microsoftspread1.qx 12/12/06 3:20 pm Page 1 Winter 2006 ...download.microsoft.com/documents/uk/business/... · 22 Case study: News Corporation How News International streamlined its

THE PEOPLE-READY

BUSINESSPEOPLE • TECHNOLOGY • PARTNERSHIP

Winter 2006

Leading the wayIIss yyoouurr bbuussiinneessss mmaakkiinngg tthhee mmoosstt ooff iittss ggrreeaatteesstt aasssseett??

Technology in partnership

How IT can improve productivity and staff retention

Know your customersStaff and customer satisfaction are

key to a profitable business

microsoftspread1.qx 12/12/06 3:20 pm Page 1

The People-Ready Business 03

The People-Ready BusinessContents05 Power to the peopleForward-looking businesses are leveraging the latest

technology to bring power to those who constitute the

commercial lifeblood of their organisations. Welcome to

The People-Ready Business

06 Streamlining the financial supply chainHow teamwork and technology can solve the problem of

uncollected cash

10 Q&A: Steve DunnMicrosoft UK’s financial director, Steve Dunn, explains how

the software giant practises what it preaches in terms of

recognising that its staff are its most important asset

15 Customer visibilityThe customer always being right is a common enough

expression in the retail and services sector. In most other

sectors, however, the customer is little more than a

number in a sales ledger

18 Case study: Paul SmithA bespoke design solution for a People-Ready Business:

leading fashion house slashes security costs by 85 per cent

22 Case study: News CorporationHow News International streamlined its operations with

voice, data, and email on a single mobile device

24 ResearchThe majority of UK firms claim to recognise their human

resources as the lifeblood of their organisations but are

they People-Ready?

The People-Ready BusinessProduced for Microsoft by:

Managing Editor for Microsoft . . . . . . Rachel Tyler

VNU Head of Client Publishing . . . . . . Hilton Freund

Editor . . . . . . . . . . . . . . . . . . . . . . . . . Robert Jaques

Art Director . . . . . . . . . . . . . . . . . . . Angela Annesley

Cover illustration . . . . . . . . . . . . . . . . Getty Images/Todd Davidson

�

Contents



Savvy UK business leaders are waking upto the realisation that the most successfulcompanies are the ones that put theirpeople first. This recognition is promptingboth new start-ups and old establishedorganisations to redefine themselves asPeople-Ready Businesses. The People-Ready Business philosophy that Microsoft®

has embraced applies to any company thatacknowledges that its people are its mostvaluable resource and engineers itsprocesses accordingly.

Such organisations must begin byproactively re-engineering their operations,systems and cultures to get the most outof the critical resource that is their staff.The traditional process-centric businessstructures that have long held sway arerapidly being stripped away and replacedby flexible and agile people-centricstructural models.

The human touchThese people-focused businesses realise that never before has theterm “human resources” had more resonance. People-ReadyBusinesses can gain a huge advantage over their rivals in thecurrent economic climate, where finding staff with the right skillsto fill vacancies has seldom ever been more difficult. Recruitmentis, for many firms across multiple sectors and verticals, a realchallenge. These difficulties are being compounded by amultiplicity of factors, including a shrinking talent pool, decliningbirth rates, an ageing workforce and younger staff who showrelatively little loyalty to their employers.

People-Ready Businesses that focus on the needs of their staffare much better able to attract, retain and develop the mosttalented people in their respective industries and so reappotentially huge benefits in terms of improved productivity andgrowth. After all, it is people and the relationships they have withother internal staff, clients and partners that, at a micro level,define the way a company performs. Good staff relationships arethings that can never be copied by a competitor.

A commercial decisionThere is nothing touchy-feely about embracing a People-ReadyBusiness model; to do so can bring immediate benefits in termsof potentially dramatic improvements in staff efficiency, produc-

tivity and retention. These improvements in turn can lead toenhanced overall commercial performance and, ultimately, apositive impact on the organisation’s bottom line.

However, for many firms, a realisation of the benefits of thePeople-Ready Business philosophy remains tantalisingly out ofreach. Recent research carried out by PricewaterhouseCoopers onbehalf of Microsoft indicates that when UK business leaders wereasked to name their most important assets some 78 per centreplied unprompted that it was their people. But the same pollgoes on to reveal that only 39 per cent of respondents believethat their IT strategies are designed to make the most of theirpeople. While it is evident that there is a high level of awarenessof the intrinsic value of human resources within UK organi-sations, for many firms there remains much work that is yet to bedone before this enhanced awareness is turned into action. ●

Power to the peopleForward-looking businesses are leveraging the latest technology tobring power to those who constitute the commercial lifeblood oftheir organisations. Welcome to The People-Ready Business

Welcome

There is nothing touchy-feely aboutembracing a People-Ready Business

model; to do so can bring immediatebenefits in terms of potentially dramatic

improvements in staff efficiency, productivity and retention

istockphoto.com


According to research carried out by the Customer Value Group,the top 1,000 companies in Europe are owed £185bn inuncollected revenue – a figure that equates to a quarter of allinvoices in circulation at any one time.

The research also illustrates the dire culture of missed and late payments among UK companies and their customers: the245 British businesses contained in the sample are owed a total of almost £40bn between them. As a consequence of thisfailure to collect, they lost an enormous combined profitopportunity of £1.8bn.

But what, exactly, is the problem? Are debtors sitting oninvoices and purposely not paying them? Is bad practice on thepart of Accounts Receivables to blame? The answer, predictably,is a combination of many things.

Payment breakdownsThe breakdown of the research carried out by the CustomerValue Group, which is a company spun-out of the respectedbenchmarking and consulting group Hackett-REL, offers anilluminating view of the financial supply chain. In the UK, almost£12bn of cash remained uncollected as a result of customerswithholding payments because of ongoing disputes: £9.6bn wasunpaid because of unresolved customer queries, while a massive£18bn came about due to poor collection practices.

According to the group’s managing director, Dickie Bielenberg,neither legacy systems nor traditional ERP or CRM platforms aredesigned to deal with how poor customer service impacts oncash collection and, ultimately, the bottom line. “Our view is thatlegacy ERP systems are very functional, but they are not able to

06 The People-Ready Business

Streamlining the financial supply chainHow teamwork and technology can solve the problem of uncollected cash


look at the reasons why customers don’t pay on time...there’s ahuge disconnect,” he said.

“The issues are huge. We have a company with a receivablesbalance of £280m, of which 50 per cent is overdue. If you improve the collection process you can radically improvecash flow.”

In fact, it may seem flippant, but payment disputes often comeabout due to very simple reasons: customers may constantly bereceiving goods late, they may have a notoriously bad credithistory, they may be dissatisfied with the goods or servicesreceived. The key challenge is working out what the issues are.

Control through technologyTechnology has a hugely important role to play in an efficientAccounts Receivables department and the wider financial supply chain. Martin Williams, managing director of credit-check company Graydon, explained that there are many ways that finance directors can look to improve efficiency – and although technology is just one of these, it is a hugelyimportant one.

“There are all sorts of software packages that people can useto run the credit-management function, in terms of systems thatdrive actions [such as collection software and dispute resolutionsoftware],” he said. The likes of Microsoft, with its MicrosoftDynamics™ GP Financial Management and SAP with its

Interest charges for late payment

What the legislation meansBusinessLink has published a guide to late paymentlegislation that outlines the updated Late Payment ofCommercial Debts Regulations 2002. The regulationsspecify that a company should charge 8 per centover the Bank of England’s current base rate for acurrent six-month period following 31 December and30 June.

So, should a company be owed £1,000 gross andit became late on 1 October, the rate would be12.75 per cent simple (rather than compound)because the debt became late during the six-monthperiod when the Bank of England’s rate was 4.75 per cent. This works out, if the debt had beenoutstanding for 30 days, to be 34.9p per day – or£10.48 for the entire period.

More spectacularly, if you take into account the total value of unpaid invoices in the UK,according to the Customer Value Group, the dailyinterest charge under the regulations would reach more than £13.9m.



Financials Accounting module, have developed technology toprovide better views of cash flow and the real-time financial viewof a business. And the Customer Value Group is forging a verysuccessful business working out why clients don’t pay on timeand what needs to be done to counter this.

With the average company processing thousands uponthousands of invoices every single month, and the large multina-tionals processing millions, maintaining a tight control over theprocess is critical. While traditional ERP systems such as Siebel arereasonably proficient at the billing process, beyond that they lackthe intelligence to analyse what’s really going on and why.

The close alignment of CRM systems, which are designed to monitor customer service, ERP systems and more intelligent analysis tools, allows companies to gain a far moreholistic view of their credit function and what’s really happeningon the ground.

Do your researchHowever, Williams urges that this is still only part of the solution.Ensuring that a company’s customers are willing and able to paytheir bills before getting involved in a business relationship isanother very important aspect of successful credit managementand, in this area, Williams claims that technology has come on inleaps and bounds over recent years.

Companies such as Graydon, Experian and Dunn & Bradstreetwork with their clients 365-days a year. The entire ledgers of their clients are made available to credit-check companies, whichare then cross-referenced against their own database and theresults fed back to the client in question. As a result, the clientsget constantly updated feeds of information on the credit-worthiness of their customers. The data for the credit reportscome from a variety of sources – from public references such asCompanies House to payments data that is donated by third-party companies.

The lesson here is clear – companies are much more likely to have a positive financial supply chain experience if thecompanies they do business with themselves have a sound credithistory, if they are traditionally good payers and if they arefinancially strong.

Getting paidAnother traditional bottleneck in the payment cycle is invoicing.How can companies guarantee that invoices are being issuedwhen an order is placed, for example? One way is to implementelectronic invoicing systems, a move that resulted in onecompany – M Barnwell Services, a manufacturer of sealantproducts with an annual turnover of £8.5m – improving cashflow by £200,000 and reducing debtor days by five.

“It’s staggering how many organisations aren’t doing it,” saidTony Bray, a director of VersionOne. “If you look at medium-to-large businesses, it’s probably around 20 per cent. But in smallerbusinesses, the figure is much higher than that.

“Traditionally, companies would print out all the purchaseorders and stuff envelopes. Now they can just click a button andthose purchase orders will be formatted automatically and intelli-

gently, and sent out in the way the customers want them[whether this be electronically, via fax or by post],” he said. “Ifyou can send documents electronically, typically it saves around£1 a document.”

Chasing debtorsAnd it’s not just invoices that companies stand to save hugeamounts of money from going digital with. By sending debtorletters electronically – something that may seem blindinglyobvious to some – collecting overdue cash should, at least intheory and if the reasons for why the cash is late are understood,be made easier, quicker and cheaper.

However, technology can only solve part of the problem.According to research carried out among UK credit managers bythe Institute of Credit Management on behalf of Financial Directormagazine, less than half said that they worked ‘very closely’ withtheir finance directors. Worryingly, almost a third said that theyeither did not work very closely with the finance director or hadnothing to do with him or her at all.

While it goes without saying that the finance director shouldnot be getting involved in the nitty gritty of receivables and thechasing up of invoices, the old dictum continues to ring true:cash is king. A failure to maintain careful and strategic controlover the credit function will result in a poorer cash flow and,ultimately, reduced profitability.

A core strategyHappily, however, the research did pick up on some encouragingsigns, with almost 90 per cent of respondents claiming that theircompanies did in fact see credit management as a strategicfunction to the business. Whether this was down to the fact thatthe respondents were all credit managers with a higher opinionof their roles than is actually the case, or whether this is in factthe case, remains unclear.

But what is clear is that in order to improve the poor state of UK companies’ financial supply chain and cash flow, finance directors must look at a variety of things: customerservice and satisfaction levels, how closely the finance directorworks with the credit function and how credit-worthy thebusiness’s customers actually are. And technology can help pullall of this together. ●


Supply Chain Management

Ensuring that a company’s customers are willing and able to

pay their bills before getting involved in a business relationship is another very important aspect of successful

credit management and, in this area, Williams claims that technology

has come in leaps and bounds over recent years


Microsoft’s chief executive officer, Steve Ballmer, officiallyunveiled the principles of the People-Ready Business philosophylast April in the UK. But Microsoft itself has been operating as aPeople-Ready Business for many years before this officialannouncement. The company attributes the adoption of thisstrategy as fundamental in helping it to consistently top staffsatisfaction league tables. In this interview, Steve Dunn explainswhy people are a company’s most vital attribute.

Q How is the People-Ready Business philosophy defined? A In terms of a definition, Microsoft starts with the very simpleprinciple that a People-Ready Business is a business that knows itspeople are its most important asset. We believe that people,more than any other asset held by the company, are the ultimatedrivers of business success. A People-Ready Business not onlyrecognises this, but proactively centres its operations, tools andculture to get the most out of this critical resource – so buildingcapacity for great service, productivity, growth and great moralefor its people.

People-Ready Businesses proactively centre on people notprocesses. This does not need a fundamental shift in corporateperceptions, but it does require certain processes put into placeto ensure that companies are able to bring in, retain and developemployees. People are definitely Microsoft’s own number-oneasset. After all, people and the relationships they have withcustomers are perhaps the only two things that cannot becopied by a competitor. We are not alone in putting people topof our list of assets.

Q What steps does Microsoft take to ensure it puts itspeople first?A At Microsoft we do that formal review-type process, formalmentoring-type process and development activity. A shift isrequired to implement such programmes. Microsoft tops theemployee league tables and is consistently voted as one of thebest places to work. This is a manifestation of the importanceMicrosoft does place on people. When staff know they arevalued and can develop themselves and their careers, they canrecognise the importance the company places on them in theirrole as the company’s most important assets.

Morale and staff motivation are key and people are theultimate drivers of capacity. For Microsoft we have a strategy thatallows employees to do what they do best and realise their fullpotential. So hiring, developing and retaining talentedemployees is not just about creating a challenging and excitingwork environment and offering the appropriate financialincentives. This obviously goes a long way towards boosting

morale and incentivising, but when you think about the war fortalent we have today, we have to look at the entire employeeexperience of working at Microsoft and include things likepersonal development, as I discussed. It is vital that employeesare continuously appraised to ensure they are moving along theirchosen career paths.

Q Are there any other factors that go towards creating a so-called “destination workplace” that will attract and retain key staff? A It is also essential to rigorously apply managerial discipline, so allemployees have to have monthly one-to-one discussions with theirmanagers that focus on personal development of staff aspirations.These are informal meetings, but they are designed to create anongoing dialogue that integrates with the formal appraisals.

Another key consideration is work-life benefits. We have socialclubs, a nursery catering for 50 children, cash machines, drycleaning and car valeting on-site. We have a wellbeing centrethat is staffed by a GP, nurses and therapists. We have freebottled water and fresh fruit, tea and coffee, soda pop and fruitjuice. We also offer subsidised gym membership and free privatehealthcare for employees, their partners and spouses. All these things add up to be the total Microsoft employeeexperience that drives the high degree of morale and sense ofcommitment to Microsoft.

Q What are the challenges of hiring, developing, and retaining talented employees? And how can they be best overcome?A There is a war for talent, and in the IT sector it is at its mostintense. There are simply not enough talented people with theright skillsets to fill out every organisation. So it is a priority for usto create a place where people want to work so we will attractthe best talent in the industry.

Microsoft centres on allowing employees to concentrate onwhat they do best so they can realise their potential. From thereit is necessary to go beyond having an exciting, challengingworkplace and beyond financial incentives. It is about havingthose management structures in place and having those work-lifebenefits. These all say that Microsoft recognises their value andwill make investment in them. It shows that the company caresabout them and wants them comfortable and content so theycan do the best work for Microsoft.

Q What specific measures should People-Ready Businessestake to ensure they attract and retain staff? A Firstly, there are physical factors, which include having the


Q&A: Steve DunnMicrosoft UK’s financial director Steve Dunn explains how the software giant practises what it preaches in terms of recognising that its staff are its most important asset

Interview


latest technology and a great workspace. These are combinedwith state-of-the-art office accommodation and very few physicalbarriers to communication and decision-making.

Secondly, there are the emotional factors including thewellbeing centre and the Employee Assistance Programme,together with external and internal mentors. Also, there are theintellectual elements including an open, trusting environment,where ideas can flourish, and the use of technology to takepeople out of processes.

Q What is the state of awareness among UK business leaders to the critical role that their people can contribute to commercial success?A Research carried out by PricewaterhouseCoopers (PwC) on behalf of Microsoft shows that 78 per cent of UK business leaders, when asked to name their most importantassets, replied unprompted that it was their people. This isgreat news, but by itself this realisation does not make anorganisation a People-Ready Business. In the same survey only39 per cent of those questioned said that their IT strategy was designed to get the most out of their people, so there is adisconnect here.

Q How can business leaders ensure that their IT strategiesare aligned to optimise the productivity of their people?A Firms have to identify which of their core business processeshave potential IT solutions and also the processes that arecausing pain and frustration to the business. When these areidentified, business leaders need to apply resources in terms ofpeople or money to build the right solutions. If this is donecorrectly there will be a payback on that investment. Theefficiency gains can be quite dramatic, and additionally the softerbenefits can be quite dramatic as well in terms of more positiveemployee experiences and more efficient use of staff time.

In terms of measurement, some gains can be assessed relatively


“People are definitely Microsoft’s own number-one asset. After all,people and the relationships theyhave with customers are perhaps the only two things that cannot becopied by a competitor”


easily. A lot of companies can say how much it is costing them toraise a purchase order and purchase something, for example. Andif you have an archaic system, then even something basic like thiscan be quite expensive. The transaction processes are pretty easyto measure in terms of people’s time and the costs against it. Theharder ones to measure are the softer costs.

Q With the new generation of employees increasingly living a “digital lifestyle”, what should firms do to attract andkeep these tech-savvy professionals? A At precisely this time, when companies are recognising thatpeople are the most critical to an organisation, there are severaltrends that are threatening to confound even the best-runbusinesses. We have a shrinking talent pool, an ageingworkforce, declining birth rates in many countries. These factorsall contribute to an enormous recruiting challenge. We are alsoseeing a change in values among younger workers who aremuch, much more willing to switch companies or even switchcareers if they are not feeling fulfilled.

Along the same line, surveys have shown that staffengagement with their employing companies has been on asteady decline over the last five years. So employees today aremore likely to work at companies that offer flexible working anda commitment to helping their staff develop an optimum work-life balance. Technology solutions can help workers do their jobsbetter. It is all about offering choice and building a culture oftrust for employees.

Q Why is flexible working so important? A The concept of flexible working is developing very quickly astechnology enables more and more people to be less location-bound. The option for employees to work from home

unhindered by their surroundings is very important for Microsoft.All employees are provided with smartphones and ADSLconnections at home, as well as Tablet PCs. So they can prioritisewhen and where to work and so allow Microsoft to fit in withtheir lives for our mutual benefit. Email and Instant Messagingprovide the ability to quickly communicate and find out what isimportant and this supports the digital lifestyle.

Q Can you provide an example of the People-Ready Businessin operation within Microsoft’s own finance department? A As the finance director of Microsoft UK, I need to recognisethat my finance team does not want or need to be stuck in theoffice all the time crunching numbers. My duty is to work withpeople within Microsoft as well as our customers and partners toadd value to the business ecosystem in which we operate.Finance should be about adding value.

Within our own finance world, I could point to several casestudies that look at how we worked ten years ago and how wework today. There is dramatic improvement that has been builtusing Microsoft technology that has transformed our ownfinance business. Like headcount management, for example,which is something that is very frustrating for a lot of companies.This was certainly the case for Microsoft, and we have developeda system that now makes it not only easier to manageheadcount, but makes it much cheaper. At the same time, thesystem adds a lot of analytical insight into our resource usage.

Q How can firms leverage technology to create a “can do” culture? A The trick is to allow employees within the business to breakdown the silos by function or by geography. Working together,or ‘collaboration’ to use the IT industry terminology, is verysimple: email and instant messenger has done more for collabo-ration and the sharing of ideas than any other technology overthe last ten years. We’re reporting more and more companies areusing information technology within their businesses. It is thegroup responsibility of all employees and not just the board ofdirectors and the IT department to generate new ideas and newways of doing business that help the business to improve.

Q What challenges and opportunities are being created by globalisation and how can technology help overcome/exploit them?A Globalisation is an opportunity, especially for small businesses.


It is the group responsibility of allemployees and not just the board ofdirectors and the IT department togenerate new ideas and new ways ofdoing business that help the businessesto improve


What we are seeing is more an opportunity than a challenge:globalisation opens up new market and new revenue streams forcompanies that deal in innovation and ideas. For example,relatively small companies now use technology like the interna-tionals and reap the same benefits and value. Small businessescan now look like very large global businesses, without requiringmultiple offices and employing hundreds of employees. All this ismade possible by technology

Q What role can technology solutions play in enhancingcustomer service?A The best way to try and answer this question is to try and usean example. Take Innocent, the manufacturers of smoothies thatyou find in cafés all round the country. From three employeesand 20 smoothies sold on day one in 1999, to the hundreds ofemployees and one million smoothies it is selling a week now,technology has been central to its development.

Innocent identified that the biggest challenge to itself as acompany was access to information. It has over 7,000 stockistsacross the UK and Europe, and a workforce that spends most ofits working day on the road or in a variety of locations. Whereasmost companies would see this mobility simply as the reality ofdoing business in retail, Innocent took a more forward-lookingapproach. It decided that a strategic rollout of mobile technologyto its employees would allow staff to work wherever they wantedwith the same back-office systems that they previously would onlyhave been able to access from their desks. This has not onlycreated competitive advantage in the way its employees canrespond faster when they’re on the road, it has also freed up timefor staff to be more strategic and innovative in the developmentof the company and its products. It has also seen improvementsin the service that Innocent offers to customers. So less labour

and less time in the office mean more time spent talking tocustomers, which in turn means better service quality.

Q How can technology be used to improve decision-making? A Process automation, the simplification of IT engagement andthe ability to use software to turn data into information all leadto better decision-making, more time freed up to be innovativeand to deliver better customer service. This in turn leads tobetter-engaged, happier and more productive employees whowill ultimately drive their businesses forward. ●

Microsoft centres on allowingemployees to concentrate on whatthey do best so they can realisetheir potential. From there it isnecessary to go beyond having anexciting challenging workplace andbeyond financial incentives.

People and technology

Q Why is it crucial for enterprises to give their people the right technology and software tools to get the job done?A Technology must be implemented with people in mind,no matter what technology it is. I think that a majordevelopment priority for all Microsoft software in the recentpast has been building in the ability to collaborate – forexample, offering the ability for several people to work ondocuments simultaneously. We have also worked to betterintegrate the various applications within Office.

It is also important to bend the technology around thepeople, rather than the reverse. Our software does not forcethe end user to work in a different way or in a differentenvironment. So, for example, Microsoft Dynamics™ CRMoperates within Microsoft® Outlook®, the email client thatthousands of sales people use every day.

A few years ago, most customer-facing employees mostprobably had eight or nine applications on their computerand they had to toggle between them, and only by doingthis could they, for example, track the progress of a packageor an order. Now because the technology has adapted to theway that these employees work, it is now possible to use justone application that integrates many separate applications ordata stores. Just think of the time that an employee can saveby having a single application view with all the data that theyneed to do their job quickly and efficiently. There are consid-erable reductions in costs from having a single interface.

In general, without the right tools, employees in businesswill always be battling with technology instead of allowing itto free up time for them to concentrate on innovating,driving customer satisfaction and growing their businesses. ●




Customer visibilityThe customer always being right is a commonenough expression in the retail and services sector.In most other sectors, however, the customer islittle more than a number in a sales ledger It’s a worrying fact that truly understanding the customer is of questionable importance to many companies – at least to the extent to which it can really begin to impact on the bottom line.

While it will not take too long for alarm bells to start ringing within financedepartments should a client debt begin to grow rapidly, how many finance directorsknow how valuable their customers are in terms of future sales and recommen-dations? And how many finance directors really know which customers are the mostprofitable rather than the most frequent purchasers? Do the majority of firms evenknow which of their customers contributes the most revenue? And what is theaverage company really doing to try and improve customer loyalty – somethingwhich, while difficult to quantify, is extremely important.

Customer knowledgeUnderstanding how customers operate outside their relationships with your businessis extremely important. Some customers, for example, are far more active with theirpeer groups than others, some take part in industry-specific meetings or pressuregroups, others hold positions of responsibility outside their primary place ofemployment. These types of customers are the ones who are far more likely to passon a lead or recommendation than more introverted clients who work strictlynine-to-five and don’t hold any type of social influence.

It is these customers that companies must ensure are satisfied with the servicelevels they are receiving, because while they may be responsible for leads andrecommendations, they are also far more likely to discuss the bad experiencesthey have with companies than they are the good.

The positive news is that many companies already have ownership of this type of information in their Customer Relationship Management systems. A research guide compiled by the US business and IT consultancy group Cutter Consortium outlines the extent of the data the average company has on its customers.

“Companies’ operational systems contain mountains of untapped knowledgeabout their customers’ preferences, buying habits, life events and expectations –information that makes it possible to tailor products and services to their needs,” the company stated. “New technology has made it possible to extract that business knowledge.”

However, it is not just about extracting knowledge so that companies are able totailor products and services. The vast amounts of data most companies have abouttheir customers can also be used for far more imaginative purposes.

The secret of Tesco’s successTake the UK’s most successful and profitable retailer, Tesco. In its 1998 annualreport, its chief executive, Sir Terry Leahy, said: “Our mission is to earn and grow thelifetime loyalty of our customers.” It’s interesting to note that nowhere does thestatement refer to revenues, earnings per share, profits or financial metrics of any kind.Sir Terry’s priority is to gain the loyalty of his customers. If he succeeds in this he has

Getty Im

ages


already guaranteed revenues, as well as secured an almostunquantifiable marketing coup – the likelihood that those samecustomers will recommend the business to people they know. It isan early form of viral marketing – the premise that the best wayto promote a product or company is through word of mouth.

One thing that Tesco is greatly respected for – among many –is its commitment to technology, and it is clear that this sits atthe heart of its customer loyalty pledge. Millions of items arebought every week in Tesco’s stores – information that provesinvaluable and which is tightly aligned with its loyalty cardscheme and CRM system.

Clive Humby, of Dunnhumby, a marketing consulting firm thatworked with Tesco on its Clubcard loyalty scheme, as well asother blue-chip clients such as Vodafone, said: “Often theproblem with finance directors is that they only look at oneaspect of the customer – what they are worth on the profit andloss ledger. You see a lot of business cases based on averagecustomer value.”

He explained that the “soft value” of the customer is extremelyimportant – and is a key aspect of successfully managingcustomer relationships. He points out that when Tesco launchedits credit card business and mobile phone service, manycustomers would have joined simply because they trusted theTesco brand. “And that trust is an intangible,” he said.

Humby goes on to say that finance directors should avoidusing average customer metrics at all costs, but also thatcompanies should ensure that they do not have separatecustomer acquisition and customer retention teams with whatcan sometimes be competing Key Performance Indicators. Hesaid that if they are not working in tandem they can often workin conflict with each other. “And there’s more money in keepingcustomers than there is in acquiring them,” he warns.

In a separate interview with Management First, Humby said:“Many companies collect this sort of information but fail to use itin a committed way every day of every week. They spend tens ofmillions of pounds collecting the data but are not prepared tospend millions of pounds analysing the information gained.”

While Tesco is a huge company with extremely deep pockets,the philosophy is the same no matter what the size of the organi-sation. The real aim of the Tesco loyalty scheme is to garnermore information about customer behaviour. This, in turn, allowsthem to decide which products to stock and when. In fact, thecompany delivers a magazine to each of its loyalty card membersevery quarter with the content tailored to the customer inresponse to their loyalty card portfolio. It makes for a satisfiedcustomer with no need to look elsewhere.

Business prioritiesIn his book The Ultimate Question, Driving Good Profits and TrueGrowth, published by Harvard Business Press in 2006,

Tesco delivers a magazine to eachof its loyalty card members everyquarter with the content tailored to the customer in response to their loyalty card portfolio. It makesfor a satisfied customer with noneed to look elsewhere


Fred Reichheld tackles the subject of how to make customers thecentre of a business, rather than earnings and other suchfinancial metrics.

He argues that, in order to drive success, companies “mustelevate customer metrics to the same level of rigour andimportance as financial metrics like revenue growth or return onequity”. And the best way to realise this, he said, is to ask onesimple question: how likely is it that a customer wouldrecommend the company that they are customers of to a friendor colleague?

In fact, Bain & Company, the consulting firm of whichReichheld is a fellow, has conducted research and found thatcompanies that experience long-term profitable growth have, onaverage, Net Promoter Scores (the metric that Bain developed tomeasure how likely customers are to recommend a company) oftwice that of other companies (see right).

The loyalty factorThe problem, however, is that companies are often focused onshort-term profit gains, rather than long-term growth. And thiscan be fatal to good customer service and, as a result, the levelof customer loyalty.

To gain access to, and to benefit from, this type of valuableinformation requires a combination of communication,technology and company philosophy – and while CustomerRelationship Management systems are designed to drill deeperand deeper into the information companies hold on theircustomers, as Humby said, it’s the analysis of this informationthat companies should really be concentrating on.

Humby offers a slightly tongue-in-cheek caveat emptor aboutcompanies’ continued reliance on and investments in CRMtechnology. “This whole CRM craze is flawed because customersdon’t want to have relationships,” he said. “We may want tohave relationships but customers don’t.”

It is a comment well worth considering at length – he arguesthat the secret is not having a wealth of information on yourcustomers, but knowing how best to use the information thatyou do have. And improving loyalty and customer recommen-dations are top of the list. ●

Are your customers behind you?The Net Promoter Score is a simple calculation of thenumber of customers who recommend a companyminus those who would actively not.

Six tips to improve a Net Promoter Score● Ask your customers to vote – don’t just add the ultimatequestion onto existing market research surveys.

● Measure at least 60 per cent of your customers – asample is not enough.

● Tie each response to customers’ profitability – tounderstand how valuable the vote is.

● Hold employees accountable for how customers vote –align incentives with executive compensation: good profits+ loyalty = bonus.

● Use the feedback to help convert detractors and increasepromoters – engage and empower the front line to act.

● Publicise departments with high Net Promoter Scores –share best practice and develop tools and training.

Source: Bain & Company



Cutting-edge fashion designer Paul Smith is always seeking ways to enhancebusiness operations. Central to this effort is the use of IT and, following aninfrastructure assessment, it implemented Microsoft Internet Security andAcceleration (ISA) Server 2004 to bring its security infrastructure back in-house.

The benefits were immediate. The overall level of defence was raised considerably, management costs plunged by 85 per cent and communicationbetween internal business groups and partners, who had previously been leftout of an important information loop, was enabled.

SituationPaul Smith’s designs are wholesaled to 35 countries and sold through 14 shopsin the UK, as well as outlets around the world, and the company relies heavilyon its IT systems for communication, collaboration and business intelligence.

In a drive to maximise IT efficiency and enhance business operations, thecompany decided to take control of its security infrastructure and extendcommunication within its business and with external partners. This began inJune 2003 when it re-evaluated a Microsoft® Internet Security and Acceleration(ISA) 2000 Server implementation at its Nottingham head office that wasbeing used as a web proxy and for virus and content checking.

Ashley Long, finance director at Paul Smith, explained: “The company’sphilosophy is very much better not more, and we would apply the same totechnology, so we want the best possible IT systems that we can justifiablyafford. We want integrated systems that give us a competitive edge, makeourselves more productive, more efficient, and we want something that’s beenthought out and probably knitted together, not a collection of make-dos.”

James Hunter-Paterson, network administrator for the fashion house, added: “Itsoon became clear that there were many other features of ISA Server 2000 thatcould help our business. We have redeployed the server in a new configuration toenforce security policies and deliver external access to business applications.”

The company also had a large number of employees accessing its UKNottingham HQ through Check Point virtual private networks (VPNs) andfirewalls. But management costs were high and there was dependence on third-party specialists to administer and maintain the firewall. Said Hunter-Paterson:“These factors prevented us from achieving our wider aim of maximising valuefrom the networking infrastructure and reducing management costs.”

SolutionTo realise these aims the company began an engagement with its technologypartner, Lynx Technology. It soon pointed out that Paul Smith could makeconsiderable management savings if it migrated its VPN use to ISA Server 2000and utilised the built-in firewall feature of Microsoft Windows® XP Professionaloperating system, used widely within the company. Hunter-Paterson said:“Following these changes we found ISA Server 2000 considerably easier toadminister, maintain and support. End users also found it far easier to use.”

Because the ISA Server 2000 implementation resulted in so many benefits,the company immediately began an evaluation of ISA Server 2004. LynxTechnology explained how it would provide a comprehensive security solution,as well as enable the company to drive through significant changes and reducemanagement costs.

Among the many compelling features of ISA Server 2004, application layersecurity in particular was key. “The application layer filtering is a very advancedprotection feature and guards against a range of attacks on Microsoftapplications that other firewalls cannot prevent,” said Hunter-Paterson.

The VPN features of ISA Server 2004 generated further enthusiasm because ofthe opportunity to securely connect four major global offices and 16 branchoffices to the company’s head office. Said Hunter-Paterson: “It was clear that theVPN security on ISA Server 2004 is tighter than a lot of comparable products.”The VPN and firewall features of ISA Server are also easier to administercompared with those of Check Point. Many of Paul Smith’s in-house IT skills arebased around Windows administration, which means that it could cut back onthe specialist skills required to manage the previous solution.

Alun Rogers, principal consultant, Lynx Technology, said: “We showed PaulSmith that the link translation functionality found in ISA Server 2004 was astrong feature. It enabled the company to build an extranet portal and securely


Case study:Paul SmithA bespoke designsolution for a People-Ready Business:leading fashion houseslashes security costsby 85 per cent

OverviewPaul Smith is a leading fashion retailer andmanufacturer. Its designs are wholesaled to 35countries and sold through 14 shops in the UK,as well as outlets around the world. Thecompany wanted to increase the overall level ofsecurity on its internet gateways, maximisevalue from its networking infrastructure, andreduce management time and costs.

Solution In partnership with Lynx Technology itupgraded from Microsoft Internet Security andAcceleration (ISA) Server 2000 to ISA Server2004, deploying it across four global locationsand 16 UK branch offices.

Benefits ● Firewall/VPN management cost savings of

85 per cent ● Security infrastructure brought back in-house ● Easy management ● Quick and flexible deployment ● Bandwidth savings ● Secure platform for business expansion

Software and Services● Microsoft Exchange Server 2003● Microsoft Internet Security and Acceleration

Server 2004● Microsoft Office 2003● Microsoft Office SharePoint® Portal

Server 2003● Microsoft SQL Server™ 2000● Microsoft Windows 2000 Server● Microsoft Windows SharePoint Services● Microsoft Windows XP Professional


provide SharePoint Portal Server 2003 to internal groups remotelyaccessing the network.” An extension of this project took teamsites created with SharePoint Portal Server and published them toselected partners.

Lynx Technology also highlighted a further feature of ISAServer 2004 that generated much enthusiasm. Rogers said:“Deploying the web cacheing feature at several global locationswould enable Paul Smith to make the best use of its networkresources. Bandwidth costs could be reduced while ensuringquality of service for its Voice over Internet Protocol (VoIP) servicedesigned to provide cut-price telephony.

Greater manageability brings reduced costs ISA Server 2004 is deployed in Paul Smith’s London office as thedefault security environment for internet access points and willbecome the default standard for new locations, such as a plannedoffice in Tokyo. The ISA Server 2004 solution provides futureflexibility, when the time arises, to replace the existing CheckPoint solutions at the remote sites in New York, Paris and Milan.

In the past, Paul Smith outsourced most of the basic adminis-tration, support and configuration of the Check Point firewallsbecause it was so complex. Now, following the ISA Server 2004implementation, this work has been brought in-house andadministration costs could fall by as much as 85 per cent.

Hunter-Paterson said: “Our expertise is with Windows. Nowwe have brought all the administration tasks back in-house,rather than having to call on third-party specialists. We havegreater control over our security and are making estimated long-term cost savings on management time of about 85 per cent.”

Better communicationThanks to Application Filtering, Paul Smith will enhancecommunication between internal business groups and externalpartners by enabling external access to designated web servers.ISA Server 2004 Application Filtering interrogates data packetseven when they are encrypted, to ensure that the payload isgenuine. Hunter-Paterson said: “We did evaluate Check Point’sApplication Intelligence but we found it had limited functionalityand is not as evolved as ISA Server 2004, in terms of some of thefilters and their configurability. It didn’t give us the confidence topublish or allow access to some of the web servers.”

But with ISA Server 2004, Paul Smith has built an extranetportal for partners and opened up communication betweeninternal business groups that are normally disenfranchised. Forexample, shop employees now have full access to productinformation, and remote workers can access email and elementsof the intranet from home without having to implement a fullVPN solution. Selected folders and confidential information aresecurely published to VPN users and external partners throughSharePoint Portal Server. For example, Lynx is accessing elementsof the IT department’s configuration data so documentation canbe updated. “Without the advanced application protection of ISAServer 2004 we would be very reluctant to offer these services,”said Hunter-Paterson.

Rapid deployment leads to management savings An important component of ISA Server 2004 is an XML importand export function that enables Paul Smith to build a firewallconfiguration offline and then export it to a XML file. Similarly, aserver configuration can be built offline and re-imported if aserver configuration is lost. Hunter-Paterson said: “This makes itsimple for our ongoing maintenance strategy. By building offlineit is less risky to test the configuration and it can be deployed inless than two hours. We are often opening up new offices andthis gives us peace of mind that the correct configuration hasbeen deployed. It saves on management time too.”

Bandwidth and cost savings ISA Server 2004 has also enabled the company to exploreoptions that it had never previously considered. For example, itrealised it could use VoIP to dramatically reduce telephony costsacross its four main global locations, London, Milan, Paris andNew York. ISA Server 2004 could be used to reduce bandwidthrequirements for non VoIP traffic. However, staff would still havegood web and intranet access because of the cacheing feature ofISA Server 2004 in its New York location.

Hunter-Paterson said: “We can deploy ISA Server 2004 as aproxy server. Any web or intranet content that is downloadedbecomes available for cacheing, which enables us to guaranteequality of service for other business services. This ensures we getthe maximum benefit from our leased line links so we cancontinue to take advantage of significant savings whilemaintaining good internet and intranet access. It also ensuresemployees can quickly access data, which increases productivity.

“In short, ISA Server has enabled us to take control of oursecurity infrastructure without having to outsource. We canmaximise the value of our leased lines through web cacheing andraise the level of security on our internet gateways. We have anumber of core Microsoft products that are central to ournetwork infrastructure, and integration is critical. ISA Server 2004allows us to securely plug into our other Microsoft technologiesto provide internal business users and partners with different waysof collaborating and communicating. It is very flexible andprovides us with very good security.” ●


isto

ckp

hoto

.com


E nable your people and

you’ll empower your

business. Because when

your people are really free to

use their skills, experience and

expertise, they can give your

business an immense

competitive advantage.

Research by PWC conducted

for Microsoft in March 2006

highlighted that where most

organisations agree that people

are their top asset, only half

describe their business as

“people-focused”.

Microsoft believes that

successful organisations are

those that find new ways to

empower their people with

tools that amplify their talents.

These tools connect them to

an information structure that

allows them to see their role in

the wider context of strategic

objectives, to find and

collaborate with the right

people, and to make best use

of the available data in their

decision-making.

Today’s challenges are

around the use, understanding

and management of

information. IDC estimates

that, on average, people spend

2.5 hours a day – or 30 per

cent – of their work time

looking for information.

It’s not hard to see how

much more value your people

could deliver if they were able

to devote all their efforts to

activities that directly

impacted on business. If

everyone can see the big

picture, if everyone can access

the data they need quickly and

efficiently, if everyone can

work together effectively

wherever they are, the

greater they can influence the

bottom line.

Software provides a key

component for any People-

Ready Business. While

organisational structure, a clear

understanding of priorities and

an engaged and effective

leadership are key to a People-

Ready Business, providing

people with the right

information at the right time

and the tools to act on it is

vital to turning business

culture into business results.

The principles of the

People-Ready Business

Every business is different, of

course. But, just like successful

people, successful businesses

often share traits and habits.

People-Ready Businesses

provide the means, the

authority and the environment

for people to thrive and the

organisation to flourish.

Their systems, tools and

culture enable their people to

make better decisions. They

give their people the right

information so they can

delight customers, create new

products and work with

colleagues and partners – in

the next office or on the other

side of the world. And they use

technology that adapts to

change so that their people

don’t have to.

The People-Ready Business:

▲ Maximises the satisfaction

levels of everyone involved in

the business – its people, its

customers, and the partners

and vendors upon whom its

success depends.

▲ Tempers its management’s

force – balancing oversight and

control, teamwork and the

constant improvement and

innovation that comes from

empowered employees.

▲ Focuses on insight and

action – its people have insight

into opportunities and

challenges and have the

ability and permission to act

upon them.

▲ Is fast and flexible –

removing barriers to success, it

is agile and adaptable in the

business environment of

constant change.

▲ Is optimised for

performance at the individual

level – where people are given

the freedom to focus on doing

things that add value to the

business, rather than

constantly being distracted

and frustrated by unnecessary

tasks, bureaucracy and

processes.

▲ A People-Ready Business is a

business that is primed for

success today – and tomorrow.

To hear from those who arealready benefiting from People-Ready Software, visitwww.microsoft.com/uk/exec

Is yours a People-Ready Business?Amplify the impact of your people and watch your business flourish

Briefing

Microsoftbelieves thatsuccessfulorganisations arethose that findnew ways toempower theirpeople withtools thatamplify theirtalents

Getty Im

ages



F INANCIAL DIRECTORGet the full picture

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News International, the arm of News Corporation in the UnitedKingdom, looked to offer top executives and editors a mobilesolution that combined voice, data and email on a single device.The media giant considered a BlackBerry solution from ResearchIn Motion, but decided against it because of concerns aboutcost, administration expense and flexibility.

With an existing investment in Microsoft® Exchange Server2003, communication and collaboration server, NewsInternational opted for a solution that provides users with directpush email, giving them access to messages anytime, anywhere.News International is now rolling out the devices to otheremployees – including journalists – and continuing to cutcommunications costs.

SituationMobile devices and communications are changing the face ofinformation collection and distribution. Today, mobiletechnology is now an essential part of any news-gathering

business. News International, which publishes four nationalnewspapers – The Sun, The Times, News of the World, TheSunday Times – and a number of internet operations is noexception to the new trend.

In 2003, several top executives at News International asked ITmanager Victor Flemons to assess mobile technologies on themarket, including BlackBerry. To improve communications, theywanted “anytime, anywhere” access to email messaging,especially when travelling.

In his review, Flemons took several factors into account. Firstand most important, the selected mobile devices had to supportglobal positioning system (GPS) and mapping technology. Thedevices also had to improve collaboration between keyemployees and integrate smoothly with existing applications.

Prior to the assessment, News International had invested inMicrosoft® Exchange Server 2003, collaboration and communi-cation server. Flemons said: “While the BlackBerry server needsspecial integration software to access enterprise servers, which

Case Study: News CorporationHow News International streamlined its operations with voice, data and email on a single mobile device

Case Study

BENEFITSBy using mobile devices with WindowsMobile 5.0, executives and journalists atNews International are always up-to-date with critical information andbreaking news, and the total cost ofownership is much lower than forBlackBerry. Connectivity costs are alsolower for journalists and executives inthe field.

● Enhanced Productivity forWorkers in FieldIn a fast-moving business like the media,newspaper executives and journalistsneed anytime, anywhere access tocommunications, databases, documents,and spreadsheets.

“When you use Windows Mobile-baseddevices, it’s easy to gain mobile access toExchange Server 2003 for emailmessages, schedules, contact informationand tasks lists,” Flemons said. “Ourexecutives can not only stay in toucheasily, but also use travelling time tocatch up with their office work, boostingproductivity across the business.”

● Improved Management forAdministratorsNews International is finding WindowsMobile 5.0 cost effective to support andadminister. For instance, IT administratorscan manage and enforce corporate ITpolicy over the air remotely. Flemonssaid: “We can also choose to have thelocal memory on a device erased, if anincorrect password is entered.”

● Excellent Integration EnsuresLow Total Cost of OwnershipAccording to research by WiproTechnologies, the total cost of ownershipof the Windows Mobile solution during athree-year period is 15-24 per cent lowerthan that of an equivalent BlackBerryinfrastructure. “There is a significantdifference in fixed cost between theExchange Server 2003 and the BlackBerryenvironment because of the additionalinfrastructure required for BlackBerryenterprise servers, as well as thesupporting database,” Flemons said.“The additional infrastructure necessary

for the BlackBerry environment requiresadditional support and IT managementeffort.”

● Single Access Point to MultipleChannelsBusy executives and journalists are savingtime and resources by using PDAsrunning Windows Mobile 5.0. Tizzanosaid: “All channels of communication arecoming into single devices, with useraccounts and passwords managed inActive Directory directory services.”

● Native Software SecurityFeatures Deliver Peace of MindMobile devices can store a company’sdata and intellectual property. Securitymanagement features native to WindowsMobile 5.0 are giving News Internationalpeace of mind about the safety of itsmobile network. Tizzano adds: “By usingindustry security standards, WindowsMobile 5.0 helps users gain access totheir corporate network without using aseparate password.”


adds to the cost of the solution, there is no such issue withExchange Server 2003.”

The News International IT team was convinced its executiveswould appreciate the benefits of carrying the Microsoft Officesystem in their pockets instead of using separate mobile devices.Enrico Tizzano, Windows infrastructure manager at NewsInternational, said: “We wanted to give our people instant accessto information in Microsoft Office Outlook 2003 without theneed for additional infrastructure.”

SolutionNews International initially selected Microsoft Windows Mobile2003 as the mobile technology for its executives’ mobile devices.The system was then upgraded to Microsoft Windows Mobile®

5.0. It has now given the devices to more than 160 users,including several journalists in its publications.

With the Windows Mobile 5.0 technology, users can accessemail messages, calendar and contacts in real time from anylocation. Executives and journalists often need to manage on-callarrangements; using their mobile devices, they can shareinformation for assignments, plan rotas and on-call schedules.

One factor in the decision to choose Windows Mobile wasthe ease of integration with Exchange Server 2003, whichoffers seamless mobile access to Microsoft Outlook Mobilefeatures. With Windows Mobile 5.0 Messaging and SecurityFeature Pack (MSFP), direct push technology is integrated withthe Office Mobile suite. Users can send Microsoft Office Worddocuments, Microsoft Office Excel, 2003 spreadsheets, andMicrosoft Office PowerPoint 2003 documents – plus music andvideo attachments – in messages with rich email formattingand no size restrictions.

The solution has also improved security and made personaldigital assistants (PDAs) easy to manage. “One importanttechnical feature is that we will now have the ability to ‘remotewipe’ to prevent unauthorised data from being leaked if a deviceis lost or stolen,” Flemons said. “This feature means we canrestore a device to a cleansed, pristine, data-free state.” ●

OverviewNews International is the newspaper arm of NewsCorporation based in the United Kingdom. It publishesfour national newspapers: The Sun, The Times, News ofthe World and The Sunday Times. The corporationwanted to offer its top executives and journalists amobile solution that combined voice, data, and emailmessages on a single device.

● Solution Having already employed Microsoft Exchange Server 2003,the company chose mobile devices powered by MicrosoftWindows Mobile 5.0 Messaging and Security Feature Pack.

● Benefits Enhanced productivity for executives.Efficient management with remote administration.Excellent lifecycle and low total cost of ownership. Single point of access to multiple channels.

● Software and ServicesMicrosoft Exchange Server 2003Microsoft Office Outlook 2003Windows Mobile 5.0

By using mobile devices withWindows Mobile 5.0, executives and journalists at News International are always up-to-datewith critical information andbreaking news



According to a recent study of over 200 UK companies carriedout by PricewaterhouseCoopers (PwC) on behalf of Microsoft, 78 per cent of UK business leaders believe people are their mostimportant asset. [See below]

This realisation does not necessarily mean that most UKorganisations are People-Ready Businesses. However, it is anindication that business leaders understand the value ofemployees. After all, it isn’t the enterprise that makes decisions, itisn’t the company that closes deals or invents new products – this is all down to the people.

People-focused or process-focused?Out of the companies surveyed, exactly half said that, generallyspeaking, they considered their company to be people-focused.A little over a quarter (26 per cent) said that they consideredthemselves process-focused, while 21 per cent saw themselves asboth people- and process-focused. Within this demographic,nearly two thirds of companies (61 per cent) with a turnovergreater than £50m felt that they were people-focused industries,compared to 41 per cent of companies with a turnover of lessthan £50m. [See below right]

When quizzed about the People-Ready principle, therespondents generally demonstrated a sound understanding ofthe concept, even though only 12 per cent of the poll partic-ipants were familiar with the phrase itself.

Perhaps unsurprisingly, firms that see themselves as predomi-

nately people-focused are more confident that they are definitelypeople-ready (31 per cent) than the process-focused firms (11per cent). [See opposite left]

Overall, 39 per cent of the companies said that theyunderstood the People-Ready concept to mean that staff are fullytrained with the correct skillsets. Some 26 per cent interpretedthe term as companies with an emphasis on people andcustomer-focused companies. “A business that understands howimportant people are in bringing a new product into the market”was one respondent’s definition of the People-Ready concept.[See opposite, right]

People-Ready as a conceptThe report clarifies that a People-Ready business is one thatinvests in its culture to create a shared value system, giving thepeople the tools they need to develop and drive the businessforward. Strategic planning and strong leadership can make abusiness successful, but to make a business excel, companieshave to empower their people with the right tools to create andexploit opportunities.

For the customer service representative in the call centre everyone of the hundreds of calls he or she will take on a daily basis isan opportunity to assist a customer, make a sale and add to theoverall success of the business by building the brand.

According to the PwC survey, the main reason customers/buyerschoose to do business with a particular firm is because of the


Is your business People-Ready?The majority of UK firms claim to recognise their human resourcesas the lifeblood of their organisations but are they People-Ready?

Research

What would you consider to be the most importantassets in your organisation?

0 10 20 30 40 50 60 70 80%

Technology

Information

Knowledge

Leadership

Product/service

People

2

2

3

4

6

78

Base: 206 | PricewaterhouseCoopers LLP

Asset importance (taking account of ranked preferences)Respondents were asked to rank the five assets in order of importance. A score of 5 was applied to the first preference, 4 to the second preference, 3 to the third preference, 2 to the fourth preference and 1 to the fifth preference. A total score for each asset was calculated. Using the highest possible score, a proportionate score was calculated out of 100

PeopleLeadershipProduct/ServiceTechnologyInnovation

93.160.157.043.637.6

Total possible score = 100

Generally speaking, would you say that your business is primarily people- or process-focused?

0 10 20 30 40 50%

Don't know

Neither/Nor

Both

Process-focused

People-focused

0

2

21

26

50


Nearly 2/3 of companies (61%) with a turnover greater than 50m felt that they were people-focused industries, compared to 41% of companies with a turnover <50m


quality of its brand (70 per cent), closely followed by the quality ofits staff (67 per cent) and the strength of previous relationships (63per cent). Given this it is logical to deduce that the people and thebrand are inextricably linked. [See top right]

So the question now becomes that if 91 per cent ofrespondents believe IT has helped their staff to work better, whyhave only 39 per cent of companies questioned implemented atechnology strategy that exists to help people do their jobsbetter? On the same note, 40 per cent have put in place an ITstrategy that is primarily a means to make the business processesmore effective, while only 18 per cent have implemented acombination of both.

Moreover, a total of 86 per cent of respondents feel that abusiness needs to strike a balance between process efficiency andpeople-oriented efforts. But, evidently, UK companies are notputting the tools and infrastructure in place to support what theyrecognise as their most valuable asset. [See overleaf top]

Indeed, the PwC survey reveals that many UK businesses aresome way off being considered People-Ready. The challenge aheadwill revolve around restructuring business practices to take the bestadvantage of technology and training the people to properlyadopt the new practice. Essentially, UK companies need to realisethat people and processes are highly inter-related and investmentin people and process is key to unlocking productivity gains.

Companies that have realised the connection are alreadybeginning to understand that the way people are managed has adirect impact on how well business processes run. However, the

danger in drawing such close relationships between the peopleand the technology put in place means that it is easy to fall intothe trap of making a knee-jerk reaction when the necessaryinvestment has not been made. If a company fails to meettargets, the tendency would be to blame the people andconsider replacing them, rather than first considering whetherthe lack of infrastructure is negatively affecting performance.

Moving to a people-based cultureThose companies that are both people- and process-focusedperformed consistently higher in terms of the benefits they offer


What does the term People-Ready Business mean to you?

0 5 10 15 20 25 30 35 40%

Don't know

Motivated staff pushing the

company forward

Customer-focused companies

Companies withemphasis/

focus on people

Staff are fully trained with

correct skillset


13

17

26

26

39

To what extent would you consider your business to be a People-Ready Business?

0 10 20 30 40 50 60 70 80%

BothPeople-focusedProcess-focusedAll

Not at all

Not really

Somewhat

Definitely


24113125

57575566

1526129

3630

Which of the following reasons do customers/buyers choose to do business with you?

0 20 40 60 80 100%

AllBothProcess-focusedPeople-focused

Innovation/ Technology

Competitive cost

Previous good working

relationship

Quality ofyour staff

Good-qualitybrand


Those companies with a turnover of 50m+ feel that a previous good working history (69%)

is more important in business that those with a turnover

of <50m (55%) Quality of staff is viewed as more of a reason amongst

people-focused businesses (69%) than process-focused

(53%)

68688070

69538267

62587363

47475750

38385541


their employees, PwC found. These types of companies had ahigh incidence of Investors in People (68 per cent) and EmployeeLoyalty (66 per cent) schemes compared to those that focusedon either people or processes.

Respondents in the people- and process-focused industriesconsistently feel that there is more to value about beingemployed in their organisations, particularly the culture (73 percent), and finding, developing and retaining the right people is acrucial and increasingly difficult task for today’s businesses.

A recent survey of human resources professionals by theInstitute of Management and Administration found that amongthe critical issues that they expected to face in 2006, retainingand developing their people was at the top of the list (74 percent). This is largely because job markets are more competitiveand the cost associated with filling positions continues toescalate. The notion of following one career at the sameemployer for a lifetime is a fading memory for most babyboomers and unknown to younger generations. The averagelength that employees remain in a job before leaving in today'smarket has dropped below five years.

Naturally, traditional reward and remuneration are the topreasons why firms are having difficulty holding on to their staff,but companies these days also face an ageing, shrinking workforce in most of the developed world over the next 50 years. Asthe workforce matures, businesses will have to maximise theproductivity of their remaining workers while retaining them inthe face of increasing competitive pressure. It is well known thatwhen people leave, they take with them their knowledge –knowledge that can be unique and irreplaceable.

So as competition heats up for talent there will be an increasein focus and resources on HR functions, while ensuring that theculture of the business is one that attracts and retains the bestpeople. But fortunately, at the other end of the demographiccurve, the “net generation” that is coming into the workforcetoday has lived its entire life in the digital era, surrounded bycomputers, mobile phones and the internet. These workersexpect their work life to be as connected as their personal lifeand so businesses that understand and embrace the digital

lifestyle will enhance their ability to attract and keep this newgeneration of employees.

Technology at the heart of a People-Ready companyThese skills will come in handy going forward as dependence ondata increases. Already most businesses are drowning in data,with some suggestions indicating that the amount of data almostdoubles every 12 to 18 months, particularly with the increasingamount of government regulation covering the retaining ofinformation.

This data is, of course, only valuable if you can quickly tap intothe most appropriate information to inform a particular decision.In today's competitive environment, how you retain and accessthat data, as well as how you use it, is becoming more and moreimportant for overall business success.

Microsoft believes that software is instrumental to the People-Ready business and is key to how that information is harnessedby allowing people to turn data into insight and transform ideasinto action.

The PwC study found that 86 per cent of respondents would say that IT in the organisation ensures that people areequipped to do their jobs to the best of their abilities, with the only significant obstacles to staff embracing thattechnology being the training [See below]. “We need torestructure the IT functions, making IT the heart of the business,”said one respondent.

In the world of high technology and ebusiness, many oftoday's tasks are now automated but people remain at the heartof the business. They are responsible for the brand, therelationships, the deals as well as the products. At the core of thisis the technology and software that empowers people to drivethe businesses.

The majority of respondents to the PwC study said that toimprove the business, the organisation must improve the people (57 per cent) and improve the processes (44 per cent).Going forward, 62 per cent of business leaders said that over the next year, their IT strategy would focus on the people usingthe technology. ●


Research

To what extent would you say that IT in your organisation ensures that people are equipped to do their jobs to

the best of their abilities?

0 10 20 30 40 50 60%

AllITNon-ITDon't know

Not at all

Not really

Somewhat

To a great extent


333031

545253

91412

322

111

To what extent do you feel that a business needs to strike a balance between process efficiency

and innovation of people?

0 10 20 30 40 50%

Don't know

Not at all

Not really

Somewhat

Great extent

4

1

8

36

50



Documents

microsoftspread1.qx 12/12/06 3:20 pm Page 1 Winter 2006 ...download.microsoft.com/documents/uk/business/... · 22 Case study: News Corporation How News International streamlined its