by Richard Sykes

A gulf in business innovation

May 24, 2010
GovernmentIT StrategyMedia and Entertainment Industry

It would have been ironic if an ash cloud had blocked my ability to reach Dubai to deliver my cloud computing masterclass. But I landed on schedule from a cloudless night sky.

The venue was the Second Arab Outsourcing Conference and Expo: over 200 delegates, twice the size of the inaugural event held last year. Three days spent working closely with a diversity of local business and technology management confirmed for me that the deep historical mercantile and technological roots of the Arab civilisation are being freshly expressed today.

I chaired the second day of the conference. The opening presentation by Abdullah Aleisa of Jadwa Investment detailed the successful outsourcing of the creation and delivery of a new ATM network for the Saudi Arabian Bank AlBilad. This was a fully Saudi exercise with no big international players involved. It was negotiated as an Outcome-Based Agreement (OBA), with the chosen supplier planning, investing in and delivering all aspects of the new ATM network, fully managing its operations and being rewarded with a per-transaction fee. The supplier that acts as business partner and has real skin in the game will be the more successful in identifying the best ATM locations and enabling a high quality of service. And AlBilad is freed to focus on its core competencies: banking.

With colleagues at the UK industry association Intellect, I have published the case for OBAs (see They offer a better way of creating business value through outsourcing because they require a culture of strongly aligned business partnerships – the antithesis of the established and crude deal-making culture rooted in adversarial bidding procurements, the essential weaknesses of which has been well exposed in the BSkyB-EDS case. In Dubai, Aleisa told a story of detailed business partnership negotiations during which the bank adjusted the main features of the risk/reward arrangements at the heart of the deal to ensure the best mutual alignment of interests over the long haul against a background of uncertain economic times.

This willingness to innovate the mercantile ‘how’ is paralleled by an intense focus on the importance of learning. The Dubai audience actively listened to the speakers, asking serious questions, probing for the experiential and the practical. The Indian presence to the east sets a competitive pace, and the fast-growing economies of the Gulf are hungry for talent and experience in all its forms.

Cheryl Lynch, VP, strategic sourcing and development for Mercator (the technology services arm of Emirates Airlines), detailed the heavy investment in training and learning that Emirates makes to hold its own in developing and keeping key talent.

On the flight back I reflected on just how vital these two factors really remain – a willingness to innovate the mercantile ‘how’, paralleled with a focus on the importance of learning.

As ICI’s group VP of IT, I never fired anyone, but I did find new homes away from ICI for those seniors whose thinking and practice was too rooted in old ways of doing things and whose learning failed to keep pace with the demands of the new.

The challenge I faced in the early 1990s was an inherited culture of a strong centralism in the management of the technology, expressed in a 1300-strong corporate resource, technically excellent, but whose work was demonstrably out of alignment with the needs of the diverse ICI businesses. The innovative equivalent to the OBA in those days was outsourcing. I have already told how I led my team towards a strategically and financially advantageous outsourcing partnership. ICI divested its pharma operations at the same time, and further outsourcing and a positively managed redundancy programme meant that by the mid-1990s my corporate resource was reshaped to a more relevant 30. By adopting such innovation in the mercantile ‘how’, ICI sharply cut operating costs and raised its strategic agility in a decade marked by frequent acquisitions and divestments.

I have been helping advise the UK government’s ‘G-Cloud and Apps Store’ initiative. In my Dubai masterclass I articulated the cloud as an open marketplace for competitively-delivered technology-enabled business services, offering the opportunity to sharply reduce operational costs and raise business agility. But I see the same conservative caution today among the UK government’s technological fraternity that I inherited at ICI in the early 1990s. And that conservatism may put at risk a very real opportunity to strip out major elements of public-sector costs while increasing the responsiveness of government services.

In the Arab world, opportunities are admittedly significantly green-field, with little inherited legacy to be conservative about. But I sense a strong learning culture demonstrably feeding a willingness to adopt the ‘mercantile new’. The UK and its European partners face an increasingly competitive Arab shore.

About the author:

Richard Sykes was vice president of IT at ICI in the 1990s and is now a consultant