Media masters

Naveen Raj, vice president of finance and CIO at media agency Middle East Communications Networks and his regional IT controller Arun Kumar Krishnan discuss the challenges of being pioneers in the advertising industry.

Tags: Cloud computingData governanceEgyptMiddle East Communications Networks (www.mcnholding.com)United Arab Emirates
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Media masters In our industry if you get a technical guy heading the firm, it’s probably going to be a disaster, says MCN’s Raj.
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By  Imthishan Giado Published  October 13, 2010

Naveen Raj, vice president of finance and CIO at media agency Middle East Communications Networks and his regional IT controller Arun Kumar Krishnan discuss the challenges of being pioneers in the advertising industry.

How did you describe your background in technology?

Naveen Raj (NR): I have done my graduation in management and law but am basically a chartered account. I’ve been working for 25 years and havew over 15 years in this industry. Before that I worked five years in Hollywood with Columbia Tristar Sony. Media and entertainment is more or less the same industry.

I started off with Citibank, audit, mergers and acquisitions. I started when there was no computers – I used to do things like trial balances manually. When I was in school, there was engineering drawing – there was no computer science.

You don’t possess a classical IT background, but a finance one. Is that an asset?

NR: IT is information technology, isn’t it? I’m more into information and how to use technology to get the information in the right way. I’m not a specialist in any of the technical areas, but I can identify a good technical guy – Arun is my main technical lead, so he handles the technology.

Is having a non-technical CIO the best strategy for an enterprise?

NR: In our industry if you get a technical guy heading this, it’s probably going to be a disaster. First, he will not understand much of the information.  Second, when costs are being controlled, he provides of solutions which he will not be able to sell to the management. You have to talk in their language which is more in terms of business.

I have been developing software for the advertising industry in my previous job as well, when I was in Publicis in Mumbai. Across the region, we still don’t have proper advertising software. Everyone has got their own workflows, their own platforms and their own stuff. When I go with a problem, I go with a solution – you never go to a person with just a problem.

All the four big agencies have in-house developed stuff. The advertising industry is a mix of manufacturing and service. Manufacturing is purely product – if people leave, they’re not so much of importance, they’re more technical. Whereas in services it’s always about people and time. Ours is mostly a time cost but we do also sell products like outdoor space.

For example McCann Erickson is implementing SAP, which is mainly for manufacturing companies. Internationally we have been using SAP. But locally we have an ERP which is based on Oracle Financials, called BOSS – Back Office Support System. We designed it ourselves, I drew the workflow myself. Then we tried out all the accounting platforms and finally decided on Oracle.

We had to develop our own software. We outsourced the work to a company called IBS based in India. We own the software which talks to OF for interfacing on the accounting bit. Our reporting is in Hyperion. Business intelligence is everything put together and information being presented in a readable format.

Why did you choose Oracle over SAP for your implementation of ERP?

NR: We are learning from the mistakes our overseas divisions have done. SAP is quite expensive, as it’s meant for large manufacturing companies. If they implement it anywhere in the world, the processes are 90% the same, the fine tuning is different. It’s not flexible enough, and you have to buy the entire module, you can’t pick and choose and adapt to anything.

We have another project leader who handles BOSS as a project, which we’ve integrating across the entire region. We started off with 16 countries, now we’re slowly making them affiliates – with the recession, we’re letting the local offices manage on their own. The number of countries is coming down. But we’ll be having a single server and single ERP system. All I’m dependent on a technical guy for is the connectivity bit. It will all be based here in Dubai.

How is the CIO’s role changing in the current reality of the executive boardroom?

NR: My title is chief information officer. It’s more on information – finance is more or less the same. There are two sections of finance, one is the controller group that takes care of the proper accounting standards; the other side is giving management information in a readable format to the people who are the final decision makers.

That is where I come into play, linking the two. I understand the business, I go for negotiation with clients, suppliers – all that information was not available until recently. At the click of a button, I should know whether this client is really making money or not.

How involved are you at the boardroom level?

NR: I sit in the board meetings. Even the CEO and CFO is not part of the board as a board member. There is a working board and a board of directors as per the company laws. This company is owned 51% by Interpublic Group, one of the largest communications groups working out of New York.

The other 49% is owned by the Miknas family which is based in Bahrain. They form the board which by invitation has the CEO, CFO, COO and me. We don’t have voting rights but we are part of the working board.

How do you create packages tailored for the advertising industry when none are commercially available?

NR: Six years back there was nothing [in place] so we took an accounting advertising software which was available called Dolphin and we rolled it to all the offices.
All the 65 offices were using the same accounting package to begin with. But when they had to send reports, it was not directly from the system but had to be exported to Excel. We still use Excel for standardising formats and all that is going to be eliminated with Hyperion.

Has your use of Hyperion’s business intelligence met your baseline expectations?

NR: I have not found it that user friendly. There are still connectivity issues. We haven’t had so much exposure with it. Right now, we are just using it for the reporting purposes because IPG uses Hyperion for reporting. I am sure that they are using one of the lower versions. I’m sure Hyperion can directly get into a database and take the reports, allowing us to do analytical reviews. I just get the graphs and variances and give my comments there.

We want to be the role model for IPG. The functional guy being CIO, this helps. If you ask Arun, he will not think about how to optimise the use of technology. He will think about connectivity and security and data warehousing. How to automate processes and reduce my manpower is more important – 60% of our revenues are directed purely towards manpower. Once the software is fully implemented across the region, I expect the payback period to be within 12 months.

Have you eliminated any staff as a result of this move?

NR: We have already started cutting people. That doesn’t mean you have to sack them – you move them to analysis. Guys who have been doing collections – they move to client relations.

Do you have any plans to introduce telepresence abilities to any of your locations?

Arun Krishnan (AK): In 2010. One of the things in the pipeline is to use telepresence. But knowing the cost of devices that have been implemented in certain companies in the US which is about $250,000 per hosting centre, the requirement to have a lot of bandwidth is actually the major catch.

Bandwidth is expensive here, especially in Saudi, it’s a monopoly provider. Egypt is dead cheap but the latency is higher. UAE is kind of OK, we have speed but it’s still expensive. Oman is pathetic, and so on.

If we had branches all over the UAE, it would be easy to do. But because our presence is all across the MENA region, that’s where we have problem because there’s no one provider that connects all these countries together. If you take a holistic view of the bandwidth figure, it’s still high.

We use parallel situations. Naveen emphasised the push of WebEx related systems, so we’re using IP telephony that brings voice together across all our interconnected offices. We are using application sharing, we have video in certain markets.

Since 2009, we have been able to establish some segments of the unified communications technology. Unified communications is basically data, voice and video – we’ve got the voice, we’ve got the data. With video, we’re still struggling.

NR: Personally I think video is not that important at this stage, at least for inter office work. I would say the payback period is around two years, not one. No one’s interested nowadays in investing anything where the payback period is anywhere beyond one year. For telepresence, we’ve still to evaluate this $250,000 figure. Maybe we’ll start with Egypt and Dubai getting connected.

Is it difficult to convince people of the merits of using telepresence systems?

NR: In our industry, it’s difficult. This is more a relationship-driven industry. It’s an old mindset and probably about change management. People still like to travel, they still like to be in hotels, new places, go out. They feel that if you do video conferencing it’s like a formal board room session, but if you go for out a shisha, that’s when you open up.

I would still say that we can easily cut 50% of our travel costs. We can have more travel sessions – earlier you might think that you can travel only once in three months. Egypt is our second largest market. This way, we can do it every month.
If you tell people that you just spent $2 versus $5,000 including your travel and all that, then they’re excited. You have to give them value terms. OK, it was a little slow, there were hiccups in the connectivity, then they agree. If you really quantify it to them, then it makes sense.

Is cutting the cost of travel a major driver?

NR: Two years back we were growing at a compounded annual growth rate of 40%. That’s huge growth, through acquisitions, new business wins, through geographical spreading, it was amazing. We were rocking. In 2008, in the last two months, that’s when it hits.

There was no real emphasis on cutting costs and travel. Last year we have felt the heat but this year, there was a significant tracking of who is travelling which class – that’s when I pointed things out and we did an analysis. You don’t save in moving the class of travel – it’s always the number of trips. It’s not saving money by travelling economy – if you’re travelling a long distance for work, you have to travel business otherwise it affects efficiency. I still believe in that – but you have to reduce the trips. Some things can be completed on the phone and in an electronic form.

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