Business and Insights

BYOD- The Approach Towards Mobile Work Environment

2012-09-15T03:21:00.000-07:00

A growing number of employers are accepting the need of allowing employees to bring their own devices – Smartphone, laptops and PDA’s to connect with enterprise applications. This transformation termed as “Bring your own Device” or “BYOD”, is led by increasing adoption of smartphones around the world. Countries such as Australia, UK, Norway, Sweden, Saudi Arabia and UAE have more than 50% of their population using a smartphone. Additionally, United States of America, New Zealand, Denmark, Ireland, Netherlands, Spain and Switzerland have around 40% smartphone penetration.

Earlier, a device used in business was very different from the one used by the consumer. The situation has changed in last ten years and now the computing power in a consumer smartphone or PDA is sufficient to fulfill needs of a business enterprise.

Lot of companies now allows employees, partners and other users to use selected devices to access enterprise applications and access data. Most organizations limit the access to smartphone and tablets and some companies even allow the users to use their PC’s. The goal behind the BYOD’s policy is to maximize employee satisfaction and productivity through the use of new technologies, while reducing the cost.

However, the concept of BYOD poses significant challenges to a company and its IT department, which has to find ways to secure various types of devices employees are using to connect to the corporate network. The biggest challenge is security of confidential data accessed from personal devices. A recent survey by an IT governance, risk and compliance services company Coalfire, reveals many companies are not discussing mobile device cyber security issues with their employees and lack policies to protect sensitive company data.

Following is a quick list of measures that can help companies limit the risk arising out of BYOD trend. However, today’s dynamic business environment requires tailor made solutions for each company depending upon the requirement.

 Effective BYOD policy
The major concern of companies adapting BYOD is the security of data accessed from the employees through their devices. The security breach can occur in the form of stolen devices, malware applications, transfer of data outside the organization etc. Therefore companies need to implement a very effective BYOD policy to ensure security is not compromised. A policy should ensure administration access to devices, ensure compliance and allow IT departments to de-link the devices when lost or stolen or when an employee no longer with the firm. This policy should be evaluated in regular intervals to keep a check on emerging threats in mobile technologies.

 Deployment of IT solutions and Costs involved
BYOD is helping organizations to save cost, as they no longer have to spend money purchasing devices. There are number of factors apart from hardware purchases which affect cost structure and the main one being setting up a BYOD environment. It includes Licensing cost, added workload for IT support team in terms of supporting various devices and a broad range of new technologies. BYOD brings additional compliance and security costs to the company. Companies therefore need to invest and develop an effective BYOD solution which can monitor compliance issues. It also needs to build self-help solutions for various devices/applications which can reduce IT helpdesk load in the long term.

 Change Management
Cloud computing is creating easier access to large number of applications and data resources on smartphones, providing a key foundation to the BYOD growth. This will require IT departments to completely shift their focus to support end-user devices. The helpdesk need to be flexible and to be able to adapt to the changing IT capabilities based on the device and operating system used by employees.

 Understand various mobile platforms

Every mobile platform has different capabilities available in it, as well as threats facing it. A good understanding by IT teams of the various platforms will help them develop security solutions and apply the policy. IT department should be trained/updated with the secure coding for the latest mobile technologies. Companies should hire and train employees with the requisite skill sets and with the right IT expertize to deal with the absolute necessity of security.

 Centralized Access
Employees can be given limited/read only access depending on their levels/job responsibilities thus limiting the mobile access to highly sensitive data to avoid data theft issues. Companies should ensure that only right people have access to sensitive data. Providing access from a centralized location will also help IT safeguard the enterprise resources and follow more consistent strategy.

 Educating Users
Organizations can implement a stricter and effective control over the applications, but it can go vain if the end-user doesn't have good understanding of the risks. BYOD brings greater responsibility to the end user to protect the enterprise data. Hence, companies should educate its employees on the usage of cloud and the risks associated with it. Users should also be made to sign agreements with responsibilities clearly mentioned in the document. An employee should be immediately made aware of any compliance gaps and implications.

Conclusion

Regardless of conservative approach followed by companies, the trend of people using their devices to access corporate resources is unavoidable. A majority of the employees own a Laptop, Smartphones or PDA’s which are more advanced than the company owned systems.

Hence employees prefer to access corporate resources using their own device/technology because it’s already an integral part of their life. Companies that have adapted BYOD have experienced increased productivity, employee retention, enhanced employee satisfaction, and a flexible work environment which provides employees freedom to choose their work timings and place of work. All these factors are ultimately helping firms trimming operating cost.

However this trend is not far from limitations. Creating a mobile environment would involve huge investments from an organizational point of view. Companies would need to deploy infrastructure support, security systems and adequate monitoring systems in place to create a right mobile environment. IT managers are under immense pressure to provide access to the vital company owned information while keeping the data secure across a never ending list of devices and platforms. This is not an easy task and generally requires expertize and services from third party vendors. There are various firms on the market specializing in data security offering. There is a necessity for every firm to create its own mobility strategy and focus on having adequate control of employee owned devices.

BYOD will also shift IT teams focus from procuring right hardware to creating a secure mobile environment. Companies need to hire and train the right skill sets to setup a security teams. A weakest link in the security system would be the end user, as they are the one having access to the most confidential information. A BYOD policy should be in place to enforce a very strong set of rules to monitor employee’s use of devices. Policies should be carefully drafted to meet the needs of all users while safeguarding the organization goals. This policy should be dynamically reviewed to adjust the ever changing threats created by invention of new technologies.

A right mobile environment with the right access and a very secure control system will help companies’ trim cost and gain competitive advantage in the market. Firms which are trying to sail through traditional IT approach are not likely to succeed in the longer term. BYOD holds a tremendous promise and it brings real value in terms of employee satisfaction and increased productivity while speeding up the technology adaption rate of the enterprise.

Cash rich IT firms and their expansion plans

2012-07-29T09:55:00.000-07:00

A recent report mentioned plans of Indian IT companies looking to acquire and expand in Australia through the acquisition of listed Australian firms. Indian It companies are sitting with lot of cash and they are looking for strategic acquisitions which can expand its offerings rather than revenue. Indian IT companies enjoy profit margin of 25-30% and they would not want to acquire firms which can impact their margins negatively. This angle impacted their acquisition plans in the recent past and there were no big ticket acquisitions seen in the Indian IT industry in the last two years.

Cash balances of Indian BIG 4's as of 30th June 2012 in US$ mil
Infosys	3345
TCS	554
HCL	95.9
Wipro	1611

But the recent report specifies that the staff of the Australian units of Indian IT firms have been tasked to identify the suitable target. This article provides an overview of the possible target companies in Australia and the benefits they guarantee to Indian firms.

Australian IT industry has seen 100+ acquisitions since 2010 and majority of the deals were between Australian entities. U.S. companies have also made their mark by acquiring 23 Australian companies in last 2.5 years. Indian multinationals were majorly interested in organic growth and they have made minimal acquisitions in this region. Now, with the increasing cash pie, investor pressure to maximize the returns, and depleting growth in U.S. region have forced Indian companies to seek acquisitions which can expand their revenue streams.

Year	No. of acquisitions in Australian technology sector
2010	40
2011	42
2012 so far	19

Here is the list of six listed Australian technology companies which can be a good fit for Indian IT firms.

------------------------------------------------------------------------------------------------------------------------------------------

Data^#3 Limited

http://www.data3.com/

Data^#3 Limited (DTL) is an ASX listed company that provides market leading technology solutions across a wide range of industries throughout Australia and Asia Pacific.

Data#3’s five specialist businesses are:

- Licensing Solutions: for software licensing, asset management and workforce productivity

- Product Solutions: for hardware procurement, warehousing, configuration, deployment and disposal

- Integrated Solutions: for strategic consulting, and the design and deployment of the datacenter, network and desktop infrastructure

- Managed Services: for essential support and hardware maintenance, selective outsourcing, and cloud-based infrastructure and software as a service

- People Solutions: for contractor and permanent recruitment, and human capital performance management

The company reported revenues of (Australian Dollars) 696.2 million during the fiscal year ended June 2011, an increase of 16.45% over 2010. The operating profit of the company was 21.83 million during the fiscal year 2011, an increase of 38.21% over 2010. The net profit of the company was 15 million during the fiscal year 2011, an increase of 37.43% over 2010.

Financials:

Sales AUD (mil) in 2011	Sales 1 Year Growth	Sales 5 year growth	PAT	Employees	Market Value USD (mil)	EPS	PE
696.2	16.4504	23.83	15.0	500	184.6	0.1	12.22

Data^#3 expects to generate a pre-tax profit of approximately AUD $19.7 million for the 2012 financial year.

------------------------------------------------------------------------------------------------------------------------------------------

UXC Ltd

http://www.uxc.com.au

UXC Ltd is an IT service provider to over 2,500 customer organizations in the private and public sectors across Australasia. The company is publically listed and is amongst the largest Australian-owned IT services companies. UXC comprises three “Go to Market” groups:

 Consulting. Three separate entities deliver UXC’s IT consulting services to the market, these are: UXC Consulting; UXC Professional Solutions and UXC Engineering Solutions. Services are provided by these entities in the following specialist areas: Training, Business Transformation, Information Management, Telecommunications Consulting, Project, Program & Portfolio Management, Change Management, IT Research, IT Strategy & Architecture, IT Professional Services and Mobility

 The Enterprise Applications ‘space’ is represented by three UXC business units Eclipse, Oxygen and Red Rock Consulting. These consult in and implement ERP systems for mid to large size organizations and individually represent Microsoft Dynamics, SAP and Oracle in the market.

 IT Infrastructure is represented by UXC Connect, this business specializes in the areas of: Workspace Innovation; Contact Centre; Security; Mobility; Cloud; Entertainment & Content; Managed Services; Data Centre Optimisation; and Outsourcing

Sales AUD (mil)	Sales 1 Year Growth	Employees	Sales 5 year growth	Net profit Margin	EPS	PE
513.5	10.91	1,499	11.47	1.2	0.01	22.41

A potential acquirer will be benefited with

------------------------------------------------------------------------------------------------------------------------------------------

SMS Management & Technology Limited

www.smsmt.com

SMS Management & Technology is a consulting, technology and systems integration company employing over 1,700 professionals throughout Australia, Hong Kong, Vietnam and Singapore. Established in 1986, SMS is known for delivery excellence. SMS helps its clients improve their business performance through the implementation of strategy and the delivery of business and technology projects. Industry expertise spans the financial services, ICT, government, defense, health, utilities, mining, gaming and infrastructure sectors.

Sales in AUD (mil)	Sales 1 Year Growth	Sales 5 year growth	Pre-Tax Profit AUD (mil)	Net profit Margin	EPS	PE
306.1	23.6227	18.98	29.8	9.06	0.43	10.3

------------------------------------------------------------------------------------------------------------------------------------------

Oakton Limited
www.oakton.com.au

Oakton Limited is a consulting and technology company. It provides the following services.

Opportunity for the acquirer

Oakton's operating margin is dwindling from last 5 years, and it has gone down to 25.13% in 2007 to 9.26% in 2011. The tough business environment made it further difficult its efforts to improve its margins.

The company opened a 400 seater Hyderabad (India) facility in May 2011, as part of its efforts to cut its operational cost and the new facility garnered 12% of the total projects delivered by the company in 2011. This new center is expected to reduce "revenue per employee" number for the company, but may give a much needed boost to its falling margins.

- An Indian IT firm will be in a position to acquire the company at a very attractive valuation and create a turn around story by implementing effective measures to improve its Utilization (Currently 70%) and margins.

Oakton may not help Indian firms extend their offerings in the market with a differential model/product suit as its business is in the similar lines of Indian IT firms. But it can help them get a diversified customer base and garner a major share in Australian IT market.

------------------------------------------------------------------------------------------------------------------------------------------

Technology One Limited

TechnologyOne is an enterprise software solutions provider.

Its integrated product suite includes:

Financial Performance over last 15 years

Revenue - 22% per annum compound

Initial License Fees - 22% per annum compound

Annual License Fees - 27% per annum compound

Profit Before Tax - 20% per annum compound

Net Assets - 28% per annum compound

Key benefits of acquiring this company

It has recently expanded into UK which is expected to fuel the company's growth in the long term.

It is one of the very few companies in the world with an enterprise solution

It has proven products in the market which is cushioning its consistent revenue/profit growth. Its Licence fees average growth is 16% over the last 10 years and consulting is at 13%.

It has also opened a R&D center in Indonesia, to contain cost by leveraging its offshore R&D staff.

Revenue break-up in terms of its offerings (in AUD million)

Income growth over last 5 years (in AUD million).
Company is able to generate/grow profit even in difficult market conditions.

Overall, this company can be a best bet for Indian IT firms. Indian MNC's can take TechnologyOne's product suits beyond Asia, which can lead to financial synergies.

This company can also help diversify the revenue base of the acquirer by increasing its revenue stream from product offerings.

------------------------------------------------------------------------------------------------------------------------------------------

ASG Group Limited

ASG is a IT business solutions provider, offering IT management and consulting services, business intelligence and thought leadership.

ASG is the sole Australian service provider with all the required infrastructure, track record, investment & relationships in place as an entity providing

ASG is a very strong contender in cloud services space and its strong partner base and comprehensive service offerings place the company at an advantage over its peers.

It gets over 70% of its revenue from long term contracts and the remaining flows from consulting and other service offerings.

Many global organizations are approaching ASG to partner as both suppliers and clients.

ASG is delivering around 29% revenue growth from last 4 years and income growth is even better at around 32%.

------------------------------------------------------------------------------------------------------------------------------------------