultra's enzymes also delivered better cleaning. P&G was convinced that it had a winner.

The bosses told them otherwise. For one thing, Mexican women didn't believe that they could really get their laundry clean by using so little. For another, Ariel Ultra didn't foam. Many members of lower-income households do manual labor and are acutely conscious of odor; they considered foam a signal that their perspiration was being rubbed out. In a matter of months, Ariel Ultra was gone.

One manager put it bluntly: "We could have understood. We should have understood. We didn't, so we failed." Paz Soldán drew the correct conclusion: "We had to get out of our offices and become immersed in the real world and daily routines of lower-income consumers and in the stores of the retailers we partner with."

Starting in about 2001, P&G developed the "consumer closeness" program to create such experiences. "Living It" enables employees to live with lower-income consumers for several days in their homes, to eat meals with the family, and to go along on shopping trips. In a related program, "Working It," employees work behind the counter of a small shop. That gives them insight into why shoppers buy or do not buy a product, how the shopkeeper stacks the shelves, and what kind of business propositions are appealing. The idea behind Living It and Working It was to sit down with the bosses and to hear what they needed, even if they couldn't articulate it directly.

Maybe that sounds vague, even touchy-feery. In feet, P&G employees report that those have been profound experiences for them. But that is not why these programs exist; P&G created them to help create new business - and it works. Downy Single Rinse proves that such understanding can, in feet, be translated into profitable products.

THE BOSSES SPEAK UP

In the early 2000s the Mexican market share for Downy fabric softener was low and stagnant. P&G wasn't sure what could be done about it, since the assumption was that people who didn't have modern washing machines didn't use softener. Not wanting to compromise the Downy brand by dropping the price too much, P&G decided to try to come up with something specific to the needs of the lower-income consumer.

One of the things P&G people notice - often to their shock - by Living It and similar experiences was the problem of water. Before the Europeans arrived in the 16th century, Mexico City was surrounded by a lake; now the metropolis is parched. Suspicion of drinking water is high. Carlos and Marta buy bottled water, as do a large proportion of families who make much less than they do. Millions of rural women still lug buckets back from wells or communal pumps. In the cities, many have running water for only a few hours a day. Most homes do not have fully automatic washing machines; even fewer have dryers. All this makes doing the laundry a seriously draining chore.

At the same time, lower-income Mexican women take laundry very, very seriously. They cannot afford to buy many new clothes, but they take great pride in ensuring that their family is turned out well. Sending your children to school in clean, ironed clothing is a visible sign of being a good mother. On Marta's wooden shelves and hangers, every single item, from jeans and T-shirts to Carlos's suits, is tautly ironed - and she is the rule, not the exception. P&G found that Mexican women spend more time on laundry than on the rest of their housework combined. More than 90% use softener, even women who do some or all of their laundry by hand.

"By spending time with women, we learned that the softening process is really demanding," recalls Antonio Hidalgo, P&G brand manager for Downy Single Rinse at the time of its debut in March 2004. A typical load of laundry went through the following six-step process: wash; rinse; rinse; add softener; rinse; rinse. No problem if all this is just a matter of pressing a button every once in a while. But it's no joke if you are doing the wash by hand or have to walk half a mile to get water. Even semiautomatic machines require that water be added and extracted manually. And if you get the timing wrong, the water supply might run out in the middle. "The big aha!" says Paz Soldán, was discovering how valuable water was to lower-income Mexicans. "And we only got that by experiencing how they live their life."

Putting it all together, P&G knew that Mexican women liked to use softener; they had high standards for performance; and doing the laundry was arduous and time consuming, and required large amounts of water. These ideas were put through the wringer, as P&G launched the kind of large-scale quantitative research it is known for. They stood up to the scrutiny.

Having identified a problem (making laundry easier and less water-intensive), P&G turned to the labs for an answer. Their solution: Downy Single Rinse. Instead of a six-step process, DSR reduced it to three - wash, add softener, rinse saving enormous time, effort, and water.

Launched in 2004, DSR was a hit from the start. Hidalgo recalls when he told one mother he had worked on DSR, her face lit up. "She thanked me," he says, with satisfaction, "and asked me to please bring more of these kinds of products to her life." Hidalgo is, of course, trying to do just that.

VALUE, NOT PRICE

Particularly when innovating for lower-income markets, it is important to think about value, not price. Lower-income consumers are price sensitive, of course, but they will pay for products if they deliver a benefit they consider worth the money. By listening to women like Marta, P&G created a trusted brand and a profitable product. Marta positively purrs when she recalls how her nieces tell her, "Your clothes smell so good."

First Published: March 10, 2008: 5:01 AM EDT

Find this article at:
http://money.cnn.com/2008/03/07/news/companies/lafley_charan.fortune/index.htm?postversion=2008031012

What It's Like to Be a First-Time CIO

2008-10-24T10:53:00.000-07:00

http://www.cio.com/article/print/194600

What It's Like to Be a First-Time CIO
– Jason Scott, CIO of Innovation Ads, as told to Meridith Levinson, CIO
March 10, 2008

Editor's Note: Jason Scott joined Innovation Ads, a full-service online advertising agency, as its first-ever CIO on September 7, 2007. Scott, 31, had never held the CIO role before. Most recently, he ran IT for Corporate Express Imaging, a $450 million division of office products supplier Corporate Express. Scott started out as an administrative assistant in the IT department at Corporate Express Imaging when he was 20 and still in college. Over 10 years, he climbed the corporate ladder at Corporate Express only to realize that he'd have to leave the company if wanted to become a CIO.
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Jason Scott
Day One: Locked Doors, Missed Connections
I showed up for my first day of work at my new office in downtown Manhattan at 7:30 in the morning carrying a box filled with family photos, framed college degrees, certificates, awards and code samples. I reported for duty wearing jeans and a Pink Floyd T-shirt. Not exactly how I envisioned my first day as a CIO, but I had arrived in New York late the night before with my wife, two kids, dog, cat and luggage, and I simply didn't have time to unpack my power suit.
The Innovation Ads office was previously used as the set for the fictional Mode magazine office featured on the sitcom Ugly Betty. I stepped off the elevator on the 21st floor, but the door to the hip, brightly colored office was locked. I was the first one there, and since I didn't have a key, I couldn't get in. A few minutes later, a stylishly dressed employee showed up. I introduced myself to him as the new CIO and asked him if we could get into the office. He pulled a credit card from his wallet, slid it between the door jam and the bolt, and opened the door. Note to self, I thought, Improve security on office doors.
I located my sleek corner office, put my stuff down and went to find my boss, Iain Grae, the president and cofounder of Innovation Ads . He wasn't in his office so I tried calling him. No answer. I later learned that he was in Europe.
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Iain and I first met and became good friends when we were students at Florida Atlantic University in the late 1990s. In 2005, he offered me the CIO job at Innovation Ads, but my career at Corporate Express was going very well, and a move to New York simply wasn't feasible for me at the time. (I was living and working in Florida.) Iain and I stayed in touch, and two years later he asked me again to join Innovation Ads. The timing was much better for me and my family. I had just finished a big project at Corporate Express and was ready for a change. And Innovation Ads was in a much stronger position when Iain approached me in 2007.
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I wandered back to my office and just sat there, not quite sure of what to do. I knew I was expected to be a contributing member of the team on day one. Yet I had no specific direction. Was there something I should be doing on that first day? Were we in the middle of a project? It was definitely a little disconcerting and very different from my previous experience at Corporate Express. Each time I moved into a new position there, I spent the first week moving into my new office, getting my stuff together and meeting new staff. I could ease into it. But here there was no ramp-up time. The first day I walked in, it was as the CIO.
By 9 o'clock the five members of the IT staff started showing up. They stared at me through the windows surrounding my office as if I were a fish in an aquarium, and I peered back at them with uncertainty. After 15 minutes I said to myself, This is ridiculous, and I went out and introduced myself to them. I told them about my background and about my extensive programming experience. They looked at me like I was full of it. In essence, they told me: "Everyone who comes in here tells us they know systems and development." I asked them about their jobs and about the company. I was just trying to get the lay of the land.
It was an interesting first day, for sure. I felt like a boxer who had survived round one against a world heavyweight champion: I didn't win. I didn't knock down the champ, but I didn't lose or get knocked out either. I was relieved I got through day one without any major issues. Next: Facing Down Loneliness, Fear, Frustration and Self-Doubt
Facing Down Loneliness, Fear, Frustration and Self-Doubt
My first week on the job was frustrating. I didn't know any of the staff. I didn't know any of the vendors. I didn't know the interactive marketing industry or its terminology.
At Corporate Express, when someone talked about delivery problems or FIFO and LIFO costing, I could speak that language. At Innovation Ads, everyone was talking about campaigns, enrollment management and lead generation. I didn't know what they were talking about. People were giving me projects, saying, "We need this client to be able to do a co-reg, but they're also driving an affiliate network." I was scribbling down notes but I had no idea what they were asking me to do. That was scary.
There were times when I wondered, Oh my god, what if I make things worse? What if I can't do this job? I imagined the core system crashing for five days and the company losing $10 million. What would I do? I didn't know who my go-to people were. I didn't know if my staff was going to accomplish what I needed them to accomplish.
In my previous role, I had a lot of people I could ask for advice. I had known them for a decade, and they were always happy to talk things out with me. Here, I had no one to ask. I had to rely on myself and do what I thought was right.
Getting the Lay of the Land, Finding a (Temporary) Go-To Person
Innovation Ads was so different from Corporate Express.
For starters, Innovation Ads, which launched in 2002, is privately owned. It's driven by speed, progress and growth, while Corporate Express, as a public company, is burdened with compliance, regulations, reporting and controls. I always thought that when I became CIO—wherever that was—that it would be very formal and hierarchical, much like it was at Corporate Express, where you have to have "gray hair" to be promoted to executive management and where every executive has a front-row space in the parking lot. At Innovation Ads, everyone on staff is my age or younger. There's a music studio in the office for employees. It's a substantially different environment and not what I expected, though I must say it's certainly no less effective or lucrative than Corporate Express.
I tried to adapt to my new environment, and I resolved to do my best. I came in early. I worked late. I read up on open-source technologies such as Apache, PHP and MySQL, since they were new to me. I also started reading books, news articles and white papers on online advertising, e-mail marketing and behavioral targeting.

Six Tips for Surviving Your First Ever CIO Job
1. Expect the unexpected.
2. Identify your go-to people. Seek out one or two members of the IT staff whom you can ask for advice and approach with questions about the company as you get up to speed.
3. Don't rely on your go-tos too much.
4. Trust your instincts, judgment and experience.
5. Read up on your new company, industry and any and all unfamiliar technologies your company is using.
6. Solve some small, visible problems within your first few weeks on the job to help build some momentum.
--M. Levinson

To get my arms around my new position and employer, I found someone on the IT staff to be my go-to person. Whenever I got a task, I talked it over with him. I asked him what he would do and what the company had done in the past. I selected my go-to guy on the basis of his tenure. Out of the five people on the IT staff when I joined, he had been at the company the longest—a year.
Relying on my go-to guy was a double-edged sword. Not knowing him very well, I didn't know if he was really any good. I also found myself becoming dependent on him over the first couple of weeks—especially as other developers, who had tired of being pulled in different directions by my predecessor, started leaving.
Then our most important system went down. Two weeks into my tenure, our core online advertising engine, iPMS, which tracks campaign activity and success rates and transmits leads to and from clients and vendors, stopped working. The application wasn't receiving leads into its database, so lead forms that customers were submitting weren't making their way into the system.
In our business, leads are our lifeblood. They're our product. So when iPMS stopped working, the sales team rightly started freaking out and raising hell. The sales director stormed into my office and asked, "Are we having a problem with the system?" I had no idea so I asked my development group what was going on. They ran some queries and tests and told me exactly what the sales director told me, "Looks like no data is being inserted into the database," they said.
I sat down and started looking through the code with them. Using pure systems logic, I quickly identified the problem. A lower-level developer had changed a core configuration file by accident during testing, and that change directed the application to a nonexistent database server—hence the reason why lead forms weren't entering our system. Within minutes, we fixed the problem, and just like that, we were back in business.
That was a big moment. Fixing a mission-critical problem engaged me with the business. It's a funny thing: I started in the CIO role with grand visions of how I was going to change the world, and yet it was this one minor system blip, which lasted at most five minutes, that was the catalyst that helped me build my confidence and that gave the company confidence in me. Go figure.
Things went South again a week later: My go-to guy gave his notice. I panicked. What now? I thought. I'm going to have a completely new staff who doesn't know the system and neither do I.
My go-to guy's quitting turned out to be a blessing in disguise: It took away my crutch and forced me to walk on my own. I had to lead the charge. Things started getting better, and I quickly learned the system—trial by fire, so to speak. I felt more powerful and far less dependent.
Next: Hiring Right, Rallying the Team
Hiring Right, Rallying the Team
When I first started at Innovation Ads, there was a distinct lack of team spirit among the IT staff, primarily due to their long-standing frustrations with the prior technology leadership. People showed up at nine, parked themselves in their cubes, put on their headphones, worked on their projects and left at six. No one talked to each other, or knew what the others were working on. Nor did they care.
The first thing I did was weed out people who didn't share my enthusiasm for programming. I live for software development and application design. I simply couldn't do anything else. If I won the lottery tomorrow, I'd be sitting at home writing computer applications. It's what I love. Anyway, I hired six new developers, and everyone who came on board wound up being really good. This is the team that's going to take our company to the next level.
Hiring is hands-down the most important thing for a CIO, for any manager. If you can't build a good team and hire the right people, you will drown—no ifs, ands or buts about it. Few CIOs have the time anymore to step in and solve technical problems themselves. My days are full morning to night with vendors, management, shareholders and staff. Even if I wanted to step in and do this stuff myself, there's simply not enough time in the day.
Finding the right people that you can count on—and letting them know how important they are—is key. I told my development group that they're the crown jewel of the company, and that the company could win because of them alone. I told them that they were my number-one priority—that my own boss came second. "What's important is what you guys need from me," I said. "My boss has five direct reports he can call on. You guys only have one boss." I let them know that I was going to represent them to upper management and that I would take full responsibility for any technical problems that came up. I wanted to shield them from politics and blame and bolster their faith in me as their leader.
When I worked for Corporate Express, I was driven to work hard not because I really cared for the company (how excited can one get about office products?) but because of my boss, the national vice president of sales, Al Zoldos. I learned a lot from him every day I was there, and I trusted and respected him. All of his direct reports did. I truly wanted to make him proud.
At Innovation Ads, I decided that I wasn't going to try to sell my developers on working hard for the sake of the company. That's a cliché. I wanted to get them to work hard for me, the way I was inspired to work hard for Al. And in exchange, I do everything in my power for them. If they believe that I truly care about them, which I do, I have a much better chance of getting them to help me and thus, help the company.
One thing I did was purchase new computers for my developers with 90 inches of monitor space. You could fit a full-grown New York Knick's guard on the monitor. Everyone in the company took notice of the technology team's giant new machines. It made my group feel special, and I think it helped inspire them to do their best work.
I also created wallpaper for their desktops that featured the Google logo in a rifle's cross hairs and put it on all the developers' machines. Google is by far our largest competitor, and I wanted to align my developers around a common foe and make it clear to them that we're shooting for the top. We are not out to be a successful online marketing company; we are out to be THE successful online marketing company. I want Innovation Ads to be as well known for its advertising platforms as Google, Microsoft and Yahoo.
When everyone else in the company saw the wallpaper, they wanted it on their machines, too. Between the monitors and the wallpaper, the technology group's zeitgeist had begun.
What a Difference Six Months Makes
Over the course of my 10-year career with Corporate Express, I became a go-to person. I felt like a star, but at the same time I always wondered in the back of my mind if my star status was due to tenure or talent. I took this job with Innovation Ads for many reasons. First, I always wanted to be a CIO. Second, it was a great company in a new and exciting industry, and I relished the chance to help it achieve its true potential. Finally, I wanted to test myself—to see if I could replicate my success at Corporate Express in a new position, with a new company, in a new industry, in a new state with people I'd never met before—and more importantly, with people who had never met me.
Although the first couple of weeks were tough, I'm now six months into my job and I have to say I am loving life. This is what I want to do. This is where I want to do it. This is what I worked a decade for. This is my dream.
The executives and managers who've been with Innovation Ads from the start are running an extremely successful business. What they've done here is amazing, building a company from zero to the multimillion dollar company it is today. They might not have one single gray hair, and their style is definitely more freewheeling than stodgy, but they're just as effective, productive and successful as the rest of corporate America, if not more so. I've learned a whole lot more about management and motivation here than I would have had I worked another 10 years at Corporate Express.
I'm getting way more satisfaction and joy now building and guiding a team than I got from being the go-to guy at Corporate Express. I'm watching my team grow, make the right moves and be productive. I've doubled the development staff to 12. Productivity has grown tremendously. The accuracy of code has also gone up tremendously. Instead of having to light a fire under my staff, I have to hold them back. They're smiling, laughing, arguing and doing all the things a team should. The whole company's morale is up because of the development group. I sometimes sit in my office watching them work and I smile with pride.
And yes, in case you were wondering, the doors to the office are now secure. They lock and unlock via electronic security cards. We know who comes and goes at any time, and we can even unlock the doors via the Internet if we have to.
© 2008 CXO Media Inc.

Radical moves led to big rebound for Dow Chemical

2008-09-21T20:08:00.001-07:00

http://www.freep.com/apps/pbcs.dll/article?AID=2008809210511
http://www.freep.com/apps/pbcs.dll/article?AID=/20080921/COL06/809210511&template=printart

September 21, 2008
Radical moves led to big rebound for Dow Chemical
CEO to talk of adapting to changing worldBY TOM WALSHFREE PRESS COLUMNIST
See if this sounds familiar.
A century-old Michigan industrial giant, in the throes of a near-death experience, loses $703 million in two years. It closes 92 plants around the world, cuts thousands of jobs and squeezes its labor union for big wage cuts.
A big automotive company?
Nope.
We're talking about Midland-based Dow Chemical Co. earlier this decade.
Encouragingly, at a time when Michigan's people need to believe that miraculous comebacks can happen, Dow in 2008 is solidly profitable. It has added jobs, forged a landmark 8-year labor pact with the United Steelworkers, raised its dividend 25% and unveiled the new K-Dow joint venture with Kuwait that is to bring 800 people to a new headquarters in metro Detroit. It even invested $25 million to renovate a Midland hotel and add new trendy restaurants. It led a community effort to build the $28-million Dow Diamond baseball park and lure the minor league Great Lakes Loons to play there. All in the past few years.
Then in July, Dow topped off its run with a whopper -- a $19-billion deal to buy specialty chemicals maker Rohm and Haas, with $3 billion of the money coming from Warren Buffett, the legendary 78-year-old investor and CEO of Berkshire Hathaway.
Andrew Liveris, 54, Dow's chairman, president and CEO, will no doubt mention some of this when he speaks Monday to the Detroit Economic Club.
He will also, I expect, speak unvarnished truths about the world as it is -- dangerous, volatile -- and about the need for U.S. companies and the government to make radical changes to adapt and prosper. The alternatives are decline and irrelevancy.
The choice of Liveris to speak on this particular Monday, when Economic Club President Beth Chappell also plans what she calls a "very special announcement," is no accident. Both Liveris' speech and Chappell's big news are to deal with energy, the environment and the critical role of manufacturing to America's future.
Spend a day at Dow's home base in Midland, as I did a week ago, and you will hear, over and over, how the world changed at the dawn of the 21st Century. The cost and price volatility of hydrocarbons escalated, as oil-rich nations of the world flexed their muscles and demanded a greater piece of the action in the downstream products made with their resources.
Dow Chemical, founded in 1897, made money for its first 100 years mostly by taking vast quantities of raw materials and mixing up vast quantities of basic chemicals and plastics from them.
Aside from Styrofoam and some household products that have since been divested, like Saran wrap and Ziploc bags, Dow sold commodity products. And suddenly, Dow found itself with virtually no pricing power over the products it sold.
New revenue approach
Australian-born Liveris, a 32-year Dow employee, was named president in 2003 and CEO in 2004, following a corporate shakeout and downsizing after disastrous, money-losing years in 2001 and 2002. His strategy was to mitigate risk and reduce cyclicality by moving Dow away from reliance on commodity feedstocks and products and toward more high-performance chemicals for the health care, agriculture, automotive and environmental sectors.
"The new world," says Mike Gambrell, Dow's executive vice president for basic plastics and chemicals, "is about company-to-country relationships, as opposed to the company-to-company relationships of the past." In the hydrocarbon world, that's a result of oil-rich nations like Kuwait, Saudi Arabia and Libya realizing that their oil will run out someday, so they need to participate in the downstream industries that now buy their crude oil.
Gambrell spends much of his time now flying around the world negotiating deals like the K-Dow Petrochemicals joint venture announced in December, between Dow and a government-owned Kuwaiti firm to make polyethylene and other chemicals used in plastics. Dow contributes its technology know-how and the Kuwaitis pay Dow about $9.5 billion in cash, which Dow can pump into growth via acquisitions or developing new products. Gambrell is working on similar deals with Saudi Arabia and Libya.
While Dow is a vast global entity with 68% of its $54 billion in annual sales outside the United States, the firm has recently renewed its commitment to Midland, the town where Herbert Dow set down roots 111 years ago. More than $500 million has been invested in the past four years to bring an eclectic mix of specialty-chemical business and research projects to a cluster of mostly old buildings on 1,900 acres in Midland. Dow is working on products that range from solar roof shingles to wind turbine blades.
"I've got to give a lot of credit to our local union," says David Dupre, vice president of Michigan operations for Dow. "They saw the writing on the wall and they've been very cooperative."
The writing that United Steelworkers Local 12075 saw, after losing 600 jobs in Midland from 2001-03, was that old commodity chemicals jobs were disappearing, and attracting new work meant having workers with more skills and an entrepreneurial mindset. And, oh, lower wages, too, in many cases.
"The whole site was in a funk," says Kent Holsing, president of the USW local, when it came time to bargain a new contract in early 2004. "But we looked around and saw what was happening in autos and in steel, all the shutdowns, and we said, 'Hey, we're looking at real change here.' "
The union, after what Holsing called "a lot of heartache and pain," ratified an 8-year deal that included wage cuts, some as much as $7 to $13 per hour, for lower-skilled work classifications. The company, for its part, has invested more than $10 million in training for the new products being made there. As a result, 1,000 USW jobs have been retained.
Dow is also trying to make small-town Midland more appealing to the best and brightest scientists and top management prospects.
Rather than assume that top-of-class hotshots from big-name schools will all bypass Dow for jobs in Boston, Chicago, Seattle or other urban meccas, Dow launched a pilot program a couple years ago to bring MBA students from University of Chicago, Harvard, the Massachusetts Institute of Technology and Penn's Wharton School to Midland to work on two- or three-month projects. Of those offered jobs, 70% to 80% have accepted.
"We're reviving research and development big-time. Our patent applications are way up," says Heinz Haller, Dow's executive vice president for performance plastics and chemicals.
"You could argue," he added, "that Dow is more like Google than an old chemical company."
Perhaps the enthusiastic Haller is stretching a bit. But it's refreshing to see an old Michigan industrial outfit on the muscle again, growing and talking with some bravado in these volatile, unsettling times.
Contact TOM WALSH at 313-223-4430 or twalsh@freepress.com.

Generation Y in the Workplace: Digital Natives' Tech Needs Are Changing Companies Forever

2008-09-19T11:15:00.000-07:00

http://www.cio.com/article/449639/Generation_Y_in_the_Workplace_Digital_Natives_Tech_Needs_Are_Changing_Companies_Forever?contentId=449639&slug=&source=nlt_cioinsider
http://www.cio.com/article/print/449639

Generation Y in the Workplace: Digital Natives' Tech Needs Are Changing Companies Forever

– Heather Havenstein, Computerworld

September 17, 2008

Like most generations before it, Generation Y -- those born roughly between 1982 and 2002 -- has been stereotyped based on a cultural change identified with its era. In this case, the group is bound by a hunger to use the latest technologies to communicate.

These digital natives -- also known as Millennials -- are natural multitaskers, often simultaneously texting on a mobile device and instant messaging on a PC without ever removing even one iPod ear bud. Many of this generation can't conceive of communicating without an IM system or social network.

As Generation Y starts graduating from college and entering the work force, they are bringing with them a slew of technology demands to IT organizations of potential employers. In fact, in many cases members of the new generation are researching the technology portfolios of potential employers before agreeing to sit down for a job interview.

Because the generation's demands are vastly different from earlier groups, many companies are struggling to find ways to satisfy them.

Those that don't, say some experts who have studied Generation Y, may find themselves struggling to hire and keep the most talented young workers.

Ron Alsop, a columnist for the Wall Street Journal newspaper and author of "The Trophy Kids Grow Up," said that many recent entrants into the workforce face a culture shock from Day One. Alsop's book, due out next month, looks at how the new generation is already shaking up the workplace.

The first Millennials are often landing in offices without instant messaging technology or access to social networks, Alsop noted. Such non-technology corporate cultures that avoid new technologies due to security concerns or budgetary issues are sending up instant red flags for new workers, he added.

"Companies really need to loosen up a bit and not play Big Brother too much by worrying about blocking certain social networking Web sites," Alsop said. "Companies have to realize that they need to meet Millennials half way."

Some forward thinking large companies are making moves that make them look technology savvy, he noted.

For example, a group of recent MBA graduates hired by Johnson & Johnson successfully lobbied the New Brunswick, N.J. -based consumer products company to create an internal social network, according to an advance copy of Alsop's book. The social network has grown to include virtual classrooms for training and a career counseling center.

The company is now looking to broaden the network beyond its MBAs, Alsop wrote.

Meanwhile, Alsop added in an interview that Capital One Financial Corp. in McLean, Va., is creating internal discussion boards and its own version of Wikipedia in an effort to improve worker collaboration. And New York City-based Ernst & Young LLP has developed a guide to help managers interpret IM shorthand..

Long & Foster Real Estate Inc., in Chantilly, Va., is facing demands that IT help Generation Y agents market themselves on social networks, noted Mayur Raichura, vice president of information services. The young workers are also seeking the ability to create YouTube-like online video presentations that can be easily spread across the Web, he said.

Long & Foster is now evaluating different services that could be used to support those requests, Raichura said.

Paul Wright, IT director for education in the State of Missouri, said that almost half of his 58 employees are part of Generation Y, requiring him to focus squarely on embracing new technologies to retain them and recruit more.

For example, the state last year a launched virtual job fair program in the Second Life virtual world to attract talented Millennials for IT slots. The program, Wright said, has already netted some quality hires.

Next month, Wright plans to meet with colleagues in other state agencies to discuss ways to expand the use of Second Life to other agencies.

The state using the Facebook Inc. social network as a recruiting vehicle, he said.

Wright noted that the use of Web 2.0 techniques paint the state's Department of Elementary and Secondary Education as technically savvy while providing an inexpensive method of reaching out to potential workers across the world.

Wright said his unit is now considering requests for IM access.

"Being a state entity we have to be very careful of the data we collect," he noted. "Anything [like IM] opens us up. We need to be extremely careful that we're not opening a hole that someone could hack into and get some data that we're responsible for."

Wright and other IT managers noted that one of the most defining characteristics of Millennials is their desire to constantly learn new skills and to have access to bleeding edge technology.

Generation Y IT developers at the state agency, for example, are always eager to try out new tools and languages as soon as they are available. Wright noted that he often allows these employees to research the tools to determine whether they would benefit the organization

Wright said that he often has to explain ROI ramifications when rejecting requests for specific technologies. "We have to come to an understanding that there is that balance between the latest and greatest technology and being responsible from a fiscal standpoint," he said.

Linda Gravett, author of "Bridging the Generation Gap: How to Get Radio Babies, Boomers, Gen Xers, and Gen Yers to Work Together and Achieve More," noted that the Millennials she interviewed for her book were very clear in their reluctance to work for a company that lacks Web 2.0 and other emerging technologies.

Gravett agreed that IT organizations can have a hard time getting budgetary approval for expensive technology that is demanded by only a subset of the workforce, However, she suggested that IT managers keep track of whether a lack of such technology is prompting talented workers to leave.

With that information companies can compare job turnover costs to the price of new technologies to help justify a purchase.

She also advises companies to create focus groups consisting of workers of all ages to better keep tabs on technology needs.

Adam Sarner, an analyst with Stamford, Conn.-based Gartner Inc., suggested that companies study how the workplace attitudes of Generation Y are significantly different than earlier generations..

A Millennial, he noted, is accustomed to using social networks and contributing his or her own content to the Internet. The generation also tends to judge people based on their technology acumen, Sarner said.

Thus, some of those workers may have trouble handling a traditional corporate hierarchy where some top executives lack strong technology skills. Generation Y workers are also more likely to contend that technology can be used to improve long established business processes, Sarner said.

"Some of the old ways of doing things are absolutely being questioned," he noted. "The workplace is going to have more explaining to do than 'This is the way we've always been doing things.'"

Alsop warned that IT managers must make sure that the new generation of employees use new technologies according to corporate dictates.

For example, workers just emerging from colleges appear to have far fewer privacy concerns than older workers, creating a strong need for training about the dangers of sharing corporate information online., he said.

The state of Missouri is in the process of developing new rules to guide employee use of virtual worlds or social networks. The new guidelines require that employees assume that activities in virtual communities are public and that any data posted online may be visible for a long time.

Also, any employee conducting business for the state in a virtual community must have explicit authorization from management, according to the new guidelines.

Despite the growing onslaught of the Millennial work force on the corporate world, some companies have not yet had to address the issue.

David Berry, senior vice president and CIO of Coty Inc., a New York City-based cosmetics company, noted that his company doesn't yet employ many younger workers, and that the IT unit has been too busy -- integrating companies, implementing new products and rolling out new applications -- to address the issue yet.

Nonetheless, Alsop warned that companies must start finding ways to address the needs of Millennials if they want access to the best new talent.

"More and more students are going to ask them what their technology environment is like," he added. "What will wake up companies to this is when they fail to recruit the students they want.

Duet: SAP customers see success, challenges ahead

2008-08-01T06:38:00.001-07:00

http://searchsap.techtarget.com/news/article/0,289142,sid21_gci1209018,00.html

By Robert Westervelt, News Editor08 Aug 2006 SearchSAP.com
Digg This! StumbleUpon Del.icio.us SAP customers with some hands-on experience of the Microsoft-SAP Duet software are reporting positive results, but many say the software needs to mature before it's ready for deployment across the enterprise, according to a recent survey from Boston-based AMR Research Inc.
The spirit of the effort to extend the SAP business processes to the desktop with helpful tools is what does appeal to customers, and they want to be able to do this. Jim Murphy,research director, AMR Research Inc.
Out of 210 U.S.-based SAP customers in the retail and manufacturing sectors, 74 were knowledgeable enough with Duet to field detailed interviews, according to AMR. Overall, respondents realized a lot of value out of improving end-user productivity while choosing SAP and Microsoft as long-term partners.
Some SAP customers – 27 out of 74 survey respondents – had reservations about adopting Duet, however. Some cited the need to upgrade to the latest version of SAP, some saw substantial hidden costs, and others were using IBM's Lotus Notes for groupware processes.
"Some customers are worried because they can put a lot of time and money into something like Duet and it could fail down the line, and SAP would decide not to support it anymore," said Jim Murphy, a senior analyst at AMR Research. "The spirit of the effort to extend the SAP business processes to the desktop with helpful tools is what does appeal to customers, and they want to be able to do this."
At best, about 29% of customers surveyed have the software and hardware requirements in place for specific Duet scenarios, Murphy said. Currently, the software supports time, leave and organization management, and budget monitoring. Value packs with additional scenarios -- including travel and sales activity management -- and analytics are due out by the end of the year.
"For many customers, the baseline requirements are covered, but there is some obscurity with certain scenarios," Murphy said.
Companies using Duet need to be running mySAP ERP 2004, NetWeaver and Microsoft Exchange Server, and Windows Server 2003. Specific Duet scenarios also carry prerequisites. Some scenarios require additional SAP tools, such as Employee Self Service, mySAP CRM 4.0 and mySAP SRM 5.0, and SAP NetWeaver BW 3.5.
Customers are also ready for a development environment to create custom scenarios, according to Murphy. Some custom scenarios would include project and production management, integration with IBM Lotus applications, and SAP Portal and financial planning and budgeting.
SAP's Kevin Fliess, vice president of emerging solutions, said that a custom development environment for users and independent software vendors will be released.
"It is part of the Duet 2.0 roadmap, and we realize that the tools component is a key piece of that strategy," Fliess said in a recent interview.
Duet is seen as valuable by many SAP customers, but only 11% of survey respondents said they would upgrade for the sake of Duet. About 60% said they were more likely to buy the software from an SAP sales representative than from a Microsoft one.
"Many SAP customers are undertaking consolidation projects, globalization business, master data management, and if you're a CIO with all those huge fish to fry, Duet looks like eye candy, but it can be disruptive," Murphy said. "Many are asking how it compromises their architecture. If they're a Java shop, now Microsoft wants to be inextricably connected to the enterprise."

Duet makes employees sing for SAP at one government agency

2008-08-01T06:36:00.000-07:00

http://searchsap.techtarget.com/news/article/0,289142,sid21_gci1323394,00.html?track=NL-137&ad=650163&asrc=EM_NLN_4153177&uid=2270653
By Courtney Bjorlin, News Editor31 Jul 2008 SearchSAP.com
SAP news, tips and expert advice
The Auckland Regional Council had a problem many companies have with SAP – many employees didn't like working in it.
Employees at the council, a New Zealand governmental agency in charge of managing growth and development for a region of 1.3 million people, had to use three different screens to manage their time, according to John Holley, group manager of information services for the agency.
What was happening was that in just trying to manage time, they were wasting a lot of it. Duet changed all that.
"Duet offered a potential panacea to our problems. It just made life simple and easy," Holley said. "The hackles don't go up when we talk about doing stuff with SAP."
The Auckland Regional Council (ARC), which has about 800 employees, is one of 15 customers using Duet 1.5, the newest release of the joint Microsoft and SAP product that marries back-end SAP power and familiar Microsoft applications -- Word, Outlook and Excel. It is scheduled to be generally available by the end of this year, according to SAP and Microsoft. Currently, 200 ARC employees are using Duet, and more rollouts are coming. The ARC started using Duet in December 2007.
The ARC uses Duet to manage time -- including scheduling, recording and reviewing project work and billable hours -- and to manage vacation requests through Microsoft Outlook. Before Duet, employees had to log in and out of separate systems to access their calendar, time commitments, and workload. They also use Duet to handle purchasing orders through Excel and invoicing through Word.
For more on SAP and Microsoft's Duet
Learn why Duet led one company to choose SAP over OracleRead more about Duet in a special report
What impressed Holley was that Duet's implementation was user-led. People wanted Duet right away. One employee, when told he would have to wait for the ARC to purchase enough RAM to run Duet on his computer, purchased it himself. It took less than half an hour to train employees on it, because everyone already knew how to use the Microsoft tools. Some employees needed no training at all.
"It's not a question of if Duet, it's a question of when," said Thomas Grassl, SAP's director of Duet solution marketing. "That's what we continuously see from customers -- a lot of demand around the product, and a lot of interest."
Since they unveiled Duet 1.0 in the summer of 2006, the tool has been sold to more than 400 customers. About 100 customers have implemented Duet.Grassl attributes this time lag to the upgrades needed to run Duet. Implementing Duet itself takes between one and two months, but creating the right applications environment for Duet can take a long time.
Because Duet relies on NetWeaver, customers must be on SAP's newest ERP release, ERP 6.0. Microsoft Office customers must be running Microsoft Office Professional 2003 or 2007, as well as those releases of Exchange Server.
Auckland Regional Council had some trouble at first because not all of its end users were running Office Professional editions, and some of their computers didn't have enough RAM. Once they sorted out their environment, it took about a month to go live with Duet 1.5, Holley said.
In addition to vacation and time sheeting scenarios run through Outlook, Duet 1.5 allows employees to manage travel through Outlook, generate purchasing agreements through Word, and access more reporting and analysis through Excel. Customers can adopt just the scenarios they want.
Holley thinks Duet will help customers reduce staff costs because some staff used to be assigned solely to approving leave requests, and that work is now all managed through Outlook. But Duet has also brought an intangible benefit -- confidence in SAP.
"There's a huge benefit of staff actually appreciating SAP," Holley said.
SAP and Microsoft said they couldn't discuss pricing because their contract states they can't talk about it together. But Holley said it cost the council about $50,000, including the implementation.
SAP and Microsoft will skip Duet 2.0 and pool that functionality into 1.5, according to Pascal Gibert, Director of Duet Product Management, Microsoft Corporation.
Duet 3.0 will have more functionality around reporting and sales management, as well as time management scenarios, he said. Its release will coincide with the newest release of Microsoft Office.
"The idea is with SAP you have a lot of workflows," Gibert said, "and they asked us to be able to expose those workflows in the Office environment."
The goal is to enable every SAP user to access business functionality through Microsoft.
"They're not trying to bring everything from SAP into Outlook," Holley said. "[They're looking at] what is the key stuff for the ad hoc user."

Inside job - LBO of Dow

2008-07-24T03:57:00.000-07:00

http://money.cnn.com/2008/06/27/magazines/fortune/inside_job_parloff.fortune/index.htm

Inside job
The extraordinary story of two Dow Chemical officials who plotted an LBO of their company - and forgot to tell the CEO or board.
Roger Parloff, senior editor
Last Updated: July 1, 2008: 11:05 AM EDT
(Fortune Magazine) -- On Jan. 18, 2007, the Financial Times reported "talk in the market" that "a consortium of private equity groups are working on a breakup bid" for Dow Chemical. Dow's share price was spiking; its shareholders, employees, and joint venture partners were demanding more information; yet its CEO, Andrew Liveris, was totally in the dark about what, if anything, lay behind the rumor.
The next morning he e-mailed Dow director and former chief financial officer J. Pedro Reinhard, whom he knew to be plugged in to the financial community. "Can you sniff around your contacts?" he asked. "Let me know if this has any basis?"
About two hours later Reinhard replied dismissively, "This rumor was in the market for about over six months."
"Anything new?" pressed Liveris.
"Not that I am aware," Reinhard responded.
Reinhard was not being candid with his CEO. A few hours before tapping out his responses, he had been meeting in London's plush Carlton Tower Hotel with two advisors working for an Omani sovereign wealth fund. The fund was trying to form a consortium with U.S. private equity firms to launch a leveraged buyout of Dow. According to later statements by the advisors, Reinhard and one of Dow's highest-ranking executives, Romeo Kreinberg - then responsible for about half of Dow's global operations - had been in a hotel room flipping through a 100-page booklet prepared by a London affiliate of J.P. Morgan Chase outlining how the Omani-led LBO would proceed. They were also discussing the compensation Reinhard and Kreinberg might expect if the deal went through as planned - Reinhard would be chairman of the new entity and Kreinberg chief executive.On April 12, 2007, Dow (DOW, Fortune 500) fired the two executives, two days after learning from J.P. Morgan CEO Jamie Dimon that his bank had been advising the Omanis on the bid and that Dow's Reinhard and Kreinberg had participated in the discussions. Dow invoked punitive clauses in their contracts, cutting off roughly $45 million in vested equity and other compensation. Reinhard and Kreinberg responded with outraged protestations of innocence and filed defamation suits against Dow for $25 million and $100 million, respectively.
The bitter litigation came to a morally unsatisfying conclusion last month. On the one hand, Reinhard and Kreinberg admitted that, well, yes, they had in fact participated in unauthorized LBO discussions, and yes, Dow's board had been fully within its rights in imposing the draconian penalties on them. At the same time, however, Dow made major financial concessions. Though the settlement terms are confidential, it's clear that the former officers will have restored to them much of the lucre that Dow tried to yank. In other words, the bogus defamation suits had just been a cynical negotiating tool, and in the end, a shrewd one.
Still, the lawsuits will have one lasting adverse consequence for the plaintiffs: articles like this one. During the course of the litigation, thousands of e-mails and other documents surfaced, as did several key deposition transcripts. From them it is possible to piece together much of what happened, and what emerges is that Kreinberg and Reinhard - the latter still a director in good standing at Colgate-Palmolive (CL, Fortune 500), Royal Bank of Canada, and Sigma-Aldrich - were actually engaging in conduct that was even worse than Dow realized when it fired them.
Kreinberg and Reinhard declined through their attorneys to be interviewed for this story. From the day they were fired, each adopted a maddeningly peekaboo stance, in which their attorneys asserted that their accusers were mistaken or incredible, but their clients refused to come forward with their own account.
Extraordinary business drama
The documents obtained by Fortune, however, provide the most complete picture to date of an extraordinary business drama - a rare, riveting look inside the world of private equity dealmaking intrigue at the height of its frenzy. There are cameo appearances by Henry Kravis of KKR, David Bonderman of TPG (formerly Texas Pacific Group), Chinh Chu of the Blackstone Group, and a walk-on by the richest, youngest industrialist you may never have heard of: 51-year-old Russian immigrant, U.S. citizen, and multibillionaire Len Blavatnik.
Though the story of the abortive Dow LBO inevitably evokes comparisons to Barbarians at the Gate, it actually teaches very different lessons from that archetypal narrative of 1980s deal intoxication. Notwithstanding that a Dow LBO valued at $50 billion to $60 billion would probably have been the largest ever, in this tale glory and ego ultimately took a back seat to reason and pragmatism. To the chagrin of the coup plotters, the moneymen were loath to go hostile and coldly skeptical about whether the numbers made sense. Dow's fate was determined neither by a self-dealing CEO nor by swashbuckling corporate raiders, but rather by a board that was majority-controlled by independent directors. Alas, there may be no movie in this one.
As their ethnically hybrid names suggest, Pedro Reinhard and Romeo (accent on the second syllable) Kreinberg are truly worldly men. Reinhard, 62, grew up in Brazil and was schooled in Germany and the U.S. Kreinberg, 57, was born in Croatia and raised in Argentina, has lived in nine countries, and speaks six languages. Each spent his 30-plus-year career at Dow crisscrossing the globe, from Germany to Italy to Switzerland to the U.S., with frequent excursions to the Middle East. Stellar performers, each was once a leading contender for the CEO spot: Reinhard in 2000 (when Michael Parker got the nod) and Kreinberg in 2004 (when Liveris prevailed).
Reinhard was respected for his keen financial acumen and vast knowledge of the chemical industry. At the same time, independent Dow director James Ringler testified in November that Reinhard's "emotionalism at times would about drive you nuts," and that "he had ... a delivery ... that would irritate the Pope."

Kreinberg was a superb executive within his operational silo, according to three independent directors, but they also say he was "autocratic" and "close-minded" and had a "my way or the highway" attitude that was abrasive to peers. He was a "very, very difficult individual to manage," a fourth director noted in his deposition, and he liked to live large on his Dow expense account.
In late 2005, Reinhard and Kreinberg were the two point men supervising Dow's joint venture with the government-owned Oman Oil Co. Reinhard and Kreinberg handled all dealings with the Omanis, according to director Arnold Allemang, a former head of operations at Dow, and they jealously protected their turf. Their attitude, said Allemang, was, "If you want to talk to [the Omanis], you'll do it through us."
While the executives' Oman connection was key to their eventual expulsion, Reinhard had a troublesome second connection that Dow scarcely understood until months after his termination: his role at Len Blavatnik's massive private holding company, Access Industries. Blavatnik, who made his fortune in Russian oil assets, is now one of the world's richest men, with a personal net worth estimated at $7 billion to $8 billion. Access holds interests in telecommunications, media, real estate, oil, metals, and - since August 2005, when Access closed on its purchase of the Netherlands-based Basell Polyolefins - the chemicals arena.
Upon buying Basell, Access hired Reinhard as an advisor. Having turned 60, Reinhard was phasing out his operational duties at Dow, though he was staying on as a director. Dow told him he could work for Access as long as he confined himself to matters that wouldn't conflict with Dow's interests. He was also advised that because Access now had the Basell unit, he couldn't sit on the Access board, since that might violate antitrust laws barring directors from sitting on the boards of competitors.
Reinhard's conception of what constituted a conflict proved vastly narrower than Dow's. By early 2006 he was not only a member of Access's investment committee - which some Access officials referred to as its "de facto board" - but also sitting as an "observer" on board meetings of Basell itself. Reinhard assured Access that Dow was comfortable with his roles.
In March 2006, Access's Blavatnik sent Dow's Liveris a letter formally offering to acquire Dow's commodities (or "basics") divisions. Unbeknownst to Dow, Reinhard had "edited and signed off" on Blavatnik's letter before it was sent, according to Access e-mails. Liveris, who was not receptive to the overture, made no response. Reinhard, however, again without Dow's knowledge, informed Access of Dow's reaction. "Spoke briefly to Pedro," an Access official reported to Blavatnik. "Later learned that Dow approached both Kuwait and Saudi Aramco with the assets we want.... He told me/us to sit tight."
In April, when Liveris became chairman of Dow's board, he directed Dow's general counsel to write Reinhard a stern two-page letter spelling out that Dow would consider it a conflict of interest for Reinhard, when advising Access, to discuss or receive any "information about Basell." Reinhard argued with Dow's chief counsel and tried to negotiate, but Dow wouldn't budge.
Reinhard told Access nothing about the letter and disregarded its dictates. In the ensuing months, Reinhard attended Access and Basell board meetings as Basell bid for and ultimately acquired Lyondell Chemical Co., forming LyondellBasell Industries, the third-largest industrial-chemical company in the world.
During the first half of 2006, Dow's share price was languishing, and the company was regularly being approached by investment banks with unsolicited presentations proposing deals to increase shareholder value, including breakup LBOs. A common view was that Dow was undervalued because it was seen as a commodities business. If it sold its commodities segments while focusing on its higher-margin "performance chemicals" units, the share price would soar, some predicted.
In July the company's senior management and board held a weeklong strategy retreat in Newport, R.I., where they debated six strategic "optionalities," including a breakup of the company. Liveris argued that Dow's commodities and performance segments were so interdependent that it was best to maintain the company's integrated structure. Instead of a breakup, he favored an "asset light" strategy, in which Dow would "monetize" its commodities assets by, for instance, selling joint venture interests in them while keeping operational control. The proceeds would be used to expand the performance units.
The board backed Liveris's asset light strategy and rejected breakup strategies. The only dissenter was Reinhard.
A tempting target
That same month an Omani-led LBO bid for Dow was in gestation. A freelance consultant and wheeler-dealer named Terry Ruane approached chemical industry consultant Eddie Wilson, asking him to do a breakup valuation of Dow. Ruane and Wilson both were based in Jersey, in the Channel Islands, and both were business consultants in Oman. Ruane worked for Dow on its Omani joint venture, the Oman Petrochemical Industry Co. (OPIC), reporting to Kreinberg and Reinhard. Wilson, who had spent 25 years at Dow earlier in his career, was also a consultant to OPIC, but for the Omanis. To help with the valuation, Ruane showed Wilson a short profile of Dow that had been prepared by J.P. Morgan Cazenove, a joint venture of J.P. Morgan Chase (JPM, Fortune 500) and the British investment bank Cazenove. Wilson did the valuation but didn't hear back from Ruane for several months.
In late July, when Dow announced disappointing second-quarter results, its stock plummeted 10%, making the company an even more alluring target for a breakup bid. Officials inside Blavatnik's Access - unaware of the nascent parallel activity in Oman - began mulling an LBO of Dow as an indirect means of capturing Dow's commodities assets. In August and September they prepared a breakup analysis for Dow using the code name Achilles (because Dow's commodities unit was its "Achilles' heel" as far as share price was concerned). Remarkably, Reinhard played a key role in preparing Access's breakup analysis of Dow, according to both internal Access e-mails and the later deposition testimony of Access's mergers and acquisitions chief, Philip Kassin. Reinhard identified appropriate comparable companies for each of Dow's business segments - information not provided in Dow's 10-K - and extrapolated appropriate earnings multiples.
By mid-September, Access officials had completed their analysis. The draft noted that the "deal would most likely have to be 'hostile.'" On Sept. 18, 2006, after a Basell board meeting at its laboratory in Ferrara, Italy, Kassin, Reinhard, Blavatnik, and Basell's CEO met in a small private office, and Kassin presented his LBO proposal. When he was just minutes into it, Kassin later testified, Blavatnik cut him off, saying the deal was "too big, probably not doable," and that he had "no desire to do anything hostile." Shortly after the meeting, Kassin e-mailed a colleague about the debacle, noting, "Pedro very very very pissed."
Someone - Dow hypothesizes Reinhard - wouldn't let the idea die. In October, Terry Ruane, the same consultant who had asked Ed Wilson to do a breakup evaluation of Dow in July, contacted Kassin at Access and described an Omani-led bid to do a Dow LBO, advised by J.P. Morgan Cazenove and to be sponsored by U.S. private equity players. He urged Access to participate. Ruane told Kassin not to tell Reinhard about the Omani bid at this point, acting as if it were a secret, but in an affidavit later submitted in the litigation, Ruane says it had actually been Reinhard who told Ruane to contact Kassin in the first place. (Reinhard's and Kreinberg's lawyers have sharply challenged Ruane's credibility, with some basis: Kassin and Wilson testified that he sometimes "exaggerates" or "spins" to get deals done, and Kassin added that he sometimes works multiple sides of a deal. Ruane also has ongoing consulting contracts with Dow.)
After having coffee with Ruane in London, Kassin e-mailed Blavatnik: "The consortium preference is to have Pedro as chairman and Romeo Kreinberg as CEO." Kassin stressed that the deal might not be hostile, after all. "[Ruane] said most of the management is supportive and involved - except, obviously, Liveris." Once an LBO bid is made, a board has a fiduciary obligation to shareholders to assess it on its merits, regardless of what the CEO may think of it. If a majority of the board approves, the deal would technically be considered friendly.

Kassin set up a meeting in London between Blavatnik and Ruane to discuss an LBO of Dow that would be led by the State General Reserve Fund of the Sultanate of Oman (SGRF), an Omani sovereign wealth fund, which was prepared to ante up at least $5 billion of equity. Ruane brought with him Ian Hannam, co-head of equity capital markets at London's J.P. Morgan Cazenove, who was advising the Omanis. Again, however, Blavatnik was noncommittal at best, and Access never went forward.
On Oct. 30, Ruane and Hannam met with Reinhard and Kreinberg for the first of two meetings at the Carlton Tower in London. Some OPIC business was discussed, but the purpose of the meeting, Ruane maintained in his later affidavit, "was to discuss what a typical leveraged buyout would mean for the resulting management," with "special reference to a potential buyout of Dow."
Two Omani government ministers wanted a face-to-face with Reinhard and Kreinberg before proceeding, so Ruane arranged a meeting in Muscat. At one point the Omanis leaned across the table and asked if Reinhard and Kreinberg thought Dow would be a good investment and if they would be willing to stay in their positions to manage it. They answered yes to both questions, according to statements Ruane made to his lawyers.
Thereafter the bid moved forward in earnest. In anticipation of signing a formal engagement letter with the Omanis, the JPM Cazenove bankers notified key officials at their parent, JPM Chase, and initiated a conflicts check. The conflicts memo stated, "Buyout team led by former CFO. Not all members of current senior Dow management team are involved." Accompanying internal JPM e-mails identified Reinhard as the "former CFO." Another e-mail said, "I understand that D mgmt deliberately keeping low profile until further down track ... i.e., aiming very much for plausible deniability at this stage."
Since JPM Chase did a lot of business with Dow, the prospect of a hostile bid made some of its bankers extremely uncomfortable. But others stressed that the deal might yet win Dow board consensus. The issue then appears to have been tabled, and the signing of the engagement letter was put off pending clarification on these points.
In mid-December, Ruane brought consultant Ed Wilson, the former Dow official, back into the picture to help the bankers draw up a 100-page business plan for what was now code-named "Project Door." (The coding was half-hearted; Dow was "Door," Oman was "Oryx," and one of the Door units slated for early sale was "Door Corning.") On Jan. 19, Ruane, Hannam, Wilson, Reinhard, and Kreinberg met at the Carlton Tower again, and Wilson took the executives through the business plan.
Wilson remembered the meeting well, since he got some bad news there, he later recounted in his deposition. He had previously been told by Ruane that the two of them would be sharing a 25% slice of JPM's banking fees as their compensation on the deal. Reinhard and Ruane now informed him that the new plan was for the 25% piece to be split three ways - among Ruane, Reinhard, and Kreinberg. Wilson would just get a lump sum. Since JPM's advisory fees were then being ballparked in the $200 million range, 25% would have been about $50 million. Wilson was steamed. (Reinhard's and Kreinberg's attorneys have attacked Wilson's credibility, as they did Ruane's - and again, with some basis. After the post-termination litigation began, Wilson struck a highly unusual "cooperation" agreement with Dow under which Dow agreed not to sue him over his role in the affair, to pay him his usual consulting fee - about $4,500 a day - for time spent responding to litigation demands, and to reimburse his attorneys fees. Ruane and Wilson had some bargaining leverage because they were outside the jurisdiction of the U.S. courts.)
Media attention
It was after or during this second Carlton Tower meeting that Dow CEO Liveris sent Reinhard the previously mentioned e-mail asking him what was behind the buyout talk reported in the Financial Times, only to be told that it was a stale rumor.
Kreinberg also kept mum, according to Liveris's later testimony, when the Financial Times item came up for discussion at regular meetings of Dow's top executives. "He was there," Liveris recounted, "sitting there all the time, looking very mute and unresponsive." The item was even discussed informally at Dow's next board meeting, according to the testimony of Liveris and other directors. Reinhard was present but volunteered nothing.
By this time the Omanis and JPM Cazenove bankers were almost ready to make their formal presentations to American private equity groups. Before doing so, however, they needed to tie up crucial loose ends. The head of Oman's SGRF needed to meet Reinhard and Kreinberg personally and make sure they were okay with a stingier management-incentive package than had been originally proposed. Rather than allowing top management to come away with 10% of the surviving company if it met performance targets, SGRF was scaling that back to 6%. Second, the JPM Chase bankers needed to know how many Dow board members and executives were really backing Reinhard and Kreinberg - i.e., was there really any hope of this becoming a friendly deal.
To resolve these issues, Hannam scheduled two meetings for Reinhard and Kreinberg in London on Feb. 27. At one they would meet the head of the Omani fund and at the other, JPM Chase vice chairman Bill Winters.
Two days before the critical meetings a second, more detailed newspaper story described an impending LBO bid for Dow. It predicted a "$54 billion approach ... likely to include powerful players such as KKR, Blackstone, and Carlyle Group." Upon learning of the item, Chinh Chu of Blackstone called Liveris to assure him that Blackstone was not involved. Liveris called Kravis, who said he didn't know of anything underway, but he assured him that it was highly unlikely his firm would be involved in anything hostile.
Still, Liveris took the rumors seriously. He launched "Project Fort," by asking Dow's two primary investment banks, Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500), to perform LBO analyses of Dow in anticipation of an unsolicited bid. He also hired the nation's premier takeover-defense lawyer, Marty Lipton of Wachtell Lipton Rosen & Katz.
Meantime, the LBO planners decided that the press leaks made it too risky to meet in London. Hannam moved them to the Compleat Angler, a gorgeous inn on the Thames, about 35 miles to the west. To ensure secrecy, he didn't reveal the name of the hotel and just sent cars to Heathrow to pick up the participants. He also rented the hotel's entire residents' lounge so that the congregants could meet unobserved.
According to Dow, Kreinberg created a cover story for his trip that day. He had the OPIC chairman write a bogus letter summoning him to London to discuss an invoice reimbursement dispute.
Neither meeting went well. Reinhard and Kreinberg did not commit to the Omanis' incentives package. In fact, in an internal JPM Cazenove e-mail later that day, a banker wrote that Reinhard now saw "no compelling reason for [an] Omani link" for the deal. (Dow speculates that Reinhard objected to the stingier compensation package.) At the second meeting Winters, from JPM Chase, learned for the first time that Reinhard and Kreinberg actually had no known supporters on the board, but were acting alone. Winters was "surprise[d] that only 2 individuals in loop at this stage," a JPM Chase banker wrote to Hannam. "Any approach likely to be perceived as unfriendly/hostile.... Much of above may make JPM commitment to SGRF more difficult at this stage."

Still, Winters did not call off the deal. He instructed Hannam to tell the Omanis it might yet be possible to win Dow board approval if the board were approached in the right way. Hannam was to tell the Omanis, "We remain committed to helping you get this asset."
Reinhard's and Kreinberg's lawyers claimed in court papers that their clients were surprised by the talk of an LBO at the Angler and that they "rebuffed" such proposals, telling JPM bankers that if an overture were made, Dow would "circle the wagons." Kreinberg even claimed that he had gone to the hotel expecting to meet only Ruane and discuss mundane OPIC business. But this account strains credulity. Though Wilson did not attend either meeting, he was at the Compleat Angler and had tea with Reinhard and Kreinberg after the meetings. Neither expressed any shock or surprise at the time, Wilson testified, nor any desire to drop out of the project or have it come to a halt.
On March 1, Dow CFO Geoffrey Merszei was told at a meeting in New York with Citigroup bankers that JPM Chase was involved in the LBO bid for Dow that was spurring newspaper reports. On March 5, Liveris called JPM Chase CEO Jamie Dimon, who promised to look into the question and get back to him.
Also on March 5, Wilson met with Reinhard in Zurich, according to Wilson. The meeting focused on the 25% of JPM's banking fees that Reinhard still hoped to get a piece of and that Wilson was still angry about being cut out of. "Reinhard was trying to assure me that the payment of some of the banking fees to himself and Mr. Kreinberg would not be problematic [legally or ethically]," Wilson testified. Reinhard had invited officials from a Swiss bank to the meeting, and they were arguing that "ways could be found to structure it ... without giving rise to problems." The arrangement allegedly would have involved having Reinhard and Kreinberg's shares of the banking fees sent to Wilson, who would then forward the money to them in Switzerland. Wilson refused.
On March 7, Liveris and Dimon spoke again by phone. Dimon confirmed that his bank's Cazenove unit was working on something, but he was still trying to find out more.
On March 12, yet another newspaper item appeared, the most detailed and accurate yet. The London tabloid Evening Standard, was heralding a "$60 billion deal ... masterminded by Ian Hannam out of J.P. Morgan in London," in which "the usual suspects," including KKR, were among the likely sponsors. Furious, Dow CFO Merszei called JPM Chase's Dow account representative, Christopher Iannaccone, and told him to stop work immediately. Iannaccone promised to relay the message to higher-ups.
More cold water was poured on the deal when it was formally pitched to KKR and TPG on March 13 and 14. "We don't think the numbers work," wrote one KKR banker. At TPG, David Bonderman was likewise "underwhelmed," according to a JPM e-mail.
On March 15, JPM Chase's Winters recommended pulling out of the deal in an e-mail copied to Dimon. "Based on this feedback, we should go back to Dow now with an 'all pencils down' message. I'm happy to help with damage control if needed." It appears that Dimon called Liveris that same day to convey the message (though Liveris is not certain of the date). JPM Chase also notified the Omanis and Hannam. JPM was out of the hunt.
But Reinhard may not yet have given up. Two days after JPM withdrew, he urged Kassin, the mergers and acquisitions chief at Access, to solicit more approaches to Dow. "Had long talk with Pedro last night," Kassin wrote Blavatnik. "He is in very weird position. He is playing on too many teams in my opinion."
The last newspaper leak came on April 8 and proved to be the coup de grâce for Reinhard and Kreinberg. The story reported that "a consortium of Middle Eastern investors and American buyout firms" was putting the "finishing touches" on a bid and identified JPM Chase in London as its advisor. As it happened, Dimon was scheduled to have dinner with Liveris at Dow's headquarters in Midland, Mich., the next evening. Dimon sarcastically e-mailed Winters and two others the next morning: "Considering that I am having dinner tonight with the CEO of Dow, can I get briefed about what is going on?" The bankers assured Dimon that JPM had been "tools down" since March 15.
Upon seeing the latest press account, KKR's Kravis called Liveris. According to Liveris's notes, Kravis told him his London office had been approached, but they had stopped when they found out it was hostile. He also said the Omanis were working with people "who know a lot about Dow."
'Double agent' Reinhard
Dimon's dinner with Liveris on April 9 - the "mea culpa meeting," as one JPM Chase banker referred to it - was amicable. "Mr. Dimon was very forthcoming," Liveris later testified. Dimon's "demeanor" communicated that "this was a man who had clearly found out that his company was involved in something that he ... did not support," Liveris said. "[Dimon] made reference to ... parties very, very close to Dow, and ... went on to more than insinuate that there were people that were really in the middle of this deal and that really I had to know about." Liveris pressed him for details, and Dimon promised to get back to him. Iannaccone, who had been present, reported afterward in an e-mail, "Clearly we have been dinged by this episode, but if Jamie is able to provide some color over the next couple days, we might not be in as bad a position as I thought."
Dimon fingered Reinhard and Kreinberg in a phone call to Liveris the next day. Reinhard in particular, Dimon said, was acting like a "double agent," according to Liveris's notes. "Jamie recommended I do my own homework, but if he were me, he would get these guys 'out' and off the [board of directors] asap."
Liveris broke the shocking news to the board the next day. It unanimously authorized Liveris to terminate Reinhard and Kreinberg after giving each man an opportunity to be heard. On the morning of April 12, each man offered only a lawyerly, blanket denial of wrongdoing. They were fired later that day.
The lawsuits and countersuits were filed on May 8, 2007, and settled on June 2, 2008. In addition to the confidential financial terms, Reinhard and Kreinberg publicly admitted their unauthorized LBO discussions, while the company acknowledged the men's "substantial contributions to Dow over their lengthy and illustrious careers at Dow."
"Pedro Reinhard is pleased with the settlement," his attorney Gary Naftalis said in a statement. "He greatly appreciates the company's public recognition and kind words about his illustrious career at the company." Kreinberg's attorney Stanley Arkin declined comment for this article.
"The defendants' acknowledgment that the board was right was key," says Dow's attorney David Bernick. "Once that was agreed, the only remaining question was whether to continue the litigation for the sake of getting back the last dollar of earned equity compensation. [Dow] decided that was not the appropriate path to take."
Obviously, mysteries still abound. Who misled whom into thinking the Dow board would be receptive to an LBO? Who leaked to the press? And what in God's name were these two guys thinking? Can't help you there.

To read Roger Parloff on legal affairs, go to fortune.com/legalpad.
First Published: July 1, 2008: 6:54 AM EDT

How I Learned to Stop Worrying and Love Telecommuting

2008-06-01T04:15:00.000-07:00

http://www.cio.com/article/197800
http://www.cio.com/article/print/197800

CareGroup CIO John Halamka takes an in-depth look at the policies and technologies necessary for supporting flexible work arrangements.

Introduction

In my 10 years as a CIO, I've strongly believed that productivity is optimized when everyone meets and works in close physical proximity. That way, teams get the benefit of being able to brainstorm in person, respond to urgent issues as a group and build trust among one another. I didn't think telecommuting was right for IT departments.

This article is my official about-face on telecommuting and flexible work arrangements. A variety of factors have changed my opinion on the best way to get work done.

Flexible Work Policies

Over the past three months, Beth Israel Deaconess Medical Center has explored the policies needed to support remote work arrangements for our call center employees, medical record coders and our desktop engineering team. We determined these three groups of employees were ideal for the pilot for a variety of reasons: JetBlue previously demonstrated with its customer service staff that call center employees can successfully work from home. We chose medical record coders because they're difficult to find in Boston and because their work doesn't have to be done in a traditional office space as long as they have access to patient medical records. Finally, the IS engineers who design Beth Israel Deaconess Medical Center's infrastructure benefit from a quiet environment that's conducive to the concentration required for their work.

The goal of the flexible work arrangement we're piloting is threefold: to enhance productivity and cost savings, improve employee recruitment and retention, and to more efficiently use existing office space. We chose employees for the pilot on the basis of whether letting them participate in a flexible work arrangement would advance any of those three goals.

We modeled our flexible work policy on one established by Blue Cross Blue Shield of Massachusetts, which has been an early leader in homesourcing. Blue Cross Blue Shield of Massachusetts created a flexible work arrangement worksheet that's designed to help managers evaluate if an employee's job tasks can be performed remotely. The worksheet also establishes an agreement between an employee and manager about the employee's job performance and productivity while working remotely. We are in the process of customizing our own flexible work arrangement worksheet based on Blue Cross Blue Shield of Massachusetts's.

Creating a policy that is flexible enough to support many employee roles while specific enough to identify which employees can work remotely and which cannot is challenging. Blue Cross's policy provides employees and managers with a framework for discussing the possibility of flexible work that sets mutual expectations, identifies the employee's responsibilities and codifies criteria for success. This framework has enabled me to have open discussions with pilot employees interested in flexible work arrangements and to maintain a sense of equity since everyone understands what can and cannot be done. Extending this framework to the entire population at Beth Israel Deaconess is still a work in progress. The next step is a series of focus groups scheduled for April and May 2008 with over 40 managers from throughout the medical center who will document their unique needs and the challenges facing their departments with respect to flexible work arrangements.

With a pilot policy in place, we can think about the infrastructure required to support flexible work arrangements.

My Personal Pilot

From November 26 to November 30, I tried working from home. I replaced my own scheduled plane flights with video teleconferencing, moved my in-person meetings to conference calls, and attempted to avoid all commuting for five days. I was almost successful. I had to go into the office for 30 minutes for an unplanned meeting with a new senior vice president of facilities. First-time meetings—with new employees or to kick off a project—seem to be the one case where "face to face" is truly important.

I was more productive during my week at home because I could work when I'd otherwise be stuck in Boston traffic. Although it's true that I have my BlackBerry with me at all times, I do not read or respond to e-mail while the car is moving, especially in bumper to bumper traffic.

For a home office to work, it must be a dedicated space with a door that can isolate the remote worker from distractions. There really needs to be a sense of mental separation: As I close the door to the home office, I've commuted to work and will commute home when I exit my workspace. It is impossible to work from home while also caring for children or other members of the household, answering the door for UPS deliveries, or competing with the family for use of the phone. A home office should have its own phone line. My time at any office, home or corporate, requires a laser-like focus on hundreds of e-mails, dozens of phone calls and numerous negotiations—all of which require my complete attention. I can't be distracted by dishes in the sink or laundry in the dryer.

Achieving mental separation is one challenge. The other challenge associated with working remotely is getting used to not being on the front lines. Typically my day takes place in data centers, hospital wards, board rooms and cubicles. Although I may be as productive working remotely as I am when I'm in the office, I feel emotionally separated from the action if I cannot walk to a colleague's office or assess a critical situation in a hands-on fashion. This problem is more about perception than reality. With the basic technology tools I've outlined in this article, I can achieve all the communication, coordination and leadership needed, but I've not yet personally adapted to virtual management. It's a bit like telesurgery. You expect to feel the heat of the operating room lights, the sights and smells of cutting and sewing, and sounds of all your coworkers around you. Technically, telesurgery can be as good as in person surgery, but it requires the surgeon to have a mind-set that sets aside the sensory cues of the traditional operating room.

I have been an effective CIO while traveling 400,000 miles a year, so I know that I can lead via BlackBerry, phone calls, Web-based collaboration and teleconferencing. I should feel as connected in my home office as I do while sitting in an airport. I'm sure that emotional comfort will come over time.

--John Halamka

Next: Infrastructure

Infrastructure

Enabling an employee to work from a remote location is like extending the corporate office to hundreds of new sites. Seamless telephone transfers to the home office, desktop support, network connectivity and security support are just a few of the services IT departments will have to provide. Furnishing employees with all the technology necessary for them to work from a home office is key to implementing a successful telecommuting or flexible work policy. You can't expect employees to maintain the same level of productivity and service that they do in the office while at home if they lack access to the files and applications they need to do their jobs and if they lack technologies such as instant messaging that ease communication and collaboration.

At the same time, security issues cannot be overstated, especially in healthcare. We do not want connected to our network a home computer running Windows 98 Second Edition that's infected with a keystroke logger. So we have to provide computers to remote workers. We decided to outfit them with thin client computing devices from HP , which provide a low-cost, self-contained computer without any moving parts—the hard drive has been replaced with Flash RAM. The devices, which cost about $300 apiece, do not allow users to do any configuration or install any software. They plug into a network just as a phone plugs into a wall. If a device fails, we issue another one. Our thin clients run only a Web browser and Citrix for applications such as Outlook and those few clinical systems that are not Web-based, such as our transplant system, cardiology systems and medical-record coding systems, so users can access all files and financial and clinical information via our intranet. At present we've deployed a dozen of these thin client devices, but we plan to deploy more in the future as we expand our flexible work arrangements.

To make sure that internal and external customers can easily get in touch with employees working from home, we worked with our telecom provider, Avaya, to forward calls from teleworkers' offices to their home phones.

Being a remote employee in 2008 requires full integration with the workflow of the company and access to all those applications and files that a person onsite would have.

One way to extend the office into a remote location is to extend the network. The use of secure socket layer (SSL) virtual private networks (VPNs), such as Juniper's SSLVPN, works extremely well and across platforms (Windows, Mac and Linux.) Our SSLVPN examines the remote computer, ensures the appropriate operating system patches and antivirus software are up to date, then enables the remote user to join our network via the public Internet. Our SSLVPN connects inside our firewall, but we have a secondary internal firewall in place so that SSLVPN traffic is further examined by our network intrusion detection and prevention systems before it gains access to our most secure resources.

Finally, remote collaborators need to be able to share files, no matter what the size. Juniper's SSLVPN enables corporate employees to access home and shared directories remotely. To support file sharing among collaborators in different companies, a secure file transfer appliance, such as that offered by Accellion, works very well. This appliance supports file transfers up to 2 gigabytes using Web technologies to place the file on a secure website and then e-mailing a user name and password to the collaborators who need to access it.

Remote desktop applications, such as the remote desktop functionality built into the Juniper SSLVPN, also enable remote users to access their office desktops and effectively use all the tools on their office computer from their home workstation.

In addition to these standard remote access methods, we may need new applications to support remote workflows. For example, our medical records coders need access to the paper medical record. Since shipping thousands of sheets of paper is a logistical nightmare and a security risk, we elected to digitize all our in-patient paper records and make them available securely via the Web. Specifically, we use EMC's Captiva software to scan each portion of the medical record, render it as a PDF, then upload it to a secure Web application for remote access.

In the next section, I discuss in detail specific communication, collaboration and presentation sharing tools that are both useful and necessary in supporting remote workers.

Technologies

E-mail, ListServs and Instant Messaging

The most basic way to communicate remotely is via text sent among collaborators. There are many ways to do this synchronously and asynchronously.

For me, asynchronous text communication works best since I'm interacting with 40,000 Harvard and CareGroup customers 12 hours a day (CareGroup runs Beth Israel Deaconess Medical Center, and the Harvard Medical School teaches at Beth Israel). And since I find it challenging to speak in a meeting, listen attentively, keep my train of thought intact and text at the same time, e-mail is my preferred method of asynchronous communication. It has mature standards, cross-platform support and is interoperable across corporate networks, so there are few barriers to using it among collaborators. I live by BlackBerry, answering 700 e-mails a day using my 8320 over GSM/GPRS/EDGE and Wifi. I don't find the Treo, iPhone or any of the Windows mobile devices as efficient as the BlackBerry for high-volume e-mail management. (For a review of different Smartphones see, The Business-Savvy Smartphone Review.)

I use Entourage 2008 on OS X Leopard, and I am quite pleased with its functionality and stability. I use Outlook Web Access 2003 in Firefox, but am frustrated by its lack of a Gmail-like search feature. Finally, I have a Gmail account for family and personal correspondence, which works well with any browser on any operating system.

I also use listservs, both moderated and unmoderated, to send communication among large groups of collaborators. We've used listservs in IT for strategic planning, to discuss points that came up in in-person committee meetings, and to develop documentation as a group. Whenever I sign up for listservs, I always configure my account for "digest mode" so I get one e-mail per day summarizing all of the discussion threads. The chatter on listservs can be very annoying, so digest mode helps me manage the amount of e-mail I receive from the list.

As for synchronous messaging, many companies have developed an instant messaging (IM) culture for communications. Given its adoption by younger workers, IM is a major communication medium that modern CIOs cannot ignore. I certainly can't ignore it: My 14-year-old daughter and her friends use IM while reading, surfing the Web and talking on the phone.

When I started this pilot, I hadn't used IM much so I took a deep dive into the technology. I opened accounts with AOL Instant Messenger (AIM), GoogleTalk, MSN Messenger, Yahoo Messenger, Skype and even BlackBerry Messenger for real-time communication with my staff.

To me, effective chat needs to work across all platforms, so I tested all of these platforms with an Ubunu Linux laptop, a Macbook and a Dell OptiPlex 745 desktop running Windows XP. For Linux, I used the Pidgin open-source instant messaging application and the Skype client. For the Mac, I used iChat plus specific clients from MSN, Yahoo and Skype. For the Windows machine, I downloaded clients from AOL, MSN, Yahoo and Skype. For GoogleTalk, I used the Google Web client, which is part of Gmail, by using a Firefox browser on all three computers. I also tried meebo.com, a web-based IM tool that works with all IM providers.

My first impression is that IM can be an effective communication tool for real-time, emergent situations, such as a server or application outage, for quick questions (when is the meeting?), and for brainstorming as a group. But my frustration with it is that I must use the same service as the person whom I want to message. Since my collaborators have accounts on different IM platforms, I must use all of them. Though some clients enable me to log in to multiple IM services simultaneously, I still need to create and remember the credentials for the accounts on all these services. There are emerging technologies such as OpenID that will simplify account management across IM providers in the future.

All of the IM services I tried support text. Some of these services support audio and video chat, but just about every audio/video experience I had was not cross-platform and did not work well on corporate networks, since many ports used by IM clients are blocked by firewalls and corporate intrusion prevention systems. Specifically, here's what I found:

AOL Instant Messaging (AIM). The Windows AIM client supports text, audio and video. Same with Mac iChat. Linux Pidgin supports text only. All use the proprietary OSCAR protocol. AIM audio worked fine between a Windows machine and my Mac. I could not get AIM video to work on my corporate networks. Why? Take a look at the instructions on AOL's website:

If either you, or the person you want to Video IM with are behind a firewall and are having problems getting Video IM to operate, work with your Internet Service Provider, your company's system administrator or modify your firewall software yourself to open ports 1024 through 5000."

It's highly unlikely that a corporate networking group is going to create a permissive firewall for ports 1024-5000 for AOL video support.
MSN. The Windows Messaging client supports text, audio and video. The Mac and Linux aMSN open-source applications support text and video. All use the proprietary MSNP protocol. I encountered the same problems with video on MSN as I did with AOL.

Google Talk. Google uses a hosted implementation of the industry standard Extensible Messaging and Presence Protocol (XMPP) and the extended Jingle protocol. It works with any standards-based chat client such as Trillian for Windows, iChat for Mac and Pidgin for Linux. It supports audio via a downloadable Google talk client for Windows and works with iChat for the Mac. No audio support is available for Linux.

Yahoo. The Windows Yahoo client supports text, audio and video. The Yahoo client for Macs supports text and video. Linux Pidgin only supports text. All use the proprietary Yahoo! Messenger Protocol. I found the same issues with video on Yahoo as I did with AOL and MSN.

Skype. The Windows and Mac Skype clients support text, audio and video. The Skype client for Linux only supports text and audio. All use the proprietary Skype protocol. Interestingly, video worked well, with no firewall issues between Windows and Mac Skype clients. Sound quality was irregular given the many uncontrollable quality of service issues on the Internet connection between my laptop, the Skype servers and my collaborators.

There are also several free, open-source IM clients available that support just about all IM providers:

Adium is an instant messaging application for Mac OS X, released under the GNU general public license, which makes it available to developers at no cost. With Adium, you can connect to any number of messaging accounts on any combination of supported messaging services and then chat using those services, which include AIM, MSN, Google Talk, Yahoo, Bonjour and MySpace IM.

Trillian Astra is the upcoming version of the Trillian instant messenger. It supports AIM, MSN, Google Talk, Yahoo, Bonjour and MySpace IM for Windows, Macs, and mobile platforms such as the iPhone.

Finally, there are Web-based services such as meebo, which do not require any software other than a Web-browser to connect to many IM service providers.

After trying all these services, my conclusion is that text works very well across all platforms as long as your collaborators are on the same IM service. If I have collaborators on Yahoo, MSN, AOL and Google, I need to establish accounts on every one of these services, install the clients for these services and check multiple different applications to determine if my collaborators are online. Audio is problematic across platforms and has very uneven quality. The poor sound quality is a function of many bandwidth bottlenecks from desktop to desktop via the Internet and the IM service provider. Even if video was available across platforms, it will still have the firewall issues I described above.

In sum, I recommend using e-mail and listservs for asynchronous communication and text-only IM for synchronous communication. If you need audio and/or video, stick with teleconferencing technologies, which I describe next.

Next: Audio and Video Teleconferencing

Technologies, cont.

Audio and Video Teleconferencing

Technologies, cont.

Collaboration Tools: Blogs, Wikis and other group publishing systems; Forums, Chats, Social Networking Tools; Presentation Sharing/Remote Desktop Tools

I tried a host of collaboration tools—including blogs, wikis and online forums—that have potential usefulness for virtual teams. The beauty of these tools is that you don't need to be in an office to use them. All you need is a Web browser and Internet connection.

A blog is a Web-based content management system specifically designed for creating and maintaining short articles. Although blogging is not a real-time collaboration tool, it is a remarkable way to spread information. Each day, I write 1000 words on my blog, GeekDoctor, for 3,000 daily readers. Although I don't use my blog specifically as a tool to support flexible work arrangements, it is a remarkable way to stay in touch with all my staff and customers. Instead of writing a broadcast e-mail or posting to a listserv, I can describe all the details of a strategic initiative in one structured document that everyone can read. I have found that blogging has replaced many meetings, phone calls, newsletters, and e-mails because every stakeholder, onsite or working remotely, is on the same page. As an external relations tool for communicating information, proposing ideas or marketing concepts, it works extremely well. Blogger, WordPress and TypePad are leading blogging sites.

A wiki is software that allows users to create, edit and link webpages easily. Wikis are often used to create collaborative websites and to power community websites. They are being installed by businesses to provide affordable knowledge management and are extremely useful for a community of authors to create shared documentation. At Harvard Medical School, the information technology department uses the open-source software Twiki as an enterprise wiki infrastructure that supports over 300 knowledge repositories authored by departments, professors, IT staff and clinicians. Having knowledge about commonly encountered problems, policies, reference materials and contact information on a wiki is a real asset to remote workers: It gives them access to institutional knowledge from anywhere in the world.

A forum is a threaded discussion with multiple participants. It is not real-time. Participants can read and respond to entries any time. At Harvard, we created our own threaded discussion forums that a diverse group of geographically dispersed participants use for strategic-planning activities. Forums are good for ongoing discussions between large groups of collaborators who want to engage in a dialogue asynchronously. The downside of forums is that they can take a lot of time to read through. As such, they have not been that popular in general. However, Harvard Medical School has used forums to support its strategic-planning initiatives and to ensure that multiple stakeholders can comment on proposed initiatives. My IT group has not used forums specifically to support remote workers in our department, but collaborators have used forums to continue their dialogues after hours. Consequently, the tool makes sense for supporting flexible work arrangements.

Chat is a real-time, synchronous discussion group with many participants that typically requires specialized chat software. I have not found a business use for chat rooms. It seems that chat has been largely replaced by instant messaging. For example, Google's Gmail includes IM with the ability to invite multiple people to a chat. However, all must be online to participate in the discussion. Forums can be more convenient than chat because the parties involved in the discussion don't have to be online at the same time. We've used multiple party IM to bring together a virtual group of IT workers spread across many locations to respond to problems, but we've not used "old fashioned" client-based Internet Relay Chat to support flexible work arrangements.

Other types of group document collaboration tools include Gobby, which enables multiple authors to edit a document in real-time. Document repositories such as Microsoft Sharepoint, Documentum and home built intranet portals support group document sharing. I've used Sharepoint as a document repository to coordinate the nation's healthcare data standardization process at HITSP. Sharepoint has become an important document repository for my teams, both onsite and offsite, to ensure we all have access to working documents, project plans and budgets.

Social Networking sites such as Facebook, LinkedIn, Plaxo and MySpace encourage users to interact through chat, messaging, e-mail, video, voice chat, file sharing, blogging, discussion groups and more. To test the value of these services for collaboration, I established accounts with Facebook, LinkedIn, Plaxo and Second Life. Although I initially did not see the business value in Facebook, it has become an increasingly important way for ad hoc groups to form, exchange ideas and launch innovative applications. Recently, the CEO of Beth Israel Deaconess Medical Center created a fundraising site using Facebook's Causes application. Hundreds have joined, and contributions are flowing. At this point, we're using Facebook for collaboration with external customers and are relying more on Sharepoint for internal collaboration, though we could use Facebook to create ad hoc work groups to help remote employees stay in touch and refine ideas. LinkedIn and Plaxo have been primarily a way for individuals to maintain contact with me without requiring a specific corporate affiliation. Many high-tech employees transition every few years, but social networking sites enable them to stay connected since their networking identity is not tied to a corporation. We've found LinkedIn and Plaxo are more useful for contacting external collaborators than internal groups. Our e-mail, listserv and Sharepoint applications are the choice of our remote workers.

Presentation sharing tools seem to be the most promising for supporting remote collaboration. This class of tools enables a presenter to deliver content over the Web. They may include audio, question-and-answer features, a whiteboard and survey capabilities. I evaluated WebEx, Adobe Connect, Elluminate and GotoMeeting.

WebEx has the most features. It supports the entire collaboration workflow. You can use it to schedule conferences and send e-mail notifications to attendees. It also integrates with Outlook. All of WebEx's functions except video teleconferencing worked on all operating systems: On Linux, video teleconferencing is view-only, meaning you can view others, but they can't see you. It costs $375.00 per month for up to 15 users.

Adobe Connect. Formerly known as Macromedia Breeze, Adobe Connect worked well under Windows, but had stability issues (it locked up) under Macs in my tests with other collaborators. Video teleconferencing was view-only in Linux. The cost is $375.00 per month for up to five users.

Elluminate is Java-based and includes a free basic service, Vroom, which supports whiteboarding, remote presentation and group instant messaging. It has a very intuitive user interface but lacks WebEx's scheduling and automated conference-calling features. The full-featured version is $180.00 per month for five users. As with the other applications, video teleconferencing is view-only in Linux.
GotoMeeting. This Web-based product only works on Windows machines and Macs. Priced at just $39.00 per month for 15 users, GotoMeeting includes an integrated voice conference service in which participants are charged their standard long-distance rate for calling a toll-based number.

Remote presentation tools enable me to assemble virtual teams, convey ideas, seek feedback and avoid commuting. They are a truly powerful tool. I did not find the lack of video teleconferencing support across all platforms to be a significant problem; I believe the need for a 'talking head' visual is limited. I prefer WebEx for its workflow support. As for the other communication and collaboration tools I evaluated, I'll continue to use blogs to share ideas, wikis to document organizational knowledge and Facebook for collaboration with external collaborators, as well as e-mail, listservs and forums.

Next: The business benefit from all this technology and lessons learned.

Benefits

To evaluate the implications of flexible work arrangements on productivity, employee satisfaction and IT staff providing remote infrastructure support, we ran two pilots: one with our desktop engineering team and one with our medical record coding team.

One of our desktop engineers worked from home four days a week and in the office one day a week. This particular engineer is responsible for developing the desktop images used on Beth Israel Deaconess Medical Center's 8,000 managed workstations. His work demands a quiet, controlled environment where he can concentrate on complex programming, configuration and testing activities. From a management perspective, his deliverables are deployable software images for specific configurations of PCs that are due on specific dates. During our pilot, he used e-mail, IM and teleconferencing to stay in touch with management and customers. He met all of his deadlines, and no one complained about his availability, work habits or responsiveness.

For medical record coders, one employee worked from her home in California and the other three worked from their homes in Massachusetts. The Massachusetts-based coders came into the office on average twice a week for work distribution or meetings. From home, they did all the work they would otherwise do in the office: They reviewed and applied diagnosis and procedure codes on path reports, operative reports, lab reports and notes in our ambulatory medical record. They used e-mail very frequently to communicate with their managers and to clarify with clinicians issues in the medical record. During the pilot, they coded 10 percent more records than they typically code when working in an office.

Coders are challenging to hire in Boston due to the large number of hospitals competing for a small number of qualified employees, so flexible work arrangements enable us to hire without geographic restrictions. Given the IT job market and the difficulty of recruiting replacements, the benefit of such flexibility cannot be overstated when you have a seasoned employee who knows your systems well. We were able to retain a coder who moved and we included her in our pilot. For medical record coders, the pilot program was very successful. In the spring we will expand the program to in-patient coding.

We observed many other benefits. The flexible work arrangements improved employees' quality of life. They're not stressed or tired from commuting so much, and they're saving money on parking and gas. The flexible work arrangements have also freed up office space. In addition to these benefits we observed, we learned some important lessons about implementing flexible work arrangements and managing remote employees.

Lessons Learned

Flexible work arrangements work best for highly responsible, productive employees with good track records who don't mind working alone. And employees' personal preferences play a large role in the success of such arrangements. One coder who lives by herself said she felt distracted at home and missed the social interaction with coworkers. Another coder who also lives alone loved working at home since she experienced no interruptions and got more done.

When you begin offering flexible work arrangements, it creates the expectation that everyone will be able to work from home. Clearly, this is not the case. Some employees' jobs may not be conducive to working outside the office. Some employees may not be trusted to work from home. Our answer to these issues is to use a flexible work arrangement framework, such as the one we adapted from Blue Cross Blue Shield of Massachusetts, as the basis for discussion. Employees can understand objectively how a flexible work arrangement may or may not work for them. If a flexible work arrangement, once started, does not work out, it's easy to refer back to the framework document to understand how expectations were not met and to justify the suspension of the agreement. For those who cannot do their jobs remotely but who require flexibility due to long commutes or family demands, you can let them work different schedules, such as 10 a.m. to 6 p.m. or four 10 hour days. That way, more people can participate in flexible work arrangements, which eliminates much of the friction among staff in different roles.

Flexible work arrangements will also be hard to extend to new employees who don't know the people, processes and policies well enough to work effectively on their own. I recommend waiting at least six months to let new employees work from home.

One thing my staff and I learned is that we're not as likely to call someone at home because we feel that we are invading a private space. If we create a sense of connectedness that goes beyond a geographic location, we create equivalence between home and office. If you need to reach a person by voice, you dial a number, not knowing or caring if they are onsite or remote. Cell phones would work, but even they have a stigma of urgency that can impede a casual conversation. In our case, by connecting our office PBX system to a phone in the home office, we create five-digit dialing that eliminates any hesitation to call a colleague who may be working remotely.

Flexible work arrangements also challenge traditional command-and-control methods of management: It's hard to manage people you can't see. You can't walk into their office or cube to ask them a question or give them a new assignment. By changing the culture to make e-mail, phone calls, IM, blogging, wikis, and WebEx the means of communication and management control, the need to walk into a cubicle lessens. On the employee side, regular status reports to the manager ensure that there are no surprises about the employee's performance.

Of all the lessons learned, the most important is that employee and manager create a written plan for the flexible work arrangement and describe specific expectations for performance. Both employee and manager need to constantly communicate and be comfortable with the basic technologies I outlined here: e-mail, IM, phone conferencing and remote presentation.

Conclusion

Flexible work arrangements are not only possible for me and my staff, they are necessary in 2008.

Some technologies are ready to support telecommuting. Ideally the technology should run on any operating system and with any browser, be compatible with firewalls, be usable on a wide variety of bandwidths and require minimal support. The technologies I have chosen to keep using after my three months of investigation are:

1. E-mail via BlackBerry as my principal means of asynchronous communication.

2. IM for interaction with some companies and workgroups. I have elected to use meebo.com as a free, cross-platform, web-based client for IM text exchange. Meebo supports all the major IM service providers.

3. Video teleconferencing over IP using a Polycom H323 appliance. This resolves any issues with client software running on my Windows computers that aren't Windows-based.

4. Blogging via Blogger.com for external communications.

5. Twiki for creating shared documentation wikis.

6. Accellion for Secure file transfer.

7. WebEx plus audio teleconferencing for virtual meetings and presentations. We use WebEx's conference calling, and Ready Conference and Intercall for ad hoc conference bridges.

8. Juniper for SSLVPN, including access to file shares and remote desktop control.

9. Citrix for access to client/server applications needed remotely.

10. For infrastructure I use a Macbook Air, which can run all these tools.

Although these 10 technologies are empowering, it's the policy changes and management framework supporting flexible work arrangements that are most important. We learned that creating a flexible work arrangement template and encouraging a cultural change in favor of remote and asynchronous communications (over in-person meetings) were key to our successful pilot of flexible work arrangements.

Now that we've completed the initial technology and policy evaluation, we'll expand our pilots over the next few months. I'm optimistic that we'll meet all three goals for the project: increased productivity and lower costs, improved employee recruitment and retention and better use of space. I'll report back on our progress. In the meantime, I'd love to hear about your experience with flexible work arrangements.

John Halamka is the CIO of Beth Israel Deaconess Medical Center and Harvard Medical School. He frequently contributes to CIO.

Five Things About SAP's Strategy That You Need to Know

2008-05-27T10:17:00.000-07:00

http://www.cio.com/article/print/359113

– Thomas Wailgum , CIO

May 15, 2008

Enterprise resource planning (ERP) systems are a career-defining decision for many IT executives. And yet, says an expert who follows SAP and its base of corporate customers, many of those executives don’t pay enough attention to the German software giant’s strategy for updating these bet-your-business applications.

Five SAP Strategies to Know

1. Product Release Strategy. SAP has traditionally released products and made major changes to underlying functionality on a five-year schedule, Shepherd notes. So twice a decade, SAP's customer base faced a tough decision.

"They could either ignore the product improvements that their maintenance fees had helped to fund, or they could invest a significant amount of time and money in an upgrade project that is often disruptive, expensive and deeply unpopular," Shepherd writes. "It became quite common for companies to delay or defer releases. However, that approach carries enough risk and cost that most organizations didn't dare go longer than eight to 10 years between upgrades." (For more on SAP's maintenance fees, see "SAP Raises Software Maintenance Fees for New Customers" and "The Man Behind 'Half Off' Third-Party Software Maintenance.")

In October 2005, SAP finally started to fix this release gap with the shipment of its ERP 6.0 product, Shepherd notes. "Instead of bundling five years of product enhancements and technology improvements into one massive upgrade, SAP has now moved to what it calls a continuous innovation strategy," he writes. "The major applications in SAP ERP and the SAP Business Suite will now be upgraded through enhancement packages issued every six to 12 months. These enhancement packages are shipped at no cost to customers on maintenance, and deployment is optional. Each enhancement package includes new and improved functionality across a variety of product areas and vertical industry applications."

Overall, what's important for SAP customers to realize is that "most SAP customers can upgrade their systems gradually without the kind of massively expensive and disruptive projects that have traditionally characterized SAP releases." (The new approach is available for SAP's ERP 6.0 product, Shepherd points out, which has shipped two enhancement packages already and is due to release its third in mid-2008.)

Shepherd says SAP executives have realized is that "companies with global deployments, multi-terabyte databases, and tens of thousands of users simply cannot afford to do monolithic upgrades anymore."

2. Growth Strategy. In the AMR report, Shepherd writes that SAP has a business strategy that is fundamentally focused on organic revenue growth and that SAP has always been confident about its organization's ability to develop new products and improve existing ones.

However, SAP execs also have realized that the company has needed to both expand its product offerings to its customers as well as move into new markets. Shepherd writes that this market expansion can be seen in getting new customers, expanding the product scope, moving into new geographies and industries, and going after not just the large enterprises but the SMBs as well. (See "SAP Pays Partners, Goes with Gusto for SMB Customers" for more on SAP's SMB strategy.)

What SAP customers should realize is that, like its competitors, SAP derives most of its revenue from its installed customer base. "Its objective is to ensure that customers never stop buying licenses, maintenance, and services," Shepherd writes. "SAP is constantly working to move ERP customers onto the full Business Suite, and it has invested heavily in products aimed at information workers who don't necessarily use transactional applications." (For more on software licensing, see "Software Licensing and Pricing Is Still Too Complex and Costly.")

Therefore, customers should expect their SAP sales reps to be pitching: self-service applications, financial and business performance management, Microsoft Office integration, and much of the Business Objects' portfolio of reporting, business intelligence, and analytics, Shepherd writes.

"SAP understands that its customers are inclined toward a single vendor strategy," he notes, "and it intends to capitalize on this tendency."

3. Platform Strategy. Shepherd traces the roots of SAP's platform strategy back to 2003, when SAP packaged up its technology components and unveiled the NetWeaver product set. (For the latest on NetWeaver, see "SAP Unveils Its NetWeaver Business Process Management Tool.")

"The idea was that this technology and architecture would no longer simply be the invisible engine that powered the application products, but that SAP could expose it as a platform and allow customers and partners to use it to extend SAP applications or even build brand-new applications," Shepherd writes. "SAP had to build the platform anyway in order to develop its service-oriented architecture (SOA)-based product line. Management believed that making it publicly available would enhance SAP's reputation as a technology leader, and it could potentially become an additional source of product revenue."

SAP has continues to refine and market the idea of a "business process platform," which is made up of SAP's Business Suite applications, a repository of enterprise services, and the NetWeaver technology platform, Shepherd notes. "While there is no indication of a groundswell of demand for a business process platform," he notes, "NetWeaver has been successful." NetWeaver had sales of nearly $1.5 billion in 2007, according to the report, and more than $450 million in standalone software revenue.

What's important for SAP customers to understand, notes Shepherd, is that SAP customers "have to use NetWeaver because their applications won't run without it, and, over time, they tend to begin using the optional components, such as business intelligence, the portal, and integration," he writes. "The attraction of tapping into the SAP installed base has encouraged a large number of other software vendors to incorporate enough of the platform to gain the coveted 'Powered by NetWeaver' certification. This market acceptance, SAP's continued enrichment of the modeling and composition tools, and the services repository is building momentum."

4. Industry Strategy. Shepherd attributes one reason for SAP's success over the years was that executives realized the importance of offering products to key vertical industries that had unique needs in their applications.

"Using a combination of internal and customer sponsored development, partners and clever packaging, SAP now has 25 separate industry solutions across a range of industries from mining and manufacturing to higher education and financial services," he writes. "Many of these are supported by product management teams, dedicated developers, and industry value networks (IVNs) of customers and partners that collaborate with SAP on defining requirements and building extensions." This strategy has enabled SAP to garner tons of market share in the oil and gas, chemicals, and life science industries, according to the report.

Now, SAP is aiming to use the same "blueprint" in going after non-manufacturing industries, such as retail, insurance, education, banking and public sector. "Over the next several years we expect to see SAP devoting a great deal of effort to increase its presence and enhance the applications in these segments," Shepherd writes. "It is also likely that SAP will use acquisitions, investments, and partnerships to address industry requirements and buy some customers and industry expertise."

As SAP aims to solidify its offering in these industries, Shepherd predicts that customers in industries where SAP is very well established "may find that their enhancement requests have a somewhat lower priority than industries that SAP has designated as strategic." On the other hand, he notes, "customers or prospects in those non-manufacturing industries are likely to find SAP very willing to commit resources and sponsor joint development projects in order to fill holes in industry applications. Companies in these industries that are willing to be highly visible lighthouse accounts will have lots of negotiating leverage if they are willing to tolerate applications that are still rather immature."

5. Product Strategy. Before 1999, SAP was known as a one-product company, which a much less confusing naming convention for its products and releases (R/1, R/2, R/3).

"Since then, SAP has accumulated dozens of products with a bewildering set of options, variants and names," Shepherd writes. "One of the reasons for this product proliferation is the software industry consolidation that has resulted in large ERP vendors like SAP competing in many other adjacent software categories, such as CRM, supply chain management, and product lifecycle management." SAP has also brought to market other complementary products not named ERP and not aimed at the CIO and IT but at the business users, he notes, in areas like performance management, regulatory compliance and analytics.

It's critical that large enterprises, especially, must take a very long view of their application strategy. "One of the important issues for large customers is knowing what happens after 2013," Shepherd writes. "The SAP Business Suite looks stable until then, and [customers] like the idea of regular enhancement package releases rather than major upgrades. That said, they live in fear that after 2013 they may be faced with another product transition like the one from R/3 to mySAP."

Shepherd predicts that the current Business Suite will remain SAP's flagship product line well beyond the 2013 maintenance window. "While the mySAP.com product was officially launched in 1999, development just recently completed on a fully SOA-based suite, and there are still a significant percentage of customers that haven't upgraded from R/3," he notes. "Launching another new product would unduly jeopardize that very important base. Furthermore, SAP is under no pressure from its customers or its competitors to move to a new technology and it is unlikely to be in the next few years."

As to SAP's Business ByDesign on-demand software offering targeted at SMBs, Shepherd writes that SAP has many large customers that need a smaller and simpler application that can be easily integrated to the Business Suite. "CIOs regularly face the question of what to do about autonomous divisions, smaller sites in remote locations, new acquisitions, and joint ventures. Incorporating them into the global, single instance of SAP is often an unpopular option that may be financially or technically impractical."

Shepherd adds that "Business ByDesign, in either a hosted or on-premise form, should be much more attractive to the users than the corporate system and yet much easier to integrate than a third ERP application."

Top 50 Tech Visionaries

2008-05-23T15:48:00.000-07:00

http://news.idg.no/pcw/art.cfm?id=036A275F-17A4-0F78-31FA8F2A2D16B712

It's easy to look at a laptop, an iPod, or a laser printer as nothing more than a tool to get work done with or to while away your free time on, but these and many other high-tech devices didn't fall off a tree. They emerged following years of hard work--and in some cases, an entire career devoted to a single technology--by inspired researchers, designers, and developers.

It's easy to look at a laptop, an iPod, or a laser printer as nothing more than a tool to get work done with or to while away your free time on, but these and many other high-tech devices didn't fall off a tree. They emerged following years of hard work--and in some cases, an entire career devoted to a single technology--by inspired researchers, designers, and developers.
Our list of technology visionaries includes the guy who invented a way to store data in a portable form--and who almost got demoted as a result. It recognizes the woman who popularized the term "bug" after a moth flew into a computer relay. And it acknowledges a genius who might have saved modern gaming by inventing Jump Man.
So it's time to pay homage where homage is due. Here's our take on the 50 most important people in the recent history of technology--the most critical players (including a few forgotten heroes) who've been instrumental in crafting the last 50 years of technical innovation.
Our opinion doesn't have to be the last word on the subject, however. If you have additional nominees who deserve recognition, or if you want to chime in to agree with or reminisce about or rail against our choices, please add a comment to let us know.
1. Jack Kilby and Robert Noyce
Unlike most of the other multiperson entries on our list, Robert Noyce and Jack Kilby didn't work together. But their common invention is still utterly crucial. In 1959, both men came up with the first integrated circuits--Kilby while he was at Texas Instruments, and Noyce at Fairchild Semiconductor. The IC solved the problem of size that got worse and worse as the need to jam additional transistors into a device grew more and more critical. Packing them all into a single chip effectively ended the era of the room-size computer. Ultimately, Noyce's design based on silicon, rather than Kilby's based on germanium, became the standard--one that we still use today--but both designs were instrumental in pushing the technology forward. Kilby and Noyce are often overlooked, but the importance of their contribution to technology cannot be overstated. Nothing else on this list could exist without the underpinning of the integrated circuit.
2. Sergey Brin and Larry Page
What is the defining contribution to technology made by Larry Page and Sergey Brin, the fathers of Google? The company is the single most important business in Silicon Valley today, but of course search engines had existed long before Google came along. What impressed so many early fans was Google's relentless pursuit of refinement and accuracy in its search algorithm: Whereas other search engines' results tended to be laden with spam, Google's were generally on target. The company had lots of other tricks up its sleeve as well: The rapidly expanding Google universe now offers dozens of productivity and entertainment tools--from word processing to video--most of them free, underwritten by the company's ubiquitous ad-serving system.
3. Bill Gates
The world's richest man (well, depending on that day's stock price) is also one of its most noteworthy technologists--a guy who dropped out of Harvard to launch Microsoft, a company that all techies are intimately familiar with, like it or not. No hands-off executive, Bill Gates has been involved with Microsoft product development at an incredibly detailed level over the company's entire 30-year history. Though he'll continue to serve as the company's chairman, Gates will effectively leave Microsoft this July to focus full-time on his nonprofit endeavor, the Gates Foundation, which he has endowed with an eye-popping $29 billion to support global health and learning. Critics love to caricature Gates as a ruthless corporate tyrant who rules the tech industry with an iron fist, but evidently he has a conscience and a social vision too.
4. Steve Jobs
The once and future King of Apple, Steve Jobs is familiar to even the most casual technophile. Jobs lays claim to two critical moments in tech history. First, with the original Apples, he pioneered the idea that computers belong in the home; and then, 20 years later, he convinced the world that people ought to carry their (digital) music with them everywhere they go. Apple may not have invented the PC, and it certainly didn't invent the MP3 player, but Jobs's famous "reality distortion field" has proved that who got there first is sometimes less important than what they brought with them. Today, after more than one brush with corporate death, Apple is bigger than ever, boasting market share that the company hadn't seen since the 1980s.
5. Tim Berners-Lee
No bones about it: You wouldn't be reading this if not for Tim Berners-Lee and his 1989 invention, the World Wide Web. Everything from URL structure to hyperlinks were part of Berners-Lee's original specifications; and though they've been extensively revised (in large part under his guidance as director of the World Wide Web Consortium), they remain in use today. Berners-Lee continues to be a key figure in the development of Web standards, and these days he spends his time developing what many think is the next step for the Internet: The Semantic Web.
6. Ray Tomlinson
In 1971 Ray Tomlinson sent the message that would ultimately be heard 'round the world: An e-mail from one ARPANet host to another. When you open your e-mail program and see that your inbox has 112 unread messages, you may not feel like thanking Tomlinson, but imagine where digital communications would be without e-mail. Tomlinson also came up with the idea of using the @ symbol to separate the username from the host name in an e-mail address.
7. Douglas Engelbart
Quick, click on this link. You now understand the importance of Doug Engelbart's creation, the computer mouse. Engelbart patented the idea of his "X-Y position indicator for a display system" in 1967, and also nicknamed the device the mouse (owing to its tail). Though it's hard to imagine working without one now, the mouse didn't catch on for more than a decade, until Apple computers started using them. Engelbart didn't stop at one invention, either: He and his research lab also developed an early online storage system--and even demonstrated videoconferencing back in 1968.
8. Bill Hewlett and Dave Packard
No company has touched so many facets of technology as the brainchild of Dave Packard and Bill Hewlett, two titans of Silicon Valley who built a monster computing company out of nothing but spit and gumption. Originally responsible for building audio oscillators for Walt Disney in the 1940s, HP went on to create all manner of test equipment for electronics before jumping into computer servers, desktops, calculators, cameras, and of course printers. After a few rocky years, HP is back on top as the largest technology company in the world. And what other people have had their garage turned into a national historic landmark?
9. Shigeru Miyamoto
The video game industry collapsed in the early 1980s, and for a while it looked as though the phenomenon would go down in history as just a quirky fad, like the pet rock. But Shigeru Miyamoto almost singlehandedly kept the industry alive with his creation of an animated character named Jump Man, who soon became known as Mario. Miyamoto's influence in the gaming business--he's now a senior director of Nintendo--has been crucial ever since. His latest creation: Wii Fit, arrives on U.S. shores this month.
10. Shawn Fanning
With Napster, Shawn Fanning introduced the technology that, some doomsayers warn, could spell the end of the Internet. Today traffic from peer-to-peer programs consumes an estimated 70 percent of all broadband bandwidth, and AT&T says that peer-to-peer is a major reason why it will have to radically upgrade its infrastructure if it is to avert the collapse of the Internet as we know it by 2010. All of this because a guy was looking for an easier way to share a few tunes with strangers? Sheesh.
11. Gordon Moore
You can't go wrong with a guy who's got his own scientific law, can you? Moore's Law, posited in 1965, three years before Gordon Moore founded a little company called Intel, predicted that the number of components on a computer chip would double every year (later, he amended it to every two years). As Intel notes, Moore's Law remains the "guiding principle for the semiconductor industry"; but, in truth, every field of high-tech--from hard drives to TVs--validates to some degree the almighty Law of Moore. Moore remains involved with Intel, which--at 40 years old--may be number one on the list of companies that Silicon Valley could not exist without.
12. Bill Atkinson
Mouse up to your PC's File menu, open a new window, and thank Bill Atkinson for being able to do that. His early ideas regarding user interface design elements like the menu bar became graphical user interface standbys not just on Apple computers (where he worked), but on every major operating system that has followed. As a programmer, Atkinson designed MacPaint, QuickDraw, and HyperCard, a sort of proto-Web system that clearly inspired the creation of the World Wide Web. After starting his own company, General Magic, Atkinson mostly retired from tech to work as a nature photographer.
13. Steve Case
Don't laugh. The brainchild of Steve Case, America Online was a big deal back in the early 1990s. The timing was perfect for a service that offered online training wheels for millions of intrigued but trepid people looking for an introduction to the World Wide Web. AOL pioneered more than just the chat rooms for which it became infamous. Case launched Neverwinter Nights--one of the first MMOs (massively multiplayer online games)--was an early champion of user avatars, and (most notoriously) started the blending of online and big media by selling out to Time Warner in 2001. Not such great timing there, alas.
14. Martin Cooper
Quick, check your pockets. Whether you're toting an iPhone, a Razr, or an enV, you owe a debt to Martin Cooper and his 1973 patent responsible for the mobile phone as we know it. His invention, created during his tenure at Motorola, weighed just shy of 2 pounds, and ten years would pass before mobile phones broke the 1-pound barrier. Cooper is still active in the telephone business. His company ArrayComm develops antenna technology so today's 2-ounce phones can reach their network.
15. Nolan Bushnell
Atari is synonymous with video gaming--so much so that the name remains in use (though now far removed from founder Nolan Bushnell, the undisputed father of video gaming) 36 years after it originated. Bushnell's inspiration--a world where everyone could play games in the comfort of their own home--is a rare instance where the vision panned out almost exactly as envisioned. Though no one is thrilling over Atari's consoles any more, Atari and Bushnell paved the way for every video game platform that has followed.
16. Vint Cerf
Turing Award. National Medal of Technology. Presidential Medal of Freedom. Vint Cerf has one of the most impressive résumés in technology. Cerf's work as an Internet pioneer has largely taken place in universities and government agencies, which in the early 1970s led directly to the creation of ARPANet, the predecessor to today's Internet. Cerf now works for--who else?--Google.
17. Don Estridge
IBM veteran Don Estridge is widely known as "the father of the PC," at least in its Big Blue incarnation. Estridge developed a number of computer systems, even tinkering with NASA radar equipment. But he is best known for his work as a manager--leading a "skunk works" staff of just 14 people that ultimately produced the IBM PC, an "open" platform that could run third-party software and accept third-party upgrades, that would become the standard for business. Tragically, Estridge died in a plane crash in 1985 and never saw his creation achieve ubiquity.
18. Michael Dell
The origin story of Dell Computer Corporation is so well-known it has become part of the canon of the tech business. Michael Dell started his company, PC's Limited, at age 19 out of his dorm room at the University of Texas. Eventually he dropped out of school to found Dell Computer, which grew at breakneck pace throughout the 1990s. Dell's marketing philosophy turned the industry on its ear: Rather than offer predetermined configurations, Dell's machines were totally customizable and built to order. Eventually almost every competing PC manufacturer followed suit--or went out of business.
19. Alan Kay
A jack-of-all-tech-trades, Alan Kay lays claim to at least two watershed innovations, starting with HP's original Dynabook, one of the first usable mobile laptop computers. Kay ideal was to design a laptop that weighed no more than 2 pounds. We still aren't there yet, but Kay's contributions to software--which include shepherding the idea of object-oriented programming and the notion of multiple, overlapping windows in a GUI--rank as essential milestones in computing.
20. Marc Andreessen
The Mosaic Web browser devised by Marc Andreessen may seem quaint now, but bits and pieces of Mosaic code remain standard software components of most of today's commercial browsers. It's a safe bet that many of Andreessen's other creations will leave similar legacies: Netscape, the company he founded, set off the tech stock craze of the 1990s, and his Ning Web site continues to grow in popularity as an outlet where anyone can build a topic-oriented social network. He even finds time to blog regularly about all this stuff.
21. Linus Torvalds
Given the exorbitant cost of most Apple computers, Linus Torvalds is the godfather of what may be the last, best hope for an affordable alternative to Windows. The Linux operating system has been in continuous development since Torvalds conceived it in 1991, and has experienced steady gains in popular acceptance every year. And a long last, Linux is making the jump from server rooms to large numbers of desktop PCs, most visibly in low-cost laptops like the Asus Eee PC. The OS now has a market share in excess of 2 percent on the desktop.
22. Chuck Thacker
Chuck Thacker has had his hands in a surprisingly wide array of tech projects, from the development of ethernet to the first laser printers. His most enduring legacy, however, involves a product that never reached market: The fabled Xerox Alto. The Alto, which Thacker designed, was the first computer with a GUI (and a mouse); as the story goes, it directly inspired Apple to build the Macintosh after Steve Jobs paid a friendly visit to Xerox. Thacker now works for Microsoft.
23. Bob Metcalfe
Moore's Law may be better known, but the law formulated by Bob Metcalfe has wider general application. Posited around 1980, Metcalfe's Law conjectured that the value of a telecommunications network is equal to the square of the number of nodes on the network. In other words, even a small increase in the size of a network makes it worth far more because of the enlarged number of new connections that each user can make. Metcalfe's invention of ethernet and his founding of 3Com are essential tech milestones as well, but his eponymous law--now in use to quantify value in the Facebook/MySpace milieu--will be around long after wired networking has passed on.
24. Vic Hayes
Wi-Fi has long been one of technology's messiest standards--and without Vic Hayes, it might never have come together at all. In the Hayes-less universe we might be left to wallow in a morass similar to the a Blu-ray vs. HD-DVD swamp with multiple incompatible wireless standards. In 1990, Hayes formed the Wireless LAN working group and rallied some 130 companies to work together to develop open standards. The result: 802.11, and the cutting of a very firmly attached cord. Hayes continues to be actively involved in Wi-Fi development today.
25. Dan Bricklin and Bob Frankston
Accounting departments around the world would be lost without the work of Dan Bricklin and Bob Frankston, who worked together in 1979 to develop VisiCalc, the world's first spreadsheet and arguably the first "killer app" written for a personal computer. The 27KB program can run on PCs today, and its simplicity is a big reason why early PCs sold in droves, especially to business customers. But never mind the bean-counters: You probably owe a lot to VisiCalc yourself. After all, if it weren't for Bricklin and Frankston, you might not be getting your paycheck regularly.
26. Grace Murray Hopper
That's Admiral Hopper, bud. Naval officer "Amazing" Grace Hopper was a computing pioneer who cut her teeth in the calculator era. Later she worked on the team that developed the UNIVAC, the world's first commercial computer, and wrote the compiler software for it (the first such software ever developed). Hopper was instrumental again in the development of the COBOL and FORTRAN programming languages, and she remained a major figure on the technology scene until her death in 1992. Even our language owes a debt to Hopper: She popularized (and possibly coined) the term "bug" after a moth was found in a computer relay during her years at Harvard.
27. Jeff Hawkins
Portable computing was shaped in large part by Jeff Hawkins, who invented the acclaimed PalmPilot, and then followed that up by spearheading development of the Treo six years later. Both Palm and Treo became household names, though Palm as a company has suffered numerous setbacks in recent years. Hawkins is now working on a startup called Numenta with his longtime partner Donna Dubinsky, focusing on the subjects of machine learning and neuroscience, which Hawkins has long had a deep interest in.
28. Fujio Masuoka
If anything is positioned to challenge the dominance of Al Shugart's hard drive (see #33 below), it's Flash memory--an invention of Fujio Masuoka. Masuoka developed solid-state storage during his tenure at Toshiba (Masuoka says that the company initially tried to demote him after he came up with the technology). The technology is now seen as a possible way around the fragility of hard drives, as capacity ramps up and prices fall. For smaller gadgets, Flash has become essential...or would you prefer to be saving your digital pictures on floppy disks still?
29. Jonathan Ive
Aside from its showman/CEO Steve Jobs, Apple tends to keep its employees out of the limelight, but Apple VP and design guru Jonathan Ive has broken that mold. That's appropriate, since he broke another mold too, killing off the beige boxes and bricklike pocket gizmos that had become standard-issue in the tech industry. Ive's designs for the original iMac and for the iPod got people thinking about tech products as fashion accessories and decorative items instead of as impersonal and purely utilitarian objects.
30. Jeff Bezos
Long scorned by Wall Street, Amazon.com--the creation of Jeff Bezos--is today the one Internet service that many people can't live without. But Bezos hasn't stopped at hawking Harry Potter on the Web. His company has also become one of the leading providers of Web services, online storage, and by-the-hour CPU rentals, as Bezos pushes Amazon toward becoming a platform that anyone can use to sell anything that Amazon itself doesn't.
31. Meg Whitman
A longtime Hasbro marketing executive, Meg Whitman went from the child's toy box to the grown-up's as CEO of eBay. Whitman joined the online auction site in its infancy and over the course of a ten-year run shepherded it into one of the most successful businesses on the Web. (She retired in March of this year.) Aside from squabbles over policy changes and the baffling purchase of Skype, eBay's run has encountered few speed bumps. That success, some say, might lead her to run for governor of California in 2010, but Whitman denies harboring any such ambitions.
32. Bill Joy
A legend in tech circles, Bill Joy was chief scientist for Sun Microsystems for over 20 years, where he oversaw numerous critical technology advances, the most important of which was the development of Java--the first major programming language designed for use on the Web. Still, Joy's greatest achievement is probably an academic project he worked on at Berkeley: The development of Berkeley Software Distribution (BSD), a major flavor of Unix; even Mac OS X uses BSD as its basis. Today Joy spends his days worrying about the evils of technology, such as bad robots and Grey Goo (a scenario where renegade nanomachines run amok and destroy the world).
33. Al Shugart
You're probably using a product conceived by Al Shugart right now without even knowing it. Shugart's company, Shugart Technology, switched to the more exotic-sounding name Seagate Technology soon after opening for business. At Seagate, Shugart developed technology that he had tinkered with during a stint at IBM (where he led the team that invented the floppy disk) into the hard drive for the mass market. The colorful Shugart ran Seagate for nearly 20 years before redefining himself as a sort of venture capitalist/promoter, a role that made him a staple at big tech shows like Comdex. Shugart died in 2006.
34. Karlheinz Brandenburg and James D. Johnston
Who says grad school is all impractical theory? At Friedrich-Alexander University, Karlheinz Brandenburg used his dissertation to work out a way of compressing digital audio files to radically smaller size without greatly diminishing their quality. We know the result now as MP3 coding. At AT&T Labs, American engineer James D. Johnston improved on Brandenburg's work by introducing "perceptual coding," which strips out inaudible parts of an audio signal to compress the file further. Johnston's contribution, too, has become a standard feature of most audio compression schemes.
35. Ann Winblad
Half of the well-known Hummer Winblad Venture Partners investment group, Ann Winblad was a key figure in the Web 1.0 boom, investing in such proto-companies as Napster, Gazoontite, Liquid Audio, and Pets.com. Despite some ill-fated investments, Hummer Winblad picked enough winners to remain a lead investor in dozens of tech companies, primarily back-end enterprises. And lest you think that Winblad is merely a stuffed shirt, consider this: She began her career as a computer programmer in the 1970s and achieved indisputable nerd cred by having dated Bill Gates.
36. Charles Simonyi
Charles Simonyi (plus a little Gatesian muscle, natch) is the reason you use Word and Excel instead of WordPerfect and Quattro Pro. As head of Microsoft's application development group, Simonyi oversaw development of both Word and Excel back in the MS-DOS days and superintended the app suite for more than 20 years. The programs are now as close to ubiquitous as Windows itself (perhaps even closer, since Office is the standard app suite for the Mac as well). Fun facts to know and tell: Simonyi was the second Hungarian in space in space and is Martha Stewart's boyfriend.
37. Thomas Penfield Jackson
Few people would have imagined that it a 62-year-old man unaffiliated with the company would have the most profound effect on Microsoft in years. But in 1999 U.S. District Court Judge Thomas Penfield Jackson shook the tech world to its foundations when he handed down a landmark ruling declaring Microsoft to be an abusive monopoly and ordering it split into two companies. Though appellate courts eventually overturned many of Jackson's rulings, Microsoft has been on the defensive against antitrust actions here and abroad ever since, and all tech companies looking to merge have had to tread more cautiously in Jackson's wake.
38. Jerry Yang and David Filo
This unassuming twosome got their start in 1994 while still at Stanford, with a truly humble idea: Populate a directory with cool places that they had found on the then-infant World Wide Web. Yahoo was born on a lark but Jerry Yang and David Filo helped it become one of the Web's top destinations: Today it is the home page for millions of people seeking the easiest entry point into the Internet. After an unfruitful turn with Hollywood insider Terry Semel at the helm, Yang retook the reins as CEO in June 2007. Yahoo is now coping with separate forays for control of the company by Microsoft and by Carl Icahn. (Full disclosure: The author writes a blog for Yahoo Tech.)
39. Peter Norton
A Buddhist monk before becoming involved in the tech world, Peter Norton has been a major figure in the computer industry for three decades, having made his mark early in the DOS era with Norton Utilities, the first major data recovery tool for the PC. Norton went on to produce a gaggle of related utilities for the PC and write a series of essential technical manuals before selling his company to Symantec in 1990. Symantec still uses his name on its utility apps.
40. Phil Zimmermann
Phil Zimmermann fought the law so you don't have to. His Pretty Good Privacy (PGP) application, the first mainstream encryption software, published in 1991, made Zimmermann a pariah in the eyes of the U.S. government. The feds spent three years investigating the possibility that Zimmermann had violated rules forbidding the export of cryptographic tools. The case was ultimately dropped, however, paving the way for everyday people to protect the material on their hard drives and in their e-mail with the same encryption standards that the government itself uses.
41. Jon Postel
How do you move from one IP address to another? Easily, thanks to Jon Postel, the so-called Father of DNS--the system that translates 70.42.185.10 into http://www.pcworld.com/. Postel also did substantial work on the TCP/IP and SMTP protocols, authoring some 200 Internet spec documents overall. But Postel didn't just envision the DNS system; he ran it himself for years as founding head of the Internet Assigned Numbers Authority (a position that led him into a memorable conflict with President Bill Clinton's science advisor when he tried to move control of DNS from Network Solutions to IANA). Postel died in 1998.
42. Alan Emtage with Bill Heelan and Mike Parker
Before Google--before the Web even--people had to find a way to locate files and programs hiding out on FTP servers around the world. The answer: Archie (a derivative of "archive"), a 1990 application devised by McGill University student Alan Emtage, who was assisted by Bill Heelan and Mike Parker. In its original incarnation, Archie contacted far-off FTP servers regularly and kept a local list of the files they contained, for easy indexing. That may sound like simple stuff by today's standards, but it inspired everything about the way we currently work with search, from the Web to the desktop.
43. Trip Hawkins
Electronic Arts is one of the few pure software companies that continues to be important 25 years after its founding--and it wouldn't have existed at all if not for gaming pioneer Trip Hawkins, a Harvard and Stanford grad and Apple alumnus who in 1982 saw the future in consoles and computer-based games. Hawkins's foray into hardware--he left EA to launch the 3DO in 1991--met with considerably less success, but his first baby continues to thrive. Just ask John Madden.
44. Arianna Huffington
Political insider Arianna Huffington has had a major influence on technology, but one that has been felt only recently. She spent her early career inside the Washington, D.C., Beltway as a columnist, author, pundit, and TV show writer, far from the geek wiring of Silicon Valley. But in 2005 she launched a little online project called The Huffington Post, which rapidly grew into one of the Web's most powerful political voices. More than anything, the HuffPo has proven the power of the blog by attracting celebrity writers ranging from John Kerry to Jamie Lee Curtis, all eager to have their message heard through Huffington's medium.
45. Susan Kare
Another Macintosh 1.0 innovator, Susan Kare worked behind the scenes, but came up with essential innovations. Her earliest achievement was designing the typefaces--and some of the, er, iconic icons--that shipped with the Macintosh. The "Happy Mac" remains one of computing's most visible expressions of things working well. Today Kare works as an independent designer: She designed the cards for Windows' ubiquitous Solitaire game and now designs Facebook's "Gifts" feature.
46. Sir Arthur C. Clarke
Sure, give Arthur C. Clarke credit for inspiring the minds of thousands of technology pioneers. But Clarke didn't just write seminal works of science fiction (including 2001: A Space Odyssey ); he also conceived of geostationary communications satellites (satellites that orbit the earth at a speed proportional to the earth's rotation, so that the satellite always remains positioned above the same geographical point). Satellites with such orbits, sometimes termed the "Clarke satellite orbit," are essential to the telecommunications infrastructure, to GPS, and to numerous other technologies. Clarke died in March 2008 at age 90.
47. Herbie Hancock
When Herbie Hancock released his single, "Rockit" (from the album "Future Shock") in 1983, few listeners knew what to make of it. But everyone was struck by its unique sound--it was perhaps the first mainstream offering to use scratching. Though Hancock was by no means the first person to make heavy use of synthesizers, drum machines, and other computer-based musical equipment, few musicians relied so heavily on such gear and reached such a wide audience. "Rockit," with its innovative music video, is now considered a turning point in the electronic music-making scene, where Hancock is revered as an elder statesman.
48. William Gibson
The king of cyberpunk, William Gibson, has dreamed up all manner of high-minded techno wizardry, some of which has actually started to come true. His early stories introduced the term "cyberspace" and the visualization concepts behind it, which in turn prompted people to start thinking about networks in a way that transcended text and a command line. We may not be plugging chips directly into our brains yet, but Gibson's fiction-based prophecies have a strange way of panning out.
49. Gary Kildall
Called "The Man Who Could Have Been Bill Gates" by BusinessWeek, Gary Kildall was the guy Gates beat out in the bidding to supply IBM with the operating system for the original PC. According to legend, Kildall blew off the meeting with IBM to "go flying," though Kildall denied that rumor, posthumously, in his unpublished memoirs. Controversy aside, Kildall made significant contributions to the tech business--especially as the head of Digital Research, which created the seminal pre-DOS operating system CP/M, and (later) as a host of the classic Public TV program, Computer Chronicles . Kildall died in 1994.
50. Udi Manber
If there is a search engine anywhere that doesn't have the thumbprint of Udi Manber on it, we don't know about it. From Yahoo to Amazon's A9 to Google, Manber has been on

SAP, RIM to let BlackBerry users access ERP apps

2008-05-04T18:26:00.000-07:00

http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9082078&source=NLT_PM&nlid=8

Brian Fonseca

May 02, 2008 (Computerworld)

SAP AG and Research In Motion Ltd. today announced a joint development effort that will allow corporate customers to access SAP business applications from BlackBerry mobile devices.

The companies said SAP CRM will be the first application to run on the BlackBerry, and it will be available in a few months. Officials were not more specific.
During a press briefing today, RIM CEO Jim Balsillie said his company is currently developing a native BlackBerry smart phone client that will embed SAP CRM 2007 with BlackBerry applications, including e-mail, address book and calendaring. He said the integrated technology will allow sales, marketing and IT personnel to enable event and alert-driven updates, augment productivity, and create better data synchronization between business systems and mobile applications.
"When you go native, it's powerful for [personal information management] and messaging. The nativeness is the key element," said Balsillie.
The companies have not yet devised a pricing model for the SAP CRM BlackBerry product.
The SAP-RIM announcement came just two days after SugarCRM Inc. began shipping a beta release of a new version of its Web-based customer relationship management software that adds support for the BlackBerry and Apple's iPhone device.
Bob Stutz, executive vice president and general manager for industries and CRM products at SAP, said that SAP and RIM also plan to let users access the remainder of SAP's application suite, including vertical industry software, at a later undisclosed date. "The plan is we're starting with CRM, then we're going to expand it around our full business suite and eventually every single SAP application will be running on a BlackBerry device," remarked Stutz.
Balsillie said BlackBerry users can utilize "dozens of hours" of video on the mobile device in a cache for mobile training purposes, as well as integrated Global Positioning System capabilities to receive directions or location of an imported contact. In addition, he said the two companies are enabling an "Event to Call" system for SAP applications that can push outbound conference calls, IT support issues or public safety information in the event of an emergency.
Balsillie noted that RIM also hopes to support the applications of other vendors on the mobile device, but no announcement is imminent. "Even if [SAP] offered us an exclusive, I wouldn't want it," he added.
SAP officials also noted that further down the road, it may let BlackBerry users access its hosted Business ByDesign service. Earlier this week, SAP cut back on its short-term ByDesign development plans after reporting poor first-quarter financial results.

ABC: An Introduction to ERP

2008-04-23T10:48:00.000-07:00

http://www.cio.com/article/print/40323

From: www.cio.com
ABC: An Introduction to ERP
– Thomas Wailgum , CIO
March 07, 2007

Compiled by Christopher Koch and Thomas Wailgum
Editor's Note: This article was updated April 17, 2008 to reflect changes in ERP technology.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

What is ERP?
Enterprise resource planning software, or ERP, doesn’t live up to its acronym. Forget about planning—it doesn’t do much of that—and forget about resource, a throwaway term. But remember the enterprise part. This is ERP’s true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments’ particular needs.
That is a tall order, building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other.
That integrated approach can have a tremendous payback if companies install the software correctly.
Take a customer order, for example. Typically, when a customer places an order, that order begins a mostly paper-based journey from in-basket to in-basket around the company, often being keyed and rekeyed into different departments’ computer systems along the way. All that lounging around in in-baskets causes delays and lost orders, and all the keying into different computer systems invites errors. Meanwhile, no one in the company truly knows what the status of the order is at any given point because there is no way for the finance department, for example, to get into the warehouse’s computer system to see whether the item has been shipped. "You’ll have to call the warehouse" is the familiar refrain heard by frustrated customers.
ERP vanquishes the old standalone computer systems in finance, HR, manufacturing and the warehouse, and replaces them with a single unified software program divided into software modules that roughly approximate the old standalone systems. Finance, manufacturing and the warehouse all still get their own software, except now the software is linked together so that someone in finance can look into the warehouse software to see if an order has been shipped. Most vendors’ ERP software is flexible enough that you can install some modules without buying the whole package. Many companies, for example, will just install an ERP finance or HR module and leave the rest of the functions for another day.
How can ERP improve a company’s business performance?
ERP’s best hope for demonstrating value is as a sort of battering ram for improving the way your company takes a customer order and processes it into an invoice and revenue—otherwise known as the order fulfillment process. That is why ERP is often referred to as back-office software. It doesn’t handle the up-front selling process (although most ERP vendors have developed CRM software or acquired pure-play CRM providers that can do this); rather, ERP takes a customer order and provides a software road map for automating the different steps along the path to fulfilling it. When a customer service representative enters a customer order into an ERP system, he has all the information necessary to complete the order (the customer’s credit rating and order history from the finance module, the company’s inventory levels from the warehouse module and the shipping dock’s trucking schedule from the logistics module, for example).
People in these different departments all see the same information and can update it. When one department finishes with the order it is automatically routed via the ERP system to the next department. To find out where the order is at any point, you need only log in to the ERP system and track it down. With luck, the order process moves like a bolt of lightning through the organization, and customers get their orders faster and with fewer errors than before. ERP can apply that same magic to the other major business processes, such as employee benefits or financial reporting.

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Why ERP Systems Are More Important Than Ever Nestle's ERP Odyssey Riding the ERP Bus Forever A Day in the Life of Celanese's Big ERP Rollup Is Open Source the Answer for ERP?How to Determine If a Single-Instance ERP Implementation is Right for You University ERP: Big Mess on Campus

NEWSLETTERS
Enterprise Applications Enterprise Resource Planning

That, at least, is the dream of ERP. The reality is much harsher.
Let’s go back to those inboxes for a minute. That process may not have been efficient, but it was simple. Finance did its job, the warehouse did its job, and if anything went wrong outside of the department’s walls, it was somebody else’s problem. Not anymore. With ERP, the customer service representatives are no longer just typists entering someone’s name into a computer and hitting the return key. The ERP screen makes them businesspeople. It flickers with the customer’s credit rating from the finance department and the product inventory levels from the warehouse. Will the customer pay on time? Will we be able to ship the order on time? These are decisions that customer service representatives have never had to make before, and the answers affect the customer and every other department in the company. But it’s not just the customer service representatives who have to wake up. People in the warehouse who used to keep inventory in their heads or on scraps of paper now need to put that information online. If they don’t, customer service reps will see low inventory levels on their screens and tell customers that their requested item is not in stock. Accountability, responsibility and communication have never been tested like this before.
People don’t like to change, and ERP asks them to change how they do their jobs. That is why the value of ERP is so hard to pin down. The software is less important than the changes companies make in the ways they do business. If you use ERP to improve the ways your people take orders, manufacture goods, ship them and bill for them, you will see value from the software. If you simply install the software without changing the ways people do their jobs, you may not see any value at all—indeed, the new software could slow you down by simply replacing the old software that everyone knew with new software that no one does.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

How long will an ERP project take?
Companies that install ERP do not have an easy time of it. Don’t be fooled when ERP vendors tell you about a three or six month average implementation time. Those short (that’s right, six months is short) implementations all have a catch of one kind or another: The company was small, or the implementation was limited to a small area of the company, or the company used only the financial pieces of the ERP system (in which case the ERP system is nothing more than a very expensive accounting system). To do ERP right, the ways you do business will need to change and the ways people do their jobs will need to change too. And that kind of change doesn’t come without pain. Unless, of course, your ways of doing business are working extremely well (orders all shipped on time, productivity higher than all your competitors, customers completely satisfied), in which case there is no reason to even consider ERP.
The important thing is not to focus on how long it will take—real transformational ERP efforts usually run between one and three years, on average—but rather to understand why you need it and how you will use it to improve your business.
Over the last few years, however, Internet-driven changes have occurred that can drastically reduce how long it takes vendors to deliver ERP modules. These faster implementations (meaning weeks, not years) are the result of a new category of ERP software delivery referred to as on-demand or software-as-a-service (SaaS). Typically, on-demand and SaaS ERP applications (such as finance or HR packages) are hosted by a third party, and customers access the multitenant (or shared) ERP applications via a Web connection. Because the software doesn't need to be installed as in the traditional on-premise manner, implementation times can be drastically shorter than implementing ERP applications on-premise.
What will ERP fix in my business?
There are five major reasons why companies undertake ERP.
Integrate financial information—As the CEO tries to understand the company’s overall performance, he may find many different versions of the truth. Finance has its own set of revenue numbers, sales has another version, and the different business units may each have their own version of how much they contributed to revenues. ERP creates a single version of the truth that cannot be questioned because everyone is using the same system.
Integrate customer order information—ERP systems can become the place where the customer order lives from the time a customer service representative receives it until the loading dock ships the merchandise and finance sends an invoice. By having this information in one software system, rather than scattered among many different systems that can’t communicate with one another, companies can keep track of orders more easily, and coordinate manufacturing, inventory and shipping among many different locations at the same time.
Standardize and speed up manufacturing processes—Manufacturing companies—especially those with an appetite for mergers and acquisitions—often find that multiple business units across the company make the same widget using different methods and computer systems. ERP systems come with standard methods for automating some of the steps of a manufacturing process. Standardizing those processes and using a single, integrated computer system can save time, increase productivity and reduce head count.
Reduce inventory—ERP helps the manufacturing process flow more smoothly, and it improves visibility of the order fulfillment process inside the company. That can lead to reduced inventories of the stuff used to make products (work-in-progress inventory), and it can help users better plan deliveries to customers, reducing the finished good inventory at the warehouses and shipping docks. To really improve the flow of your supply chain, you need supply chain software, but ERP helps too.
Standardize HR information—Especially in companies with multiple business units, HR may not have a unified, simple method for tracking employees’ time and communicating with them about benefits and services. ERP can fix that.
In the race to fix these problems, companies often lose sight of the fact that ERP packages are nothing more than generic representations of the ways a typical company does business. While most packages are exhaustively comprehensive, each industry has its quirks that make it unique. Most ERP systems were designed to be used by discrete manufacturing companies (that make physical things that can be counted), which immediately left all the process manufacturers (oil, chemical and utility companies that measure their products by flow rather than individual units) out in the cold. Each of these industries has struggled with the different ERP vendors to modify core ERP programs to their needs.
To help address industry-specific problems and customization needs, ERP vendors have recently begun to offer specially tailored application sets to take care of each vertical segment's needs. There still is customization work to do to satisfy each and every customer, but packaged applications now target such industries as: retail, media, utilities, high-tech, public sector, higher education and banking. In addition, ERP vendors have further tailored application to address the individual concerns within the broad manufacturing space. These range from consumer products to construction to HVAC to aerospace and defense companies.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

Will ERP fit the ways I do business?
It’s critical for companies to figure out if their ways of doing business will fit within a standard ERP package before the checks are signed and the implementation begins. The most common reason that companies walk away from multimillion-dollar ERP projects is that they discover the software does not support one of their important business processes. At that point there are two things they can do: They can change the business process to accommodate the software, which will mean deep changes in long-established ways of doing business (that often provide competitive advantage) and shake up important people’s roles and responsibilities (something that few companies have the stomach for). Or they can modify the software to fit the process, which will slow down the project, introduce dangerous bugs into the system and make upgrading the software to the ERP vendor’s next release excruciatingly difficult because the customizations will need to be torn apart and rewritten to fit with the new version.
Needless to say, the move to ERP is a project of breathtaking scope, and the price tags on the front end are enough to make the most placid CFO a little twitchy. In addition to budgeting for software costs, financial executives should plan to write checks to cover consulting, process rework, integration testing and a long laundry list of other expenses before the benefits of ERP start to manifest themselves. Underestimating the price of teaching users their new job processes can lead to a rude shock down the line, and so can failure to consider data warehouse integration requirements and the cost of extra software to duplicate the old report formats. A few oversights in the budgeting and planning stage can send ERP costs spiraling out of control faster than oversights in planning almost any other information system undertaking.
What does ERP really cost?
One of the most often-cited studies of the total cost of ownership (TCO) of ERP was completed by Meta Group in 2002. (Gartner acquired Meta Group in 2005.) This TCO study accounted for hardware, software, professional services and internal staff costs. Costs included initial installation and the two year period that followed, which is when the real costs of maintaining, upgrading and optimizing the system for your business are felt. Among the 63 companies surveyed—including small, medium and large companies in a range of industries—the average TCO was $15 million (the highest was $300 million and lowest was $400,000). While it’s hard to draw a solid number from that kind of range of companies and ERP efforts, Meta came up with one statistic that proves that ERP is expensive no matter what kind of company is using it. The TCO for a "heads-down" user over that period was a staggering $53,320.
Results from a 2007 Aberdeen Group survey of more than 1,680 manufacturing companies of all sizes found a correlation between the size of an ERP deployment and the total costs. Therefore, "as a company grows, the number of users go up, along with the total cost of software and services," states the Aberdeen report. For example, a company with less than $50 million in revenue should expect to pay an average of $384,295 in total ERP costs, according to the survey results. A mid-market company with $50 million to $100 million in revenues can expect to pay (on average) just over a $1 million in total costs; a much bigger mid-market company, with $500 million to $1 billion in revenues, should expect to pay just over $3 million in total costs. And those companies with more than $1 billion in revenues can expect to pay, on average, nearly $6 million in total ERP costs.
When will I get payback from ERP—and how much will it be?
Don’t expect to revolutionize your business with ERP. It is a navel-gazing exercise that focuses on optimizing the way things are done internally rather than with customers, suppliers or partners. Yet the navel gazing has a pretty good payback if you’re willing to wait for it—a 2002 Meta Group study of 63 companies found that it took eight months after the new system was in (31 months total) to see any benefits. But the median annual savings from the new ERP system were $1.6 million.
What's interesting to note is that according to a the results of a 2007 Aberdeen Group survey of more than 1,680 manufacturing companies of all sizes, those companies that pay the closest attention to return on investment (ROI) at the outset of an ERP engagement "reap far more rewards" than those companies that don't. The companies that Aberdeen Group identified as "best performing" were able to produce, on average, 93 percent more improvement with their ERP systems across a variety of metrics such as cost reductions, schedule performance, headcount reduction or redeployment, and quality improvements, states the Aberdeen Group survey results.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

What are the hidden costs of ERP?
Although different companies will find different land mines in the budgeting process, those who have implemented ERP packages agree that certain costs are more commonly overlooked or underestimated than others. Armed with insights from across the business, ERP pros vote the following areas as most likely to result in budget overrun.
Training—Training is the near-unanimous choice of experienced ERP implementers as the most underestimated budget item. Training expenses are high because workers almost invariably have to learn a new set of processes, not just a new software interface. Worse, outside training companies may not be able to help you. They are focused on telling people how to use software, not on educating people about the particular ways you do business. Prepare to develop a curriculum yourself that identifies and explains the different business processes that will be affected by the ERP system. One enterprising CIO hired staff from a local business school to help him develop and teach the ERP business-training course to employees. Remember that with ERP, finance people will be using the same software as warehouse people and they will both be entering information that affects the other. To do this accurately, they have to have a much broader understanding of how others in the company do their jobs than they did before ERP came along. Ultimately, it will be up to your IT and businesspeople to provide that training. So take whatever you have budgeted for ERP training and double or triple it up front. It will be the best ERP investment you ever make.
Integration and testing—Testing the links between ERP packages and other corporate software links that have to be built on a case-by-case basis is another often-underestimated cost. A typical manufacturing company may have add-on applications from the major—e-commerce and supply chain—to the minor—sales tax computation and bar coding. All require integration links to ERP. If you can buy add-ons from the ERP vendor that are pre-integrated, you’re better off. If you need to build the links yourself, expect things to get ugly. As with training, testing ERP integration has to be done from a process-oriented perspective. Veterans recommend that instead of plugging in dummy data and moving it from one application to the next, run a real purchase order through the system, from order entry through shipping and receipt of payment—the whole order-to-cash banana—preferably with the participation of the employees who will eventually do those jobs.
Customization—Add-ons are only the beginning of the integration costs of ERP. Much more costly, and something to be avoided if at all possible, is actual customization of the core ERP software itself. This happens when the ERP software can’t handle one of your business processes and you decide to mess with the software to make it do what you want. You’re playing with fire. The customizations can affect every module of the ERP system because they are all so tightly linked together. Upgrading the ERP package—no walk in the park under the best of circumstances—becomes a nightmare because you’ll have to do the customization all over again in the new version. Maybe it will work, maybe it won’t. No matter what, the vendor will not be there to support you. You will have to hire extra staffers to do the customization work, and keep them on for good to maintain it.
Data conversion—It costs money to move corporate information, such as customer and supplier records, product design data and the like, from old systems to new ERP homes. Although few CIOs will admit it, most data in most legacy systems is of little use. Companies often deny their data is dirty until they actually have to move it to the new client/server setups that popular ERP packages require. Consequently, those companies are more likely to underestimate the cost of the move. But even clean data may demand some overhaul to match process modifications necessitated—or inspired—by the ERP implementation.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?
Data analysis—Often, the data from the ERP system must be combined with data from external systems for analysis purposes. Users with heavy analysis needs should include the cost of a data warehouse in the ERP budget—and they should expect to do quite a bit of work to make it run smoothly. Users are in a pickle here: Refreshing all the ERP data every day in a big corporate data warehouse is difficult, and ERP systems do a poor job of indicating which information has changed from day to day, making selective warehouse updates tough. One expensive solution is custom programming. The upshot is that the wise will check all their data analysis needs before signing off on the budget.
Consultants ad infinitum—When users fail to plan for disengagement, consulting fees run wild. To avoid this, companies should identify objectives for which its consulting partners must aim when training internal staff. Include metrics in the consultants’ contract; for example, a specific number of the user company’s staff should be able to pass a project-management leadership test—similar to what Big Five consultants have to pass to lead an ERP engagement.
Replacing your best and brightest—It is accepted wisdom that ERP success depends on staffing the project with the best and brightest from the business and IS divisions. The software is too complex and the business changes too dramatic to trust the project to just anyone. The bad news is a company must be prepared to replace many of those people when the project is over. Though the ERP market is not as hot as it once was, consultancies and other companies that have lost their best people will be hounding yours with higher salaries and bonus offers than you can afford—or that your HR policies permit. Huddle with HR early on to develop a retention bonus program and create new salary strata for ERP veterans. If you let them go, you’ll wind up hiring them—or someone like them—back as consultants for twice what you paid them in salaries.
Implementation teams can never stop—Most companies intend to treat their ERP implementation as they would any other software project. Once the software is installed, they figure the team will be scuttled and everyone will go back to his or her day job. But after ERP, you can’t go home again. The implementers are too valuable. Because they have worked intimately with ERP, they know more about the sales process than the salespeople and more about the manufacturing process than the manufacturing people. Companies can’t afford to send their project people back into the business because there’s so much to do after the ERP software is installed. Just writing reports to pull information out of the new ERP system will keep the project team busy for a year at least. And it is in analysis—and, one hopes, insight—that companies make their money back on an ERP implementation. Unfortunately, few IS departments plan for the frenzy of post-ERP installation activity, and fewer still build it into their budgets when they start their ERP projects. Many are forced to beg for more money and staff immediately after the go-live date, long before the ERP project has demonstrated any benefit.
Waiting for ROI—One of the most misleading legacies of traditional software project management is that the company expects to gain value from the application as soon as it is installed, while the project team expects a break and maybe a pat on the back. Neither expectation applies to ERP. Most of the systems don’t reveal their value until after companies have had them running for some time and can concentrate on making improvements in the business processes that are affected by the system. And the project team is not going to be rewarded until their efforts pay off.
Post-ERP depression—ERP systems often wreak cause havoc in the companies that install them. In a Deloitte Consulting survey of 64 Fortune 500 companies, one in four admitted that they suffered a drop in performance when their ERP system went live. The true percentage is undoubtedly much higher. The most common reason for the performance problems is that everything looks and works differently from the way it did before. When people can’t do their jobs in the familiar way and haven’t yet mastered the new way, they panic, and the business goes into spasms.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

Why do ERP projects fail so often?
At its simplest level, ERP is a set of best practices for performing different duties in your company, including finance, HR, manufacturing and the warehouse. To get the most from the software, you have to get people inside your company to adopt the work methods outlined in the software. If the people in the different departments that will use ERP don’t agree that the work methods embedded in the software are better than the ones they currently use, they will resist using the software or will want IT to change the software to match the ways they currently do things. This is where ERP projects break down. Political fights break out over how—or even whether—the software will be installed. IT gets bogged down in long, expensive customization efforts to modify the ERP software to fit with powerful business barons’ wishes. Customizations make the software more unstable and harder to maintain when it finally does come to life. The horror stories you hear in the press about ERP can usually be traced to the changes the company made in the core ERP software to fit its own work methods. Because ERP covers so much of what a business does, a failure in the software can bring a company to a halt, literally.
But IT can fix the bugs pretty quickly in most cases, and besides, few big companies can avoid customizing ERP in some fashion—every business is different and is bound to have unique work methods that a vendor cannot account for when developing its software. The mistake companies make is assuming that changing people’s habits will be easier than customizing the software. It’s not. Getting people inside your company to use the software to improve the ways they do their jobs is by far the harder challenge. If your company is resistant to change, then your ERP project is more likely to fail.
One cautionary tale that came to light in 2008 illustrates that sometimes there is a big difference between what an ERP vendor promises to deliver in its software and what actually is ready for prime-time enterprise use. Trash-disposal company Waste Management announced in March 2008 that it was suing SAP, seeking the recovery of $100 million in project expenses that related to a failed ERP implementation that had started in 2005. In the complaint, Waste Management alleges that SAP executives participated in a fraudulent sales scheme and that SAP's Waste and Recycling ERP product was actually "fake software" that was still not ready for Waste Management's use by spring 2008.
How do I configure ERP software?
Even if a company installs on-premise ERP software for the so-called right reasons and everyone can agree on the optimal definition of a customer, the inherent difficulties of implementing something as complex as ERP is like, well, teaching an elephant to do the hootchy-kootchy. The packages are built from database tables, thousands of them, that IS programmers and end users must set to match their business processes; each table has a decision "switch" that leads the software down one decision path or another. By presenting only one way for the company to do each task—say, run the payroll or close the books—a company’s individual operating units and far-flung divisions are integrated under one system. But figuring out precisely how to set all the switches in the tables requires a deep understanding of the existing processes being used to operate the business. As the table settings are decided, these business processes are reengineered, ERP’s way. Most ERP systems are not shipped as a shell system in which customers must determine at the minutia level how all the functional procedures should be set, making thousands of decisions that affect how their system behaves in line with their own business activities. Most ERP systems are preconfigured, allowing just hundreds—rather than thousands—of procedural settings to be made by the customer.
Even the new on-demand or software-as-a-service (SaaS) ERP offerings necessitate some system configuration and customization to each company's individual requirements. This process, however, generally takes less time and resources than with an ERP application that's installed on-premise.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

How do companies organize their ERP projects?
Based on our observations, there are three commonly used ways of installing ERP.
The Big Bang—In this, the most ambitious and difficult of approaches to ERP implementation, companies cast off all their legacy systems at once and install a single ERP system across the entire company. Though this method dominated early ERP implementations, few companies dare to attempt it anymore because it calls for the entire company to mobilize and change at once. Most of the ERP implementation horror stories from the late ’90s warn us about companies that used this strategy. Getting everyone to cooperate and accept a new software system at the same time is a tremendous effort, largely because the new system will not have any advocates. No one within the company has any experience using it, so no one is sure whether it will work. Also, ERP inevitably involves compromises. Many departments have computer systems that have been honed to match the ways they work. In most cases, ERP offers neither the range of functionality nor the comfort of familiarity that a custom legacy system can offer. In many cases, the speed of the new system may suffer because it is serving the entire company rather than a single department. ERP implementation requires a direct mandate from the CEO.
Franchising strategy—This approach suits large or diverse companies that do not share many common processes across business units. Independent ERP systems are installed in each unit, while linking common processes, such as financial bookkeeping, across the enterprise. This has emerged as the most common way of implementing ERP. In most cases, the business units each have their own "instances" of ERP—that is, a separate system and database. The systems link together only to share the information necessary for the corporation to get a performance big picture across all the business units (business unit revenues, for example), or for processes that don’t vary much from business unit to business unit (perhaps HR benefits). Usually, these implementations begin with a demonstration or pilot installation in a particularly open-minded and patient business unit where the core business of the corporation will not be disrupted if something goes wrong. Once the project team gets the system up and running and works out all the bugs, the team begins selling other units on ERP, using the first implementation as a kind of in-house customer reference. Plan for this strategy to take a long time.
Slam dunk—ERP dictates the process design in this method, where the focus is on just a few key processes, such as those contained in an ERP system’s financial module. The slam dunk is generally for smaller companies expecting to grow into ERP. The goal here is to get ERP up and running quickly and to ditch the fancy reengineering in favor of the ERP system’s "canned" processes. Few companies that have approached ERP this way can claim much payback from the new system. Most use it as an infrastructure to support more diligent installation efforts down the road. Yet many discover that a slammed-in ERP system is little better than a legacy system because it doesn’t force employees to change any of their old habits. In fact, doing the hard work of process reengineering after the system is in can be more challenging than if there had been no system at all because at that point few people in the company will have felt much benefit.
The On-Demand Nibble—You're most likely to see this approach in a small or midsize business that's lost its patience for Excel spreadsheets and the fax machine, and in large companies that either have massive operations and will never be able to standardize on one system or have been burned by costly and not-so-satisfying ERP rollouts in the past. In this instance, companies turn to a small but growing number of on-demand or software-as-a-service (SaaS) ERP vendors that can offer:
faster implementation times (there's no software to install on-premise, and that literally shaves months off installation periods);
easier and more frequent upgrades (they can happen automatically because the vendor manages the applications and can roll out patches and bug fixes more regularly); and
cheaper up-front costs (the software price tag can be much cheaper than traditional on-premise applications because of subscription pricing that is on a "per user, per month" basis as well as big reductions in integration and consulting fees).
Why companies are just "dipping their toes" in the on-demand and SaaS waters right now is because those companies (and their vigilant IT departments) still have concerns about housing their mission-critical and highly sensitive ERP data (such as HR and financial) on a third party's servers and not their own.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

How does ERP fit with e-commerce?
ERP vendors were not prepared for the onslaught of e-commerce. ERP is complex and not intended for public consumption. It assumes that the only people handling order information will be your employees, who are highly trained and comfortable with the tech jargon embedded in the software. But now customers and suppliers are demanding access to the same information your employees get through the ERP system—things like order status, inventory levels and invoice reconciliation—except they want to get all this information simply, without all the ERP software jargon, through your website.
E-commerce means IT departments need to build two new channels of access in to ERP systems—one for customers (otherwise known as business-to-consumer) and one for suppliers and partners (business-to-business). These two audiences want two different types of information from your ERP system. Consumers want order status and billing information, and suppliers and partners want just about everything else.
Traditional ERP vendors are having a hard time building the links between the Web and their software, though they certainly all realize that they must do it and have been hard at work at it for years. The bottom line, however, is that companies with e-commerce ambitions face a lot of hard integration work to make their ERP systems available over the Web. For those companies that were smart—or lucky—enough to have bought their ERP systems from a vendor experienced in developing e-commerce wares, adding easily integrated applications from that same vendor can be a money-saving option. For those companies whose ERP systems came from vendors that are less experienced with e-commerce development, the best—and possibly only—option might be to have a combination of internal staff and consultants hack through a custom integration.
But no matter what the details are, solving the difficult problem of integrating ERP and e-commerce requires careful planning, which is key to getting integration off on the right track.
One of the most difficult aspects of ERP and e-commerce integration is that the Internet never stops. ERP applications are big and complex and require maintenance. The choice is stark if ERP is linked directly to the Web—take down your ERP system for maintenance and you take down your website. Most e-commerce veterans will build flexibility into the ERP and e-commerce links so that they can keep the new e-commerce applications running on the Web while they shut down ERP for upgrades and fixes.
The difficulty of getting ERP and e-commerce applications to work together—not to mention the other applications that demand ERP information such as supply chain and CRM software—has led companies to consider software known alternately as middleware and EAI software. These applications act as software translators that take information from ERP and convert it into a format that e-commerce and other applications can understand. Middleware has improved dramatically in recent years, and though it is difficult to sell and prove ROI on the software with business leaders—it is invisible to computer users—it can help solve many of the biggest integration woes that plague IT these days.
What is ERP?
How can ERP improve a company’s business performance?
How long will an ERP project take?
What will ERP fix in my business?
Will ERP fit the ways I do business?
What does ERP really cost?
When will I get payback from ERP—and how much will it be?
What are the hidden costs of ERP?
Why do ERP projects fail so often?
How do I configure ERP software?
How do companies organize their ERP projects?
How does ERP fit with e-commerce?
How do on-demand and software-as-a-service ERP applications work?
How do I know my ERP data is any good?
Just how important have ERP systems become?

How do on-demand and software-as-a-service ERP applications work?
A small but growing number of vendors now offer on-demand or software-as-a-service (SaaS) ERP applications. These HR and finance applications are hosted by a third party, so there's no software to install on your company's servers and PCs. Instead, users access the ERP applications via a Web connection, and on-demand/SaaS vendors are trying to make their applications more "user friendly" than traditional on-premise applications. (Though, to be fair, traditional on-premise ERP vendors are also trying to make their applications easier to consume.) The three main selling points that on-demand/SaaS vendors employ are:
faster implementation times (there's no software to install on-premise, and that literally shaves months off installation periods);
easier and more frequent upgrades (they can happen automatically because the vendor manages the applications and can roll out patches and bug fixes more regularly); and
cheaper up-front costs (the software price tag can be much cheaper than traditional on-premise applications because of subscription pricing that is on a "per user, per month" basis as well as big reductions in integration and consulting fees).
Many businesses and their ever vigilant IT departments still have concerns about keeping their mission-critical and highly sensitive ERP data on a third party's servers rather than on their own. An October 2007 CIO magazine survey of IT executives who currently had an ERP system installed found that just 9 percent reported using a non-traditional on-premise model. Those alternatives included SaaS, open-source tools and various in-house applications. Nearly 54 percent of those responding to the CIO survey said they probably or definitely would not consider moving to an alternative ERP model. And while 35 percent of CIOs said they would probably or definitely consider trying something different, they're not actually doing it yet.
The majority of early adopters of the on-demand/SaaS ERP alternative are small and midsize businesses, though large companies, perhaps burned by a costly or lengthy ERP rollout, have started to experiment with on-demand/SaaS rollouts in certain areas or departments at their companies.
How do I know my ERP data is any good?
When you start talking about data integrity and just how "clean" your enterprise data is, you'll usually hear about the goal of getting to "one version of the truth" with your ERP data. As usually is the case, the bigger the company, the more systems it has with more employees that need to touch those systems, and the more complicated it becomes to keep data accurate and timely. Most of time, companies don't want to know just how dirty their data is. But when companies do start "peeling back the onion" in an attempt to remedy their data ills, what they typically find is a hodge-podge of systems and anywhere from a dozen to hundreds of financial and HR data sources. Therefore, the job of new data management techniques, such as master data management (MDM), is to rectify those inconsistencies by creating an integrated and standards-laden system that automatically fixes data discrepancies. (Beware: It's not easy.) Because ERP systems are the backbones of most businesses, they are a key piece of any data-management overhaul. General ledgers, financial data repositories, reporting applications, purchase orders, invoices, customer contact information, inventory data, performance management tools—they will all be apart of any company's data management initiative.
Just how important have ERP systems become?
An October 2007 CIO magazine survey of nearly 400 IT executives who had an ERP system installed found that more than 85 percent of them agreed or strongly agreed that their ERP systems were essential to the core of their businesses, and that they "could not live without them." Though there has been recent IT scuttlebutt that ERP systems are now shrugged off as legacy inside 21st-century businesses, almost 80 percent of those surveyed disagreed or strongly disagreed with the statement, "My company views ERP systems as legacy systems and no longer invests in them." And when asked if their company would be able to live without its ERP systems within the next five years, more than 80 percent disagreed or strongly disagreed. For better or worse, ERP systems are here to stay.
Senior Editor Thomas Wailgum can be reached at twailgum@cio.com.
Related article: The ABCs of Supply Chain Management.

Make the Connection Between IT and Business Strategy

2008-04-20T16:13:00.001-07:00

From http://www.cio.com/article/print/207400

From: www.cio.com
Make the Connection Between IT and Business Strategy
– Sean Burke, CIO
March 28, 2008

Every mid-size company eventually recognizes that it has outgrown the ad-hoc, local processes that allowed it to function from the start-up stage. Whether a company stays within a single country or expands globally, there comes a point when each function is too focused on location rather than on corporate direction, and an IT leader with a central guiding strategy becomes necessary.

At Galderma, that realization came eight years ago, when the dermatology products company, aware that it had a problem with IT management, brought me in to solve it. Galderma, based in Paris, is a relatively young company. Formed in 1981 as a joint venture between Nestlé and L'Oréal, Galderma is on a fast growth path, operating in more than 30 different countries. But when I arrived, the only corporatewide technology system we had was e-mail. There were 28 ERP packages; we probably had a system from every vendor you can think of. Virtually every location had a different one, and that made it nearly impossible to centrally manage data and use it effectively.
My primary role has been to develop a central IT strategy and bring some coherence to the mess. It's taken me until now to change the company culture to one that values technology and information as strategic assets. The knowledge of how to do that—my strategic orientation—wasn't something that I came into through chance.

Origins of an Outlook
I started in IT 20 years ago in the United Kingdom as a systems support controller at what was then E.R. Squibb & Sons (it became Bristol-Myers Squibb after merging with Bristol-Myers in 1989). I was lucky enough to work with general managers who valued IT and information asset management, and who could see their long-term strategic value. My conversations with them about my role and the role of IT in business initiatives helped more than anything to instill in me an understanding of business strategy and the key levers for IT. When you become a CIO, one of the best things you can do to improve your abilities and enhance your position is to actively seek out business partners like these, especially if they have decision-making authority, and to build relationships with them.
My view of my role and that of technology really changed when I became involved in a project to develop customer relationship systems for the whole company. I had become associate director for sales, marketing and medical systems, and I was working closely with the leader of the project, our global director of sales force effectiveness. I had the opportunity to sit down and really think about how IT could make a strategic difference to the company—from sales all the way to the management decision-making process.
In the pharmaceutical industry, as in some other industries, we tend to look at sales force activity as the primary tool for measuring our investment with the customer, and sales or sales audits as the key measure of return. However, the relationship between a company and its customers is far more complex than that; we use multiple tools to change purchasing habits and measure success.
The problem has always been to collect this data from all the silos around a company, to consolidate it, and then present it in a meaningful or usable way. The hurdles are not just technical but also political. Persuading each country manager that there was value in consolidating shampoo sales data with infant nutritional sales data was a challenge.
That experience changed my focus and my role from being operational or tactical—where I was thinking only about the next project and the delivery of services—to a strategic role where I was looking at the value of data in the customer relationship and the value of the information asset to the enterprise.

Painting the Strategic Picture
When I joined Galderma, we were still a young entrepreneurial company run more as a commonwealth than a corporation. Financial consolidation was a black art, with information flowing from local systems to the corporate center at the end of each reporting period. We had to change how data was managed in a way that both satisfied our strategic need for consistency and respected the decentralized culture of the company. I knew from what I had learned during my years at Bristol-Myers that we needed to avoid doing too much too quickly.
We needed a massive ERP replacement, but we couldnâ¬"t afford to invest in such a project without approval from the business leaders who owned the country-specific systems. Getting that approval became the initial thrust of the IT strategy.
I could tell Galderma's employees that a single system is important to the business, but it took years to get people throughout the company to understand why. They believed that having systems specific to local economies, cultures, and people was more likely to lead to good products and high sales than a system used by everyone around the world. I had to show them the value of a single ERP system and get them to want to fund such a project. Therefore, we did not start with the single ERP solution; rather we focused on constructing what would be the foundation of our future application architecture at the corporate center.

The message I focused on in the meantime was that data is an asset that must be managed properly; otherwise, it becomes a millstone rather than something of value. I had to make it clear to people in the business units that when you have unmanaged data everyone has to spend all their time translating and managing it. And when you're spending all your time trying to figure out where your data is and how data from other departments relates to yours, there isn't time to use it to deliver shareholder value.
When people know how a project affects their corner of the company, they develop a personal stake. But they also have to see how an IT project affects the bottom line, so that they fully grasp how the IT strategy plays into the health of the business. In the case of our ERP revamp, the message was that putting in place a single ERP was not just about having something as amorphous as "better technology" it was about the central leaders having transparency of information across units, enabling them to be flexible in using resources across the enterprise.
When our new CEO and CFO were appointed in 2004, they emphasized this message. They were not willing to work with the ingrained processes. They wanted and needed to have accurate, consistent and timely information at their fingertips to allow them to pilot the company, and they pushed that vision throughout the company. Now the time has come for the second phase, when we harmonize our ERPs and finally have a common data language in use around the world.

No Turning Back
Once you've started to execute a strategic vision, you cannot become complacent. You have to keep pushing for strategic value from your IT investments, even when you find yourself thinking that a tactical opportunity seems preferable to a long-term initiative. Sometimes you will have disagreements with business leaders about such decisions as balancing the roles of business and IT personnel within a project, and you have to be willing to compromise to get the job done.
Instilling a strategic, corporate-centered view of IT at Galderma is a work in process. The money for a single ERP implementation finally became available, and we kicked off the project in January. It doesn't matter whether the ERP project itself is ever associated with me. The fact that this project is going forward is, for me, the final tick in the box to say that our strategy is right, and that people now understand the value of data, the value of consistent information, and how the IT strategy enables a business vision.

Sean Burke is CIO at Galderma International, based in Paris, and is responsible for information management strategy within the Galderma Group. He is a member of the CIO Executive Council.

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http://www.cio.com/article/169750

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http://www.cio.com/article/173600/How_to_Get_Real_About_Strategic_Planning

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...

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