Point of ViewSummer 2013 - Deloitte United States€¦ · the massive offshore North Field, which spans an area roughly equivalent to Qatar itself. Distribution of proven reserves

Middle EastPublished by Deloitte & Touche (M.E.)and distributed tothought leadersacross the region.

Summer 2013 PointofViewAll under control?

Has the train left the station?It’s good to be Qatar

SACK your management!The art of reporting

WhistleblowingNot for everyone

It’s NOT all about the moneyIntellectual capital in IslamicFinance institutions

2 | Deloitte | A Middle East Point of View | Summer 2013

Summer 2013Middle East Point of ViewPublished by Deloitte & Touche (M.E.)

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Deloitte | A Middle East Point of View | Summer 2013 | 3

A word from theeditorial team

Take a drive along the traditionally billboard-infestedLebanese coastal highway and you would be forgivenfor thinking that some advertising agency has placed the wrong ad on the wrong billboard. A bettertransportation network, a strong and well-equippedarmy, these are visions being touted by the LebaneseMinistry of Energy and Water now that, as thecampaign says: “we have oil and gas.”

The polemics surrounding the relatively recent discoveryof energy fields in Lebanese waters are plentiful and this is not the forum to be discussing them. The ideabehind the ad campaign has been well received though:gas is good.

Gas has certainly been good to Qatar, which, accordingto Saleem Mamode, was catapulted onto the worldstage in the late 20th century after it turned its huge gasreserves into liquefied form and now has the highestGDP per capita in the world. But what of the newmarket players? Is Qatar under threat? Probably notargues Mr. Mamode in his article Has the train left the station? “Qatar’s LNG commercial and shippingrelationships are so well developed globally,” he says,“that they give Qatar a whole range of options tomaintain and optimize its leading position.”

Qatar has certainly not been resting on its laurels either,with multiple investment projects in the country, it hasalso undertaken an infrastructure re-haul in preparationfor the 2022 FIFA World Cup, which it will be hosting.

Qatar, according to Adil Parvez, will invest anapproximate USD 65 billion to host the World Cup. In his article on events management, Bringing peopletogether, it is one of many events in the Middle East and North Africa region, albeit the one with the highest-profile, that are “increasingly used as a catalyst to encourage economic diversification andsocial development.” As such, he continues, “eventsmanagement as a key activity has become moreimportant than ever before.”

Events management can help insure that things thatcould normally go wrong: don’t; because if they do, theeffects would be less than desirable and that is putting it

mildly. The same is true of Industrial Control Systems(ICS), “those big machines with lights, switches and bigknobs,” as described by Raddad Ayoub, that are actuallythe cornerstone of operations in industries such as oiland gas. With these industrial operations “representinga major portion of the GCC National GDP,” continuesMr. Ayoub, “significant disruption is not an option.”

With high-profile security breaches of ICS making news headlines in the last few years, Mr. Ayoub advises that “in the GCC, the protection of ICS needs to be customized to the unique regional characteristicsof the area and should adapt to the changing landscapeof security globally.”

Unhappy with your management team, asks GhazanfarShah, in his article Less is more? Then SACK them. “Withever-increasing demands on our time, can any leaderafford their managers not to respect theirs?” he asks.But before you put this magazine down, fire everybodyand find yourself alone in the office by the end of theday, you should note that SACK – which stands forStipulate, Appoint, Collaborate and Keep monitoring – is a solution for efficient and effective managementreporting that has been developed specifically to assistcompanies working towards achieving success on theirprojects and investments.

“Streamlined reporting,” argues Mr. Shah, “allows forquicker reporting and is easier to digest. It also frees up your valuable time to focus and discuss the areasthat are not on track and require more attention.”

It also frees up your time to read our magazine. Withmore insights into building intellectual capital in Islamicfinancial institutions (Brick by brick), whistleblowing or‘Ethical’ hotlines that have been gaining prominence inthe region in the last few years (Blowing in the wind?)and finding the value in environmental, social andgovernance performance, you can kick back, relax and wade through the points of view of our expertcontributors.

And then when you’re done, SACK your team!

ME PoV editorial team


In this issue

Has the train left the station? A view of LNG from QatarSaleem Mamode

Event managementBringing people togetherAdil Parvez

ICS: Protecting the ‘other’ networkRaddad Ayoub

Brick by brickBuilding Intellectual Capital in Islamic Financethrough Knowledge Management strategyDr. Hatim El-Tahir

6

14

24

30

Contents


Less is more Ghazanfar Shah

New business strategies from big dataVivekanand Gopalkrishnan, David Steier,Harvey Lewis, James Guszcza and John Lucker

Blowing in the wind?David Clements

36

40

52

Table of contents

Has the trainleft the station?


A view of Liquefied NaturalGas from Qatar

Oil and Gas


Liquefied Natural Gas (LNG), the buzzing phrase of the nineties that catapulted Qatar onto the worldstage, is simply natural gas: methane-cooled to -164º Celcius (its natural boiling point) therebyturning it to liquid. Easily said, but do not try thisat home: it costs around USD 5 billion and five years to construct a plant to liquefy natural gas.


Why invest so much time and money? It’s all in thename of getting access to an ever-growing energy-hungry market. Natural gas, once extracted andpurified, is normally transported to consumers throughpipelines such as the Russian pipelines running acrossEurope. This is still the case for a major portion of thenatural gas supply chain. But for countries like Qatar,access to outside markets is very limited due to anumber of geopolitical factors. The solution? Compressthe natural gas 600 times into its liquid state, which isodorless, colorless, non-toxic, non-corrosive and non-flammable. And the icing on the cake? It can be carriedon special ships around the globe.

In the last 12 years, LNG has taken us all by surprisewith global demand growing by 140 percent and nowaccounting for roughly 10 percent of the methaneconsumed worldwide. Energy experts have long beensaying that gas will play a major part of our energyfuture, being relatively cleaner and cheaper than crudeoil. Nuclear energy, once a strong contender for thesecond position to the oil king, has seen its fortunesdwindle following the Fukushima disaster in Japan in 2011.

In the last 12 years, LNG has taken usall by surprise with global demandgrowing by 140 percent and nowaccounting for roughly 10 percent ofthe methane consumed worldwide

Global natural gas and LNG demand World demand, bcm/year

5,000

4,000

3,000

2,000

1,000

2000 2010 2020e 2030e

6%

9%

14%

19%

0

25%

20%

15%

10%

5%

0%

LNG share of total

World gas demand World LNG demand LNG share of total

Source: Pareto Securities Equity Research

Consumption by regionBillion cubic metres

‘86 ‘91 ‘96 ‘01 ‘06 ‘110

3500

3000

2500

2000

2000

1000

500

3500

3000

2500

2000

2000

1000

500

Production by regionBillion cubic metres

‘86 ‘91 ‘96 ‘01 ‘06 ‘110

World natural gas production increased by 3.1% in 2011. While the US saw the largest national increase, the Middle East recorded the largest regional increment to production. Production growth in Russia and Turkmenistan was partly offset by a large decline in European production. Natural gas consumption increased by 2.2%,with below-average growth in all regions but North America. TheEuropean Union experienced the sharpest decline in natural gas consumption (-9.9%) on record.

Rest of WorldAsia Pacific

Europe & Eurasia North America

Source: BP Statistical Review of World Energy 2012 © BP 2012


With global warming and environmental concernseveryday on the news, the past decade has seencountries investing more in gas power generationplants. Several energy experts suggest that natural gaswill become the world’s number-two fuel as demandshifts to lower carbon sources. This has provided theneeded impetus for Oil & Gas Majors, National OilCompanies and independent prospectors alike to lookfor more gas, and has resulted in the ballooning ofglobal proved gas reserves.

Russia, Iran and Qatar have so far managed to standfirm in claiming the top positions as the countries withthe three largest reserves globally. But the landscape ischanging rapidly with new discoveries in Mozambique,Australia, Cyprus and the Mediterranean, among others,and the development of fracking technology, which hasresulted in the cost of extraction of shale gas in the U.S.to become an economically viable reality.

So where does Qatar fit in?Qatar has proven natural gas reserves of approximately25.4 trillion cubic meters (TCM), almost 14 percent of allknown natural gas reserves and the third largest in theworld behind Russia and Iran. The majority is located inthe massive offshore North Field, which spans an arearoughly equivalent to Qatar itself.

Distribution of proven reserves in 1991, 2001 and 2011Percentage

1991Total 131.2trillion cubic

metres


metres


metres

Middle East Europe & Eurasia Asia Pacific

Africa North America S. & Cent. America

7.1

7.2

7.24.0

32.67.7

7.8

4.64.2

42.1 8.0

7.0

5.23.6

38.4

37.833.741.8


Oil and Gas

Qatar has proven natural gas reserves of approximately 25.4 trillion cubicmeters (TCM), almost 14 percent of all known natural gas reserves and thethird largest in the world behindRussia and Iran


Throughout the 1990s, until the mid-2000s, Qatarinvested heavily in the construction of its LNGproduction facilities. The latest trains of RasGas andQatargas came online during 2010 and early 2011 withthe same liquefaction capacity of 7.8 million tonnes

(MMt) of LNG. The 7.8 MMt train is considered a mega-train and is currently the largest operating in the world.In December 2010, the State of Qatar celebrated theachievement of 77 million metric tonnes per annum(Mta) of LNG production capacity, reconfirming thecountry’s position as the world’s leading producer ofLNG with the largest production capacity – by far. By2011, Qatar accounted for 31 percent of global LNGoutput, exporting to 23 countries. These recentdevelopments, coupled with gas prices in the Far Eastoften reaching USD 19, boosted Qatar’s hydro-carbonrevenues to USD 210 billion in 2011, resulting in Qatarenjoying the highest GDP per capita in the world.

Current LNG market trendsThe scene, however, is not all idyllic. In an effort tointegrate and control its supply chain, Qatar had, inpartnership with Exxon Mobil, undertaken theconstruction of regasification plants in Europe (Southookterminal in the U.K. and Adriatic terminal in Italy) and inthe U.S. (Golden Pass). The latter investment, costing

In December 2010, the State of Qatarcelebrated the achievement of 77 millionmetric tonnes per annum (Mta) of LNGproduction capacity, reconfirming thecountry’s position as the world’s leadingproducer of LNG with the largestproduction capacity – by far

Major trade movements 2011Trade flows worldwide; billion cubic metres

U.S. Mexico Europe & Eurasia

Canada S. & Cent. America Middle East

Africa

Asia Pacific

88.0 26.6

14.1

3.8

9.7

3.0

44.1

16.835.2

4.4

13.5

17.3

10.2

12.1

23.5

66.4

117.1

32.0

9.8

19.05.0

41.37.1

6.7

8.6

6.3

29.1

3.9

15.7

Pipeline gas

LNG



around USD 3 billion, was planned prior to the adventof shale gas. In the mid-2000s, with the start ofproduction of shale gas, gas prices in the U.S. rapidlyplummeted to USD 2 before stabilizing at around USD3.5 in the past couple of years. This episode has seenQatar redirecting its cargos from the U.S. to Asia, wheregas prices are peaking, especially in China and Japan.

In fact, unlike the crude oil market, currently there is noglobal gas market per se. At best, as can be seen on thechart below, the market is regionalized, with the U.S.,Europe and Asia representing the major consumers. This might change if new players such as the U.S. and Australia start to export heavily. However, withconstant environment and health lobbies and thelegislature in the U.S. trying to maintain low domesticprices and Australia needing at least another five yearsfor the completion of its plants, the near future looksgood for Qatar’s LNG. Another factor giving Qatar itsedge is the relatively low cost of extraction comparedwith other countries (a similar analogy can be drawnbetween Saudi oil cost compared to, say, the North Seaor Canadian Sands). Recent evidence has shown howhigh labor costs in Australia, for example, can be aseriously limiting factor in bringing its LNG projects tofruition. This makes competing with Qatar LNG a majorchallenge.

What are the next steps for Qatar?On the foreign investment front, Qatar has beenfocusing on the energy sector, building stakes of 5percent in Shell and 2 percent in Total through itsSovereign Wealth Fund, Qatar Investment Authority. TheNational Oil Company, QP, has also been busy. Barzan, a USD 10 billion gas plant, being constructed under theRasgas banner will cater for local gas needs. Through itsinternational arm, QPI, it has been investing around theglobe with a view to consolidate, and in many casesvertically integrate, its operations so as to control thesupply chain. To date QPI has acquired interests in gaspower plants in Egypt and Vietnam and is activelylooking for potential investments.

Australia is now the fourth-largest LNG exporter and is already China's biggest supplier, with liquefactioncapacity forecasted to increase five times from currentlevels to 100 million tonnes per annum (Mta) by 2020.However, it seems Qatar sees this as an opportunityrather than a threat. Abdulrahman Al-Shaibi, director of finance at Qatar Petroleum, recently told Reuters inDubai: “I think we are exploring all geographical placesthat would really achieve our business objectives andAustralia definitely is an important proposition wheremaybe we will be able to find good investmentopportunities…”

Recent evidence has shown how highlabor costs in Australia, for example,can be a seriously limiting factor inbringing its LNG projects to fruition.This makes competing with QatarLNG a major challenge.

Prices$/Mmbtu

U.S. Henry Hub

‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘110

2

4

6

8

10

12

14

16

Average German Import Price cif

UK NBP Japan LNG cif


Oil and Gas


Qatar further plans to spend USD 25 billion onexpanding its domestic petrochemical industry over the next decade, more than doubling its annualpetrochemical production capacity from 9.2 Mmt nowto 23 Mmt by 2020. The petrochemicals will targetgrowth markets in Asia, Africa and Latin America.

Shale gas: the game-changer for Qatar?Maybe not! Qatar’s Golden Pass degasification plant in the U.S., which was all but redundant a year ago,received permission to export LNG from the U.S. inOctober 2012. Qatar and its partner, Exxon Mobil, arestill finalizing the plans for the USD 10 billion investmentthat would be required to develop the liquefactionplant. The plant, with an expected annual capacity of15.6 Mmt will open up new avenues in Qatar’s globalLNG supply chain.

According to the 2012 BP energy outlook 2030, globalenergy consumption is expected to grow by 40 percentfrom its current levels to reach approximately 16.6billion toe (tonnes of oil equivalent) by 2030. The MiddleEast supply will still play a key role, contributing 2.5 toeor 26 percent of the global growth.

Natural gas is projected to be the fastest-growing fossilfuel globally (2.1% per annum). BP projects the globalLNG supply to grow 4.5% per annum by 2030, morethan twice as fast as total global gas production (2.1%per annum) and faster than inter-regional pipeline trade(3.0% per annum). LNG is expected to contribute 25

With Qatar’s current state-of-the-artgas processing infrastructure, fully-functioning shipping fleet of 54 LNGvessels and accumulated industryknow-how, the country seemsstrategically positioned to play a key on the global energy stage

120

Qatar Australia

80

40

0

MTPA

77

21

65

29

In production In construction Planned

By 2018

By 2020

Australia vs Qatar planned LNG production by 2018

Source: Morgan Stanley

50%

*Includes biofuels

Renewables*Nuclear

Hydro

Gas

Coal

Oil

40%

30%

20%

10%

0%

1970 1990 2010 2030

Shares of world primary energy



percent of global supply growth between 2010-30(1990-2010: 19%). The world gas reserves in 2010could sustain 59 years of production at current levels.However, experts expect the reserve levels to more thandouble over the next 20 years. Shale gas is expected toplay a key role in the North American energy productiongoing forward but will remain on the back burner inother regions including Europe.

At the World Climate Summit in Doha in December2012, H.E. Mohammed bin Saleh Al Sada, Minister of Energy and Industry of Qatar, said that demand fornatural gas will rise by more than 60 percent from 2010through 2040, overtaking coal for the number twoposition behind oil. Unconventional Gas, such as shalegas, is foreseen to contribute 30 percent of globalproduction in 2040, meaning that conventional gas isexpected to meet 70 percent of gas demand even afterthree decades. “With this, the development of NaturalGas and LNG capacities will become necessary tobalance the world energy equation,” Dr. Sada said.

Dr. Sada also said the future of energy will be shaped by decisive factors such as the secure availability ofconventional resources, the growth of renewableenergy, development and deployment of newtechnologies, national energy policies, security of supply and demand in its wider sense and reduction of geopolitical tensions which lead to logistical andinvestment challenges in supply across the energy valuechain. This theme is re-emphasized by the decisions of countries like Japan to rebalance their energy mixtowards gas while moving away from nuclear andenergy giants such as Eni and Anadarco, who in turnhave announced their intention to jointly develop theirfields and invest in a liquefaction plant.

Qatar is currently selling a substantial portion of its LNG through long-term Sales and Puchase Agreements(SPAs), thereby locking in clients and prices and hedgingany drops in gas prices. However, recent trends in thegas market are showing a shift away from this model oflong-term pricing to an oil-indexed pricing model. Thiswould eventually result in the gas price spread betweeneast and west thinning with more homogeneous pricesand a competitive global market.

With Qatar’s current state-of-the-art gas processinginfrastructure, fully-functioning shipping fleet of 54 LNGvessels and accumulated industry know-how, thecountry seems strategically positioned to play a key onthe global energy stage. Given the constant shifts in thegas market dynamics and uncertainties over the futuredirection of gas prices, Qatar needs to carefully considerits next moves, although it is well-placed to become one of the drivers of the gas market. Positive steps inthis direction have been taken through the creation of the Gas Exporting Countries Forum, which hasambitions to become the OPEC of the gas world.Headquartered in Doha, the Forum already has 15member countries including the gas giants, Russia, Iranand Qatar. Together, these members control 70% of theworld proven natural gas reserves.

“There has been a lot of speculation recently thatQatar’s LNG pre-eminence may soon be challenged by shale from the U.S and LNG from Australia. This is overdone: Qatar’s LNG commercial and shippingrelationships are so well developed globally that theygive Qatar a whole range of options to maintain andoptimize its leading position” said Kenneth McKellar.

by Saleem Mamode, principal, Audit, Deloitte Middle East

“There has been a lot of speculationrecently that Qatar’s LNG pre-eminence may soon be challenged by shale from the U.S. and LNG fromAustralia. This is overdone: Qatar’sLNG commercial and shippingrelationships are so well developedglobally that they give Qatar a wholerange of options to maintain andoptimize its leading position.”

Oil and Gas

Kenneth McKellar


Event manageme Bringing peoplet


Event management

ent together

As the Middle East experiences rapidsocial and business development,events are increasingly taking place.With countries, cities and companiesspending a considerable part of theirbudgets on events, the need foreffective Event Management has become significant.


Events are an excellent platform for governments andbusinesses to market and promote an idea, product,company or nation. In a region where economies arelargely driven by oil revenues and accelerated populationgrowth, events are increasingly used as a catalyst toencourage economic diversification and socialdevelopment. This is particularly the case in high-profileevents, where at an international level Qatar hasinvested an estimated USD 65 billion to bring the FIFA2022 football World Cup event to the Middle East.1

With many Middle East businesses found to invest anannual average of USD 1.89 million in their events,2

Event Management as a key activity has become moreimportant than ever before. As Event Management is a new and unfamiliar field to many organizations, weexamine its background, significance and outline amodel solution to key challenges many organizationsface with their events today.

Background: development of a key disciplineCongregations, conventions and festivals have for long been a practice of social interaction, knowledgeinterchange and sharing, as well as a key element inenhancing relationship building between differentcommunities to foster an environment of socialcollaboration and cohesiveness. Throughout history, the advents of organized events and festivals are welldocumented, even before the fall of the Western Roman Empire in A.D. 476.3

Recently, the practice of managing events has beengrowing and evolving as a formal discipline and body of knowledge. Since the late 1990s, attempts tostreamline and aggregate fragmented theories andpractices started out within academia by a number ofscholars but quickly attracted freelance consultants andpractitioners. This core group of professionals initiallyexplored the application of project managementconcepts to the organization of events. Just asaccountants have developed accounting as a practiceand profession with global standards, eventmanagement professionals have also created andcontinue to build an “Event Management Body ofKnowledge (EMBOK)”, dedicated to the developmentand professionalization of Event Management practices.

Administration

Body of knowledgeInternational competency

standards

• Assess

• Select

• Monitor

• Communicate

• Document

Core valuesDomains

Design

Marketing

Operations

Risk

Creativity

Strategicthinking

Continuousimprovement

Ethics Integration

Process

Initiation Planning Implementation Event Closure

Source: International EMBOK Executive, Emerit

Recently, the practice of managingevents has been growing and evolvingas a formal discipline and body ofknowledge


7.00

6.00

5.00

4.00

3.00

2.00

1.00

02008 2009 2010 2011 2012 2013 2014 2015

Managed budgets

Managed budgetsa and economic impactb of Global IAPCO meetings eventsc between 2008-2015 (USD billion)

1.68

4.19

3.042.51

2.762.28

1.99 2.08

4.80 4.895.32

5.796.30

6.86

1.87

4.52

Economic impact

a Based on Average Delegate Fee of USD 748 & Average Exhibition Rental Fee of USD 680b Based on Average Delegate Spend of USD 2,204c Based on Corporate, Associations & Governmental Meetings organized by global IAPCO members

Historical

15% CAGR

10% CAGR

Projected

30%

25%

20%

15%

10%

5%

0%Lebanon Qatar Egypt UAE Morocco Tunisia MENA World

Growth in MENA conventions events from 2005 to 2010

18%

27%

3%

12%

8%7%

17%

9%

The Event Management industry: value,significance and potential Estimates about industry size vary considerably, as EventManagement covers a wide variety of categories fromthe very small-scale cultural, to the very large-scalemulti-national, including mega events such as theOlympic Games. Indicative of the value of the EventManagement industry is an annual survey conducted bythe International Association of Professional CongressOrganizers (IAPCO), an internationally recognized bodyof professional event organizers and a leading authorityon the meetings events industry, which values themanaged budgets of meetings organized by theirmembers at over USD 2 billion.

With an average economic impact of two to three timesmanaged budgets and healthy double digit growth,global IAPCO events clearly indicate the rising demandfor events and event management services at aninternational level, driven by the economic impact theybring to companies, governments and countries. Whenconsidering larger scale events such as conventions,exhibitions, festivals, shows, concerts and sports events,we would expect the size and potential of the globalindustry to be far greater than USD 3 billion by 2015.

Significantly, an indication that demand is now alsopicking up in the Middle East North Africa (MENA)region is the growth in their number of conventions.Driven by huge economic and population growth inQatar, Saudi Arabia and the United Arab Emirates,demand for events in the MENA region appears to beincreasing at a far greater pace than the rest of theworld. With rapid economic, infrastructure and socialdevelopment, the Middle East could be fast emerging as the destination of choice for all kinds of events. Theevidently increasing demand and resulting spend onevents by companies and governments therefore makeseffective event management essential, especially if theyare to maximize the economic impact of their events.

Driven by huge economic andpopulation growth in Qatar, SaudiArabia and the United Arab Emirates,demand for events in the MENAregion appears to be increasing at a fargreater pace than the rest of the world

Source: Deloitte Analysis, International Association of ProfessionalCongress Organizers (IAPCO), 2011

Event management

Source: Deloitte Analysis, South African Association for theConference Industry (SAACI), 2012, International Convention & Congress Association (ICCA), 2011


Events as assets: three fundamental levelsEvent Management is most widely defined as theapplication of project management principles to planand deliver events as projects. When asking individualsin organizations what ‘Event Management’ means to them, most people believe it is simply a form ofsupervision during an event, to ensure the eventproceeds according to plan. But what is the event’s plan and where does it come from? How do we reallymeasure the event’s success? Few organizationsrecognize their events as assets, preventing them from understanding how Events Management (assetmanagement of a portfolio of events) and EventManagement (project and risk management of a single event) can be applied to most effectivelyrationalize, plan and maximize the benefits that their events can bring.

Just as an organization’s intangible intellectual property,brand and goodwill, are now widely recognized ashighly valuable assets, events can similarly be recognizedwith their success measured as a Return on Investment(ROI). Like any organization, Strategic Business Unit(SBU) or project that requires investment and is assignedwith measurable ROI targets, events are also aninvestment that should be developed and managed atthree fundamental levels over time: strategic,management and organization (operation).

Events strategyAt the strategic level, the formulation of an eventsstrategy enables organizations to rationalize, streamlineand focus their portfolio of events. This is especiallyneeded for organizations whose events tend to beunevenly distributed through different divisions, when it is often unclear why most events are held. Based onan organization’s overall strategy, the events strategy is a long-term development vision, a plan outlining the overall objectives of an organization’s events, thebenefits they are expected to bring and how they will be achieved. This guides the development of the eventsportfolio, a collection of events that have been assessedand identified as strategically important.

Regardless of the type of event, it is the desiredoutcome of the event – its strategic value – that shoulddrive an organization’s decision to invest money andresources to host or participate therein. Each important

At the strategic level, the formulation ofan events strategy enables organizationsto rationalize, streamline and focus theirportfolio of events

Three fundamental levels of events4

Event strategy

Event management

Competency

Objectives

Event organization

Source: Deloitte Analysis, International Association of ProfessionalCongress Organizers (IAPCO), 2011

event’s objectives, desired outcomes and measures ofsuccess are therefore linked with the overall objectivesand strategy of an organization’s business to maximizetheir ROI. In this way more and more companies,government departments and organizations can useevents strategies to maximize the benefits of theirevents portfolio.

Event ManagementAt the management level, each event is individuallydesigned, planned, managed, delivered and evaluatedas a project. The two largest aspects of this are projectmanagement and risk management. However withevents, unlike other projects, the date cannot be shifted.For example, the date of New Year’s Eve, birthdays, orevents on national holidays cannot be changed. All tasksare therefore planned and managed around the eventdate as the fixed deadline.

Project ManagementAs with many other project-orientated businesses suchas construction, consulting and IT, project managementis a specialized skill and a key competency which needsto be built and continuously developed over time.

However, in Event Management, many organizationsoverlook this, focusing on delivering the next event in the calendar and not on developing their EventsManagement competency. Staff managing anorganization’s events are often employed with little orno training in Event Management. Without any EventsManagement templates, common documents or systemof knowledge management, little or no knowledgeretention or transfer can take place. Consequently, eventmanagers and coordinators are left to develop their ownEvent Management competencies, methods, practicesand make their own mistakes in the process. Withreputations, brands and images at stake, such mistakescould be highly damaging to the event and to thehosting organization as a whole. For this reason,reputational risk is the most important to manage.


Strategic framework for events

Overallorganization

strategy

Eventsstrategy

Portfolioof events

Proposedevents

Eventfeasibility

Event goalsand measures

of success

With reputations, brands and imagesat stake, such mistakes could be highlydamaging to the event and to thehosting organization as a whole. Forthis reason, reputational risk is themost important to manage.

Source: Deloitte

Event management


Risk ManagementAccordingly, Risk management is essential, as EventManagers are constantly confronted, fraught andstressed with unexpected problems that arisethroughout the Event Management process. AlthoughEvent Managers apply risk management to solveproblems as they arise, their occurrence and solutionsare rarely documented. This can also stifle thedevelopment of an organization’s events and itscompetency in managing its events, as risks or problemscannot be foreseen, tracked, resolved and learning from

previous mistakes can never be shared. Problems comeas a surprise and there is no way to refer to past eventsor past solutions. As a result, last minute changes andmajor problems can barely be contained and canreappear across an organization’s other events.

The use of a simple risk register resolves many of thesecommon issues. Risks can be more adequately foreseenbefore they evolve into problems and experience can beshared to enable colleagues and superiors to understandthe complexities involved in managing various events. In this way, embedding risk management and itsdocumentation as a core process can continuously helpdevelop event professionals, a practice that is widelyacknowledged as an international standard in EventManagement.

Event organizationAt the organization (operational) level, an event’s planand design are elaborated, prepared, executed andclosed. Often, event organization is thought to representthe key activities that take place before an event. Whilstthis is mostly true with the bulk of the workload inadvance preparation and setup, we must not forget thekey organizational and operational activities that alsotake place during, after and even throughout an event’slifecycle.

Just as an organization’s intangibleintellectual property, brand andgoodwill are now widely recognized as highly valuable assets, events cansimilarly be recognized with theirsuccess measured as a Return onInvestment


Before the eventIn this phase of event organization, detailed planningand preparation is undertaken. In planning, key activitiesinvolve identifying the full scope of work required todeliver the event and detailing the event’s design, theset of key activities and elements that will take placeduring the event (e.g. theme, topics, speakers, food andbeverage requirements, attendee plan, agenda, sitedesign, event documentation). As with most projectplans, the event’s scope of work is broken down intodetailed tasks, scheduled and allocated to eventorganizing staff (Human Resources) with responsibilitiesto meet set deadlines. Ultimately, the event planstranslate into checklists, a best practice used to drive therest of the event preparation and setup activities.

In preparation, key activities include procurement ofgoods and services (e.g. speakers, food and beverageservices, equipment), site preparation (e.g. venuedecoration, seating), invitations to participants andlogistics (e.g. travel and accommodation arrangements,security plans, transport and storage of equipment).These various activities are all coordinated andperformed together to work towards the event’s date, the target deadline.

During the eventOn the day, the participants arrive and the event isstaged. During the event, the Event Manager should be physically present, only checking to ensure that allexecution activities flow according to plan. This includesregistration and attendance of participants, execution of event design elements required to run the event assmoothly as possible (e.g. protocol services for VIPs,food and beverage services, planned performances) and site closure once the event has concluded.

After the eventIn the final phase, the event is closed. All outstandingaccounts with suppliers and participants are settled and all documentation produced in relation to the event is archived. Most importantly, the event should be measured and evaluated against its strategicobjectives. Successes, shortcomings and improvementopportunities should be formally documented andarchived for future reference and development.

Event management


Throughout the event life cycleAs with all projects, events very rarely flow smoothly asthey are constrained by a budget, set timeframe and keystakeholders. At various points throughout the event’slife cycle, there are always risks that are realized andencountered as problems. Plans need to be adjusted,changed and constantly updated. The event’s budgetalways needs to be controlled through allocations andapprovals. Key stakeholders (e.g. the event organizingteam, management, participants, media, press andmarketing agencies, government) also need to beinformed through an adequate communication plan.Risk management, communication and budgetallocation are therefore key activities actively appliedthroughout, where Event Managers coordinate efforts,resolve problems, update plans and control budgetallocations to ensure the event is ready, successfullyexecuted and properly closed.

Mapping the life cycle of events: a completeprocess modelLike any project that involves people, each event isunique. New problems emerge and plans need to beconstantly updated. The dynamic, flexible and scalablenature of the activities involved in event organizationand management are therefore extremely challenging to map in the form of a process. Accordingly, manyorganizations struggle with mapping, streamlining andimproving their Event Management activities.

The process model for Events and Event Management as shown on the following page, across all threefundamental levels, integrates all events strategy,management and organization activities throughout the full life cycle of an event. By understanding andapplying this process model, organizations can take asignificant step towards maximizing the full potential of their events.

Building capability: A path to potentialIt is clear that events have become more prevalent andimportant in the region than ever before. With theconsiderable investment involved, organizations shouldrecognize their strategically valuable events as assets,developing them as well as their Event Managementcapabilities over time. The Event Management practicesand process model outlined enable organizations to takea first step towards achieving this. However, the journeyis far from complete.

Developing a dedicated events team, having the rightorganization structure in place, installing appropriatetechnology, training and fostering a knowledgemanagement system are all additional ways in whichorganizations can build their Event Managementcapabilities. With these capabilities, governments andbusinesses can maximize the potential return on theevents that they invest in bringing to life.

Most importantly, the event should be measured and evaluated against its strategic objectives. Successes,shortcomings and improvementopportunities should be formallydocumented and archived for futurereference and development.


Pro

cess

Phas

eP

has

eP

roce

ss

Event initiation(before)

Event planning and preparation(before)

Event execution(during)

Common process(throughout)

Closure(after)

Strategicframework

Scope definition Scheduling Protocol servicesSettlements andreimbursements

Feasibility study Event designInvitation andregistration

Registration andattendance

Reports anddeliverables

Site selectionand preparation

Logistics Staging the event

Event documentation

HR and organizationstructure

Risk management Communication Budget allocation Approval

Procurement On site closure

Evaluation

Events and event management process model

Source: Deloitte, “Events Feasibility & Development: From Strategy to Operations” by William O’Toole, 2011

by Adil Parvez, consultant, Strategy & Operations,Consulting, Deloitte Middle East

Endnotes1 “Qatar 2022 – Business Opportunities” by Qatar First InvestmentBank, 2012

2 “The 5th Middle East Meetings Industry Research Report” by ReedTravel Exhibitions & Meetme, 2011

3 “Events Management: An Integrated and Practical Approach” byRazaq Raj, Paul Walters & Tahir Rashid, 2009

4 “Events Feasibility & Development: From Strategy to Operations”by William O’Toole, 2011

Event management


Protecting the‘other’ network

ICS:


Industrial Control Systems (ICS), those bigmachines with lights, switches and big knobscommon to manufacturing environments,have long been considered a matter forengineers and Operations. But the recentspate and proliferation of cyber attacks -attacks utilizing technology and the Internet,has brought to light how these systems affectour daily lives and are raising questions abouthow they are being managed and protected.

ICS

Since the advent of the industrial age and the rise ofmanufacturing, large, integrated and highly-complexindustrial sites, even cities around the world, have beenprocessing staggering amounts of raw materials orfeedstock into final products down the chain. At thevery heart of such processes are Industrial ControlSystems (ICS): they are what holds everything togetherand scale to become vastly complex proprietarynetworks. ICS is the common overarching term for otheracronyms such as SCADA (Supervisory Control And DataAcquisition), DCS (Distributed Control Systems), and PCN(Process Control Networks), all types of control systems.For the Gulf Cooperation Council (GCC) countries withsignificant reliance on process industries such as Oil and Gas, complex ICS systems are considered thecornerstone of operations. With Industrial Operationsrepresenting a major portion of the GCC National GDP,1

significant disruption is not an option.


For the Gulf Cooperation Councilcountries with significant reliance onprocess industries such as Oil and Gas,complex ICS systems are consideredthe cornerstone of operations. WithIndustrial Operations representing a major portion of the GCC NationalGDP, significant disruption is not an option.

Figure 1: Common industry segments relying on ICS

Industrial Control Systems

Electricity(common

generated anddistribution)

Manufacturing

Food and beverage

(preparationand packaging)

Oil & Gas(production,

storage,transportation,

distribution)

Water & waste(water

treatment anddistribution)

Chemical andPharmaceutical

Transport(traffic and power lines)

Nuclear andrenewable

energy

Source: Deloitte

Figure 2: Industrial sector as % of GDP for GCC Countries1

100%

56.1 %

UAE Qatar Kuwait KSA

77.8 %

42.3 %

66.9 %80%

60%

40%

20%

0%

Source: International Monetary Fund

By common classification, ICS fall under what is termedOperational Technology or Operational Systems, hencedistinguishing ICS from IT (Information Technology)systems. These systems are not built for what is typicallyreferred to as “Security”, namely the protection ofinformation assets from compromise. ICS systems have a fundamentally different premise of operation, havingreal and significant impact on the physical safety ofengineers and operators in the production cycle. Anexample would be the risk of industrial fires andexplosions due to faulty control systems during themanufacturing or refining cycles. Direct access toproduction control is therefore vital to prevent suchincidents, or for responding to them quickly to preventinjury or loss of life.

While information security is founded on three guidingattributes: Confidentiality, Integrity and Availability, ICS reverses these priorities to be more aligned withAvailability first, then Integrity of operations.

The issues with ICS and Information SecurityWith the drive to reduce manufacturing costs andoperational overhead, ICS networks have over the pastdecade opened up to the corporate IT networks. Theidea of leveraging existing networks to manage andmonitor ICS operations reduces dependency on on-siteengineers to monitor and manage the ICS networks and facilitates integrating large, physically-diversemanufacturing operations, from corporate locations.The integration of ICS networks into corporate ITnetworks, however, has presented a new set of securityrisks that have been unaccounted for, such as:• ICS are not designed with Information Security inmind. Reliance on strong physical security and accesscontrols become circumvented when opened up tocorporate IT Networks;

• Exposure of ICS to the threats of attacks from theInternet;

• Exploitations are compounded when IT systems with known (or unknown) risks become an entry point into ICS.

The fact that the key controls of ICS need to be“accessible” is the same reason why there are “weak”security access controls, and with the exposure of suchenvironments to the corporate and IT networks, thedomino effect can now reach all the way to the heart ofproduction. Recently, the exploit dubbed ‘Stuxnet’ wasused as a medium of cyber-attack specifically targetingICS against nation states. Variations of the same exploithave been associated with other regional high-profileattacks.2 According to a popular website tracking cyber-attack incidents,3 the statistics for 2013 (as of March2013) show that the attacks targeting Industry haveaccounted for 11.2 percent of the cyber-attacks trackedglobally, out of which the Oil and Gas Industry rankedfirst with about 22 percent, and the Energy Industryranked third at 11 percent.

The recent and increasing wave of high profile cyber-attacks such as those stated above, have drivenorganizations in the region to elevate informationsecurity to a major board-level agenda item. SeniorManagement has been demanding that business and IT departments overhaul operations to show that theirsystems and networks are adequately protected andthere are plans for recovery from any compromise. Thechallenge related to protecting ICS is the traditionalTwo-Silo approach of management betweenEngineering/Operations and Information Technology.


While information security is foundedon three guiding attributes:Confidentiality, Integrity andAvailability, ICS reverses thesepriorities to be more aligned withAvailability first, then Integrity ofoperations

ICS


According to the National Institute of Standards andTechnology (NIST) “ICS have unique performance andreliability requirements[…]considered unconventional totypical IT personnel.”4 It is common in the region to seethat this is evident in Oil and Gas operations where thesensitivity and criticality is such that Operations wouldisolate IT in its entirety from matters related to ICS.However, the IT organization may be much betterequipped to handle and respond to Information Securityand breach threats, whereas Operations typically wouldfocus on physical security and human safety. When itcomes to securing ICS, both engineering and IT need to operate as partners and stakeholders.

Governments also need to look into what controls are in place to ensure the safety of the ICS network ofnational services of which a breach would possiblyaffect national and economic security. Similarly, anydisruption of critical services such as electricity andwater would directly impact citizen wellbeing. Driven bythis, the state of Qatar has recently released guidelinesrelated specifically to ICS Security.5

Protecting Industrial Control Systems: the task at handIn the GCC, the protection of ICS needs to be customizedto the unique regional characteristics of the area andshould adapt to the changing landscape of securityglobally with particular attention to the mutualconvergence of IT and Operational Technology. Theapproach to address these requirements can becategorized into four points:• Increasing awareness: knowing there is a risk is thefirst step to addressing it. Regionally, entities need toexpand the fold of Information Security beyond justthe IT department and address the risks related to ICS.Communication needs to flow top to bottom on the possible risks and what each stakeholder’sresponsibility should be. Tried and true tactics such as workshops including individuals from both IT and Operations should be conducted to facilitateinformation flow and build bridges between thesetraditionally separate functions.

• Build fit-for-purpose controls: ICS vary by industryand type of operations. In the Gulf region, given the importance of industries such as Oil and Gas,operations may be part of a larger turn-key projectsuch as a global partnership, where the managementor maintenance of ICS may be outsourced in part toexternal parties. All these qualifying factors need to betaken into consideration when putting together a planfor the protection of industrial assets controlled by ICS.

• Leverage existing best practices: there exists a widespectrum of guidance documents that address each ofthe layers and components of ICS Security and to suchextent, a number of global initiatives with interest inprotecting ICS have begun consolidating standards,frameworks and policies. Examples of such initiativesare Europe’s enisa6 and the publications of theInformation Technology Laboratory of the NationalInstitute of Standards and Technology (NIST) in theUnited States.

In the GCC, the protection of ICS needsto be customized to the unique regionalcharacteristics of the area and shouldadapt to the changing landscape ofsecurity globally with particularattention to the mutual convergence of IT and Operational Technology


• Involvement of assurance: periodically performindependent assessments of the security of ICS. Teamsthat have sufficient expertise in both ICS security andthe proprietary technology of the ICS being reviewed,should be hired to perform such assessments, asopposed to solely IT-specific assessments byinformation security practitioners.

Achieving ‘Information Security’ is a challenge. AchievingIndustrial control system information security, with itsinnate complexities, becomes a much more difficulttask. The security and safety of Industrial ControlSystems and the environments they manage represent areal and present risk to entities and governments in theregion. The compounded effect of the limited exposureand experience of stakeholders in the topic, theexponential growth of Internet-based security attacksdriven by geopolitical turmoil and the involvement ofnation-states all make this a topic that must find its wayon the agenda of the Boards of Directors. Similarly,government agencies entrusted have a role to play withguiding industries to a set of regulations and guidancedocuments to mitigate the impact of such risks.Organizations should implement measures to ensurethat if such compromises were to happen, there aresufficient processes to mitigate the impact of theseincidents and the time to recover from them. Protectionof Industrial Control Systems also touches upon criticalnational infrastructure, areas that directly affect citizenwellbeing, in addition to national safety and security.

by Raddad Ayoub, principal, Enterprise Risk Services,Deloitte Middle East

Endnotes1 IMF word economic Outlook 2012 2 http://www.symantec.com/connect/blogs/stuxnet-introduces-first-known-rootkit-scada-devices

3 http://paulsparrows.files.wordpress.com/2013/04/march-2013-targets.png

4 NIST National Institute of Standards and Technology/ SpecialPublication 800-82 Guide to Industrial Control Systems Security

5 ictQATAR, Controls for the Security of Critical IndustrialAutomation and Control Systems Guidelines, January 2012

6 European Network and Information Security Agency (enisa),Protecting Industrial Control Systems Annex III

Achieving ‘Information Security’ is achallenge. Achieving Industrial controlsystem information security, with itsinnate complexities, becomes a muchmore difficult task. The security andsafety of Industrial Control Systemsand the environments they managerepresent a real and present risk toentities and governments in the region.

ICS


Building Intellectual Capital in Islamic Finance throughKnowledge Management strategy

Brick by brick,tile by tile

Islamic Finance is a business and operationalmodel that predominantly relies on its‘intellectual capital’, ‘knowledge assets’ and‘knowledge managers’ to drive its evolution andsustainability in both terms, qualitative andquantitative. Yet some institutions offeringIslamic Financial Services (IIFS) often lack thetools to help them identify the knowledge assetsand the knowledge management value propositionit could develop to deploy resources and achieveefficiency and profitability.

Islamic Finance


‘Knowledge management’ is one of any organization’smost important strategic resources and is rightfullygaining increasing importance in businesses andcompanies. However, most IIFS don’t yet capitalize onwhat knowledge value they possess or what knowledgeassets they have and should define clear strategies andframeworks to retain and utilize their knowledge assets.Our research did not find or come across a formaldefinition or process that entails knowledge managementin Islamic finance nor do I believe it should be differentfrom knowledge management in other industries ordisciplines. Thus Islamic Finance Knowledge Management(IFKM) could be described or defined as ‘a practice orset of processes that aims to identify and build Sharia’aand business knowledge resources within the institutionto enable and empower capabilities and competenciesto excel in conducting Sharia’a-compliant business andrealize business objectives.’

A knowledge management strategy could help IIFS buildtheir intellectual capital and strengthen their capabilitieson functional, operational and organizational fronts. Thediscussion highlights the importance of developing arelevant set of tools and resources that help IIFS build

capabilities in knowledge management and ultimatelybuild adequate intellectual capital to drive and achievethe desired business objectives. A common theme thatemerges from the discussion is that IIFS ought to have a collaborative approach towards the concept ofknowledge sharing, leveraging their scarce resourcesand expertise and proposing practical steps to develop a knowledge-sharing culture in the industry.

A number of important questions emerge in this regard:• How will market participants have an effectivemechanism to learn about new Islamic financeproducts, tools, resources, laws, standards,documentation formats or new skills?

• How will they access these tools within largeorganizations and learn to use them or reuse skills,processes and expertise?

• How will they interact with other stakeholders –including regulatory authorities - and have anintellectual knowledge-sharing dialogue to enhancepractice and regulation policies?

• How will regulatory authorities improve practice andregulation development through an effectiveknowledge-sharing approach with market players?

• How can we best promote regulatory consistency andharmonization amongst different markets andjurisdictions around the world?

• How will the Sharia’a Advisors collaborate to developthe profession’s code of conduct and promote itamongst market participants?

A sound Islamic Finance industry would require a betterunderstanding of the knowledge value of each of theabove questions and assess what stakeholders can bringto improve practice.

The American management consultant, educator andauthor, Peter Drucker said: “Today knowledge haspower. It controls access to opportunity andadvancement.” In his book The Practice Management,he interestingly describes it with dual functionalitydepending on our application to knowledge: “If weapply knowledge to tasks we already know how to do,we call it ‘productivity’. If we apply knowledge to tasksthat are new and different we call it ‘innovation’.”

A common theme that emerges fromthe discussion is that IIFS ought to havea collaborative approach towards theconcept of knowledge sharing,leveraging their scarce resources andexpertise and proposing practical stepsto develop a knowledge-sharing culturein the industry

To build an effective Knowledge Management (KM)strategy in Islamic finance and ultimately strengthen theintellectual capital of the organization, it is important totake account of the unique fiduciary investmentrelations and stakeholders structure and business modelof the IIFS and address the pertinent factors that mayimpact strategy development.

• It is vital to assess the individual business1 and Sharia’acompetencies and face up to the need to plug gaps inknowledge and information sharing in the businesssuch as the variations in markets where Islamic financeoperates – the socioeconomic, demography structure,economic buoyancy, business and financeinfrastructure, Sharia’a Law acceptance, talent andhuman capital.

• It is also important to take into account any existingknowledge collaboration initiatives, the professionalculture level of the IIFS, the talent and humanresources availability, the learning and training culture in the IIFS and commitment from its board and executive management.

The IIFS ability to unlock its practitioner’s knowledgeand sharing this knowledge with peers and industryfellow professionals is extremely important in Islamicfinance. This importance arises from the fact that theindustry is constantly evolving and expanding and yetstill has to reach the scale and scope aspired to. The IIFSleaders are required to exert considerable efforts tosustain forward-looking planning and strategize businesspriorities and ways to harness growth, efficiency,profitability and succession. Several IIFS, industryregulatory authorities and industry professional servicesstakeholders have recognized the importance ofknowledge management initiatives and the supportvalue it brings to the good practice of this niche market.

The following section suggests some of the corebuilding blocks to set forth the KM function in Islamicfinance. Five building blocks have been identified for the process of establishing an effective IFKM strategy.

1. The corporate knowledge-sharing competencieswill require an institution to look at three mainareas to achieve knowledge-sharing behavior: • Building the knowledge assets – identify whatconstitutes knowledge asset? and who to sharewith? To build knowledge-sharing relationship bothwithin the organization (intra-organization) andwith other industry stakeholders, as appropriate(inter-industry).

• Building knowledge base – Islamic financial servicemarket and customer data

• Building knowledge value – communicateknowledge assets and apply within the institution.


The IIFS’s ability to unlock itspractitioner’s knowledge and sharingthis knowledge with peers and industryfellow professionals is extremelyimportant in Islamic Finance. Thisimportance arises from the fact that the industry is constantly evolving and expanding and yet still has to reach the scale and scope aspired to.

Chart 1: The corporate knowledge-sharing competencies

Knowledge-sharing

Knowledge-enabledinnovation

IFKM Strategy

Communityof practice

Culture &norms

Source: Deloitte

Islamic Finance


2. Community of practiceCreating communities of practitioners helps IIFS buildintellectual capital and allows Subject Matter Experts(SMEs) to share knowledge assets with fellow peers tooptimize business processes and efficiency. Moreimportantly, they help IIFS achieve business objectivesand better performance. More recently, the industry hadwitnessed the growth of ‘community of practice’ both,within the individual organization, which addressesinternal issues, or within the wider industry domain,which address macro industry practice issues. Thecreation of Thompson Reuters’s IFG Community standsout. When considering the creation of a specializedprofessional community of practice in Islamic finance,the Sharia’a inputs and compliance factors should notbe overlooked.

3. Cultural differences and business norms in theone country or marketKey to the understanding of the national culturaldifference is the knowledge flow between differentstakeholders to better understand customer needs andrequirements and thus develop the right products andservices.

4. Knowledge-enabled innovation processProducts and services development in Islamic finance is afundamental driver of sustainable growth in the industryand key to its success is building the knowledge-enabledinnovation process. This act forms a practical insight intocustomer-driven research that helps develop productsand services that address the needs of customers.However, some internal and external factors emerge:• Learning capability- Sharia’a considerations and compliance - Business, operational, risk management and finance

• Collaboration within the institution/industry - Process to enable sharing knowledge acrossfunctions- Improve internal communications

• Sharia’a-based and customer-focused innovation

5. Developing an IFKM strategyCreating and developing an IFKM strategy begins withpeople and the IIFS should carefully think organization-wide in the process of shaping the IFKM strategy. TheIIFS should leverage on its individual expertise to ensureproper planning, process of its products and measureperformance of the KM strategy. Therefore, the strategydevelopment process should be aligned to the IIFSstrategic objective, market strategy and businessplanning. The role of engaging the organization’sSharia’a Supervisory Boards (SSBs) is vital. The SSBs haveparticular importance in not only vetting products andservices and their compliance, but also in mitigating risksand checking on business processes and help achievethe operational efficiency desired.

Nevertheless, any strategy aimed at improvingintellectual capital in Islamic finance must considercreating Key Performance Indicators (KPI) of knowledgemanagement to measure performance more effectively.It should also identify what makes knowledge asset,how it can be evaluated, processed, shared and managed.

The IIFS should leverage on itsindividual expertise to ensure properplanning, process of its products andmeasure performance of the KMstrategy. Therefore, the strategydevelopment process should be alignedto the IIFS strategic objective, marketstrategy and business planning.

Knowledge management:Knowledge relates to all the capital owned by peopleand staff of a company: know-how and expertise,competencies, market experiences etc. Knowledgemanagement helps companies turn this humancapital into intellectual capital by creating value.

Intellectual capital1: Is intellectual material –knowledge, information, intellectual property,experience – that can be put to use to create wealth.

The human aspects of knowledge sharing is the largest challenge2: Though supported by atechnological platform, knowledge management is not only a technological tool. Knowledgemanagement is about effectively managing peopleassets and needs to be balanced evenly between:• People and learning organizations• Process and technology• Collaboration of exchange

Share

Innovate

Reuse

Collaborate

Learn

Peop

le

Process

Technology

Source: Deloitte


The creation of an enterprise-wide KM function, withclear governance and oversight from the managementand Board helps the IIFS identify skills and resourcesgaps, better use of available intellectual capital that helporganizations achieve business performance.

To conclude, the commonly-used ‘five Ps’ model to develop KM strategies can work quite well fordeveloping KM strategy for an IIFS. What is requiredthough is that the IIFS define its technical competenciesresources and the role of its SSBs in developing ameaningful and workable strategy. The following chart draws the lines of what are the key steps todevelop the KM strategy.

Chart 2: Developing an effective IFKM strategy

Develop a thought foreplanidentifying IIFS activities andtypes of knowledge assets

Identify a knowledge check-listfor products and services and mechanism to share information

Devise a standardized processto create, measure, share andmanage knowledge

Create Key Performance Indicators (KPI) to measure roles in knowledgemanagement function

Planning Process

Products Performance

People

Source: Deloitte

Islamic Finance

by Dr. Hatim El-Tahir, FCIB, FCISI Director, IslamicFinance Group Leader, Deloitte ME Islamic FinanceKnowledge Centre (IFKC), Deloitte & Touche - Bahrain

Endnotes1 Thomas Stewart, Intellectual Capital: the New Wealth of

Organizations, 1997.2 Deloitte Research and Thought Leadership.



With ever-increasing demands on our time, canany leader afford their managers not to respecttheirs? If your management is reportingineffectively, SACK them!

Less is more

Effective Management Reporting – Fancy term or an essential necessity? Success of any business is dependent on effectivemanagement, largely achieved through a two-prongedapproach: Proactive Planning and Efficient and EffectiveReporting. In today’s fast-paced, information-overloaded world, creating an environment where timeis valued and respected is essential. If you start right,you will finish strong.

Time – Friend or foe? “Time is what we want most, but what we use worst”said William Penn, Seventeenth century entrepreneur,philosopher and founder of the Province ofPennsylvania. Effective time management, especially for champions of industry, is a challenge. Add to the24/7 smartphone world the increasing usefulness ofsocial media such as LinkedIn, Facebook and Twitter,and one finds oneself constantly connected and

accessible, like it or not. Time and time again SeniorManagement and Directors complain that their biggestchallenge is keeping abreast of critical aspects of theirbusiness(es) and how difficult it is for them to filterthrough the mounds of documents, e-mails andmanagement reports to determine what requires theirimmediate attention.

Daily statistics paint a gloomy pictureSo what are the most common demands on time during a day? According to a survey1 on e-mail statistics,senior management personnel receive about 100 to 120 e-mails and send 30 to 40, a day. The more senior,the higher the number as one gets copied on a lot ofunnecessary ‘for your information’ e-mails as well. Inpractical terms this means that even if you spend justone minute reading or responding to these messages, it equates to more than three hours of your time on a daily basis.

Time management


The chart below represents the typical most commondemands2 on the time of senior management anddirectors during a 60-hour work week that includestraveling for board meetings. After meetings that takeup almost 30 percent of their time, they spendapproximately 25 percent of their work week reading or responding to e-mails and reviewing importantmanagement reports (including board committeemeeting reports). If you combine meetings, e-mail/document reviews and travel time, senior managers anddirectors only have 30 percent of their time to devote tothe other demands of their business. As expected, thiscreates a huge business risk as they are unable to reviewall the various management reports for timely andcorrective action, thereby having to rely on managementto update them on what they deem is critical. As aresult, key issues and problems, which inexperiencedmanagement may not report upwards, are overlooked,resulting in losses costing possibly millions of dollars torectify. Imagine the benefits a one or two percentincrease in this time alone for the productivity of the business through timely decision making.

Two-minute ruleSimilar to the “two-minute” rule3 for e-mails being usedeffectively around the world; it is propitious to create an environment whereby management reporting isarticulated in 1-page reports that allow all criticalinformation to be available at your fingertips. If it’s noton this one page, it is either irrelevant, or has beendeemed unimportant to be brought to your attention.This allows you to substantially reduce your time readingdetailed management reports and just focusing on whatthe Key Peformance Indicators (KPI), status updates andaction items are. More importantly, this also allows youto hold management accountable for what is reportedand what isn’t and for the approvals sought at regularintervals. Detailed reports should only accompany the 1-page report as appendices to enable you to delvedeeper if, and when, certain KPI deviate from whatmanagement had reported earlier. Accountability, as youknow, brings the best out of your team. If you do nothave an effective reporting mechanism in place, SACKyour management!

SACK© your Management SACK4 is an acronym encapsulating a 4-point solutionfor efficient and effective management reporting thathas been developed to specifically assist companiesworking towards achieving success on their projects and investments.1. S = “Stipulate”: Stipulate the requirements foreffective and efficient reporting, including thefrequency of reporting. Make your management

Effective time management, especiallyfor champions of industry, is achallenge. Add to the 24/7 smartphoneworld the increasing usefulness of socialmedia such as LinkedIn, Facebook andTwitter, and one finds oneself constantlyconnected and accessible, like it or not.

Average hours spent in a 60-hour week

10

18

6

5

12

3

15

Travel and others

Emails

Phone calls

Conference calls

Social Media

Business meals

Working alone

Meetings

Source: Deloitte


respect/ value your time as a 1-page report can beread easily on your phone, on your drive to work, or even on the plane ride for a board meeting.

2. A = “Appoint”: Appoint the right people toundertake this task. If your management team werecapable of creating succinct valuable reports, youprobably wouldn’t be reading this article. This iswhere the benefits of appointing experts, who canshare their experiences and knowledge with you,comes in handy. It makes a huge difference to thebottom line if the issues are identified earlier on,which could result in savings of millions of dollars.After all, a report is only as good as the informationused to compile it (the “Garbage In-Out” phenomenon)and an independent advisor can help you overcomethis challenge by assisting you and your managementvalidate the integrity and adequacy of reporting fromyour managers and consultants.

3. C = “Collaborate”: Collaborate with yourmanagement (and advisors) to work hand in hand in determining the project KPIs, required updates and the format you would like to see the criticalinformation being presented. This is where your inputis most valuable as let’s face it, you are the end-user.

4. K = “Keep Monitoring”: As with everything else,there is no value addition if there is no subsequentmonitoring. Keep monitoring the reports to see whatis being reported, what was reported last time, whatis missing and what needs to be done to improve thereporting and decision-making process. As we adviseour clients, in a continuously evolving businessenvironment there is no end-for-all template. Youneed to keep monitoring to remain abreast ofchanges that will allow you to adapt your reportingmechanisms and protocols to remain head andshoulders above your competition.

Success means mastering your time Successful reporting need not only be efficient (1-pagetemplates that are easier to create and subsequentlydigest) but also needs to be effective i.e. it needs tocapture relevant and important information: identifyinginefficiencies, determining relevant KPIs, tracking issues. Streamlined reporting allows for quicker reporting and iseasier to digest. It also frees up your valuable time tofocus and discuss the areas that are not on track and

require more attention. However, the time now savedalso means that you probably have sufficient time toreview and discuss most projects rather than beingselective. To sum up, Alan Lakein’s5 words on time management echo true for effective reporting; “Time = life; therefore,waste your time and waste your life, or master your timeand master your life.” So, master your time…SACK yourmanagement!

by Ghazanfar Shah, assistant director, Forensics,Deloitte Corporate Finance Limited (Regulated by theDFSA), Middle East

Endnotes1 Radicati, Sara. “Email Statistics Report, 2011-2015.” Radicati.com.The Radicati Group, Inc., May 2011.

2 Based on statistics from Rachel Emma Silverman, “Where's the Boss? Trapped in a Meeting.” The Wall Street Journal, 14 Feb. 2012.

3 A concept by David Allen, author of Getting Things Done.4 The SACK© acronym has been developed personally by the

author and is used by him to educate and advise his clients in his capacity as a trusted advisor.

5 Alan Lakein is a well-known author on personal timemanagement, including How to Get Control of Your Time andYour Life.

Similar to the “two-minute” rule for e-mails being used effectively aroundthe world; it is propitious to create anenvironment whereby managementreporting is articulated in 1-pagereports that allow all criticalinformation to be available at yourfingertips

Time management

New businessstrategiesfrom big data


“The possibilities are numerous oncewe decide to act and not react”

The possibilities presented by big data arenumerous. But, to paraphrase George BernardShaw, how should business leaders act rather thanmerely react? In seeking to derive maximum valuefrom their businesses, organizations should actbefore they are faced with challenges. Under theappropriate circumstances, big data can lead toinsight within emerging trends that are invisiblein small data and thereby provide the means forbusinesses to be more proactive.

Deloitte Review

George Bernard Shaw


The current state of big data for businessRoom to grow for big dataIndeed, in a competitive environment, big data maycompel such action and dictate against mere reaction.But assuming that an organization has carefully weighedthe benefits of big data applications against thecorresponding costs, which among the numerous bigdata-enabled possibilities is best? Big data presents three types of possibilities:• Answering existing questions in existing businesses,with a focus on improved efficiency and operations

• Answering new business questions in existingbusinesses, with a focus on opportunities for growth

• Answering new questions in new businesses, with thegoal of reshaping the competitive landscape.

While acknowledging that companies may be at manypoints along their data journey, research suggests theprimary focus of big data applications has been on thefirst category of applications, and that the time is ripe to look more closely at the second two. A recent surveyof more than 100 CIOs across multiple industries andgeographies showed that big data – including itsapplications to business and the technologies to realizeknowledge discovery – is expected to be one of the topthree most disruptive technologies in 2013, third only tocloud deployment and mobile enablement.1 As definedin Clayton Christensen’s The Innovator’s Dilemma,2 adisruptive technology should create a new market thatwill ultimately overtake an existing one. In Christensen’s

terminology, the bulk of today’s big data applicationsare generally sustaining, in that they merely improveexisting products with the goal of making more profitsfrom higher-end customers.

From big data 1.0 to big data 2.0“If you do not change direction, you may end up where you are heading” – Lao Tzu

New infrastructures or data sources can unlock somevalue in big data by answering existing businessquestions. This happens when conventional ways ofcreating business value from data become untenabledue to significant growth in the available data. Forexample, Rackspace started out with a small customerbase in its email hosting service. Over time, the numberof its customers grew rapidly to a million users, resultingin a considerable paper trail of 150 GB per day of logsrecorded in various formats. The situation created abottleneck in Rackspace’s capacity to respond totroubleshooting requests using its data.3 Tasks that hadpreviously taken minutes to complete now took hoursbecause the company was still reliant upon a legacysystem that could not scale to meet demand. Rackspacecould only resume reaping business value from its email-hosting service by migrating to a Hadoop stack-basedbig data infrastructure.

Beyond enabling faster answers, big data may enablebetter answers as well. For example, telecommunicationscompanies can improve the value of customer churnanalyses by augmenting existing customer data withnew data from customer interactions on socialnetworks.4

Yet upon closer inspection, in neither of theseapplications of big data do the fundamental strategiesand ways in which businesses are run change. Thecompanies’ goal of understanding customer churn,

Big data is expected to be one of thetop three most disruptive technologies in 2013


for example, still remains largely the same, onlyaugmented with attributes gleaned from social mediadata. This relatively conservative approach seemscharacteristic of today’s big data applications. A surveyconducted by The Economist magazine in 2010 asked,“What new opportunities do you see for yourorganizations as the result of the availability of increasedamounts of data?” Most respondents cited “increasingoperational efficiency” as the top effect (51 percent). Instriking contrast, “innovating new services/products”came in only at number four (24 percent).5 This focus on efficiency may not be surprising given the state ofthe economy at the time of the survey, when businesseswere more focused on cutting costs. However as theeconomy improves and the focus shifts from cuts togrowth, different approaches may be warranted.

To create disruptive innovations, companies shouldadopt new paradigms and find new ways of creatingand stimulating growth. Recall the way that content-creator driven Web 2.0 technologies disrupted thecontent-consuming Web 1.0 world, contributing todramatic changes in the ways businesses interact withtheir customers, innovate in products and services,collaborate, and channel their marketing efforts.6

Similarly, big data 2.0 strategies can open up newmarkets, providing leading businesses with smallwindows of opportunity within which to reap significantbenefits that their competitors have yet to identify.

New business strategies toward disruptive big dataOur review of existing research and discussions withbusiness leaders suggest three types of big datastrategies for creating disruptive innovation.

The first is a customer strategy of leveraging access tocustomer interaction data to shape – instead of merelysense – customer behavior. Access to this data can give

companies the opportunity to generate new profits byanticipating and directing the market toward unrealizeddemands. This strategy can be combined with a productstrategy, where unrealized demands come in the form ofnew products or services that monetize big data. Asimportant as these strategies are, relying only on themmay not lead to persistent benefits. This leads us to the ecosystem strategy, a third approach wherebycompanies aim to participate in or even shape a newindustry-oriented community in which the sharing ofdata enhances the overall business propositions of itsmembers.

Customer strategy: shaping customer behavior“The most significant idea for big data is that it allowsyou to see around corners and react,” according toMichael Cavaretta, technical leader of predictiveanalytics and data mining at Ford Research andInnovation.12 Such a reactive stance has been widelyadopted by data-driven companies even in their dealingswith customers. Until quite recently, the primary way forcompanies to sense their customers’ behavior was byengaging market research firms. Companies sought torespond to the needs of their customers based primarilyon what they learned from these studies. Today, even asthe expression of market sentiment has gradually shiftedto social media, the essentially reactive approach ofsensing customer behavior remains dominant.

Access to this data can give companiesthe opportunity to generate new profitsby anticipating and directing themarket toward unrealized demands

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Businesses in some domains, however, are beginning toactively shape, rather than remain content to merelysense, their customers’ behavior. This involves couplinga comprehensive view of customers, encompassing theirbehavior, preferences, and competitive actions, togetherwith real-time location data that may be, for example,triangulated from cell tower or wireless hotspot signals.Doing so enables companies to make highly customizedoffers using the most suitable channels and at theappropriate moments.

Organizations such as Netflix and Amazon tap into suchdata to identify the tastes and preferences of theirrespective customer bases and use this information toprovide helpful and relevant real-time offers. Theseorganizations thereby influence their customers’purchase behavior. In the case of Netflix, therecommendations are not just limited to new movies butalso include older titles to help reduce licensing costs.13

Retailers, too, gain access to customers’ preferencesthrough customer loyalty cards and by leveraging real-time “check-in” data from Foursquare, for example, andthen they try to influence customer shopping patternsby sending promotions via mobile apps.14

We recently worked with a financial institution tocritically assess its loan and borrowing risk exposure bypooling a large variety of data from macroeconomicindicators, such as consumer – and home– price indices,as well as from national-level charge-offs (how manyloans are written off as uncollectible). This broadapproach shaped the attitudes of financial institutionstowards risk assessment by elevating the stress-testingbar to a more realistic level.

Yet implementing this strategy involves particularchallenges. The chief concern is that of individualprivacy: matters pertaining to personal and sensitiveinformation – even if such information has not beenderived from personal data – are best handledjudiciously and transparently. From an executionstandpoint, companies should also try to anticipate the resulting changes in customer behavior. Given theuncertainty involved in estimating how many customersultimately become influenced by recommendations, thisis hardly a trivial task. In some cases, companies do nothave sufficient visibility and control of their supply chainto allow the additional variability into customer demandthat real-time offers would introduce. The conclusion is that companies should continuously monitor theircustomers to learn how much "shaping" is appropriate.

Product strategy: creation of new products and servicesThere are organizations in the data value chain that aresituated in busy spots of data traffic, finding themselvesin strategic positions to benefit economically from thedata they have access to. These include organizations in the communications, media, and entertainmentindustries. Such organizations, by virtue of theirsignificant interactions with customers over digitalchannels, are becoming repositories of vast amounts of valuable customer data.

In some cases, companies do not havesufficient visibility and control of theirsupply chain to allow the additionalvariability into customer demand thatreal-time offers would introduce


Many of them have leveraged this data for insights thatsupport the day-to-day business of serving their existingmarkets and clients. Banks have been collating 360-degree views of their customers from their profiles,transactions, and online and phone banking interactionsto improve customer satisfaction. For example, out-of-cash ATM incidents can be minimized and the pricing ofproducts and services can be refined.15 Others, though,have innovated and designed entirely new businessmodels by monetizing their data and targeting newmarkets. Telecommunication companies for instancereceive a fine-grained and real-time view of their largecustomer base encompassing location, usage, socialnetworks, and other features through the smartphonesbeing used. They can put this data to use to offer newservices, such as location-based marketing. For example,on top of their regular phone services, the three localtelcos in Singapore – M1, Starhub, and Singtel – incollaborations with Singapore Press Holding and otherretailers have been offering location-based advertising(LBA) SMS to customers. The number of SMS being sentand potentially the rate of consumer responses, thentranslate into additional revenues for the telcos.16

Big data can therefore be used to provide lifestyle-related services to customers in real time. Thesestrategies can help telcos improve customer retention as well as create additional revenue streams. The sameconcepts can be put to use in other areas as well. Forexample, insurance companies can create new productsand services rather than just sell standardized insurancepolicies. This could be done by aggregating customerrisk appetite, policy adoption, and claim history dataover a period of time as inputs to a new service line ofregulatory reporting that is more realistic than theconventional approach.

This product strategy is not limited only to establishedcompanies and their spin-offs. As the provision of new products or services typically caters to unchartedmarkets, this strategy offers big opportunities for new

Big data can therefore be used toprovide lifestyle-related services tocustomers in real time

Deloitte Review


entrants as well. In the retail space, for example, real-time price comparison services such as GetPrice inAustralia and PriceRunner in the UK provide customerswith enhanced information while also opening up newchannels for more targeted online advertisements. In thehealth care space, Castlight Health, founded in 2008,uses big data to inform patients of health care costs by providing them with pricing not usually available tocustomers.17 The community site PatientsLikeMe offers a free forum and friendly environment within whichpatients can seek others who have similar diagnoses,medications and even lab test results. It generatesrevenue by reselling data to pharmaceuticalmanufacturers, all the while remaining transparent with users about its use of their data ratings, reviews and opinions.

Of course the creation of new products and servicesfrom big data is not without its challenges. Newentrants should be sensitive to the legal and ethicalaspects of data usage, especially when involvingpersonal customer data or deriving information from bigdata of a personal nature for profit-making purposes.Legislation related to data is under constant scrutiny bypolicymakers around the world, and a growing body ofcase law in various jurisdictions is being developed. Theregulatory landscape for data-monetization and profit-making opportunities will likely remain dynamic in thenear future.

As big data technology advances apace, data protectionand privacy legislation will likely continue to struggle toencompass all its possible uses. Therefore, businessesthat adopt new customer and product strategies usingbig data have, at a minimum, an obligation to keepcustomers aware of how their data is being used and to provide them with sufficient information to enableinformed choices. Doing so can allow benefits to berealized by both parties, and such transparency may helpmaintain regulatory and moral discipline as well asstrengthen reputation, customer loyalty, and the brand.

Reliance solely on new products and services for datamonetization can pose certain longer-term risks as well.Without being an integral part of an established system,it is possible that the new market can be disrupted byother new developments. From a data perspective, thiscalls for a viewing of data through the prism of anecosystem within which data originators, beneficiaries,competitors, and regulators alike thrive and mutuallybenefit from the sharing of data and insights.

There are organizations in the data value chain that aresituated in busy spots of data traffic, finding themselvesin strategic positions to benefit economically from thedata they have access to. These include organizations in the communications, media, and entertainmentindustries. Such organizations, by virtue of theirsignificant interactions with customers over digitalchannels, are becoming repositories of vast amounts of valuable customer data.

Ecosystem strategy: ecosystem view of dataIt often happens that a single organization does nothave access to enough complementary views of itscustomers to create a new and compelling product or service. In such cases, organizations can fill in theblanks using complementary sources of data from otherorganizations within the ecosystem. Such ecosystemsare built upon appropriate collaboration strategiesimplemented in such a way as to benefit all partiesinvolved, from enterprises to consumers. The ecosystemview can take many forms. At one end of the spectrum

As big data technology advances apace,data protection and privacy legislationwill likely continue to struggle toencompass all its possible uses


is collaboration between companies viewed traditionallyas competitors; at the other end are citywidecollaborations between various public sector agencies to enable better delivery of services. In addition to theimmediate short-term benefits of collaboration, theecosystem strategy helps generate long-term benefits by ensuring risk diversification.

In the area of insurance, we are already seeing thesetypes of data collaboration emerge. Identifying andpreventing fraudulent motor insurance claims, forexample, improves profitability but also helps to keeppremiums low for drivers. Members of the Associationof British Insurers (ABI) in the United Kingdom are nowcombating this problem by sharing claims data frommillions of customers and centralizing its analysis in theInsurance Fraud Bureau – a not-for-profit organizationfunded by the ABI. The information from its database,called the Insurance Fraud Register (IFR), is alreadyhaving a significant impact on the estimated number of fraudulent claims made every year. According to the ABI, “The IFR will help insurers identify whetherindividuals have committed insurance fraud so that theymay take appropriate action. The information may beused at any point in the lifecycle of the product frompoint of sale, at renewal, or when a claim is made andat any other point.”18

Several music-related organizations, includingpublishers, music service providers, and songwriterassociations, are also helping to shape the musicindustry’s digital future by creating a “Global RepertoireDatabase" – a single, authoritative view of all songs, forall territories and uses. This data will be usable by allorganizations in the music publishing value chain toenable efficient and accurate licensing of music andsubsequent payment of royalties for its use. Thedatabase marks a step change in approach to rapidlyevolving online business models for music serviceprovision, consumption, and licensing.

Although the evidence base is as yet relatively small, the strongest of these intra-industry strategies tend tofocus on using big data to address a specific sharedrisk – regulatory, commercial, or technical – while still

allowing participating companies to compete forbusiness from customers as normal. This approach leads to the smallest set of potential conflicts that would otherwise tend to tear the consortium apart andechoes Evan Rosen’s view that collaboration amongcompetitors makes sense when such associations createvalue for both parties, when they begin with structureand clarity, and when they involve non-differentiatingprocesses.19

Going cross-industry, big data provides telcos andfinancial institutions with the potential to generate more insight through collaboration than they couldindividually – particularly as retail payments and mobiletechnologies converge. By leveraging their respectivecustomer data, they can create a truly differentiatedmobile banking platform by collaboratively analyzingtheir combined data.

Government can also have a role in the ecosystem.Many businesses can benefit from the inclusion ofadditional data, such as real-time weather andtransportation-related sensors, which is collectedtypically by the public sector, and which would beprohibitively expensive for any single company toreplicate. Businesses are incentivized to work withgovernment agencies to share investment costs in data collection where they also have a stake in thedownstream impact of the service. For example, whenplanning transportation of shipments, a company canbenefit from integrating its internal freight and bookingdata with external real-time port data from the sensors

Businesses are incentivized to workwith government agencies to shareinvestment costs in data collectionwhere they also have a stake in thedownstream impact of the service

Deloitte Review


and radars deployed by port authority. It is in the interestof the port authority as well to ensure the logisticefficiency and the safety of personnel and ships, hence its willingness to invest in the sensorinfrastructure.

Government-industry collaboration is also seen in theemerging ecosystem of open data, which is currentlyspearheaded by various governments around the world(with huge quantities of open government data nowavailable, for example, on data.gov, data.gov.uk,data.gov.sg, and many other national data portals).Open data typically does not include personal data,which means that it is easier for organizations to handleand mix the data with their own proprietary sources. Forexample, the Practical Law Company is one of severalcommercial and academic institutions working hand-in-hand with the UK government to build an accurate andup-to-date repository of UK legislation, published aslinked open data on the website legislation.gov.uk.

In collaborating with the government and othersupporters to maintain the open data, the Practical LawCompany saves considerable time and expense it wouldotherwise have incurred on maintaining its own dataset, but is now able to use the common, authoritativerepository to compete for legal services on the openmarket.

While data sharing and collaborative analytics can bringtremendous benefits, there are considerable hurdles to overcome. The greatest challenge lies in sharingpersonal customer data that has been collected forother purposes. Recent surveys suggest that customersare wary of companies that share even completelyanonymized data.20 And in many countries, dataprotection legislation explicitly precludes organizationsusing or sharing personal data without the explicit andinformed consent of their customers. Larger ethicalquestions also arise as different pools of data are sharedbetween different parties. What was once unconnected,and therefore implicitly private information, is nowjoined up and exposed to the scrutiny of advancedanalytics. There are fears, too, that collaborators could learn too much from each other’s data, thuscompromising their status of competing on a levelplaying field. Other potential pitfalls include collusion on the part of the collaborators to either fix prices orother similar trade practice violations. Operationally, thelack of a common data schema among even structureddatasets across organizations – let alone unstructureddata – makes collaborative analysis challenging. In thisrespect, governments can have a key role to play ascatalysts for promoting standards through their opendata initiatives.

What can business leaders do?Each of the three strategies discussed offers big dataopportunities in the right business context. Businessleaders can ask themselves a number of questions todetermine if they are positioned to tap into the positivedisruptive potential of these strategies.• Consumer strategy: Big data provides businesses theadditional opportunity to shape customer behavior,with offers that address needs that customersthemselves may not have recognized. To determinewhether an organization is ready for such a proactiveuse of big data, it should answer a number ofquestions. What customer decisions are being made,and what are the processes involved in making those

Big data provides businesses theadditional opportunity to shapecustomer behavior, with offers thataddress needs that customers themselvesmay not have recognized


decisions? Is there an opportunity to influence thesedecisions with new data? If so, where does thenecessary data reside? Does the appropriateinfrastructure exist to serve it up cost-effectively and in a timely fashion (including real-time, if necessary)?

• Product strategy: Businesses also need to assesswhether they are in a position to create new productsand services that will give them a competitive edge.This involves answering questions about the value andthe volume of the data they possess. Do they haveany unique assets? Would these assets in somecombination address a market need? Will it be new orexisting markets that will respond to the new productsand services, and if new ones, what channels can beused to penetrate new markets? Will the investmentinto new products or services come at an opportunitycost to their existing business operations?

• Ecosystem strategy: A business should analyzewhether it is in a position to derive maximum valuefrom strategy shifts in isolation or whether it would bebetter off collaborating with other businesses to forma unique, enhanced interpretation of that data. Dobusinesses have complete visibility of all other playersin their business value chains? If so, business leadersshould determine whether datasets or businessinsights owned by these players can complement theirown businesses. Furthermore, business leaders shouldalso establish whether it is possible to share datawithout losing their competitive edge.

Not every business will be in a position or have thenecessary capabilities to implement all three strategiessimultaneously, or they may need to implement only oneor two of the strategies to improve performance in aspects of business they are targeting. Whicheverstrategy is chosen, businesses ought to develop theappropriate kinds of big data resources, fromempowering and harnessing the desired talent, toinvesting in appropriate technology infrastructure tosustain operations. Companies should be mindful of

the economics of big data and weigh the costs of theinfrastructure and expertise required to store, sort, andanalyze large volumes of data against the potentialbenefits big data can bring to business.

Is big data revolutionary? While there is certainlyincreased awareness and a growing number of toolsrelated to big data, for the majority of businesses, thetransformation has not yet been disruptive. There will be new players that will emerge strongly and newmarkets that will open in the near future as peopleleverage the benefits of big data and advance newbusiness strategies that go hand in hand with big data.Those businesses that ignore the hype and focus onhow big data might be used to ask new businessquestions and meet market needs will be wellpositioned to use the data to drive sustainablecompetitive advantage.

*Note that precedents exist for the “ecosystem strategy” of datapooling described here. For example, insurance companies routinelywrite commercial and professional liability contracts for relativelysmall numbers of heterogeneous risks. For such heterogeneous and low frequency/high severity insurance products as MedicalProfessional Liability (Medical Malpractice) or Workers Compensationinsurance, few insurers collect enough data to reliably estimate thecost of providing insurance to the multitudinous types of risksseeking insurance. (For example, there are hundreds of medical

Is big data revolutionary? While thereis certainly increased awareness and agrowing number of tools related to bigdata, for the majority of businesses, the transformation has not yet beendisruptive

Deloitte Review


specialties and types of businesses.) It is therefore not merelyadvantageous but essential for insurers to pool data throughinsurance rating bureaus. The bureaus in turn use this pooled data to actuarially estimate the expected loss frequencies and severities by risk classification.

The major U.S. credit bureaus provide another long-standinginstance of the ecosystem data strategy. These bureaus collect smallamounts of borrowing and payment information from each of a

number of financial institutions. In return, they provide morecomplete profiles (credit scores, cluster assignments, collections of variables, and so on) of individuals’ financial positions andfinancial stability.

It is reasonable to anticipate many more such arrangementsemerging as individuals leave behind ever more digital “traces” of their daily activities.

Evolution of big data business strategies –a taxi company example

Big data 1.0 strategyTechnology for scalability: A Singapore-based taxicompany, ComfortDelGro, at one point served taxibooking requests only via phone conversations withhuman operators. Over time, as the number of itscustomers grew, this booking channel becamecongested, presenting the need to invest in big data.The company spent over $60 million7 to ramp up anadvanced taxi booking system based on an automaticdialing system and smartphone application. At theback end is a data infrastructure that supportsstorage and processing of hundreds of thousands oftrips,8 15,000 taxis, and billions of data points onreal-time GPS location data.9 This move has scaled up the company’s capacity to serve 20 million taxibookings per year.

Big data 2.0 strategiesShaping customer behavior: ComfortDelGro hadcollected years’ worth of data on taxi usage and thefluctuating demand for taxis through the course of the day. Responding to a persistent increase in taxidemand at certain times of days and weeks, largelyproduced by Singapore’s population and tourismgrowth, the company revised its fares by applyingvarious surcharges at different times and locations.10

This move actually helped shape the customers’booking patterns in a way that allows the company to meet their demands more consistently.

Creation of a new product or service: A taxicompany with access to real-time customer and taxi locations, and in combination with its stores ofhistorical booking records, can technically forecastoptimal routes that are not crowded during differenttimes (at different times of day or on the weekend, for example). Based on this capability, the companycan offer a new service in the form of real-timererouting recommendations, on top of its usual taxioperations.11 Not only can this service improve theability of its taxi drivers to anticipate both demand and traffic, it can also be sold to any other drivers in the city.

Ecosystem view of data: A reliable traffic autorerouting service can be made from an ecosystemview of data shared among taxi operators andnational land and environment authorities. Theseentities have complementary data and interests in this context. While the land authority owns temporalsnapshots of traffic density across the city, the taxioperator stores sparser but more detailed trajectoriesof traffic movement collected from i ts active fleets.These data, combined with real-time weather androad-flooding information from the environmentauthority can enable better forecasts of routecongestions. This service benefits the three entitiessimultaneously. Reduction in citywide trafficcongestion is one of the primary goals of the landauthority. Less congested roads translate to higherrevenues for taxis. And finally CO2 emission isreduced with less traffic jams, something that is inthe interest of the environment authority.


by Vivekanand Gopalkrishnan, is a director withDeloitte & Touche Financial Advisory Services Pte LtdSingapore and leads Deloitte Analytics Institute Asia,David Steier, is a director with Deloitte Consulting LLPand leads the Deloitte Analytics Solutions Group,Harvey Lewis, is a director with Deloitte UK and leadsthe research programme for Deloitte Analytics in the UK,James Guszcza, is the National Predictive Analyticslead for Deloitte Consulting’ LLPs Actuarial, Risk, andAnalytics practice and John Lucker, is a principal withDeloitte Consulting LLP and Global Advanced Analytics& Modeling Market Offering leader and a US leader ofDeloitte Analytics.

Endnotes1 Constellation Research, “Four Personas of the Next Gen CIO,”

Constellation Research, 2011.2 C. M. Christensen, The Innovator’s Dilemma: The Revolutionary

Book That Will Change the Way You Do Business, Boston:Harvard Business School Press, 1997.

3 T. White, Hadoop: The Definitive Guide, O’Reilly, 2009.4 B. Baesens, “Social Networks in Data Mining: Challenges and

Applications,” 2011.5 Economist Intelligence Unit, “Big data harnessing a game-

changing asset,” Economist Intelligence Unit, 2011.6 McKinsey, “How companies are benefiting from Web 2.0:

McKinsey Global Survey results,” McKinsey Quarterly, September2009.

7 K. Stewart, Sustainable Transportation, Singapore: Land TransportAuthority, Singapore, 2010.

8 S. Iswaran, “Speech by Mr. S. Iswaran, Minister, Prime Minister’sOffice & Second Minister for Home Affairs and Trade & Industry,at The Official Opening of the Business Analytics TranslationalCentre of Singapore,” 2012.

9 Comfortdelgro, “Comfortdelgro revises taxi fare structure,”Comfortdelgro, Singapore, 2011.

10 R. Metz, “An App that Could Stop Traffic,” July 25, 2012.<http://www.technologyreview.com/news/428523/an-app-that-could-stop-traffic/>

11 Comfortdelgro, “Comfortdelgro’s taxi bookings soar to a newrecord of 24,000,000,” Comfortdelgro, Singapore, 2011.

12 Michael Cavaretta (Ford), Interview with L. Dignan, September11, 2012.

13 D. Palmer, V. Mahidhar, and D. Elbert, “Making Sense of SocialData,” Deloitte Review, Issue 9, 2011.

14 S. Clifford, “Linking Customer Loyalty With Social Networking,”New York Times, April 28, 2010.<http://www.nytimes.com/2010/04/29/business/media/29adco.html?_r=1&>

15 P. Crosman, “The Big Data Myth,” June 1, 2012.<http://www.americanbanker.com/btn/25_6/customer-data-improve-marketing-1049578-1.html>

16 Singapore Press Holding, “SPH’s location-based advertising SMSservice extended across all telcos,” Singapore Press Holding,Singapore, 2009.

17 McKinsey Global Institute, “Big data: the next frontier forinnovation, competition and productivity,” McKinsey GlobalInstitute, 2010.

18 J. Salmon, “To share or not to share: insurers, banks andregulatory requests,” September 20, 2012. <http://www.out-law.com/en/articles/2012/september/this-weeks-headline/>

19 E. Rosen, The Culture of Collaboration, Red Ape Publishing,2007.

20 Deloitte, “Data Nation 2012: Our lives in data,” Deloitte LLP, July 2012.

Deloitte Review


Whistleblowing, or ‘Ethics’ hotlines, have gainedprominence in the Middle East over the last fewyears, although it is difficult to identify anylegislation to protect ‘whistleblowers’ within the various Middle East government sectors.However, history provides many instances where the whistleblower, and not the alleged offender, isthe one penalized and people in the Middle East areuncomfortable with the process, which allows foranonymous reporting.

Blowing in

the wind?


The Middle East is relatively new to the concept ofanonymous reporting and there is a fear that unfoundedallegations could jeopardize someone’s job. The otherpoint is that the Middle East culture historically has notincluded the concept of informing on someone.

The Sarbanes-Oxley Act in the U.S. and other legislationin Europe and the Far East have seen an increased use ofhotlines in the business community. Under Section 301of the Sarbanes-Oxley Act, companies trading on theU.S. stock exchange must provide a mechanism foremployees to remain anonymous when reportingconcerns about accounting or audit irregularities. This is at odds with legislation in certain European countries,where anonymous allegations are not sanctioned.

The Australian Standard 8004-2003 ‘WhistleblowingProtection Programs for Entities’ is only a guideline but is increasingly being used as a basis of ‘best practice’ inother countries, in the absence of any other appropriateguide. That, coupled with an increased awareness ofcorporate governance, has also helped the increase inhotlines. Indeed, some organizations have been createdsolely to provide outsourced hotline services.

Regular statistics from the Association of Certified Fraud Examiners surveys identify that ‘tip-offs’ stillprovide a significant percentage of fraudulent behaviordetections. However, there is a need to balance thewhistleblower’s requirement to maintain anonymityagainst the organization’s need to establish whether the information provided genuinely raises allegations of inappropriate behavior.

The whistleblower also has to rely on the organization’spolicy of protecting a genuine whistleblower, withoutany backup from legislation. So can the whistleblowerrely on the organization to protect him? What must the organization do to provide a whistleblower with that sort of comfort? The answers to these questions are normally found at the top of the organization. Thedirectors and senior management are responsible forsetting the culture of the organization. Therefore, themessage has to go out from the top. The term ‘tonefrom the top’ is often used in corporate governance andculture rhetoric, but it holds true. If the senior playersdon’t provide the leadership, who further down thechain is going to bother?

Whistleblowing


By providing outsourced whistleblower hotlinemanagement, organizations can send the message totheir employees that the initial communication will behandled independently to ensure that the allegation isrecorded and passed to the appropriate person. Whatoccurs subsequently depends on the nature of theallegation and the organization. Although internally-operated hotlines can also work well, they aredisadvantaged by the fact that all allegations are initiallyreceived by employees of the organization where thesubject of the whistleblower’s allegation is alsoemployed. This has always been a point of concern.

The processes required to establish the bona fides ofallegations involving junior or middle ranking staff tendto be fairly straightforward. Either internal or externalinvestigators are normally appointed to review thematter and report on the allegations raised. Usually anappropriate senior manager will then deal with thematter after legal and HR advice.

If the allegation is against a senior manager, thesituation becomes a little murkier and the issues maybecome confused. Unless the organization has a robustpolicy for dealing with such a scenario, investigationsrun the risk of becoming compromised by seniormanagement involvement, or of allegations beingignored.

It is really at this level that the true ethical nature of theorganization becomes clear.

In reality, the use of a whistleblower hotline is anotheralternative to reporting issues to management and isnormally only used where the whistleblower isuncomfortable in approaching their line manager or HR department. One of the major issues in dealing withwhistleblowers is that the person taking the initial call is unaware of the history leading up to the contact. For example, it is possible that the whistleblower hasresorted to the hotline as a final act following theunsatisfactory resolution of other avenues. As such, the whistleblower may be under extreme psychologicalpressure, having invested a significant amount ofemotional capital in the matter. With this in mind, from an investigative perspective it isadvantageous that the initial contact should be with anexperienced investigator or operator who has the abilityand training to deal with stressed and anxious callers.Sometimes, if the whistleblower refuses to give theirdetails or contact number, the call receiver may only get one chance to get all the information, although the call receiver may actually be able to convince thewhistleblower that better assistance can be provided ifthe person identifies themselves. It is becoming morecommon for hotlines to be Internet- and e-mail-based.Although this makes it easier to report concerns, itremoves the ability of the hotline operator to gatherpotentially critical additional information at the outset.

Few studies have been undertaken into the motivationof whistleblowers. Only in the U.S. is there a provision toprovide whistleblowers with financial rewards followingsuccessful prosecutions. Anecdotally, the vast majorityare motivated by ethical issues concerning inappropriateconduct by the subject of the whistleblowing. However,it is also possible that some whistleblowers may bemotivated to make allegations with the intent toembarrass someone or for the sake of revenge.

There is a need to balance thewhistleblower’s requirement tomaintain anonymity against theorganization’s need to establishwhether the information providedgenuinely raises allegations ofinappropriate behavior


It is only by talking at some length to whistleblowersthat an understanding of their motivation may begained. This can prove critical in understanding how the matter should proceed.

Ongoing support for the whistleblower is also importantto ensure that they are comfortable with what isoccurring and are not suffering any adverse treatment as a result of their actions. This fear seems to be themajor reason whistleblowers initially wish to remainanonymous.

Essentially, the key to an effective whistleblowerprogram is two-fold. The first part is dealing with the allegation, but just as important is the ongoingmanagement of the whistleblower. Policies shouldensure that any ‘detrimental’ action taken against thewhistleblower as a result of their allegation should be treated as a serious matter and appropriate action taken.

Whilst the major focus of most whistleblower policies is on whistleblowers, processes should also be put inplace to deal with the person(s) against whom thewhistleblowing allegation is made.

As part of any investigation, the subject should beinterviewed and provided with any evidence supportingthe allegation and offered an opportunity to respond to the allegation. This is known as the duty of fairness,which underpins most legal processes. Once adetermination has been made, the subject of theallegation should be advised of the finding. If theallegation is found to be unsubstantiated, any harmcaused to the subject of the allegation should beremedied, including a statement of outcome fromsenior management if the matter had been made‘public’.

The final issue, especially where no legislation exists toprotect the whistleblower, still reverts to the question of trust. Can the management be trusted to respond to whistleblower allegations in an appropriate manner?The answer comes back to the issue of culture,mentioned earlier. The increasing global acceptance of the need for a whistleblower process means that the Middle East needs to adopt the process in order tocomply with overseas expectations and requirements.Obviously, no one is going to use the system if theydon’t trust it. As with most other cultural issues the buckstops with senior management. If senior managementcan demonstrate that the whistleblower system is fair,transparent and has sufficient safeguards to both thecomplainant and the accused, the program has a lotmore chance of succeeding than where it can’tdemonstrate them.

by David Clements, director, Forensic and DisputeServices, Deloitte Corporate Finance Limited (Regulatedby the DFSA), Middle East

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