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GS-insightp e o p l e • t e c h n o l o g y • b u s i n e s s

Issue 16

1 Cover StoryJames Stevenson, CitrixSystems Area VP UKI & S.Africa, explores securingan IT environmentrevolutionised by freedevice choice

2 VC EconomyMichael Elias, MD of growth equity

investor Kennet discusses the inherent

appeal and challenges of “bootstrapped”

businesses

3 SoundByteCitrix Systems’ James Stevenson

considers the reinvention of corporate IT

through “Bring your own PC” schemes

4 Global EconomyGS-insight brings together two Venture

Capitalists and the CEO of software

start-up Mamut to debate the secret of

the Nordic zone’s entrepreneurial

success

6 LeadershipAndy Isherwood, VP & GM of HP’s

Software Solutions Group provides a

change agent’s perspective on

management, career and the economy

8 Executive ViewPhil Pavitt, having driven

significant change in TfL’s

IT strategy and operations,

discusses his next

challenge; becoming

CIO of HMRC

10 The Big DebateSenior executives from Atos Origin and

Channel Dynamics examine the reality

of strategic alliances

12 GS OpinionGillamor Stephens Partners Paul

Gillespie and Steve Morrison discuss

the health of the recruitment

marketplace, and how best to utilise

stock options to attract talent

In this issue

Globally CIOs are under increasingpressure as a new generation ofworkers enters the workplace

demanding the same slick, personaliseduser experience as at home. To illustrate,Stevenson describes directors who require“an Apple Mac, a Netbook, an iPhone anda Blackberry” to operate, and companieswhere people have resigned over aTwitter ban.

Stevenson believes that Citrix has theanswer to enable user’s complete choiceon the device they use to access theirapplications (see p.3 for Citrix’s “BringYour Own PC” scheme), but also resolvesthe perceived security issues:

“Providing users with complete choiceover the device they use into a “lockeddown” environment would at first sightappear to be a security nightmare.However, CIOs should instead embrace it,and only secure what you absolutely haveto.”

“Citrix, in association with Intel, canenable users to run multiple virtual

environments on one machine. Using aclient-side hypervisor, multiple desktopoperating systems can coexist incomplete isolation on a single end userdevice. This layer of separation betweenthe operating systems enables, forexample, a “personal” desktop and a“corporate” desktop to reside on thesame hardware, but completelyprotected from each other. IT can placeall requisite security, controls and policieson the corporate desktop, while stillallowing personal space for the user.”

Using a virtualised approach has theadditional benefit of unchaining officebased workers from their desks. As thethreat of swine flu looms, this solves yetanother CIO headache as critical workerscan be home based without losingproductivity.

Viewed like this, consumerisation ofenterprise IT coupled with virtualisationmoves away from bowing to necessity,and into the positive realm of ITevolution.

ReinventingCorporate ITJames Stevenson, Area Vice President UK, Ireland and

South Africa, at Citrix Systems explores how to secure a

flexible workplace

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Viewfinder

Welcome to the sixteenth edition of GS-insight, the quarterly newsletter frominternational executive search firm, Gillamor Stephens. In this issue we consider avariety of topics relevant to technology companies and the investment community.Key figures from the industry provide insight and perspective on contemporary issuessuch as: reinventing corporate IT, in-sourcing, building effective channel alliances,leadership, driving change and “bootstrapped businesses”. In addition we explorethe reasons behind the success of the Nordic region in producing exciting andsuccessful “start-up” technology companies.Gillamor Stephens is the leading executive search company serving theinternational technology, online and cleantech sectors. GS-insight is published inboth print and electronic formats, and can be viewed and downloaded fromwww.gillamorstephens.com Steve Morrison, Founding Partner

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VC Economy

For mature growth equityinvestors like Kennet, thereare companies in the market

that need help, but just don’trealise it.

Instead of concentrating oncompanies that have swallowedtheir third or fourth round offunding and continue to consumecash, the smart search is on forsuccessful, entrepreneurialtechnology businesses that havebuilt a solid foundation with littleexternal funding, and need to takethe next big jump in growth. Tokeep ahead of their markets andlead to greater value forshareholders, they may need toramp up their sales force or expandinternationally. Elias explains:

“A bootstrapped business oftenstarts with the founder making allthe sales. Once you get over thatand show that you can hire andtrain sales people in a reliable way,then you have the capacity toexpand. At that stage, manybusiness owners face a dilemma:should they sell the company ortake capital and grow it? Werecommend a third path: sell a bitof your company to us and takecapital.”

That can mean adopting adifferent attitude to cash flow.“Activities that are great for near-term cash flow aren’t necessarilythose that are providing the moststrategic value for the business. Soit’s not unusual for us to suggestshutting down activities that aregood for cash flow, but not so good

at creating shareholder value. It’ssomething we see quite frequently.”

“Often, the less a founder isinterested in raising capital, themore we like the company. In somecases we are pitching to themrather than visa-versa. We oftenestablish long relationships withcompanies before we invest. It’s notunusual to have a multi-yearrelationship before an investment isconsummated.”

Elias feels that a key differenceregarding “bootstrapped”companies is that their foundershave much more self confidencethan early stage entrepreneurs.“They have already shown that theycan build a company without ourhelp. Our relationship with them isdifferent.”

There is nonetheless a clear

opportunity for Kennet to help suchcompanies, and often that helpcomes in the form of finding thebest people to take the companyforward to the next level:

“A lot of bootstrapped businesseshave similar characteristics. Youwill find a strong, capable founderat the top with twenty peoplereporting to him like worker bees.There is frequently very little in theway of second tier management,and the founder may not realisethat these are important hires. Somuch of what we do is recruitment-related.”

The reality is that a lot of“bootstrappers” are heavily relianton serendipity in hiring:

“Most bootstrapped companieshave not used search firms before,instead recruiting people throughexisting, sometimes opportunisticrelationships. When asking afounder CEO how he found his VPSales, it’s not unusual to hear ‘Wemet on a plane/train/cruise, andthat although he didn’t havedirectly relevant experience, I likedhim, and sales are sales....”

Looking ahead, Elias sees somechallenging times ahead for thetraditional venture capital model,which Kennet abandoned in favourof growth equity in 2002. “I think itis going to be a completelydifferent landscape. In Europe,firms are getting to the end of theirfunds and the fundraising market isdire. There may well be 50% fewerVCs in four years than there arenow, in both the US and in Europe.”

A different kind of capitalWhy Michael Elias, Managing Director of Growth Equity investor Kennet, prefers

“bootstrapped” businesses

What is bootstrapping?

Company built with little or no outside funding • Growth funded primarily through operational cash flow • Equitypredominantly held by founders and key staff • Customer focus is in the “DNA”• Investment decisions are rational,not speculative • Business focus is on rapid, affordable growth

Michael Elias

Managing Director of Kennet

??????????SoundByte

3

Facebook, Twitter, iPhone andNetbook are hardly standardwar cries, however applications

and devices such as these arehelping draw the battle lines for thebiggest enterprise IT revolutionsince the launch of the personal PCin 1980. Just as the ‘80s workforcepampered at home by Lotus 1-2-3rebelled against a clunky, greenscreen in the workplace; so too aretoday’s “technology natives”, spoiltby iTunes’ intuitive interface andaccess to a plethora of consumerdevices, beginning to demand morefrom corporate IT.

Stevenson believes that theconsumerisation of IT is a pressurethat has been building for a numberof years and that this is somethingthat the CIO will have to address:

“The question is how does the CIOenable the user to have choice andstill keep the things that areimportant to him, such as deliveringservices which are effective in theirenvironment? We think it's inevitable– look at how the Mac is beingintroduced to the corporateenvironment due to widespreadiPhone adoption. The bottom line isthat CIOs are going to have toembrace this new environment.”

This has led to a struggle for CIOsregarding budgets, maintenance andhow to safely allow users to bringunmanaged devices within thesecure corporate domain (see p.1).Stevenson explains how Citrix isaddressing through an innovative“bring your own PC” (BYOPC)programme:

“Citrix is in phase one of rollingout a programme to enableemployees to buy their own machinerunning a PC environment of theirchoice - the concept is similar to acompany car allowance. Staff caneven buy a top of the range Mac if

they want to supplement from theirown pocket.”

Part of the of the programme’scriteria is that devices must cost atleast 20% less to purchase andmaintain than devices managedthrough the traditional system.Therefore Citrix has created aBYOPC website as a self-serviceapplication portal, interactivesupport community (ensuring thatinternal IT do not have to supportdevices) and online shop offeringdiscount purchases through theCitrix channels. Interestingly, it wasfound that the productivityincreased for the majority ofemployees, that better care wastaken of equipment due to a prideof ownership, and Citrix has a fairlyunique edge in wooing technicallysavvy employees.

Stevenson feels that thisprogramme represents the beginningof a fundamental change to how ITis supported within the corporateenvironment, and that this issomething which Citrix can supportfrom a user experience and ITmanagement perspective:

“We have given our employees a

choice over which devices they use.We can do this because we use ourown technology – the Citrix Receiverallows users a simple, ubiquitousaccess point to drive theirapplications on Mac, Windows,iPhone operating systems (and soonWindows Mobile, Symbian,Blackberry and Android) as theywish.”

“Through enabling choice ofdevice, and giving more control tothe user we are moving toward apublisher-subscriber model, anddelivering IT as an on-demandservice. By embracing SaaS andCloud-based technologies anyonewith network connectivity cansecurely access to corporateapplications remotely. Despite thisabundance of connectivity anddevices, IT still maintains controlover data, applications and securityensuring a risk free and compliantenvironment. We are already seeinggrowing interest and adoption fromour customers as they identify withthe user experience, control andmanagement benefits.”

Wide adoption could mean forcedchange for the channel as Stevensonnotes:

“If you are a reseller which seesthe main bulk of your businesscoming through laptop or generalend-point device sales, BYOPC couldimpact your pipeline. However, withconsumers driving the device side ofIT, it frees IT decision makers tofocus on the strategic,infrastructure and service deliveryaspects of their role – a realopportunity to add greater value forour channel with virtualisation andnetworking technologies.”

BYOPC is part of Citrix’s strategyto reposition IT as a service providerrather than an over-controllingobstacle to progress and innovation.

Bring Your Own PCJames Stevenson, Area Vice President UK Ireland & South Africa, at Citrix Systems

discusses the reinvention of corporate IT

James Stevenson

Area Vice President at Citrix Systems

4

Global Economy

The Nordic Alternative

Despite the challenging economic times, the Nordic zone continues to produce

exciting technologies and successful start-ups. Is there a secret to this success?

4

Helge Hellebust

Partner at Ferd

Ventures

Bjørn Stray

Partner at Northzone

Ventures

capital from people and funds that they know,

and therefore many companies are funded

locally. So in that sense one might say there is

a “community”. The Governments across the

Nordic region provide capital financing

through funds such as Argentum (Norway),

Finninvest (Finland) and Vækstfonden

(Denmark). The fact that a number of

established technology companies have been

global leaders in their space provides

individuals with a technology and market

insight essential in helping create companies

which can quickly take unique propositions to

the market.”

Hellebust feels that the Nordic approach to

start-ups also affects deal flow:

“The quality of deal flow is relatively high,

partially due to the cultural heritage which

dissuades establishing a new company unless

you have a “really good idea”. As more and

more “classic” venture success stories become

known, the positive development is likely to

continue. But we still have a long way to go

and a lot of untapped potential.”

Both of the VCs can also see that the

marketplace has been affected by today’s

economic climate:

“VCs are still active, but with a stronger

appetite for later stage investments. The

strength of the downturn is difficult to gauge,

however it would seem to be stronger in other

parts of Europe than in the Nordics” states

Hellebust.

“The best companies can still get funding.

However there will be a shakeout of

companies and investors alike. For the long

term the fundamental is that there is

continuous technology development and that

start-ups will solve problems, grow and create

value and will secure a living space for players

in the industry” confirms Stray.

The Entrepreneur

Eilert Hanoa started Mamut in 1994 with a

The Venture Capital Practice at Gillamor

Stephens has worked with the Nordic

start-up scene for nearly four years,

hiring CxO, VP and Director level executives

into a broad array of technology companies –

from PCB manufacturing processes to

enterprise software. We have noted with

interest that where other geographies’

growth tends to have slowed over the last 18

months, the Nordic region continues to

produce an increasing array of successful

start-up companies.

To take the investment temperature of the

Nordic zone, we have sought the views of

Venture Capitalists Helge Hellebust, Partner

at Ferd Ventures in Norway www.ferd.no and

Bjørn Stray, Partner at Northzone Ventures in

Sweden www.northzone.com, and also

spoken to Eilert Hanoa, CEO of Mamut, a

successful business software company,

founded in Norway www.mamut.com.

The VCs

Whilst examining the Nordics start-up scene,

Helge Hellebust finds that native conditions

have helped foster native entrepreneurs:

“The relatively high education level, social

welfare system and growing private equity

industry contributes to the start-up scene

developing in a positive manner. State funded

seed money is available, as is support from

organisations such as Innovation Norway and

various incubators to help many start-ups

through the initial stages... And importantly,

it is viewed as socially acceptable to

establish your own business and take on an

element of risk to earn money.”

Bjørn Stray reinforces this impression:

“There is a high degree of risk willingness

among entrepreneurs and investors, and a

community of experienced entrepreneurs,

capital sources and service providers that

can support early stage companies in the

Nordics. By instinct, entrepreneurs seek

“There is a high

degree of risk

willingness among

entrepreneurs and

investor”

“VCs are still active,

but with a stronger

appetite for later

stage investment”

??????????Global Economy

5

than the Venture Capitalists regarding

the supporting infrastructure

surrounding the entrepreneurial

community in the Nordics:

“There is a huge political focus on

supporting start-ups in the Nordics,

but to actually succeed in starting-up

a company, the main success factors

are the willingness and true passion

from the founders. Start-ups often

succeed despite the lack of

governmental support, not because of

any support offered. In fact, the

social security network is well

developed in the Nordics, so the risk

of failing is low and success is

rewarded with high taxes! The social

security system is more of a barrier

than a catalyst for starting up.”

Although Hanoa does also speak

highly of its benefits:

“When expanding regionally, a

Norwegian based headquarters has

provided a real advantage as the local

economy is strong, innovation is high,

cash has been available, knowledge

workers are available and

infrastructure is well developed.”

Hanoa is also working to give

something back to the

entrepreneurial community:

“We are actively supporting start-

ups in our seven core markets by

offering a complete software package

the local economy is strong, innovationis high, cash has been available,knowledge workers are available andinfrastructure is well developed

Eilert Hanoa, CEO of Mamut

The Nordic Venture Forum

The Nordic Venture Forum (NVF) plays an active role in the European and Nordic innovation scene, fostering start-upsand high-tech, high-growth entrepreneurship and promoting Denmark, Sweden, Norway, Finland and Iceland ascountries to do business or invest in. The NVF showcases the 50 highest potential companies in life sciences, ICT andclean technologies – The Nordic Venture 50. v

Now in its 7th year, the NVF has established an impressive history of over 60% of presenting companies raising newinvestments following participation.

for entrepreneurs that helps them

plan and start up their own business.

We also engage in seminars and

training, both through Mamut and

through my role as Chairman of ICT

Norway.”

The Recruiter

Gillamor Stephens supports venture

backed businesses across EMEA - from

early stage University spinouts to

later stage businesses. Paul Gillespie,

a Founding Partner, follows the adage

“good companies will always get

funding” and this is true wherever

they may be in Europe.

“However the Nordic region does

have a strong infrastructure in place

to assist the creation of start-up

companies, and maybe the

somewhat isolated location of the

Nordics makes the region more self-

reliant and therefore more likely to

operate as a community than other

parts of Europe. What is clear is that

across the Nordic region there is a

vast array of early stage companies

that have an opportunity to become

successful global players in their

market. If the local Governments,

VCs and corporations continue to

work together the Nordics will

continue their international success

story.”

vision of simplifying the way smaller

organisations do their business by

offering software, services and

knowledge. Today, Mamut has more

than 400,000 customers in 16

countries. Hanoa recollects his

company’s humble origins:

“I established my first company as

a 15-year-old in 1986 and after 10

years in the software industry, I

incorporated Mamut in December

1994. We started without any external

funding or any kind of governmental

assistance, local VCs joined in 1998,

including Northzone Ventures and

other co-investors, and our

development from 1995 to 2009 has

largely been based on long-term

investors.”

He feels that today’s start up

market is a much more challenging

environment for the entrepreneur:

“Today, 15 years after establishing

Mamut, the entry barriers are even

bigger than they were then. It is more

difficult to get full funding at the

right terms in the early start-up

phase. The result is fewer start-ups

and that very few companies are able

to go global. In contrast my

company’s business plan from Day

One was to conquer our home market,

then expand internationally.”

Hanoa has a slightly different view

‘‘’’

6

Leadership

66

It’s not a spectator sportAndy Isherwood, Vice President and General Manager for HP’s Software Solutions

group, discusses the need for people to step up, get involved and be change agents

Having joined HP more than20 years ago, AndyIsherwood has long been a

key change agent within thecompany; as can be seen throughhis integration of the Mercury andPeregrine acquisitions during histime as VP and GM EMEA for thesoftware business. He is now usingthese foundations to addresstoday’s uncertain economicclimate.

My view on the current climate? I

don’t read the papers.

“My view is simple. Whether youbelieve Gartner, IDC or Forrester,take the worst case scenario, andthen focus on where the money isbeing spent. If you becomefocussed on what is not beingspent, you can talk yourself into arecession and have a realconfidence issue. I won’t read thegeneral gossip about the economyas the tabloid negativity can leadyour confidence into downwardsspiral. Instead I focus on the factthat customers are still spending,just in a different way. They arelooking at every purchase with asharp eye on ROI (return oninvestment); therefore you need to adapt your selling style toaddress the pressures whichcustomers are now under.Customers also require shorterterms in order to reach ROI, andthey don’t have capital, thereforeyou must adjust your strategy towhat the customer requires, andfocus on where they are spendingmoney.”

Consolidation in the technology

marketplace

There has been a lot ofconsolidation in the technologymarketplace. Andy believes thatthis consolidation will only beaccelerated by the currentclimate, as now is a good time tobe acquisitive if you have a strongbalance sheet.

“HP is not trying to be biggestsoftware business in world, insteadwe want to be relevant tocustomers, and try to bringtogether those assets that thecustomer wants to have under oneumbrella, which is why HP hasbuilt out a comprehensive ITManagement portfolio. HP hassuccessfully bought in either the#1 or #2 software solutions inevery category of its portfolio, ascan be seen with key acquisitions

such as Opsware, Peregrine andMercury.”

Unique cultures and values with a

unifying HP foundation

“HP has a simple philosophyregarding how to integrate newcompanies. If you go back to theCompaq days, a $40Bn businesswith c. 80,000 people, we didn’tmarch in raise the HP flag and tellthem the answers, it was verycollaborative, and we havebecome even more so with time.With the Software business, ourphilosophy has been to go acquire really good assets thatcustomers want, then do athorough evaluation, and accessthe talent. We don’t assume thatan HP person will run the show,and this has been very effective. Ihave legacy-Mercury and Peregrine people working for me,and in fact I have only one“classic” HP person on mymanagement team.”

Has the culture changed with all

of the acquisitions?

“It has evolved; but we have keptour strongest themes from whenthe company was set up. As wehave built out different business,we have created unique culturesand values with a unifying HPfoundation, each tailored to thedemands of that business. If youlook at the software managementteam, almost everyone has comefrom a software background, andthis has led to our own specialisedculture.”

Andy Isherwood

Vice President and General Manager

HP’s Software Solutions Group

??????????

7

Leadership

Management Style

When considering how hismanagement style has beenformed, Andy gives credit to thelessons he has learnt from hismentors, previous members of HP’ssenior management team:

“I have tried to learn somethingfrom each of my mentors. It isfrom them that I have seen theimportance of rigorousbusiness practices, so Iplace a great deal ofemphasis on havingoutstanding operationalrigour, strong executionand maintainingstrategic drive.Following their exampleI make it a point to stayin touch with my team, walkingthe floor and fostering an informalyet informed culture.”

Connecting the dots

“Fundamentally I am a prettydirect person. My philosophy isthat people need to know whatyou are doing and why, and therole that they play in this bigpicture. I am a clear communicatorin terms of what is expected ofpeople, and I share the profit andloss of the business with everyone.This is because I believe that themore you can connect the dotsbetween what you are doing withthe shape of the P&L, the morepeople can understand why certaintough decisions are made, and“buy into” your strategy. Thisopen, direct communication addscontext, and I recruit strong

leaders who share this philosophyand perpetuate this practice.”

Career Management

“I always think two jobs ahead. Iplan ahead, knowing the attributesand qualities I will need for thefuture. Once you have this in yourmind, you can focus on buildingthe skills you need for that job,

and the network of people you willneed to support your bid. We havean excellent talent team, howeverin a 300,000 person company, ifyou don’t tell people what youwant to do next, and focus yourattention on where you want togo, they are not going guess.”

Tip for success? Execute like hell

“Deliver on what you are doing,execute like hell. Focus on gettinga job which is part of your careerplan, and then deliver against itgiving you the right to moveonwards and upwards. When hiring,I’m looking for people who haveexecuted and driven change. Thesetough times necessitate moreinvention, so always be one stepahead of the game, and don’t waitfor a difficult period. Do the heavylifting now, get the cost structure

down to be competitive; if youhave a palatial office environmentand your competitors are home-based, your cost structure is wrongand you are dead in the water. Youhave got to have aligned coststructures and economics in orderto compete in the marketplace. Ilook for people who want to drivethis leading edge, bleeding edge

philosophy towardsrunning a businessrather than justmanaging andmaintaining.

With all of thecurrent uncertainty,learn to shrink thetimescales. I thinkabout annual plans

and keep the “big plan” in mind,but I also look at our positionagainst the P&L every single day.We make monthly adjustments as amanagement team in order to stayahead of the curve, rather thanwaiting for the next cycle, if I waituntil November we might not stillbe here.”

It’s easy to be a spectator

“After a couple glasses of wine, I’man expert on the economy and couldbe the Chancellor. I can tell theEngland rugby team why they aredoing a bad job and how they canimprove. It’s easy to be a spectator,but I don’t want people in myorganisation to sit on the sideline;I want my people to get involved, beplayers, be change agents, becausethese environments necessitatemore change than ever before.”

It’s easy to be a spectator, butI don’t want people in myorganisation to sit on the sideline;I want my people to get involved,be players, be change agents

‘‘’’

8

Executive View

Balancing the books

This September, Phil Pavitt,formerly CIO at Transport forLondon (TfL), has taken on

the biggest challenge of his career.As the new CIO of HMRC, Pavitt hasone of the most influential IT jobsin Europe, responsible for budget ofover £1bn with 1,400 staff. Pavittwill also play a pivotal role inshaping how the Governmentaddresses IT, andmust ensure thatevery penny spent isa cost effectiveinvestment.

Pavitt is nostranger to achallenge. At TfL heconducted anexhaustive reviewinto how the businessstructured IT withone mantra in mind: “What’s thecost, what’s the numbers, what’sbest?” This resulted in afundamental shift in the negotiatingof outsourcing contracts, with theemphasis moving away from aheadline number and towardsflexibility; creating a sharedinfrastructure (placing 65% of TfL'ssystems on a shared commontechnology platform) and businessprocesses ultimately resulting in anoptimised system with a leanerbudget.

Prior to his arrival, TfL spent 60%of its IT budget on 17 outsourcingcontracts covering the bulk of its ITinfrastructure and services, fromdesktop management to helpdesk.Upon his departure, 15 of the 17

contracts have been brought backin-house, cutting costs by 40% anddesktop and support costs by 61%.

Pavitt’s arrival at HMRC willtherefore prompt questions as towhether the organisation willconsequently be taking a differentapproach to outsourcing. Howeverhe rejects suggestions that he is aserial insourcer, instead stating that

he adopts the required solution foreach unique situation:

“I try to get the best for theorganisation I work for - my job isnot to “reinsource”, but instead toredraw the line and find the bestvehicle for what the organisation istrying to deliver. I used to be partof ITNet so I see it from both sides.I’m not a serial insourcer. Whatannoys me is that in the massiverush to outsourcing 10 years ago weoften lost the commercial ability tomanage the project. The strategy,the architecture, the governance,the thinking, the intelligence wereall outsourced, so after a year yousit back and think “Every time Ibreathe I’ve got to pay extra forit”, and CEOs begin to wonder what

IT actually do.” “If the contract has the right level

of flexibility, this encouragesbusiness process change, thusenabling contracts to becomestructured agreements whichencourage shared infrastructure -you can therefore save moneywhilst retaining control. Forexample IT across three or four

differentdepartments can allbind their mobilemessaging platformstogether, optimisingthe heavy lifting offix, install, resolveand engineering,allowing thebusiness to startseeing IT as a brokerand facilitator. In

TfL this corporate approach wasused externally, customers can lookat their mobile and see where thelatest tube train is to the second,and be able to look at a GSM map.”

Looking forward to his newestchallenge, Pavitt admits that HMRCis an organisation facing some toughrequirements:

“HMRC has to collect taxefficiently, whilst targeting andpaying credits to the appropriatecustomers as efficiently as possible.The pressure is on to make surethat every penny is spent as costeffectively as possible. My job is toget the right level of costeffectiveness into the ITorganisation, and more importantlyto enable the business to perform

Phil Pavitt, the incoming CIO of HM Revenue & Customs (HMRC) talks about the

challenges IT faces in balancing the demands of insourcing, outsourcing and

security whilst getting the most out of our taxes

8

my job is not to ‘reinsource’,but instead to redraw the lineand find the best vehicle forwhat the organisation is tryingto deliver

‘‘’’

better – be that in enforcement,collection or granting credit. Theseare large volume jobs where IT canplay a pivotal role.”

When asked about the futurePavitt speaks of a “massivefrustration” within the IT sectorthat we have not yet been able torealise the full benefits of the lastfive years of technology:

“We are so busy looking for thenext “sexy” thing sold to us byGartner, Forrester or the ITproviders that we haven’t wrungthe potential out of the technologycurrently available. The 101 of IT ismaking it work effectively, withprojects being broken down intomanageable chunks – I think that ITshould take the time to focus onThin Client, Virtualisation and VoIPfor the next few years beforebusinesses get frustrated atseemingly unending investmentwithout the promised return,starting to think inside the alreadypurchased ‘box’.”

“A lot of people bought Oracle orSAP licenses and got massivefunctionality, yet never took thetime to use it. If businesses becomemore willing to change process inorder to exploit current strength wewill be able to fully cash the chequewritten over the last five yearsbefore we start writing the next.The industry is currently clamouringabout Cloud computing, predictingthat if we do not invest “then theworld will end”. You know what, itprobably won’t, and if we canconsolidate our current costs and

resources, then I believe that wecan face the future on muchstronger foundations.”

Whilst looking forward, Pavitt hasthe following thoughts on datasecurity:

“At a technical level, therealisation around datamanagement has become muchmore important in organisations andin IT. You must be able toconsistently classify data types,manage them, put in placeprotocols, enable access and thenrestrict it with passwords. The

problem with any data is the“human factor”; this can benegated to some extent byprocesses (education onresponsibility, repercussions etc) -and lack of tabloid headlines doesindicate that this is having an effect- but the risk will never go awayunless you can get rid of humanintervention”.

Given all that Pavitt has achieved,it is interesting that when askedabout his proudest accomplishmentat TfL, he immediately points to histeam:

“The thing I’m most proud of isthe culture of the IT team, and howthe broader organisation’sperception of my guys has changedcompletely. Before the team feltmarginalised, with the emphasis onoutsourcing and back end support,there was little recognition fromthe rest of the organisation. Nowwe are very visible, implementingthe most up to date technology,bidding for services and taking onsignificantly more work across theGreater London Authority. There is ahuge demand for our services, and Ihave a tremendous pride in what wehave achieved.”

Executive View

9

Phil Pavitt CV

1996: International CableTel, Director of Commercial Support1998: NTL, Director of Internet TV launch 2003: NTL, CIO2005: Centrica Onetel & ICICI Onesource India, CIO and IS Transformation

Director2007: Transport for London, Group CIO2009: Her Majesty’s Revenues & Customs, Group CIO & Director General

We are so busy looking for the next ‘sexy’thing sold to us by Gartner, Forrester or the ITproviders that we haven’t wrung the potentialout of the technology currently available

‘‘’’

Phil Pavitt

CIO of HM Revenue & Customs

10

The creation of a strategic salesalliance between companies –whether large global

corporations or small innovative startup – is an incredibly attractiveproposition fraught with difficulty.Atos Origin’s DerekWard describes theappeal:

“With the rightpartnership everyonecan win. The clientgets the best solutionat a competitiveprice. The partnerscan share costs andcustomer contacts andultimately increase sales. If you cangear other people’s sales force to sellfor you, then you can realise yournumbers a lot easier than if you triedto do it all yourself.”

The attraction for small companiesto form an alliance with a largecorporate is clear; however this is nota simple solution. Richard Griffith,co-founder of Channel Dynamics - acompany which provide strategicbusiness management advice toclients - outlines a commondifficulty:

“Often we work on projects withsmall companies to look at how theycan convince a large corporate totake their product to market. It cansometimes seem as if they don’t havethe capability or capacity to do thisindependently and so look to the

corporate for a quick fix rather thantaking responsibility themselves.”

Ward agrees that it is simplistic fora small company to view an allianceas an effortless answer to all of theirsales problems, and provides some

insight into the frustration corporatesare faced with:

“Everyone comes to the party witha slightly different agenda, withsmall companies thinking we have themagic key that will unlock the worldfor them - they can see retirementcoming through a sell-out andflotation and of course getdisappointed when that doesn’thappen. Equally the large customersfind that the fantastic innovation soldto them by the small company isactually not as robust and resilient asit seemed, so we are left wonderinghow on earth it can be embedded inour technology stack.”

So how does a small technologycompany with a strong piece oftechnology build a relationship with aTier 1 company? Griffith feels that

the key to success is in thepreparation:

“If you can structure yourproposition taking into accountmatters such as the corporate’s timeto market, how their current product

offering is shaped andthen highlight howyou can mutually addvalue to each other,then you have acompelling pitch. It isimportant to researchyour potential alliancepartner’s goals, andalign your propositionto match this – the

small company has to do the hardwork and provide the intelligencewhich will generate enoughenthusiasm to continue theconversation.”

This level of preparation is vitallyimportant for a small company insecuring an alliance with a majorcorporate, as is shown through Wardhighlighting the difference betweenan alliance of equals, and how asmall company must approachagreements:

“At Atos Origin we have some verysuccessful large scale alliances –including SAP, Oracle, Microsoft, IBMand HP as examples. These arefounded on the huge amount ofbusiness that we do with each other,and both sides can afford to throw alot of money at an alliance to make it

Helping David teamup with GoliathDerek Ward, Atos Origin EVP UK Markets & Strategic

Relationships, Tim Barnsley and Richard Griffith

co-founders of Channel Dynamics discuss the reality of

strategic alliances.

The Big Debate

1010

Derek Ward

Atos Origin, EVP UK Markets & Strategic Relationships

It is important to researchyour potential alliancepartner’s goals, and align yourproposition to matchRichard Griffith

‘‘’’

11

work. Once you drop out of the“mega league”, and get to the moreone-sided investment of a “David andGoliath” situation the corporatescan’t justify this level of expenditurefor all potential candidates. Here Ithink that the best advice I can giveyou is not to overestimate thesophistication of the large companythat you wish to target. Ultimately itis just a series of individuals withspecific jobs to do. So throwingbrochures at them doesn’t work,instead talk to the right peopleregarding a specific opportunity ifyou think that you have something tohelp us achieve us our objectives.Track down the person who has themost interest in seeing thatprogramme be successful, and thentarget them with a very specific, veryshort message along the lines of ‘Weknow you’re doing this. We knowyou’re doing that – our product willhelp you achieve this because....’”

Over recent years, Ward hasseen a major change in theworld of alliances. “Thetraditional alliance has beenseen as one that would cometogether with a joint go-to-market proposition. But nowthere's another borne out of oneparty understanding that they don’thave all the capability themselvesand having to find a partner to comeand help deliver”.

Channel Dynamics also highlights

the recent work which is being doneto put a mature structure aroundcollaborative business relationships tohelp create and maintain successfulbusiness-to-business collaborations.Tim Barnsley, Channel Dynamics co-founder explains one such innovation,PAS 11000:

“PAS 11000 is a Publicly AvailableBritish Standard concerningcollaborative relationshipmanagement, which is due to go livenext year. It will be cross industry,and will lay out some best practiceprincipals regarding howorganisations should work together,define the customer-vendor'srelationship and how to managevaluable business relationships withinthe supply chain. In the fullness oftime it will be refined for individualindustries and will highlight how wecan become smarter and moreprofessional.”

Griffith points to ASAPTech (the

Channel Dynamics foundedAssociation of Strategic AllianceProfessionals) as another importantdriver of change:

“ASAPTech positively influences theability of a partner manager toarticulate his case more powerfullywithin and across his organisation andthe more people that can do that,the more these people networkamong themselves the more powerfulthe possibility of partner.”

Ward also feels that the UKtechnology industry group Intellect isdoing more for the Alliances sectorthat just providing a networkingforum:

“With Intellect’s help Atos Originhas worked together with ourcompetitors in order to try to makethings more efficient, especially inthe public sector. We have created astandard form contract, althoughtrying to get this rolled out across

government is challenging. It hasenabled us to have commonsenseconversations with our majorcustomers.”

The final piece of advice whichWard has to offer for all companiesseeking an alliance, whether small orlarge, is as simple as it is critical:

“One of the mistakes often made isto forget the customer. At Atos Originwe always adopt a Client Firstapproach and, in our experience, ifyou can bring the customer into thealliance then that’s very powerful. Agood example is the GovernmentGateway which Atos Origin deliverswith Microsoft as a partner. We wantthis to be adopted as the commonauthentication service acrossgovernment, and through initiallybringing the Cabinet Office on boardas our champion, this has now beenadopted by HMRC, the Department ofWork and Pensions and many othercentral and local government

organizations. Alwaysremember that alliancesessentially rely on the peopleinvolved, including yourcustomers. An Alliance

Manager gets out of bed because heenjoys his job and he wants to makeit work, and with all of the bestpractice in the world that’s difficultif the person on the other side of therelationship is someone you don’t geton with. So never underplay thehuman element.”

11

The Big Debate

Tim Barnsley

Channel Dynamics, Co-Founder

Richard Griffith

Channel Dynamics, Co-Founder

Derek Ward

never underplay thehuman element‘‘ ’’

Are stock options still acompelling way to attracttalent?

Stock options have always been atthe heart of compensationpackages offered by early stage

venture backed companies. They actto offset the cash component andrecognise the personal commitmentmade by joining a higher riskcompany at an early stage.

Ten years ago, the very idea ofoptions was sufficient to motivate,but following the hard lessonslearned from the tech bubblebursting, candidates take a moreeducated, cautious approach. Thecurrent generation of start-upveterans might be working in theirsecond or third venture and this has

led to a more pragmatic acceptancethat stock options are not a ‘slamdunk’, and instead should only beviewed as a long term incentive toattract a certain profile of personinto the company. Therefore it is notjust Executive hires qualifyingpreferential shares, dilution, taxefficiency etc – these questions nowcome from every level.

Early stage ventures will always usestock options in remuneration;however the ability to “offset” thecash element of compensation will belimited by the individual’s base salary“pain-threshold”. When largervolumes of options come into play for

Executives, options can help leveragea reduction of base salary or in lieuof a benefits package. It is importantthat each individual’s personalsituation is considered, as a marriedcandidate with children will havedifferent priorities to a bachelor.

Never forget that options are notjust a hiring tool, but also animportant retention device. Ifsomeone is looking to leave, optionscan be used to help reinforce theircommitment to the company.Personally owning a stake in thebusiness remains a key factor indeveloping and maintaining theemployees’ commitment.

Paul Gillespie, a Founding Partner of Gillamor Stephens

GS Opinion

121212

2009 Technology SectorHealthcheck

If levels of recruitment activityindicate the health of an industry,then Q4 of 2008 saw the

technology sector being rushed toA&E. The global financial crisis andresultant lack of business confidenceensured a hiring paralysis waspervasive across the industry from“early stage” VC backed businessesthrough to large global corporations.Due to this diagnosis GillamorStephens approached 2009 with theexpectation that it was going to be avery challenging year. However ninemonths on we have been pleased atthe number of search assignmentsthat have been conducted.

Most hiring activity has been withthe VC backed businesses, despitelimited levels of new funding, as theinvestors have sought to change andstrengthen the boards of theirportfolio companies. This activity has

encompassed a broad spectrum oftechnology businesses from PCBmanufacturing processes totechnology enabled services andcloud computing. Location has beenequally diverse, with assignmentsconducted across the UK, Ireland,Finland, Spain, Holland, Germany,France and Switzerland.

Proven CEOs are in particulardemand; with experienced individualscapable of delivering top line andEBIT growth being much fêted,especially those whose track recordincludes leading companies to asuccessful exit in challenging times.Other companies have sought SalesDirectors to galvanize sales teams,bring structure and rigour to the salesprocess, shape value propositions anddeliver the revenue number. The VPEngineering has also entered our mostwanted lists, as clients seek

candidates to “productise” theiroffering, optimise product lifecycle management and deliver aquality product on time and onbudget.

As 2009 has progressed, renewedhiring activity within the Europeancorporate technology sector couldindicate increased levels ofconfidence. However appointmentstend to be selective and strategic, ascompanies seek entry to newverticals or to build new servicelines. It seems that from a hiringperspective, the green shoots ofrecovery in the corporate technologycompanies may be a little later indeveloping than in the VC technologysector.

For examples of our recent workand a snapshot on currentassignments please visitwww.gillamorstephens.com

Steve Morrison, a Founding Partner of Gillamor Stephens, provides a

GS view of the current recruitment market