Information Digest: Seek and ye shall find

The Virtue matrix: calculating the return on corporate responsibility

Executives who want to make their organisations better corporate citizens face many obstacles: If they undertake costly initiatives that their rivals don’t embrace, they risk eroding their company’s competitive position. If they invite government oversight, they may be hampered by costly regulations. And if they adopt wage scales and working conditions that prevail in the wealthiest democracies, they may drive jobs to countries with less stringent standards.

Such dilemmas call for clear, hard thinking. To aid in that undertaking, Roger Martin introduces the virtue matrix – a tool to help executives analyse corporate responsibility by viewing it as a product or service.

The author uses real-life examples to explore the forms and degrees of corporate virtue. He cites Aaron Feuerstein, CEO of Malden Mills, a textile company whose plant was destroyed by fire in 1995. Rather than move operations to a lower-wage region, Feuerstein continued to pay his idled workforce and rebuilt the plant. Unlike the typical CEO of a publicly held corporation, who is accountable to hundreds or thousands of shareholders, Feuerstein was free to act so generously because he had only a few family members to answer to. But as Martin points out, corporations don’t operate in a universe composed solely of shareholders. They can be subject to pressure from citizens, employees, and political authorities.

The virtue matrix provides a way to assess these forces and how they interact. Martin uses it to examine why the public clamour for more responsible corporate conduct never seems to abate. Another issue the author confronts is anxiety over globalisation. Finally, Martin applies the virtue matrix to two crucial questions: What are the barriers to increasing the supply of corporate virtue? And what can companies do to remove those barriers?

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The hidden challenge of cross-border negotiations Cultural differences can influence business negotiations in unexpected ways, as many a hapless deal maker has learned. But the differences extend well beyond surface behaviours, such as proper table manners and the exchange of business cards – and even beyond deeper cultural characteristics, such as attitudes about relationships and deadlines.

Indeed, there’s another, equally treacherous aspect to cross-border negotiation: the ways that people from different regions come to agreement, or the processes involved in negotiations. Decision-making and governance processes can vary widely from culture to culture, not only in terms of legal technicalities but also in terms of the behaviours and core beliefs that drive them. Numerous promising deals have failed because people ignored or underestimated the powerful differences in process across cultures.

In this article, James Sebenius offers ways in which negotiators can prepare for such cultural differences. A useful approach, he says, is to map out the decision-making process – including who’s involved, what formal and informal roles people play, and how a resolution is actually reached. With that knowledge, you can design a strategy that anticipates obstacles before they arise.

Governance and decision-making processes can take devilishly unexpected forms as you cross borders. But by designing your strategy and tactics so that you’re reaching all the right people, you increase your chances of striking a sustainable deal. Those negotiations that might otherwise have failed because people ignored or underestimated powerful disparities in process will, in the end, yield a meaningful yes.

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Making sense of corporate venture capital

Large companies have long sensed the potential value of investing in external start-ups but, more often than not, they fail to get it right. Remember the dash to invest in new ventures in the late ’90s and the hasty retreat when the economy turned?

This article presents a framework that will help a company decide whether it should invest in a particular start-up by first understanding what kind of benefit might be realised from the investment. The framework – illustrated with examples from Intel, Lucent, and others – explains why certain types of corporate VC investments proliferate only when financial returns are high, why other types persist in good times and bad, and why still others make little sense in any phase of the business cycle.

The framework describes four types of corporate VC investments, each defined by its primary goal – strategic and financial – and by the degree of operational linkage between the start-up and the investing company. Driving investments are characterised by a strong strategic rationale and tight operational links. Enabling investments are also made primarily for strategic reasons, but the operational links are loose. Emergent investments, which are characterised by tight operational links, have little current – but significant potential – strategic value. Passive investments, offering few potential strategic benefits and only loose operational links, are made primarily for financial reasons.

Passive corporate VC investments dry up in a down economy, but enabling and driving investments usually have more staying power. That’s because their potential returns are primarily strategic, not financial. In other words, they can foster business growth. Emergent investments may make sense even in a weak market because of their potential strategic value – that is, their ability to help companies identify and spark the growth of future businesses.

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Brand building: SchlumbergerSema goes for the gold with Olympic IT services

An IT services project of the size and magnitude of the 2002 Salt Lake City Winter Olympic Games does not come along very often. When it did, there was a company ready to take the challenge. SchlumbergerSema (SLB) was the lead integrator among 15 into whose hands dozens of vendors – including Xerox, Samsung, AT&T, Lucent, Qwest Communications, and Sun Microsystems – put the integration of all their services at the 2002 Winter Olympics. SLB will also be the lead integrator for the next four Olympic events. IDC analyst Richard Dean has authored Brand building: SchlumbergerSema goes for the gold with Olympic IT services sponsorship, IDC #26599, a document which discusses the success of global brand building efforts and name recognition and identifies some of the challenges and milestones a project this size can be faced with.

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North American wireless industry is heating up The North American wireless industry has always been thought of as a hamstrung backwater compared to its European and developed Asian counterparts. However, the market is currently taking great strides forward with its wireless Internet offerings, spurred on by the rapid deployment of next-generation networks.

In this research extract, senior analyst Robin Hearn considers some of these major North American trends. All North American operators are now aggressively deploying next-generation wireless networks.

Of course, the fact that most operators are deploying their networks in stages must be recognised, but do not be too unsympathetic – they must cover vast geographies and may also face the challenge of technology migration. AT&T Wireless and Cingular both have to contend with the migration from TDMA to GSM, and while the rights and wrongs of how they choose to do this might be questioned, nobody can doubt the seriousness with which they are treating their upgrades to GPRS.

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The future of intelligent computing What is an intelligent computing fabric? It’s the next step in the history of IT infrastructure architectures that started with the mainframe, migrated to the distributed environment, and will move to the adaptive infrastructure. Hurwitz Group defines it as: “The automatic and user transparent sharing, aggregation, and utilisation of technology resources by an organisation across a single computing infrastructure.”

As the definition suggests, intelligent computing fabric means users will share applications and data from repositories and servers around the world without knowing where the information resides. IT managers will be able to group together and allocate technology resources from less utilised systems to meet business requirements and increase return on investment, while controlling capital expenses. To make this a reality, enterprise and storage management vendors such as BMC Software, Computer Associates, EMC, IBM/Tivoli, HP, Veritas, and others, must develop technologies and marketing strategies that address what Hurwitz Group believes to be the top three stumbling blocks for deploying a intelligent computing fabric: intelligence, standards, and IT organisational cultural shift.

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Pull the plug on your legacy applications Kevin Murray, CIO of domestic claims and personal lines for American International Group (AIG), had a mainframe full of fat-client legacy applications. He just trashed it in favour of newly written thin-client Java and XML applications.

Dan Roberts, CIO of the PMI Group, a mortgage insurance company, is in the middle of web-enabling his back-office legacy systems, a project he anticipates will take up to three years. However, he says it’s “absolutely necessary” if his company is going to keep up with product development and customer demands.

Maria Fitzpatrick, CIO of PacifiCare Health Systems, just decided to get away from the multiple OpenVMS and Unix programs scattered across her company’s business units, and upgrade to a single web-enabled platform. The project is part of a major effort to redesign PacifiCare’s corporate strategy by unifying business processes across all units.

The list, long now, will get longer. Every day thousands of enterprises rely on decades-old applications written in obsolete programming languages that, along with the systems on which they reside, are no longer supported by the application’s creators – whoever they were and wherever they may be.

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Jaguar Racing gets power on demand

The Jaguar Racing team is hoping computing-on-demand will help drive it to Formula One success this season.

To compete in an increasingly technology-led sport, the Milton Keynes-based team needed to improve its testing and design process at an affordable cost. The answer has come in a deal which allows it to call on the power of up to eight extra processors when it is really needed: during the Grand Prix season. When they are no longer needed, a single phone call will turn them off, according to computer-aided engineering manager, Steve Nevey. “I say what I want and the machines are instantly mine, just added to our network with the names we’ve given them and our IP addresses,” he said.

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Storage suppliers to kiss and make up

The new storage buzzword is “interoperability”, which comes as a relief to a technology area dominated for so long by proprietary infrastructures. A series of big storage names have proclaimed their intention of making their products work with those from other suppliers. Even operating system suppliers such as Novell and Microsoft are looking into enterprise software management. This could result in a new approach to storage: instead of forever increasing disk space, we can expect products to tackle growing data volumes. The big surprise is Microsoft’s sudden interest in storage. It is less than three months since Bill Gates told Network News that he thought intelligent data archiving was not a problem because storage capacity was unlimited.

“That is just wrong,” laughed Dave Norris, vice-president at storage management provider Princeton Softech. He said that people were not just buying more disks, but bigger machines at the same time.

“That gets terribly expensive,” he said. “More metal is not the way forward. The volume growth of data is terrifying. It is cluttering systems and slowing performance. Anyone who believes growth rates will reduce is very optimistic. It’s more likely they will get worse.”

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Maximizing business value through e-mail

Not only will e-mail continue to be a crucial business tool, but its role within the enterprise will widen. We look at e-mail, what it is, what it can be and how enterprises can most safely and successfully employ it.

E-mail will gain an even wider role in the enterprise as four forces come together in 2002, validating e-mail as critical business infrastructure and modifying the way enterprises look at e-mail products.

The economy is driving a decrease in capital investment, as well as influencing enterprises to cap head count and operations costs. IT spending hasn’t significantly declined, but its growth has slowed as enterprises have been scrutinising spending on all applications, including e-mail. Rather than following the “obvious” course forward with their current products, many enterprises are taking another look to ensure that the options available from their vendors are what they need to properly support the business.

To establish a culture of economical use of e-mail and to reduce the risk of legal liability, every enterprise should have a usage policy that defines for the employee what is appropriate and what is inappropriate, and outlines some etiquette for e-mail use. Such a policy will also help to define the line between employee privacy and the enterprise’s responsibility to its investors to keep the systems running efficiently and to prevent embarrassment or consequences to the enterprise that can stem from inappropriate actions on the part of employees.

With virus attacks rising exponentially (many of them carried via e-mail and instant messaging), e-mail users have lost their na’vety about security. In addition, the amount of spam in the networks today is about 16 times what it was two years ago. All told, an estimated 30% to 50% of the messages coming toward enterprises is spam or malicious content. Serious spam control is needed to optimise the use of bandwidth, disk space and people time. Concerns about terrorism and industrial espionage are very real. Serious defences are needed in a way that they have never been needed before.

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EAI solutions market worth $37bn by 2005

Laurent Lachal, senior analyst, looks at the prospects for the EAI market, where some vendors are confusing marketing with shouting loudly. In this extract from market analysis, SoftwareArchitectures@Ovum, he asks, how big is the EAI market and where is it going?

The global market for systems integration services and software is currently worth more than $100bn per year. At the beginning of 2001, very little of that demand was satisfied by specially designed EAI software products. However, this is set to change. The sale of EAI software – and related services – will grow rapidly over the next five years to exceed $37bn.

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