Ayesha is a principal of the Hybrid Reality Institute, which explores human-technology co-evolution and Its implications for society, business and politics.

Ayesha is the author of Straight Through Processing (Reed Elsevier, 2007), and is series editor of The Complete Technology Guides published by Reed Elsevier, which includes the titles Next Generation Datacenter: Driving Extreme Efficiency and Effective Cost Savings (2009), Electronic and Program Trading (2006), and Introduction to Financial Technology (2005). She has also written for diverse publications such as BusinessWeek, Forbes, Strategy+Business, and Foreign Policy.

Ayesha was Founder and Director of EGO Magazine, a leading arts and culture magazine for the South Asian diaspora in New York. She also enjoys translating Urdu poetry.

Ayesha has a BA (honors) in Economics from Harvard University and an MS in Operations Research from Columbia University.

Contact: ayesha@hybridrealities.com

Western Dominance in Decline

Ben Simpfendorfer
The New Silk Road: How a Rising Arab World Is Turning Away from the West and Rediscovering China
(Palgrave Macmillan, 2009)

Nandan Nilekani
Imagining India: The Idea of a Renewed Nation
(Penguin Press, 2009)

Nirmalya Kumar, with Pradipta K. Mohapatra and Suj Chandrasekhar
India’s Global Powerhouses: How They Are Taking On the World
(Harvard Business Press, 2009)

Ian Bremmer and Preston Keat
The Fat Tail: The Power of Political Knowledge for Strategic Investing
(Oxford University Press, 2009)

Robert P. Smith, with Peter Zheutlin
Riches among the Ruins: Adventures in the Dark Corners of the Global Economy
(AMACOM, 2009)

The best books on globalization this year offer insights into three directional trends that are changing the topology of global trade and influence: the deepening of regional ties across emerging markets; the continuing rise of powerful new global players; and, finally, the intractability of risk factors inherent in emerging markets and regional networks, and how best to analyze them. Indeed, as the United States loses its hegemony as the primary engine of global growth, the new drivers of growth deserve intense examination.

New Ties That Bind

Traditionally, the West has myopically viewed globalization from the perspective of how its influence has spread eastward, but globalization also entails the deepening of economic, political, and demographic ties between any two regions, not just between the countries in the Organisation for Economic Co-operation and Development (OECD) and the rest of the world. The simultaneous rise of the economies of China and the Persian Gulf region, for example, is no coincidence. They are intimately connected and contributors to one another’s rising prosperity, as skillfully described in this year’s best book on globalization, Ben Simpfendorfer’s The New Silk Road: How a Rising Arab World Is Turning Away from the West and Rediscovering China.

Simpfendorfer, a Royal Bank of Scotland economist based in Hong Kong, has the unique vantage point of having worked in Damascus and Dubai, as well as in many countries in East Asia. He uses the southern Chinese city of Yiwu as a microcosm for the reopening of the Silk Road. Until recently an out-of-the-way village, Yiwu is a revealing node because its residents make their fortunes selling cheap “made in China” goods to the developing world, not to the U.S. and Europe.

Yiwu’s rise as a trade center — its annual trade fair drew 3 million visitors in 2007 — and the repaving of the Silk Road are due in part to the United States’ harsh response to the attacks of September 11, 2001. Difficulties getting U.S. visas forced Arabs to take their business elsewhere at the very time they were amassing capital from high oil prices. The growing demand for oil from India and China provided a natural alternative, and Gulf-Asia trade burgeoned. Saudi Arabia’s oil exports to China hit US$31 billion in 2008, and China’s exports to the Arab world pulled even with those of the U.S. at about $50 billion, a trend embodied in the sprawling Dragon Mart on Dubai’s outskirts (the largest trading hub for Chinese goods outside the Chinese mainland) and Chinese car dealerships in Damascus.

This new Silk Road is not only slicked with oil, it is technologically enhanced through multilingual B2B websites such as Alibaba.com, which have dramatically lowered the costs of trade between the Persian Gulf and China. And it is reinforced by the migration of labor; at least 10,000 Chinese work on building oil terminals in Saudi Arabia on the coast of the Red Sea. This also means that 10,000 potentially idle young Saudi men are not working at oil terminals, something for which China may eventually suffer political blowback. But for now, China’s baggage in the Arab world remains very light, unlike the Gulf region’s conflicted relationships with the U.S. and other Western nations.

Shifts in trade are usually followed by shifts in finance, and here the evidence Simpfendorfer offers is equally revealing. Arab and Chinese businesses continue to court one another’s sovereign wealth funds, looking for capital infusions and building trust, while many U.S. companies and markets look more and more like dry holes. Even before the economic crisis struck in 2008, Gulf countries had begun a gradual shift of foreign exchange reserve holdings to euros, and the European Union is in the final stages of free-trade negotiations with the Gulf Cooperation Council. China has also telegraphed its desire to diversify investments and currency reserves away from the U.S. dollar, in essence signaling a certain ideological unity with its new Arab partners.

The political ties on the new Silk Road are evident in the frequent reciprocal summits to which Saudi Arabia’s King Abdullah and China’s President Hu Jintao bring planes full of executives eager to sign deals. Oil trading, foreign investment, arms deals, and the rhetoric of diplomatic alignment are all part of the mutual reinforcing.

In using the Silk Road as a metaphor, Simpfendorfer reminds us that the trade networks between the Middle East and Asia date back centuries, illustrating how globalization is not an entirely new phenomenon either. He also points out that the Silk Road was in fact plural; it was many routes in multiple directions. Much like the new world order, it had no single center.

The New Silk Road is a window into the deepening commercial and cultural ties that define globalization outside the Western domain. English may be the necessary global language, but it’s insufficient to understand and capitalize on today’s multidirectional globalization. Simpfendorfer’s first-person observations plausibly sketch the many individual threads that will likely be woven together to create tomorrow’s geopolitical alliances.

India’s Bid for Economic Leadership

It is remarkable how in the past few years the analytical perspective on globalization has shifted from Westernization to the rise of two Asian giants. The literature on Asian globalization has also matured; the overly simplistic language of “Chindia” is gone, with each nation now being treated as a confident competitor in its own right — and it is India that has gained ground, at least in publishing-volume terms, over the past year.

After several years of almost outlandishly unrealistic portraits of India’s rise that glossed over its crumbling infrastructure, fractious politics, and impoverished masses, in Nandan Nilekani’s Imagining India: The Idea of a Renewed Nation, we finally have an inspiring yet balanced account that takes these challenges head on. Nilekani, the hero of Thomas Friedman’s The World Is Flat: A Brief History of the Twenty-first Century (Farrar, Straus and Giroux, 2005), a former co-chairman of IT giant Infosys and now a cabinet minister in the Indian government, knows that for India to achieve global respectability, the success of firms like Infosys must spread to companies throughout India. As a CEO and statesman, he elegantly glides between national history, entrepreneurial autobiography, trend forecasting, and public policy — taking the attitude that “what’s good for India is good for Infosys” and focusing on how to improve access for all Indians to health, education, jobs, and infrastructure. (Also see Nilekani’s “India’s Demographic Moment,” s+b, Autumn 2009.)

Although so much of the talk about the Indian market opportunity revolves around the “bottom of the pyramid,” Nilekani wants to shrink the pyramid’s base by growing the middle class while also ensuring a dignified and sustainable life for those who are worse off. The twin foundations of this strategy are IT and the promotion of English-language education above all else. Exuding a confidence that rivals China’s pronouncements about its economic future, Nilekani states, “We can, first of all, reasonably assume that within a few years we should be able to have ubiquitous connectivity to cover every Indian home, hamlet and town.” Such ambition is coupled with a detailed strategy for harnessing an emerging demographic dividend created through the combination of economic growth and a boom in the number of working-age people. This will create tremendous business opportunities for foreign firms and Indian entrepreneurs alike, particularly in products such as low-cost computers and PDAs.

To realize this vision, Nilekani says, universities must be stripped of ideological dogmas and produce more experts in health care and alternative energy; informal and non-unionized labor must be empowered as service distributors; and more states must follow the business-friendly model of the state of Andhra Pradesh, which features India’s best highway system and emphasizes competition instead of subsidies.

The recent electoral victory of the Congress Party–led alliance ought to mean greater support for and confidence in India’s ability to establish more such zones of innovation. The India of the past, where entrepreneurs were considered “devious capitalists” and computers referred to as “job-eating machines,” is beginning to look like the U.S. of the 1990s, whereas Nilekani’s India of electronic ID cards and e-governance is proving to be a progressive experiment worthy of investors’ attention. After the book’s publication, Nilekani left Infosys to become chairman of the Unique Identification Authority of India, a $6 billion smart-card project aimed at providing Indians with personal ID cards.

Where Nilekani champions India as a market destination, Nirmalya Kumar, Pradipta K. Mohapatra, and Suj Chandrasekhar focus on the nation’s growing status as a player in the global arena and the effect this will have on the next phase of globalization. Their book, India’s Global Powerhouses: How They Are Taking On the World, offers a deeper look at the way India’s major multinationals are pursuing globalization on their own terms. Kumar, a marketing professor at the London Business School, and his coauthors argue that these firms, which include the Birla and Tata groups, can leverage vast assets and tolerate high debt-to-equity ratios to complete international deals, such as Tata Steel’s 2006 acquisition of Anglo-Dutch steelmaker Corus and the 2007 merger that created ArcelorMittal, the world’s leading steelmaker.

Based on extensive interviews with deal makers in major Indian firms, the authors’ case for eventually seeing more Indian companies (as opposed to Chinese companies) among the top multinationals rests on arguments similar to those of Nilekani — namely that Indians’ command of the English language and comfort with diverse, multiethnic workforces result in relatively frictionless outbound acquisitions. The fact that outbound investment surpassed inbound investment for the first time in 2006, a major turning point for “Brand India,” lends credence to this reasoning. Further, they expect to see Indian companies competing globally in a greater variety of industries. Indeed, this well-selected set of cases, which includes Hindalco’s global aluminum empire and Suzlon’s international windpower supply chain, demonstrates that India has already branched out beyond IT and manufacturing, with biotech and other sectors certainly on the near horizon.

Both Imagining India and Global Powerhouses see India as a rival to China in the global arena, competitive thanks to its younger demographic profile, English proficiency, and higher-value finished goods. The fact that Indian companies have proven that they can pull off multibillion-dollar acquisitions overseas gives them an additional advantage. Many questions remain, however: Will India’s publicly traded companies be allowed to hold high levels of debt? What will happen when the country’s dominant family-owned model is confronted with international management practices — and scandals on the magnitude of Ramalinga Raju’s billion-dollar fraud at Satyam Computer Services? India has reached well beyond its borders, but a turbulent global economy means that there is no guarantee of smooth progress.

Risk and Reward in New Markets

Major Western firms, such as Coca-Cola and GM, have reported greater profits overseas than at home for almost a decade now, and global expansion into faster-growing economies seems essential to all First World companies that can afford it. But even though emerging and frontier markets, such as Sri Lanka and Romania, are undoubtedly the next major globalization story, they are volatile and unpredictable. Yet few companies take political risk seriously. Most either rely on experts and “insider advice” or simply ignore the subject as too complex and intangible to integrate with day-to-day strategy.

In this sense, Ian Bremmer and Preston Keat’s The Fat Tail: The Power of Political Knowledge for Strategic Investing is long overdue. The authors, both at the prestigious consulting firm Eurasia Group, draw on years of top-level advisory experience to provide the first accessible and rigorous treatment of political risk for business executives. “Fat tail” is a statistical term that refers to a bump at the end of a distribution curve where there is added risk, but the likelihood that a particular event will occur “appears so catastrophically damaging, unlikely to happen, and difficult to predict, that many of us choose to simply ignore it. Until it happens.” The authors’ main point: Black swans, as Nassim Nicholas Taleb calls them, can be political as well as financial.

Such is the volume’s tone as it takes the reader through a wide variety of events that wreaked havoc in capital markets, including the Russian ruble devaluation of 1998, the 2003 PDVSA oil strikes in Venezuela, the 9/11 terrorist attacks, and the passage of the U.S. Sarbanes-Oxley legislation in 2002. Indeed, as shown by the critical firestorm that forced state-owned China National Offshore Oil Company to withdraw its bid to acquire Unocal in the U.S. in 2005, local political sensitivities impact investments everywhere, even in the United States.

Bremmer and Keat turn the amorphous notion of risk into a catalog of former secretary of defense Donald Rumsfeld’s oft-quoted “known unknowns” and “unknown unknowns,” covering warfare, energy supply disruptions, terrorist attacks, coups and civil wars, expropriation and breaches of contract, currency controls and defaults, global warming and demographics, and, of course, corruption. Along the way they offer sensible resilience mechanisms to prepare for such events (e.g., risk mapping, data collection, scenario analysis), ensure continued operations (e.g., personnel location), and hedge strategic bets (e.g., joint ventures).

But lest we begin to believe that political risk is fully manageable, Robert P. Smith’s Riches among the Ruins: Adventures in the Dark Corners of the Global Economy (written with Peter Zheutlin) provides a stark reminder that “frontier markets” can be a euphemism for the chaotic Third World. Smith, the founder and managing director of the Turan Corporation, which specializes in emerging-market sovereign debt, takes us on a tour of places where he says you have to “hold on to your wallet and your life”: El Salvador, Guatemala, Iraq, Nigeria, Russia, Turkey, and Vietnam.

In the 1970s and ’80s, before dollarization and Bloomberg terminals, sovereign debt–trading middlemen like Smith relied on chutzpah and instinct to determine bond prices and find trusted money changers. For such financial swashbucklers, understanding people was as important as, if not more important than, understanding markets. Clearly, improvisation was Smith’s greatest gift: He carried large volumes of cash internationally, set up local holding companies to collect debts, and sent alias-named proxy lawyers to scout for contacts and information — anything to get the job done.

Even as the sovereign debt trade has grown into a $1.7 trillion industry conducted by multinational banks and investment firms, Smith’s characters are alive and well today, just dressed better and using BlackBerrys instead of rotary-dial telephones. After reading this book, one wonders how Arab and Chinese investors described by Simpfendorfer will treat the frontier markets of Uzbekistan, Afghanistan, and Pakistan that lie between them on the New Silk Road.

Smith witnessed every incident in The Fat Tail taxonomy, from arbitrary currency controls to coups to expropriations. His implicit reminder is that emerging markets are a long-term investment. It’s a reminder that would have been worth hearing in late 2008, when the worldwide flight of capital to safety caused foreign direct investment in the developing world to plummet. Many analysts threw the baby out with the bathwater, and the U.S. became the default market of choice even at near zero percent yield on Treasury securities. But, in fact, by April 2009, the Wall Street Journal was already reporting a surge in emerging market indexes. Growth had not gone negative, and foreign exchange reserves and high savings rates combined to restore stability.

This isn’t to say that recoveries are permanent. Smith’s description of Russia in 1997, when he and others bought in heavily on the assumption that Russia was too big to fail, inadvertently reminds us of Russia in 2007: too dependent on high oil prices and with weak regulations and enforcement. Just over a decade ago, the Russian stock market lost 75 percent of its value; in 2009, it has lost at least 60 percent. Emerging markets can always submerge again.

In the evolution from Smith’s boots-on-the-ground adventures to Bremmer and Keat’s more detached, methodological approach, an interesting mutual appreciation appears: Smith thinks that his adventurous tactics are no longer relevant in a world of real-time, electronic information, yet Bremmer and Keat argue that local political knowledge is still essential to staying ahead of the curve. In other words, paying more attention to data is not enough — good instincts are also essential to figuring out all the unknowns.

A Warning to Established Players

An unmistakable conclusion that we share with all the books featured in this essay is the assertion that the U.S. has lost its status as the preeminent driver of globalization. Thus, we predict that two trends will typify the next phase of globalization: First, stronger regionalism in terms of deepening economic integration in areas such as East Asia, Latin America, and the Arab world will be driven by local powers such as China, Brazil, and Saudi Arabia. Second, the global playing field for firms, capital, and strategies will become much more level as Western companies lose the automatic edge they once held in trust and credibility. (See “Capturing the Asian Opportunity,” by Andrew Cainey, Suvojoy Sengupta, and Steven Veldhoen, s+b, Winter 2009.) Companies in emerging and frontier markets may not become global leaders in their own right, but they will surely be powerful players in their own domains and beyond.

Ayesha Khanna is managing director of Hybrid Realities, a research and strategy consulting firm, and author of Straight Through Processing for Financial Services: The Complete Guide (Elsevier, 2008).

Parag Khanna is a senior research fellow at the New America Foundation and author of The Second World: How Emerging Powers Are Redefining Global Competition in the Twenty-first Century (Random House, 2009).

Link to article

Hamaare Daramiyaa.N Aisaa Ko_ii Rishtaa Nahii.n Thaa

By Parveen Shakir
Translated by Ayesha Khanna

hamaare daramiyaa.N aisaa ko_ii rishtaa nahii.n thaa
our relations were not such

tere shaano.n pe ko_ii chhat nahii.n thii
no roof bore down on your shoulders

mere zimme ko_ii aa.Ngan nahii.n thaa
nor any yard depend on my  care

ko_ii vaadaa terii zanjiir-e-paa banane nahii.n paayaa
no promise could restrain you

kisii iqaraar ne merii kalaa_ii ko nahii.n thaamaa
nor any love bind my wrist

havaa-e-dasht kii maanind
like desert wind

tuu aazaad thaa
you were free

raaste terii marzii ke tabe the
roads winding at your behest

mujhe bhii apanii tanhaa_ii pe
on my solitary life,  i too

dekhaa jaaye to
upon reflection

puuraa tasarruf thaa
had full command

magar jab aaj tuu ne
yet today

raastaa badalaa
you changed your route

to kuchh aisaa lagaa mujh ko
and it felt

ke jaise tuu ne mujh se bevafaa_ii kii
as if you betrayed me

Image Courtesy the film Guru

By Ayesha Khanna and Jaime Fitzgerald

The global recession has negatively impacted transshipping, tourism and real estate in Dubai, three of its primary economic sectors. To counter skepticism about its future, Dubai has been touting the Dubai Health Care City (DHCC) whose Phase I is going to be completed in 2010 as the world’s new center of medical tourism and an emerging pillar of the Emirates’ economy. Indeed, given that medical tourism is a multi-billion dollar booming industry with 2-3 million patients seeking treatment in foreign countries annually, Dubai seems to be in the right place at the right time. But medical tourism is now an increasingly competitive marketplace, with Singapore, Thailand and India leading the way among a group of over 35 countries that cater to international patients. Several of these competitors are in the Middle East region itself with both Jordan and Lebanon being top contenders, and Abu Dhabi close behind Dubai in developing its healthcare offerings.

So what can Dubai do to secure top ranking in the industry and attract a significant percentage of the millions of medical tourists swarming the globe today? The primary attraction for medical tourists is financial savings (if they are coming from the West) and quality of care (especially if they herald from developing countries). For example, a heart bypass that costs $130,000 in the US costs only $10,000 in India. Similar cost structures exist in Thailand and Singapore as well, two other well-known providers in the region, and thus Dubai does not offer a cost advantage versus these areas. Dubai has partnered with Harvard Medical International (HMI) to provide a renowned and trusted name as its strategic collaborator. However, HMI has, in fact, developed over 50 programs in more than 30 countries across five continents and most medical tourism hubs have alliances with similarly well-respected institutions, thus diluting the uniqueness of this partnership in Dubai. The Government of Dubai needs to employ a coherent strategy leveraging customer information and analytics in order to develop a competitive edge in this industry. Other governments such as those of Singapore, South Korea and Malaysia are already collaborating with their local health industries to improve the profile and attractiveness of their medical tourism sector. In other words, the hundreds of million dollar investments in healthcare facilities and alliances at DHCC while commendable and necessary are not enough to give Dubai an edge over its competitors, all of which are following similar paths. Only with a highly sophisticated and dynamic strategy that is both responsive to market trends and technologically innovative can Dubai become one of the top destinations for international patients, and in the process, diversify its economy and experience high growth. Five strategies ranging from understanding and targeting customers better to using state of the art information technology to strengthen and increase the longevity of customer relations will help Dubai sustain competitive advantage on an on-going basis.

Targeted Customer Marketing and Services – Identifying relevant customer segments is the key to building having a strong client base. Thousands of UAE citizens traditionally went to the US for medical treatment. However, visa barriers since September 11^th meant fewer patients from the Middle East and Gulf states could pursue treatment in the US. Now they go to other medical hubs, including 90,000 UAE citizens per year just to Thailand alone. Targeting and capturing a greater share of this market should be the first priority for DHCC. A strong regional and domestic customer base also protects Dubai from recessions in other regions of the world.

Ironically, the US now suffers from out-bound medical tourism because of the bloated, inefficient and expensive healthcare system in the country that makes treatment unfeasible even for the insured. Then there are the 50 million uninsured Americans, and even those who have free healthcare like US army veterans suffer long waiting times for basic procedures. According to Paul Keckley, executive director of the Deloitte Center for Health Solutions in Washington, D.C., 600,000 Americans will travel abroad for medical treatment, looking for cheaper better medical care. This reality is not lost on Jordon, ranked #1 in medical tourism in the Middle East by the World Bank, which regularly appeals directly to the cash strapped and frustrated US population. Recently, the head of Jordan’s Private Hospitals Association, Dr. Fawzi al-Hammouri, advertised treatment packages as “less than 25 percent of what you have to pay in the U.S.”

Another massive market for Dubai are patients from Canada and Britain, all of whom suffer from long waiting periods that are characteristic of publicly funded healthcare. Carefully profiling and analyzing each kind of customer, their needs, and their motivations for seeking healthcare abroad will allow Dubai to prioritize and target high value customers. This kind of customer segmentation and profitability analysis is common in multinational organizations such as Pepsi which continually calibrate their marketing and products to customer preferences and needs.

Superior Customer Experience – According to Josef Woodam, author of Patients Without Borders, patients highly value the customer experience in terms of the attention they receive, the quality of treatment, and the attractiveness of local tourism. Dubai is already a popular tourist destination and is planning to leverage its experience and services in tourism to enhance the value of the medical stay of international patients. Other countries are similarly working in the same vein. South Africa, for instance, offers luxurious resorts and safaris as part of its medical care packages (one leading provider is called appropriately Surgeons & Safari, and is run by Lorraine Melville, a Founding Member of the Medical Tourism Association of South Africa.)

But customer experience is far more than just adding tourist attractions to patient treatment. When Joseph Pine and James Gilmore wrote about customer experience in their pioneering article “Welcome to the Experience Economy” in Harvard Business Review in 1998, they wrote about how “an experience occurs when a company uses services as the stage–and goods as props–for engaging individuals in a way that creates a memorable event.” Customers respond to an experience which is not only functionally reliable but also emotionally rewarding. Companies that have thought deeply about customer experience management such as Starwood Hotels & Resorts have found high returns on the effort. Thus, Dubai must pay attention to the end to end experience of a patient’s interaction with the country’s medical process if it is to successfully differentiate itself from other market players that are less adept at seamlessly managing customer experience.

Customer experience management requires understanding what customers value, and then using that information to improve, automate and integrate business processes. Creating a positive customer experience is a continuous evolution based on careful management and monitoring of feedback provided by customers, which is then incorporated into key interactions with the customer.

Disease Management for the Aged and Chronically Ill– Most patients undertake medical tourism for one-off or treatments, yet the majority of the world’s burgeoning aging population suffers from chronic diseases such as diabetes, cancer, and arthritis. Medical tourism hubs usually don’t cater to the aged or chronically ill, yet these two groups will soon comprise the majority of patients seeking medical care. The world’s population, especially the developed world, is aging at a very high rate. In fact, the 50+ age-group is the fastest growing segment of the world population. Take just a few examples that underscore this fact: 50% of the European Union’s population will be over 65 years of age within a few years; every seven seconds, an American turns 50; between 2000 and 2050, the number of elderly men and women in Asia will more than triple, with Japan having the most rapidly aging population in the world; and by 2030, the number or retirees in Italy will surpass the number of active workers.

Dubai can be one of the pioneers of innovative long term disease management , which necessarily involves both in- and out-patient care, in the medical tourism marketplace. It can achieve provision of long-term attentive care through virtual support, well managed information systems that track patient cases and even satellite workers that provide periodic home visits. Companies such as Canada’s New IT Healthcare provide tools for intelligent distance patient monitoring and need to be integrated with the business processes of the medical facilities in DHCC to provide a seamless e-health environment for each patient. Since DHCC is starting anew, it does not suffer from the paralyzing legacy systems and paper based processes for healthcare facilities in most countries. It has already made the commitment to electronic medical and health records as a fundamental pillar of patient service, and this should in turn greatly facilitate providing long-term care for aged and chronically ill patients.

Innovative Health Delivery Models – Dubai should attempt to build a healthcare city of the future, creating quality care using telemedicine and the latest technological devices to track and manage patient health. For example, the Fraunhofer Institute for Experimental Software Engineering (IESE) in Germany, which undertakes innovative software design, is developing intelligent homes which will help with the care of the elderly. The core of the smart home consists of several hidden devices with sensors which document, track and monitor the activities of the patient. The data collected, such as how often the person goes to the bathroom, can be used by doctors to analyze the patient’s health and contact the patient should the behavior imply illness. Telemedicine, or virtual consulting, where the doctor communicates with the patient over email, video or phone, will increasingly become prevalent. Medical tourism should not be limited to medical travel; in fact, its definition should expand from medical treatment that is outside one’s country of origin to one that is independent of geography.

Early adoption of this kind of integrated medical solution consisting of both virtual assessment and follow-up care will definitely put Dubai ahead of the game. Dubai will have to leverage specialists in knowledge and information management and partner with the makers of smart devices to create the capabilities to execute this kind of approach.

Specialization and Leadership in Research and Innovation – Specialization tends to emerge naturally in some countries, but Dubai can make conscious choices since it is planning its healthcare economy. Brazil, for example, is known for plastic surgery while South Africa is known for dentistry and India for cardiology and fertility treatments. Countries in the Middle East are also advertising their specialization. The Lebanese Ministry of Tourism recently hosted the launch of Image Concept, a Dubai based company which specializes in connecting Gulf patients interested in cosmetic surgery to surgeons in Lebanon. The Ministry’s Director General, Mrs. Nadra Sardouk, commented, “Cosmetic Tourism is a widely recognized and appreciated concept and we are very hopeful that this initiative will contribute to our economy and benefit tourism and medical sectors.” Dubai will also need to invest in particular health services to differentiate the country from competitors.

In addition, it is important for Dubai to establish thought leadership in medical research and innovation. Of all the medical tourism hubs, Singapore has been the most successful in this regard, building a reputation in bio-technology, stem cell research and cancer treatment.

In conclusion, Dubai must think of itself as a corporation and utilize information technology and analytics to provide customized positive experiences to target patient populations. Only this approach will help Dubai create and sustain a competitive edge in the medical tourism marketplace.

Ayesha Khanna is Partner and Jaime Fitzgerald is Managing Partner of Fitzgerald Analytics, a management consulting firm which specializes in information management and analytics. Ayesha Khanna is also Director of Hybrid Realities, a strategic consulting firm focusing on the impact of technological innovation on social and economic trends.

Link to article: http://www.arabianbusiness.com/569065-rebranding-dubai-

By Noon Meem Rashid
Translated by Ayesha Khanna

ai merii ham_raqs mujh ko thaam le
zindagii se bhaag kar aayaa huu.N mai.n
Dar se larazaa.N huu.N kahii.n aisaa na ho
raqs_gaah ke chor daravaaze se aakar zindagii
Dhuu.NDh le mujh ko nishaa.N paa le meraa
aur jurm-e-aish karate dekh le

come, my fellow dancer, hold me
from life I have fled and arrived
quivering with fear
that in this brothel, life may follow
and find me intoxicated
see me decadent, corrupt and debauched

ai merii ham_raqs mujh ko thaam le
raqs kii ye gardishe.n
ek mubaham aasiyaa ke daur hai.n
kaisi sargarmii se Gam ko rau.ndataa jaataa huu.N mai.n
jii me.n kahataa huu.N ki haa.N
raqs_gaah me.n zindagii ke jhaa.Nkane se peshtar
kulfato.n kaa sang_rezaa ek bhii rahane na paaye

come, my fellow dancer, hold me
these cycles of dance
enigmatic revolutions of sin
with what zeal I spin the wheels of sorrow
and in my mind, I agree
before entering this brothel
not one speck of my troubles should remain

ai merii ham_raqs mujh ko thaam le
zindagii mere liye
ek Khuunii bhe.Diye se kam nahii.n
ai hasii.n-o-ajanabii aurat usii ke Dar se mai.n
ho rahaa huu.N lamhaa lamhaa aur bhii tere qariib
jaanataa huu.N tuu merii jaa.N bhii nahii.n
tujh se milane kaa phir imkaa.N bhii nahii.n
tuu merii aarazuuo.n kii magar tamsiil hai
jo rahii mujh se gurezaa.N aaj tak

come, my fellow dancer, hold me
for me life
is no less than a surreptitious murderer
o beautiful stranger, from its very door
slowly, I come closer to you
knowing you are not my love
and meeting you is unlikely
but still you are that one desire
which eludes me till today

ai merii ham_raqs mujh ko thaam le
ahad-e-paariinaa kaa mai.n insaa.N nahii.n
bandagii se is dar-o-diivaar kii
ho chukii hai.n Khvaahishe.n be-soz-o-rang-o-naatavaa.N
jism se tere lipaT sakataa to huu.N
zindagii par mai.n jhapaT sakataa nahii.n
is liye ab thaam le
ai hasii.n-o-ajanabii aurat mujhe ab thaam le

come, my fellow dancer, hold me
of no divine promise am I a follower
and bondage to this place
has weakened all desire for abstinence
to your body I can cling
but life I cannot battle
so hold me now
o beautiful stranger hold me now

Image Courtesy the film Paheli

All this takes several months and that’s just to get a strategy approved. Next orders have be generated and executed, and that starts a whole new batch of work and stress: IT connecting back-end systems to order and execution management systems, middle office scrambling to make sense of risk, and quants chewing their nails about when the market will change and the model will have to be updated. The days when a strategy was a long-term alpha laying golden goose are over. Nowadays, a strategy is good on average for about 6 months till the market catches up, and lo and behold, the whole process starts all over again.

FAST FORWARD!!!

A platform exists that automates all parts of the workflow outlined above. It can handle and translate known datasets like Bloomberg, and Reuters, not to mention real-time low-latency tick feeds; it has a library of thousands of well-known mathematical models with which a quant can build any kind of factor based model, creating these models through drag and drop visual interfaces; it allows users to test this model on data sets (past, present and simulated future); and finally, it connects directly to an order management system. All this should take a couple of weeks! It might sound as close to reality as Virgin Galactic, but mind you, both are not as far off as they seem. And quant platforms that are codeless – allowing visual plug n’ play creation of alpha-generating strategies – and have a seamless workflow from market data source to trade execution, i.e. comprise a true straight through processing solution – are here today!

Aite Group published a report “The World According to Quants: Enter Alpha Generation Platforms” in July this year, which first brought some innovative and cutting edge new companies to the forefront. These include Alphacet, Deltix, and ClariFi, and 4th Story.

Their platforms are definitely worth checking out:
Alphacet: http://www.alphacet.com
Deltix: http://www.deltixlab.com/
ClariFI: http://www.clarifi.com/
4th Story: http://www.4thstory.com/

It’ll soon be time to update the Quant job requirement with “no coding experience necessary.”

By Faiz Ahmed Faiz
Translated by Ayesha Khanna

dasht-e-tanhaai mein, ai jaan-e-jahaan, larzaan hain
In the desert of my solitude, oh love of my life, quiver
teri avaaz ke saaye,
the shadows of your voice,
tere honthon ke saraab
the mirage of your lips

dasht-e-tanhaai mein,
In the desert of my solitude,
duri ke khas-o-khaak tale
beneath the dust and ashes of distance
khil rahe hain tere pehlu ke saman aur gulaab
bloom the jasmines and roses of your proximity

uht rahi hai kahin qurbat se
From somewhere very close,
teri saans ki aanch
rises the warmth of your breath
apani khushbuu mein sulagti hui
smouldering in its own aroma,
maddham maddham
slowly, bit by bit.

dur ufaq par chamakati hui
far away, across the horizon, glistens
qatra qatra
drop by drop
gir rahi hai teri dil daar nazar ki shabnam
the falling dew of your beguiling glance

is qadar pyaar se hai jaan-e jahaan rakkhaa hai
With such tenderness, O love of my life,
dil ke rukhsaar pe
on the cheek of my heart,
is vaqt teri yaad ne haath
has your memory placed its hand right now

yun guman hota hai
that it looks as if
garche hai abhi subah-e-firaaq
(though it’s still the dawn of adieu)
dhal gaya hijr ka din
the sun of separation has set
aa bhi gaye vasl ki raat
and the night of union has arrived.

INTRODUCTION
Most organizations today continue to regard technology as merely a back-office cost center, a viewpoint that diminishes the breadth of IT’s impact on a firm’s competitive profile. In fact, increasing innovation in global markets requires that IT take a far greater role in helping the enterprise differentiate itself from competitors. To address this deficiency in the linkage between IT and enterprise strategy, this paper revisits the seminal paper by Michael Porter, “What is Strategy?” and proposes a framework called Meta-IT that would leverage IT as a partner in attaining competitive advantage.

To contribute to strategic growth, IT’s role has to be understood as far more than a repository of software and hardware applications. Instead, it should be seen from a Meta-IT perspective, which views the management of IT as a firm-wide service and infrastructure fabric that collaborates with business units to respond rapidly, innovatively, and cost effectively to changing market conditions. When firms employ a Meta-IT approach, they find that IT quickly becomes a dynamic contributor to the enterprise vision.

“CIOs are now expected to deliver the solutions that make the enterprise different in a way that matters to company performance and customer satisfaction,” according to Mark McDonald, head of research at Gartner EXP, which recently published Making the Difference: The 2008 CIO. The trend toward a greater role for IT in business strategy is also prevalent in the media. In CIO Magazine’s State of the CIO ’08 survey, CIOs are divided into three categories: functional, transformational, and business strategist, with the latter described as the future state of the CIO.

Yet despite broad acknowledgement of IT’s greater role in revenue generation, there is no holistic framework that ties this goal to an IT management strategy. Traditional IT strategy and governance models fail because they do not take into account the changing needs of the markets in which businesses operate, and the new technologies that are now available to expedite and facilitate IT management. This paper fills this void by introducing the Meta-IT model in which IT is positioned as complementary to other strategies of attaining greater market agility.

THE DISCONNECT: BETTER TECHNOLOGIES, SAME ISSUES
The world that firms compete in today in terms of markets, customers, and supply chains is drastically more competitive than a decade ago. Simultaneously, recent technologies such as Virtualization and Web 2.0 have the potential to help organizations navigate these waters deftly and leapfrog over their competition. But in most firms, business and IT have not managed to effectively form a successful partnership. In fact, they continue to dodge the same obstacles that have bedeviled IT services for decades with complaints such as business-IT misalignment, inability to prioritize projects, IT’s failure to be agile and innovative, and the continuing frustration with modernizing legacy infrastructure. Why does IT management fail in making the crucial link between business needs and IT services?

Several key business challenges are worth noting:
* Globalization: New markets and consumers have appeared from China to Brazil, India to Eastern Europe, but pressure has commensurately grown for 24/7 operational connectivity and processing.
* Competition: Innovative rivals have emerged in all corners of the world.
*Profitability: Margins are falling as consumers increasingly expect free services—this requires conceiving new ways to generate profits while providing value-added services.
* Skills Shortage: CEOs of companies across the globe are vying for an elite group of skilled experts, and are struggling to develop their human capital and prevent the high turnover that has become typical in recent years.
* Cost Cutting: Except in the energy sector, most firms are bracing for a recession.
* Technological Advances: Staying on top of new standards, technologies, and frameworks are essential to retain an edge.
* Regulation: The U.S. credit crisis will likely result in a deluge of new regulations as financial markets seek to prevent future asset bubbles. Meanwhile, emerging markets will also formalize regulations to raise their legal and accounting standards to global levels.
* Client Expectations: Clients are more discerning of quality than ever before, and demand interactivity, real-time information, and superior quality interfaces from all their service providers.
* Green Infrastructure: Concerns about climate change have finally crossed a tipping point where all firms are judged on their eco-efficiency.
In this intensely competitive and unpredictable landscape, some new technologies and processes have emerged that can help organizations to confront these challenges. Foremost amongst these are the following:
* Service Orientated IT, which has accelerated the ability to reuse modular services and scale them rapidly to meet new business demand, leading to faster time-to-market and greater productivity for a base fixed cost.
* Real Time Infrastructure (RTI), which is the creation of a dynamic IT infrastructure that matches the demand for infrastructure resources with supply in real-time, thus enabling greater efficiency and higher utilization of the infrastructure. RTI employs the concept of virtualization which allows central management of diverse resources by inserting a virtual layer of abstraction between the end users and the resources.
* Web 2.0 and Social Computing, which affords companies a treasure of information and a set of creative, interactive tools that gives them insights into customer behavior and preferences.
* Data Governance Standards, which provide guidelines on the collection and organization of information which can be used to analyze business models, markets, and competitors more accurately.
* Agile Development Best Practices, which have transformed the whole lifecycle of application development into a series of lightweight and agile processes, and allow firms to move quickly to capture market share when opportunities arise.

According to Gartner’s 2008 Worldwide Survey of CIOs[1], 85% of CIOs realize the potential of IT to help firms meet today’s business challenges, and are looking toward “IT to make the difference in their enterprise strategy”. Yet many feel frustrated by their inability to propel IT to this stage because traditional IT management frameworks are not conducive to building IT and business partnerships. IT is still governed as a function separate from revenue generating units, instead of a holistic fabric that contributes to value creation. The Meta-IT framework attempts to correct this deficiency through its more holistic and enterprise driven model for IT governance.

THE META-IT FRAMEWORK
Meta-IT represents a new IT management framework and governance packaged into set of results-oriented best practices. Even though it is vendor neutral, it is not divorced from the technological capabilities that make the pursuit of business-IT alignment more achievable. The fundamental premise of the Meta-IT model is that IT management must be viewed holistically from the enterprise level, abstracted away from the conglomeration of software and hardware components. In other words, IT has to be viewed as more than the sum of its parts.

In his definitive paper “What is Strategy?[2]” Michael Porter highlighted that competitive advantage is a consequence of differentiating strategies, not operational effectiveness:

“Operational effectiveness (OE) means performing similar activities better than rivals perform them. Operational effectiveness includes but is not limited to efficiency. It refers to any number of practices that allow a company to better utilize its inputs, by for example, reducing defects in products or developing better products faster. In contrast, strategic positioning means performing different activities from rivals’ or performing similar activities in different ways.”

Differentiation stems from making unique choices both in firm activities and in how the firm performs those activities. Firms must make certain choices vis-à-vis IT as well—choices that include but are not limited to management techniques, and software and hardware decisions. Historically, IT has oscillated between roles geared toward operational efficiency or effectiveness, but has rarely been elevated into a strategic positioning role (see Figure 2).This can be attributed to the fact that the average tenure of CIOs has for some time been limited to only a few years, mainly due to an inability of Executive Management to understand, assess and value the CIO’s role. As a result, CIOs were changed quite often as firms promoted CIOs to more prominent posts, or replaced them when their performance was dissatisfactory. This created an inherent instability in the principles by which the organization managed IT across departments. Each new CIO came armed with a set of initiatives that were promptly turned over by the next CIO, forcing IT managers in each line of business to become more independent and siloed, and less reliant on a holistic strategy.

Thus, IT never came into its own with a centralized coherent strategy: it was endlessly trapped oscillating between directives from department IT managers and the conflicting signals from different CIOs. As a result, there were some efficiencies and effectiveness but never to the degree which alignment within IT itself would create. Fortunately, CIO tenures have recently stabilized to slightly over four years[3], which points to both an appreciation of the CIO’s role, and to the opportunity for a new management approach such as Meta-IT to take root.

Meta-IT is able to help firms break out of a siloed approach to IT management, allowing it to unlock the full force of its potential as a strategic thought partner for business innovation. This is because Meta-IT is a governance strategy that enables IT to be an organizational lever by institutionalizing a set of holistic best practices based on latest technologies.

META-IT BEST PRACTICES
Meta-IT can be achieved through a set of systematically institutionalized practices:
1. RECOGNIZE IT’S VALUE: Acknowledge IT as Part of the Revenue-Generating Value Chain
Meta-IT calls for a new mindset that recognizes IT as part of value creation. Without this shift in thinking, IT cannot fully embody its expanded role as a thought and execution partner in mapping strategy, and creating value-added products and services for the organization.
2. ALIGN BUSINESS AND IT: Trust to Educate, Educate to Trust
The single biggest obstacle in forming a strategic business‐IT partnership is lack of trust—the belief that the other party just ‘doesn’t get it’. This calls for business and IT to educate each other on their respective goals and competencies in simple conceptual terms. Such discussions align business and IT priorities and efforts, create a shared sense of common objectives, engender trust, and stimulate innovation.
3. THINK LIKE AN INVESTOR: Understand the Economics of Supply and Demand
The most appropriate way of evaluating ROI (return on investment) on IT investments is by examining IT supply and demand, i.e. mapping business processes (that are weighted by their contribution to enterprise goals) to IT services. Inadequate staffing and skills often doom IT projects. Matching IT supply and demand prevents investments in low-value services, which deflect resources away from high-impact initiatives. Like any investment portfolio, IT services are retired when their ROI is low and ramped up when their ROI is high. This represents a fundamental shift in the rigor with which IT is viewed, and brings IT to the same scrutiny as business units, thus elevating it to the same responsibility and same benefits.
4. BREAK SILOS: Invest in a Portfolio of Common Services
Services are those software components that can satisfy more than one business demand, and the identification of these services is a key outcome of the business process mapping exercise. The set of reusable software services, such as data and computing services, form the foundation of Service Oriented Architecture (SOA), and facilitate rapid time to market for new applications. Together, they form a portfolio of common reusable technology services, which are regularly evaluated for their ROI.
5. BE EFFICIENT AND ECO-FFICENT: Construct a Real-Time Infrastructure Utility
Most firms find themselves in a constant cycle of energy waste and underutilization of resources, most visible in the hugely inefficient and costly data centers that are the hallmark of every large company today. Organizations need to manage their infrastructure like a utility, such as an electricity grid: a real-time infrastructure that is able to pool and direct resources to meet fluctuations in business demand. The technology for managing IT infrastructure like a utility is variously called grid computing, cloud computing, and virtualization. For example, instead of dedicating a server to each business process, virtual infrastructure management directs several lines of business to use the same servers, often leading up to fifty times the performance at one-third the cost.
6. EMPOWER IT PERSONNEL: Create a Product Management Environment
One of the best ways to empower the federation of IT staff is for the central enterprise team to create a product management environment. This is an environment where a network of developers can coalesce around a core set of guiding standards and products, where they feel empowered to be innovative and yet trust that they have the support they need. For example, common services developed by various groups can be placed on an in-house virtual shelf, where other developers can access them and receive instructions on their usage. Very quickly, this environment will begin to migrate the developer community toward reuse, which will result in cost savings and faster time to market when creating new applications.
7. CREATE TRANSPARENCY: Measure Performance and Conduct Forensics
Systematic ways of monitoring the performance of IT are enabled by utility computing or real-time snapshots of IT utilization. There exist in the market today analytical tools that map IT usage to business processes, providing insight into whether IT is directing its efforts in line with strategic goals. In addition, they allow rapid investigation of root causes when problems occur and quick readjustment of resource allocation if wasteful consumption of services is identified.
8. SUSTAIN IMPACT: Build Skills through Education and Training
The only way to sustain the impact of current development and to continue to plan for the future is to build skills through education and training. Educating Operations on how to handle problems through simulated exercises, for example, is critical for maintaining the value proposition of a product or service. CIOs also have to look beyond the capabilities required today and plan for future skills. Having an adaptable workforce is now considered an essential capability for CEOs. More than half of the CEOs interviewed in a recent IBM study indicated that “the inability to rapidly develop skills is a primary workforce challenge”[4].
9. ENCOURAGE OWNERSHIP: Institutionalize Incentive Structures
In order for IT to rise to the occasion and take ownership of IT’s new expanded role—and accept the accountability that accompanies this ownership—it will have to be given incentives both in terms of recognition and reward. Incentive structures will have to be built along two dimensions: calibrating bonus structures to IT’s contribution to profitability; and aligning remuneration with use of Meta-IT principles, e.g. providing reward for efficient leveraging of existing IT as much as for creation of new modules.
10. VISUALIZE THE FUTURE: Use Playbooks to Imagine Scenarios
The ability to capture and analyze massive amounts of data is an extremely powerful capability that was not previously available to CIOs. It allows for the creation of playbooks whereby executives can evaluate strategies under different market scenarios and calculate the IT resources that will facilitate these strategies. IT can thought-partner with business units on which options to pursue by providing quick insight into IT capabilities currently available to service different scenarios scenario, and the time it will take to build new capabilities if needed.
11. DELIVER RESULTS: Plan Strategic Solutions with Short-Term Benefits
Businesses need to continue to operate daily, even as they plan for longer-term strengths and capabilities. The Meta-IT model is a results-based framework that emphasizes short-term delivery of high-quality results. New technology frameworks such as Service Orientated Architecture (SOA) are structured for such an approach. In SOA, even legacy components can be reused as the firm moves toward modernization, illustrating yet another example of how technical innovation can enable managerial best practices.
12. EVOLVE CONTINUALLY: Adopt an Iterative Approach
Businesses are not static: they are constantly responding to changing market conditions and evolving in response to competitor innovations. Thus, IT also has to continually collaborate with business to review the IT portfolio and ensure that it’s aligned with and providing input into the latest vision and direction of the organization.

LEARNING FROM SUCCESS STORIES: THE CASE OF WACHOVIA
The best way to prove a hypothesis is to test it, and even better, to have the evidence based on the testing someone else has already done. Does the Meta-IT approach work? While there are several examples of successful strategic use of IT in silos within an organization, one firm has particularly shown the benefits and value of using the right technologies the Meta-IT way: Wachovia Corporate and Investment Banking Technology (CIBT) division.

In 2004, Susan Certoma was hired as the CIO of Wachovia CIBT division with the explicit mandate to transform the organization into one of the leading investment banking divisions in the market. Even though Wachovia was the fourth-largest bank in the country, it lagged behind its competitors in its investment banking division and stood at an unacceptable position of No. 14. Certoma noticed that even though there were nine lines of business, each competing in different markets, they were using the same kinds of technology services. The lack of standardization amongst these services, however, meant that each line of business was creating its own set of software applications, often using servers, computing power, and code redundantly. The cost inefficiencies were astronomical.

Certoma decided that instead of finding specific answers for each line of business, her team would look at the infrastructure of the investment bank in a holistic manner and identify common services that could be leveraged across lines of business. “As part of our SOA strategy, our goal is to provide a single infrastructure that will provide multiple services that can be very differentiated based on each of our businesses,” she told Wall Street & Technology in an interview[5]. For this purpose, she hired Tony Bishop as director of product management, and they set out to transform Wachovia to become a serious competitor in the investment banking space.

What followed were four years of an effort that won Wachovia accolades and awards for innovative and transformational activities, including InfoWorld’s “Top 100 IT Project Awards” two years in a row for its Service Oriented Architecture & Utility Computing projects. These projects enabled $50 million in new revenue and $100 million in cost efficiencies (for an investment of $20 million over two years). Wachovia achieved this success by applying principles which fall under the realm of Meta-IT best practices.

With an elite team of experts, Certoma’s group spent several months working with business units to understand Wachovia’s business model and enterprise growth strategy. They then mapped all the required business processes (demand) to IT services (supply). Wherever they noticed that a service could be used for more than one business goal, such as information management and desktop modules, they earmarked it as a common service. The team then created a product management environment where a core set of reusable services were made available, and coupled it with a virtual grid infrastructure which provided lines of business computing and processing power on demand.

Wachovia thus entirely restructured the way technology was created, valued, and utilized in the bank, resulting in several advantages for the firm including:
* Differentiation: Wachovia’s Meta-IT philosophy paid off when it was able to differentiate itself from its competitors. In 2006, CIB’s global financial institutions group won three multi-million dollar contracts, partly because they were able to show streamlined technology architecture and processes that could be easily integrated with clients[6].
* Agility: Wachovia was able to leverage common services to quickly enhance enterprise strategies to respond to market demands. For example, one of CIB’s groups wanted to develop an “equity desktop”, which would allow bankers to trade equities and run portfolio analytics. Usually, creating a new equity trading application would take about six months to a year. However, several components identified during conversations with the business were already available as common services, and were leveraged to create the new desktop in just three months, giving the bank a significant me-to-market advantage.
* Innovation: The new infrastructure fabric built by Certoma’s team won it the No. 8 spot in Information Week’s Top 500 IT Projects since it improved business service levels (100x) and reduced transaction costs (30x), paying for the investment in less than nine months. The benefits directly led to the creation of more innovative business products. Wachovia’s Equity Structured Products unit, for instance, had plans to offer new derivatives products to its clients. Traditional Excel-based risk calculators would take anywhere from 30 minutes to several hours to calculate volatility metrics, which was extremely frustrating since it directly affected the business’ ability to sell and monitor new products. All that changed with the new infrastructure fabric, which powered a ‘volatility surface’ service that was able to generate risk metrics under different scenarios within minutes.
* Eco-fficiency: Wachovia had pledged to reduce its greenhouse gas emissions profile by 10% by 2010.[7] Since one of the largest consumers of energy at any organization is IT, the bank looked to IT to help in this cause. The CIBT unit led the way by consolidating its infrastructure and overlaying it with a virtual grid that could serve computing power on demand to business units. The team was awarded Network World’s “Enterprise All-Star Award” for successfully consolidating infrastructure and applying “green” computing strategies to achieve a project ROI of 300% (50 applications over 300 servers were reduced to 50 shared/allocated servers).

THE NEW CHANGE AGENTS
Implementing the Meta-IT framework requires an elite team of experts well-versed in technology management, business domains, and the latest innovations in technology implementation. But just as importantly, it requires each of them to be change agents—individuals committed to a new wave of thinking even in the face of the organizational resistance. Organizational resistance is an unfortunate but common phenomenon whenever innovative processes and technologies are introduced in firms with an entrenched corporate culture. Change agency is thus the single most valuable trait in a Meta-IT team.
Listed below are essential traits that should be used as criteria when putting together this team:
* Change Agency: First and foremost, the team must be comprised of change agents committed to leading the transformation of the organization. For this they must possess leadership skills, emotional intelligence, and the ability to work with the organization through its resistance to achieve adoption of new paradigms. It requires them to have clear and strong understanding of Meta-IT best practices, and to convincingly and clearly draw line-of-sight between the Meta-IT approach and business results.
* Management, Business, and Technical Expertise: Technology managers, business domain experts, and senior IT architects form the core of the Enterprise Meta-IT team. They not only bring superior knowledge of latest technologies and business models, but they are adept at simplifying complex concepts and communicating their benefits to the rest of the team.
* Relevant Experience: Ideally, team members must have experience institutionalizing the Meta-IT approach for an organization. While it is rare to find such people, the value of their experience is priceless in terms of knowing what works and what doesn’t.
* Dedicated to Finding Best in Class for You: The Meta-IT approach does not exist in isolation: it is an agile framework for firm-wide partnership. The team is therefore sensitive to charting the most appropriate path to Meta-IT given a firm’s particular history, business model, and corporate culture.
* Ability to Communicate and Educate: Essential to change agents is the ability to constantly educate and empower others to partake in organizational transformation. It is an essential skill that each member of the team must possess, since they will again and again find themselves in the position of having to explain and persuade traditional managers of the strategic value of the Meta-IT approach.

Providers of Meta-IT

Today’s IT teams and consulting firms are not equipped to be change agents—they have neither the thought leadership nor the expertise for Meta-IT initiatives. Thus, there remains a veritable gap in the market for the kind of forward-looking and holistic approach advocated in this paper. For now, Executive Management will have to cherry pick a team of in-house experts and/or consultants to create the Enterprise Meta-IT team. One firm which is emerging as a market leader is Adaptivity, a consulting firm formed by the team that led and jump-started Wachovia’s successful transformation. Given its extensive experience and relevant expertise, Adaptivity’s team has devised a number of frameworks that align with Meta-IT best practices. Adaptivity’s proven track record for being effective change agents and the approach that it has developed for Meta-IT shows the demand for such advisory.

Three examples of how Adaptivity incorporates key principles of Meta-IT effectively highlight how to incorporate these principles into concrete implementation plans.

Service Orientation of IT: Adaptivity utilizes innovative techniques for aligning business and IT, emphasizing theimportance of every aspect of IT as being a service which is flexible, dynamic and consistently aligned with enterprise goals. It is the first step in their five-phased methodology called ADIOS (Align, Design, Integrate, Operate, Sustain), in which each phase is tailored to fit the unique circumstances of an organization.
Quality of Experience (QoE): Adaptivity’s QoE maturity model is premised on the belief that cost efficiency and service quality must be balanced in order for any technology approach to be sustainable, and have continued business buy-in. For this purpose, they employ a systematic investigative exercise which gives them insight into an organization’s holistic IT infrastructure. This information allows them to create a system which dynamically allocates infrastructure resources as needed, thereby preventing waste without compromising service quality.
Fit-for-Purpose: The Fit-for-Purpose design methodology includes creating an inventory of all IT services and understanding how how their quality is affected. The requirements for achieving quality service are then mapped to the supply of infrastructure resources available in the organization. Using virtualization platforms, Adaptivity is then able to show how supply can dynamically be fitted to demand, resulting in an optimized energy footprint.

CONCLUSION
The Meta-IT framework is a holistic view of IT as a partner in enterprise strategy and requires a fundamental shift in how the role and value of IT is traditionally perceived. Without it, successfully leveraging technical frameworks and best practices to compete in global markets will be next to impossible. The Meta-IT framework is implemented using a set of best practices, and can be facilitated by a team of business and technology experts who are proactive change agents. Case studies such as Wachovia prove that if undertaken correctly, these best practices directly translate into increased profitability, better resource management, and IT’s stronger participation in revenue generation.

REFERENCES
1. The Gartner EXP report “Making the Difference: The 2008 CIO.”
2. Michael Porter, “What is Strategy?” Harvard Business Review, November/December 1996.
3. Gartner EXP, “Making the Difference: The 2008 CIO Agenda.”
4. IBM Global Business Services “Unlocking the DNA of the Adaptable Workforce: The Global Human Capital Study 2008.”
5. Maria Walken, “Susan Certoma Takes Wachovia to the Next Level,” Wall Street & Technology, July 26, 2007.
6. David L. Marguluis, “Banking on SOA” Infoworld.com, July 17, 2006.
7. Stacy Collett, “Top 12 Green-IT Users: No. 12 Wachovia Corp,” Computer World¸ February 15, 2008.

The idea is not new, but recently it has come to the forefront with full force. There is nowadays considerable debate raging on whether the alpha generated by hedge funds is actually alpha, or what is called alternative beta, i.e. beta generated through systematic risk exposure to non-traditional assets in the market. Alternative beta returns are achieved because risk premiums were rewarded, not because the hedge fund manager was able to arbitrage inefficiencies or pick stocks with unique skill.

Why does this matter? Alpha, beta, alternative beta … who cares as long as there is a return on investment? Well, in good times, everyone enjoys the party, but in bad times, investors are prickly when it comes to paying hefty hedge fund fees (usually 2% of assets under management (AUM) and 20% of profits) if there is evidence that the manager is not getting his/her returns through particular skill but through systematic and predictable methods. Granted, a return is still a return, but the question becomes, how much is it worth? Is it worth being charged 20% of performance in fees, is it worth not always getting your money out when you want it and is it worth facing minimal transparency into what is being done with your money (hedge funds are notoriously secretive)? Well, it is definitely not worth the fees, the illiquidity and the secrecy if that return can be replicated systematically through alternative beta.

What are these ‘alternative beta’ factors and how can one gain exposure to them? Hedge fund managers expose their portfolios to risk factors such as credit volatility, foreign exchange risk, event risk, small cap, and then use leverage to further enhance exposure to these non-traditional or alternative factors. Traditional managers meanwhile achieve beta by exposing their portfolios to traditional risk factors such as equity, credit risk, large cap and so forth. Is there a way to replicate systematic risk exposure to alternative beta factors, and therefore achieve hedge fund returns without hedge fund fees?

The three gurus of hedge fund replication techniques, Professors William Fung, David Hsieh and Narayan Naik, believe they can. Credit Suisse also believes they can, for it formed a partnership with them to replicate the risk and return characteristics of hedge funds strategies in March 2008. Credit Suisse belongs to a growing list of financial institutions that are looking to Fung, Hsieh and Naik for direction on how to use securities such as options, futures and ETFs to replicate hedge fund strategies.

It’s not easy to replicate hedge fund strategies, not least because these strategies are dynamic and change as the market changes. With alpha generating platforms like Alphacet, ClariFi and Deltix hitting the market, it may be more possible than ever before to quickly test strategies and bring them to market. One can very well expect a flood of alternative beta shops appearing on the horizon. If hedge fund returns can be replicated, the kingmakers will be separated from the wave riders, and the smaller universe of true alpha generating funds will become the new elite.

Good site for alpha, beta, alternative beta: http://www.allaboutalpha.com

Pakistan’s hubristic and shortsighted leadership has been caught off guard by both the strength of the Taliban and virulent autonomy of militant groups such as Lashkar-e-Taiba. The current “wake-up” operations to retake Swat and Buner are crucial, but not decisive. Halting Predator drone strikes against senior al Qaeda and Taliban commanders would be no panacea either because American popularity and public acceptance of the Pakistani Army are already near zero in the tribal areas. Resentments will outlast such tactical switches. A much deeper strategy is needed that simultaneously tackles the political, military, economic, and social dimensions of Pakistan’s failure.

Pakistani President Asif Ali Zardari arrives in Washington this week at a tough time for his country. Gen. David Petraeus has stated that the next two weeks are crucial to Pakistan’s survival, while counterinsurgency expert David Kilcullen has claimed that the country could collapse within six months. Indeed, Gen. Ashfaq Kiyani, Pakistan’s Army chief of staff, could declare martial law imminently if his military’s counteroffensives in the Swat region prove ineffective against the Taliban. But irrespective of whether the Army takes over yet again from civilian authority, Pakistan has been a failure for over a decade, and the essential prescriptions to restore the state apply to both the elected government and the military — and preferably a coordinated effort between the two.

It is now the Pakistani government that must actively, but constructively, agitate in restive provinces to regain the upper hand — or risk losing even its nominal sovereignty over Pashtun-dominated areas forever. On the political level, the National Assembly must pass a constitutional amendment to integrate the Federally Administered Tribal Areas (FATA) into the North-West Frontier Province (NWFP) and mandate a fresh round of provincial elections. Only in this way can the government offer an alternative to the hands-off Frontier Crimes Regulation that has abetted the Taliban’s rise in authority in the tribal regions. Zardari must also finally sign the Political Parties Act to enable the formation and campaigning of political groups. Together, these steps would constitute an assertion rather than a surrender of sovereignty — and they would justify a strengthened presence of the Frontier Corps and police to monitor elections in the FATA while forcing the Taliban to consider secular options.

A smarter balance between military and police efforts is also needed. Pakistan should launch its own, indigenous version of the NATO-led provincial reconstruction teams (PRTs) that have had some success in maintaining local order, building relationships with district-level authorities, and stimulating small-scale economic activity in Afghanistan and Iraq. The Pakistani government’s focus to date has been almost exclusively on military-driven counterinsurgency, but real success requires boosting police recruitment and training while deploying civilian forces to oversee the construction of roads, schools, hospitals, and government offices. For its part, the military must now focus on internal defense, disrupting militant networks that have gained strength even in the Punjabi heartland.

Under the forced apathy of ineffective governance, Pakistan’s disaffected masses have developed greater tolerance for antigovernment forces such as the Taliban, no matter how intolerant they are. The silent majority is increasingly becoming acquiescent, allowing radicals to find safe haven among them rather than repelling this insidious threat. While wealthy Pashtuns flee Taliban intimidation in Peshawar and some of the elites of Islamabad and Lahore gloomily consider abandoning Pakistan altogether, what remains of the country’s educational system and economic resources must be directed toward national stabilization.
Giving millions of mainstream Pakistanis a stake in the economy is the only way for the country to avert a deeper failure. A country in existential crisis does not have the luxury of separate education and labor policies. Twenty million children ages 10 to 17 are not in school, and of the almost 25 million Pakistanis ages 18 to 24, more than half have either not completed school or graduated but remain underemployed. Many in these poor and disenfranchised classes are listless young men; most suicide bombers are the 18- or 19-year-olds who come from their ranks.

The textbook approaches to supporting secondary education don’t make sense unless the economy is geared toward employing the educated. So much international research and commentary on Pakistani education has focused on madrasa reform, ignoring the older portion of the population that most needs to be engaged. Vocational schools must get immediate funding to recruit and train able-bodied youth in basic engineering and construction work, and university students should be dispatched to participate in PRTs as well as “Teach for Pakistan” programs. There are many shura councils in the FATA, including even in North Waziristan, that have expressed a desire to receive outside assistance provided it works with them rather than around them.
International assistance must support each of the aforementioned strategies seamlessly, but to date this has not happened. In both Pakistan and Afghanistan, recent years have seen a USAID gravy train of contracts for U.S. and European companies and NGOs with little accountability or effectiveness. Not surprisingly, they have been outspent, at least in terms of effectiveness, by even the 100 rupees per day the Taliban will pay the families of boys from NWFP to join its campaign. The State Department, White House, Congress, and Pentagon are presently at odds over how to certify or validate that Pakistan is spending U.S. assistance on the right purposes — to say nothing of the $5.3 billion in aid pledges that Pakistan received at the recent donors conference in Tokyo. President Zardari has to use his Washington meetings this week to make progress on spending this money right.

If the protests against the Taliban that have recently rippled across Pakistan are any indication, the elite are becoming quite vocal. Now this sliver of Pakistan’s population must mobilize with the help of its government, the international community, the rest of the country, and Pakistan’s extensive diaspora. Pakistan has been unhelpfully called the “most dangerous country in the world.” Its citizens must now decide if that is the case.

Ayesha Khanna is a partner at Fitzgerald Analytics, a strategic management consulting firm.
Parag Khanna is a senior research fellow in the American Strategy Program of the New America Foundation and author of The Second World: How Emerging Powers Are Redefining Global Competition in the Twenty-first Century.

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