System Talk

Resolutions for Corporate Learning in 2009

2008-12-13T08:09:00.001+08:00

Resolutions for Corporate Learning in 2009
by Josh Bersin

This has been a transitional year for corporate learning organizations. We have seen reductions in discretionary spending and budgets, recentralization of training and tighter integration with talent management initiatives.

Next year will bring even greater change. Here is our list of resolutions for senior-level executives wishing to maximize the impact of their learning programs:

1. Further integrate learning with talent management.
The current economy and demographic shifts make this the biggest priority for 2009. Make sure your learning programs are aligned with business goals and challenges and are tightly integrated with employee development and career planning. Today's biggest talent challenge is gaps in the leadership pipeline. Therefore, take a focused look at your management and leadership development programs.

2. Bring centralization back to corporate training where appropriate.
Because of today's emphasis on integrated, corporate-wide talent strategies, the learning function must be more coordinated and often more centralized. The role of the CLO also is changing. In fact, some companies have done away with the role, putting in its place someone responsible for integrated talent strategies. As a learning leader, you can aspire to this role if you broaden your perspective to include development planning, performance management and succession management.

3. Bring learning on-demand into your organization.
Learning on-demand is the "always on" world of content, people, communities and support expected by young employees, as well as many Web-savvy older workers. Your learning teams must make content sharing, content standards and information architecture a top priority for 2009. In fact, content sharing and standards development is one of the top 20 high-impact learning processes identified by our research. Most organizations now have plenty of content; the challenge is making it easy to find, relevant and up-to-date.

4. Embrace new rich-media tools and approaches.
Today it is almost trivially easy to develop podcasts, rapid e-learning (PowerPoint with audio, published to the Web), mobile content (published automatically onto high-resolution mobile devices such as iPhone) and video. Most cell phones can capture video, so the challenge of developing instructional video has dropped by orders of magnitude in the past few years. Simulations and gaming can be done for a fraction of what they used to cost. New tools open up new methods of delivery and add interest and appeal to information, especially for younger workers.

5. Maximize your LMS by integrating it into a complete employee or customer portal.
Most LMS offerings don't have strong portal front ends, easy-to-use and collaboration features, integrated social networking or on-demand search and publishing. In 2009, many buyers will separate products for social networking, rather than using their LMSs. To drive maximum value, the LMS must become a "service" within your broader employee, talent or customer portal.

6. Take a leadership role on the implementation of corporate social networking.
Corporate learning must take a leading role in the development and implementation of social networking strategies. Learning professionals must embrace this form of internal communication and harness its power for learning. Today, fewer than 5 percent of companies surveyed reported including social networking in their learning and talent strategies. Sales, engineering and customer service have been among the early adopters.

7. Think, act and organize for global learning solutions.
In recent research, 66 percent of respondents told us that globalization is an important priority in their strategies. Organizations of all sizes now have global customers, partners and employees. How can learning programs be similarly globalized? A start is to begin moving some content development and delivery into the hands of local learning leaders, who can supervise translation and localization with geographic-specific examples and styles, and determine the best delivery method for audiences. Especially important are global learning initiatives for leadership and career development.

8. Build a learning culture.
The best learning programs and solutions will have impact only when corporate leaders and managers commit the time, energy and resources required for continuous corporate learning. To build a strong learning culture, you must engage top leaders in learning, rotate line-of-business leaders in and out of learning-related roles, make sure managers and employees participate in learning programs and invest in learning through good times and bad.

[About the Author: Josh Bersin is the principal and founder of Bersin & Associates, with more than 25 years of experience in corporate solutions, training and e-learning.]

I Hate Coaching Employees!

2008-12-13T08:08:00.000+08:00

I Hate Coaching Employees!
by Chuck Murphy

"I hate coaching employees! They take so much out of my day and waste my time. Why can't they understand this? It's so simple. I can explain it 10 times, and they still don't get it. Boy, are they thick! Where did they get this one?"

Sound familiar? Well, sometimes trying to coach employees can be challenging. This is especially true if the talent manager believes coaching merely means showing another employee how to do something. The difficulty usually is not the employee, but rather in the manager's understanding of what is required to be an effective coach.

Like other duties, coaching requires specific competencies. Think about the following change in our society.

Computers have greatly reduced our patience in waiting for information. Thirty years ago, it would take five to seven minutes for someone to retrieve information from a folder in a file cabinet, but nobody had a problem waiting. Today, if the computer takes 10 seconds to retrieve data from a system 1,000 miles away, we tend to think it is taking all day to service our request.

We become frustrated, angry, irritated and may click "Ctrl, Alt, Delete," to end the task because we feel the computer is hung up. In reality, the computer is just taking a bit longer to process our request because it has 100 million other customer requests in the queue before ours.

This instant-response mentality also might be the root cause of our impatience in other situations, such as waiting in line for a sales clerk, waiting an hour at a restaurant for a table on a Friday or Saturday night or, in our professional lives, waiting for an employee to catch on to what we are trying to explain.

Coaching involves patience and understanding. It requires that we perceive an employee's difficulty in comprehending what we are trying to convey. To be a professional coach, you must think back to a time when you had to learn a new process or task yourself. How did you feel about not getting it the first time? Were you nervous or unsure of yourself as you entered into the learning process? Did the coach appear to be irritated when you didn't catch on immediately?

Professional coaches go slowly and are patient. They move in slow motion, shifting down from their normal 90 mph speed, to 2 mph so the employee can comprehend the task or concept being explained.

Professional coaches are patient, empathetic, resourceful, kind, understanding and focused on maintaining the employee's self-esteem. Coaches know it may take several attempts before a trainee understands what they are trying to demonstrate or communicate. Further, professional coaches employ different approaches to effectively transfer information. A professional coach is creative and thinks out of the box, or uses analogies the trainee can relate to everyday life.

Good listening skills are extremely important in the coaching environment. A professional coach listens carefully to employees' questions to pinpoint the specific areas in which the trainee is experiencing difficulty. They chunk information and ask questions at key points to ascertain an employee's level of understanding. These periodic checkups allow the coach to correct any confusion or lack of understanding prior to proceeding with additional information. The coach approaches the task at hand in a slow and systematic manner and is aware of where the employee is in the learning process.

A good coach has his or her finger on the employee's pulse and an eye on the person's body language. A professional coach proceeds slowly and cautiously, maintaining the employee's self-esteem and providing the person with opportunities to stop and ask questions.

There's really only one thing talent managers need to do on a continuous basis when coaching: Ask, "How would I feel if I was the one learning something brand new?" Now you get it, coach.

[About the Author: Chuck Murphy is a training specialist for the Massachusetts Department of Revenue.]

Capturing Knowledge That Makes the Company Great

2008-12-13T08:07:00.001+08:00

Capturing Knowledge That Makes the Company Great
by Robert Hyde

As the Cold War generation retires from the defense industry, companies in this sector are struggling to replace these personnel with a shrinking pool of qualified professionals. Northrop Grumman has turned to knowledge transfer as a means for growing tomorrow's leaders.

The concept of knowledge transfer is taking on new importance throughout the defense industry. That industry is faced with a demographic profile that had its foundation during the 1960s portion of the Cold War. It developed the world's best technical workforce in a society in which engineering was an occupation of choice and our public education systems had the rigor to develop tens of thousands who understood, learned and applied the math and science skills needed to be successful engineers.

That workforce is now retiring and the pipeline of talented replacements has shrunk considerably. All of the above are realities forcing the defense industry to understand that knowledge transfer isn't just another consultant-generate d fad or cutting-edge buzzword. Survival - and, by extension, the qualitative edge the industry provides the American defense establishment - is reliant on successful knowledge transfer.

The Northrop Grumman Story
For Northrop Grumman Marine Systems, which employed more than 2,000 during the peak of the Cold War, the final victory was symbolized with the fall of the Berlin Wall, the crumbling of Soviet Communism and the Westernization of the Eastern Bloc.

All of those events, however, resulted in tens of billions of dollars in canceled defense contracts and a flattening of defense spending on development programs and weapons systems production. It was the peace "dividend," which meant reducing the workforce from approximately 2,500 to about 1,000. Business wasn't expanding, few new employees were hired and attrition was limited to retirement.

Fast-forward to today and Cold War-era systems need replacement, business is better, employment is growing, and the generation that won the Cold War is retiring in droves.

Northrop Grumman Marine Systems owns the intellectual property that makes one of its products singular in the world. It helps deliver the absolute reliability of a key strategic weapons system. This technology, which has never failed even a single test during decades of deployment, is the brain child of a key and indispensable engineer who has nurtured, fine-tuned and mastered this technology.

The problem is that this engineer has decades of accumulated "institutional" and "tribal" knowledge bouncing around in his head. He is planning to retire. In response, the business hired a brilliant engineer to serve as a protege for several years and learn from the master. That was a plan right up until the moment the protege accepted her "dream job" at NASA. Lesson learned: Don't put all of your eggs in one basket.

The case above demonstrated a key flaw over and above having "all of your eggs in one basket." Where were the lessons? How can they be replicated? What gets taught first? These and other questions plagued the management team. The result was a documented process and management commitment.

The leadership team quickly understood that to succeed, the organization needed a plan that standardized the process and removed the guesswork of ad-hoc learning. That plan and the lessons inherent in it had to be documented and shared with more than a single protege. Lessons are now prepared, reviewed by contemporaries of the knowledge holder and the management team and presented in a classroom in Socratic fashion.

Starting with the basics, the senior technologist presents the technical road map intertwined with that invaluable lifetime experience. "Here's what the book says, and here's what I've found out about this that isn't in the book," is the key to passing on the unique knowledge and keeping the interest level of the learners high.

The foundational sessions are presented to a group of learners that represents varying levels of experience. A veteran should be included along with newer high-potential employees and those others who need the knowledge to better accomplish their jobs. That veteran will help with organizational knowledge and has his or her own set of experiences to impart. Along with each learning session, job assignments and projects are assigned so the learners, the master and the management team can be confident that the concept is being imparted.

As the lessons progress, they get more detailed and specialized. With the input of the knowledge-holder and management team, the larger group branches out toward those aspects that best fit their skills, abilities and interests.

If there are any prodigies in the group, they will keep up with multiple branches of the lessons. These lessons are presented at intervals of three to four weeks. In the intervening periods, the project assignments are prepared in consultation with the knowledge-holder and in collaboration the entire team of learners.

At the right times, independent projects are assigned so the learner can demonstrate competency in an aspect of the knowledge. To spread the advantages, other interested engineers and technologists who can benefit from the entire process are invited. Managers debrief the senior technologist and the learners in individual sessions every 60 days. Progress is measured and reviewed, and necessary adjustments are made.

To summarize some of the key lessons learned:

a) Management must allow the senior technologist to have the dual role of contributor and teacher. Time and workload have to be carefully managed to make that work.

b) It doesn't work without budget and allocated time.

c) Keeping critical skills is the organization' s highest priority. Without them, it is like every other organization. Remember that when weighing priorities.

d) Impart the knowledge to groups, and don't hesitate to have the body of knowledge branch out into more discrete paths.

e) Learned skills must be exercised, and learners have to develop their own lessons learned.

f) Measure results and reward success. This process shouldn't be a burden; it should be an opportunity.

In summary, because there was a plan, a road map, frequent review and adequate documentation, the process not only succeeded, but could be replicated. The business is stronger because of it. Instead of a sense of dread regarding retirement of the senior levels of the workforce, this is seen as an opportunity to grow tomorrow's key contributors.

Conclusion
The U.S. defense establishment is faced with a wholesale passing of the baton from the Cold War generation. The legacy of that generation can be preserved. It's neither cheap nor easy, but it is imperative if the defense industry is to fulfill its responsibility to the shareholders and keep the United States and its Armed Forces personnel safe.

[About the Author: Robert Hyde is director of human resources at Northrop Grummans's Marine Systems business.]

Measuring Business Impact

2008-12-13T08:05:00.000+08:00

Measuring Business Impact
by Michael E. Echols, Ph.D.

In its one-year-plus existence, the Bellevue University Human Capital Lab has funded research on how best-practice companies are using measurement of learning's business impact to support their talent management and strategic objectives. Here is what's happening at some of those companies.

Business Issue: Employees Quit Their Supervisors
At ACS, multivariate statistical methods were used to determine the impact of learning on call-center performance. The first phase of the research documented that training is a key factor impacting employee retention. The method used to derive this conclusion addresses a key measurement issue: how to be sure the improvement in business outcome - in this case, retention - was directly related to the training and not something else. Based on the initial business implications, ACS extended the analyses to additional dimensions of the business including recruiting.

Business Issue: Leadership Pipeline
The business challenge addressed here is one way a geographically dispersed global retail organization identifies highly engaged associates and delivers learning to this hourly and salaried workforce at thousands of locations. In this case, the focus is a customized retail-management program leading to a bachelor's degree. The program is co-designed by retail subject matter experts in conjunction with Home Depot executives to provide maximum impact on current associate performance and on future career capability.

This program integrates the corporation' s tuition assistance benefits into its leadership career development strategy. The key element of this program is the opt-in nature of the highly engaged associates. The business-impact measurements at the company include the tracking of the percentage of future store management that emerges from the customized program vs. more traditional channels.

Business Issue: Tuition Assistance as a Strategy
One of the most advanced companies in the use of tuition assistance is Verizon Wireless. Under the leadership of Dorothy Martin, LearningLINK program manager for Verizon, the corporation already has monthly dashboards that document business impact. The four key business outcomes measured include recruiting, retention, job performance and job mobility.

These are key human capital factors for any company. All four parameters show favorable outcomes for employees utilizing tuition assistance relative to the general Verizon Wireless employee population. Especially dramatic is the fact that the strategy has produced as much as a 10 percent improvement in retention. This result is important because it is directly opposite to the "educate them and they will leave" opinion widely held among operating managers.

To extend the impact of tuition assistance, Verizon Wireless is collaborating in the development and deployment of a customized retail management program targeted at accelerating the development of future leaders in critical retail operations. Calibration of the impact of the custom program on the business outcomes listed above is part of the deployment.

Business Issue: Sales Training Redesign and Redeployment
Few industries face the challenges seen in the auto industry today. Innovation, a key concept in many markets, is more than a mere expression at Chrysler Academy. First presented to the public in detail at the Fall 2008 Chief Learning Officer Symposium, the corporation has deployed an innovative approach including:

a) Performance maps for high performers.

b) Gap analysis.

c) Sales training redesign and new deployment model.

d) Measured business impact.

Answering questions around learning's impact has motivated senior Chrysler management to extend the analysis to dealership management programs that reach far beyond sales training.

In summary, these best-practice companies are walking the talk when it comes to innovative learning strategies and the related business outcome measurements that show the value of the investments. Validated in the first phase, these measurement initiatives are being leveraged to impact even broader strategy issues - the true seat at the table.

[About the Author: Michael E. Echols, Ph.D., is vice president of strategic initiatives at Bellevue University and author of "ROI on Human Capital Investment." ]

CFO PROFILES, September2004

2008-11-29T10:18:00.000+08:00

The Burger Master

A Philippine fast-food chain looks to multinational expertise for its shared-services initiative. JFC's strategy could hold lessons for other globalizing Asian companies.
By Cesar Bacani

Ysmael Baysa knows more about selling hamburgers than a man should rightly know. As CFO of Jollibee Foods (JFC), the Philippine fast-food market leader, he's confident, for example, that a hamburger cooked less than 12 minutes earlier awaits any customer at Jollibee's 491 teeming yellow-and-orange-themed restaurants. "We know what the sales for a particular day will be per item per hour," he says. Baysa, a slim 48-year-old executive with a serious face but a winning grin, adds: "We have developed our own predictive capabilities."

Smirk if you will, but burgers are serious business, and JFC is one of the few Southeast Asian companies to leverage local popularity into an emerging global enterprise. This plucky firm has toeholds in markets that span from Daly City in California to Brunei to Hong Kong - most places, in fact, where Philippine overseas workers form a substantial part of the expatriate workforce. Its managers' ability to service a customer base that knows what it likes has positioned JFC to extend that knowledge into other markets and other tastes overseas.

The company went all out in March and acquired 85 percent of Belmont Enterprises Ventures, giving it control of 77 Yonghe King fast-food outlets in China. For the first time, JFC bought a ready-made chain targeting the general population in a country outside the Philippines, instead of franchising its brands overseas and limiting itself to Filipino communities abroad. "Ten years from now," predicts Baysa, "we should have at least 50-50" - referring to the ratio of foreign to domestic sales.

This is a big claim, given that today international operations account for just 4 percent of JFC's 21.6 billion pesos (US$393 million) in revenues. But Baysa's confidence is built on more than mere optimism. His keen awareness of the timing and operations at JFC's Philippine restaurants illustrate what analysts frequently cite as the company's greatest asset. JFC is a proven master of harnessing logistics to create economies of scale and squeeze earnings from its thriving businesses. Now its managers want to expand this core competency via technology to operate on a much larger, multinational scale.

JFC's strategists want to wield all the tools that consultants have championed for Western multinationals - shared services in low-cost labor markets and data mining via customer resource management (CRM) software - as a lever into global markets. But there's a twist. The company can buy into an offshore strategy with the eminently satisfying knowledge that it doesn't have to go offshore. JFC is already headquartered in a market famous for lower-cost labor and efficient back-office operations.

In theory, at least, this means that JFC can skip a wasteful stage on the road to globalization. Many Western multinationals have gained a global footprint by expanding with separate systems in separate markets, leading to a costly sprawl. The best of them have then retrenched offshore where labor costs are lower, simultaneously harnessing technology to introduce scalability and growth that doesn't incur wasteful costs.

JFC wants to avoid this pitfall from the word go. It already has a clear advantage in its low-cost base. The trick will be to arbitrage cheap local expenses as it expands in a big way to pricier foreign markets like the US and comparable-in-cost but behind-in-expertise places like China. If it succeeds, the model is sure to be imitated by Asia's newly globalizing companies.

Thinking globally

Baysa will be the agent of this knowledge transfer and deployment at JFC. He was hired in July last year in part because of his experience at Procter & Gamble (P&G), where he spent 23 years. The multinational giant reinvented its operating structure in 1998 along global rather than individual-country lines, in the process also changing the provision of support services by centralizing such functions in an independent shared services center (SSC). As finance director of the Philippine unit, Baysa was a key SSC player because low-cost Manila was chosen as the hub for P&G's salary and travel-expense accounting, purchasing services, banking and treasury functions, and fixed-asset management.

Of course, mid-sized JFC is still a long way from P&G in scale and global reach. But Baysa believes that it makes sense to design and implement shared-services functions at the outset, rather than wait until international operations are fully set up. The timing seems right.

JFC is currently upgrading its Oracle ERP system as it integrates the operations of its acquired local companies. "So we just do not think of the Philippines, we also think of the US, we think of Indonesia, we think of China," says Baysa. "We have to design the house to include all these countries. Otherwise, we will have to redo all of this." The pay-off: significant savings that could then be used for further expansion. International studies have shown that SSC operations can trim expenses associated with receivables and credit services by 25 percent, and by 45 percent for payables and general accounting.

This will not be easy. In fact, if JFC succeeds, it will be a first in Asia, where home-grown companies have not always invested wisely in technology. Many often found themselves with various IT systems that do not communicate well with one another. Their back-office procedures may not be best practice and the employees who implement them may not possess the required capabilities and experience. Writing in The SGV Review, Francis Huang, senior director at Manila-based international consultancy SGV & Co and its Knowledge Institute, warns: "There is a huge risk that service response will be slow, cumbersome, bureaucratic, and result in inefficient processing. Business units that are dissatisfied with shared services may eventually develop their own 'shadow units' that provide the same services as the SSC. In the end, costs escalate rather than decline."

Despite this sketchy Asian track record, investors seem convinced for now that JFC has a strong chance of succeeding. ATR-Kim Eng analyst Martin Enrile, for example, projects that Baysa's efforts will eventually slash corporate overhead expenses related to JFC's various brands from the current 11 percent of revenues to just about 6 percent. Projecting potential benefits from the cost-cutting and expansion programs, UBS Investment Research's Tina Ibarra sees net profit growing at an annual compound rate of 25 percent over the next three years. So far this year, JFC is the Philippine bourse's best-performing stock, soaring 42 percent to 26 pesos as of August 8.

We can do it

Can JFC deliver? Baysa is confident. "From the standpoint of experience, I see no reason why shared services cannot be done," he says. The food company's geographically dispersed operations should benefit from a centralized back office. Jollibee, the burger-and-chicken core brand, has nine of its 491 outlets in California, where there is a large concentration of ethnic Filipinos, and 11 in Brunei, Guam, Hong Kong, Jakarta, and Saipan. Chinese-themed Chowking has 259 stores (six in the US). Pizza-and-pasta chain Greenwich has 213, while bread-and-pastry line Delifrance has 29, all in the Philippines. As of June, Yonghe King opened 14 new outlets, bringing the total to 91. Collectively, the five brands serve nearly 2 million customers every day. The ambition is to bring all these diverse units under the same information platform.

Because JFC grew by acquisitions, each brand has its own IT system, finance department, human resources, purchasing, and other support offices. JFC has allocated an initial 173 million pesos (US$3.2 million) for shared services and related expenses, such as payments to redundant employees. Another 200 million pesos has been set aside for new IT infrastructure, including software licenses and leased lines.

Baysa declines to quantify the targeted cost savings, but given the amount the company is willing to spend, he says they will be substantial. Indeed, when he first came onboard and learned of the original estimates, the CFO felt they were on the low side. The focus was primarily on IT savings. "The shared-services program decided [on] at the time and how it was being rolled out was less articulated in terms of its aim," recalls Baysa. "My role was to articulate it better. What are we after?" The overall goal, he says, is to improve net margins to world-class levels - to double digits from the current 6.6 percent. That means squeezing efficiency from the whole gamut of support services, not just sharing technology but everything else from accounting to human resources, tax issues, legal work, insurance structure, and all the way down to the commissary system.

A key source of the savings would come from arbitrage. "The cost of accounting in terms of employee services in the US is very high," notes Baysa. "Salaries in Shanghai are comparable, if not higher than in Manila, but if you look at how much it costs to process an invoice, then Manila would be cheaper." The differentials are large enough to more than offset new leased-line and other telecom costs. Baysa sees extra scope for savings in Yonghe, which is due to be covered by the shared services scheme in 2006. "Frankly, they are not very efficient because they are not integrated and there is some manual inputting," he says. In the Philippines, every shop automatically captures sale and expenditure transactions and then electronically transmits the data to the head office at the end of the day.

Now for the hard part

JFC has given itself three years to fully implement the shared services program, even though that would mean realizing the cost savings slowly. "There is a trade-off in doing it very fast, say, one year," says Baysa. "If you make some mistakes, then you can have disruptions."

From his stint at P&G, he knows how complicated the process can be. Any number of problems can crop up, such as misaddressed checks because an inherited database had not been properly updated. Morale may also wilt as some support employees are retrenched. But, says Baysa, "it's not necessarily an outright one-to-one reduction, but a combination of attrition, redeployment, and separations." Because the business is expanding, some support staff can be reassigned to store and commissary operations, for example.

One of the toughest challenges will be ensuring that trimming costs does not mean degrading services. This could happen if the initiative is seen purely as a cost-cutting exercise, rather than as a means to a larger end. A shared-services program should free business units from the worries of back-office drudgery. If it impedes their operations instead because of inefficient, delayed, or poor-quality services, then the scheme should be retooled or even discontinued, no matter how much money it is saving the company.

SGV's Huang, whose company is helping JFC with its shared-services program, says the shared-services unit should be able to guarantee a certain level of quality. In units that are structured as a separate entity, such as P&G's Manila SSC, service contracts detail what, when, and how the SSC will service its client business units, and how much the services will cost. JFC is likely to go this route mainly for administrative reasons - it cannot legally require an employee of Chowking, for example, to process transactions not only of Chowking but also of Jollibee, Greenwich, Delifrance, and Yonghe King. Still, simply putting employees from the various units in a central location is also an option. "As long as there is some way to guarantee responsiveness and you get the pooled experience of the different people, this can work," says Huang, noting that some companies may be deterred from setting up an independent SSC because of tax and other considerations.

Baysa says JFC will initially limit shared services to transactions such as IT management and maintenance, general accounting, human resources functions like employee benefits, and some purchasing. These are transactional, easy-to-standardize processes that yield economies of scale. Yonghe and other foreign units will be required to follow International Accounting Standards because that is how Manila-listed JFC reports its returns. This is not really as big a problem as it seems. The industry effort to unify accounting standards is well advanced and IAS is expected to eventually become the global benchmark.

Baysa argues that business processes are basically the same from the standpoint of information. "We look at Indonesia or Hong Kong as another country, but the way suppliers are paid is the same there as here," he says. "If you relax your idea of borders and look at the world as one country, you realize that [operations] should be in a way integrated." JFC's homogenous operations as a pure food company are a big help. Shared services may be more complicated for an Asian conglomerate with a diverse range of products.

Baysa is eyeing other systems. "As good as the profit of JFC is right now, there are still major areas for improvement," he says, pointing to matters like the tax structure, legal services, and insurance issues. In theory, the SSC can also perform these expertise functions, but management consultant Huang says they must not be handled in the same way as transactional services. What would be pooled together are content experts, and so their performance should be measured on business impact and value creation, not low costs and economies of scale as in the case of transactional services. And while general expertise such as editorial services can be shared across business units, niche specializations like Chinese law are best embedded in the operation that uses that particular knowledge.

Analysts have also identified the supply chain as a source of margin improvement. "There are still synergies to be leveraged such as shared purchasing and delivery," writes ATR-Kim Eng's Enrile in a report. Jollibee outlets in Brunei, Guam, Hong Kong, Saipan, and even the US, already source pocket pies from a new six-hectare commissary in an industrial park on Luzon island. Operating 24/7, the highly mechanized facility, JFC's third, bakes 157,000 pies and processes 150,000 pieces of chicken and 480,000 burger patties every day.

Baysa says JFC intends to build a common supply chain. Parts of the process are already being centralized, such as the sourcing and ordering of chicken. "So Chowking could say, 'This is what I will need in the next six months,' and somebody else is going to do the sourcing," Baysa explains. "This group will negotiate with the suppliers [in the Philippines and overseas]. They will have the expertise to manage the exchange rate and contract prices." Will the supply chain be extended abroad as well? Says Baysa: "When the [international] businesses become large, we will have to assess what the optimum sourcing configuration should be."

In aid of expansion

For the CFO, the shared-services scheme is not only cost effective, but also a competitive advantage for global expansion. By itself, each outlet in a particular country may be making money. But taken as a group and factoring in the cost of support services, the stores may in fact be in the red. "It's the back office that brings your business down," says Baysa. "How many stores can support a back office? You can say, well, I need 30 stores. That means you have to wait for the number of stores to go beyond 30 to be profitable. But what if I lower the cost of the back office? For all you know, store number ten would already be profitable. This is what we're hoping to do. We do not see why it would not work."

One litmus test will be Yonghe King. Even with a relatively rudimentary store, commissary, and support systems, the Chinese group boasts net margins close to JFC's 6.6 percent. "Think about it," says Baysa. "If Yonghe has a margin comparable to JFC's with 91 stores, can you imagine what that margin will be with hundreds of stores? With economies of scale, what will be the margin for 400 stores?" - especially if, as he expects, the Manila SSC and operational improvements would really trim costs.

Baysa and other JFC negotiators made sure that there are incentives for Yonghe to perform. They agreed to pay the owners US$11.5 million and promised a bonus of US$11 million more within three years if certain profitability benchmarks are met. The founders, Taiwanese husband-and-wife Lin Yu Au and Lee Yu Lin, still own 15 percent of holding company Belmont. Lin recently became chairman so that Jeffrey Chao, who used to run McDonald's restaurants in Taiwan and oversee Kentucky Fried Chicken stores in China, could take over the CEO post. Yonghe reported first-quarter 2004 sales of US$7.3 million, up 27 percent from the same period last year, when the Sars scare kept people at home.

Yonghe has given JFC a new blueprint for future acquisitions. With shared-services trimming back-office costs, the old strategy of extending brands abroad to service Filipino communities still looks attractive, albeit of limited scope. But the main focus will now be on acquiring an indigenous brand that targets the general population, so long as the target's margins are comparable to JFC's. Both the brand and its stores may be acquired, or just the brand or only the outlets for conversion to JFC brands. A lot of possibilities are opening up as lower back-office costs from shared services makes overseas expansion more feasible. That's food for thought for Asia's other globalizing companies.

Cesar Bacani is a contributing editor at CFO Asia based in Hong Kong

Source:
http://www.cfoasia.com/archives/200409-02.htm

Many DNS Servers Still Vulnerable To Attack

2008-11-11T21:20:00.000+08:00

One-quarter of DNS servers are still not patched against cache poisoning, study says

Nov 10, 2008 | 04:16 PM

By Tim Wilson
DarkReading

More than six months after the discovery of security flaws in the Internet's core addressing system, many Domain Name System (DNS) servers are still open to attack, according to a study published today.

According to a report on DNS trends published by Infoblox and the Measurement Factory, approximately one in four DNS servers still does not perform source port randomization, the chief patch for the so-called "Kaminsky vulnerability" that was discovered by researcher Dan Kaminsky in the first half of last year and fully disclosed at the Black Hat conference in August.

"A surprising number have not been upgraded and are very vulnerable to cache poisoning," the report states.

The study, which took a sample of 5 percent of the Internet's IPv4 address space -- about 80 million addresses -- also showed that more than 40 percent of Internet name servers allow recursive queries, which is one of the design flaws that might enable attackers to abuse Internet address spaces for their own purposes. About 30 percent allow zone transfers to arbitrary requestors, another flaw that could lead to vulnerabilities such as those discovered by Kaminsky.

Only 0.002 percent of DNS zones in the test were found to support DNSSEC, which is widely viewed as a possible "next step" in reducing the effects of DNS security flaws. "Administrators have not been convinced of its importance -- perhaps intimidated by its complexity -- but new mandates could mean a significant change in the near future," the study says.

The researchers found that 90 percent of DNS server operators are running the most current version of BIND, and that reliance on the vulnerable Microsoft DNS Server has dropped to 0.17 percent. Adoption of IPv6, which is designed to provide greater security, continues to be slow, the study says.

From:

http://www.darkreading.com/security/vulnerabilities/showArticle.jhtml?articleID=212001592

Yahoo mail and Kaspersky

2008-10-22T06:49:00.000+08:00

Just installed KIS2009 on client"s PCs. Client gave feedback that there is slowdown on attaching files to their yahoo mail. I noted that while attaching a 350kb file, yahoo mail uses Norton to scan the attachment. For the said file size attachment process takes about 20 minutes. Client formerly used Norton Anti Virus and claims that the attachment process was under 3 minutes for the same files size.

Not really leaving Multiply.com

2008-10-19T09:00:00.001+08:00

It's cool to see this feature in Multiply where my blogs from the other site can be set to automatically update also here in Multiply. Nevertheless, I'd be writing on my journals:

Speakology.blogspot.com

SystemTalk.blogspot.com

Firebird Relational Database Engine (RDBMS)

2008-10-17T07:48:00.007+08:00

Yesterday, Ms. Raquel Jet Vargas of QnE Software Philippines, Inc. and I met on a new product offering QnE Business Solutions from Malaysia. I was thrilled to hear and learn about another open source database engine. Though not known to many, it is really exciting to see a robust and comprehensive system like QnE utilizing a soon to be known database system.

More on Firebird Relational Database website.

New Talk

2008-10-17T06:55:00.003+08:00

I am an accountant by training and experience specializing on IT services for diverse businesses through OpenSource, Inc. and Digital Steer IT Solutions. My experience has gone silently for about 20++ years. As of this writing, we have supported several business owners in the quick service industry, health care industry, restaurant industry, business process outsource, etc. There is anticipation for this blog and the business to go hand-in-hand because there's so much thought going on concerning a mature service industry that's got immense challenges of helping business face their respective arena.

Everything will be shared for public consumption and I will be talking about:

1. Technical challenges with clients and prospects
2. Technical tips on providing and supporting IT services to businesses
3. Present and future developments concerning IT and business processes
4. Sales and marketing challenges concerning IT services
5. General profile of IT services
6. Remarkable personalities in IT services

Comments for interaction are also shared. I'd also like to invite contributors who share the same interests and passion. Just email at digitalsteer@gmail.com