As promised, something on
Mercator. Or should it be mercator?
Within the Emirates Group,
Mercator travelled along a pretty rocky path.
I cannot comment with authority about events prior to me joining
Emirates in July 2006 but, by all accounts, the situation was far from straight
forward. At some stage, the Emirates IT
department was known internally as Mercator and, right up until I left in 2010,
many people in the business areas of the group referred to us as Mercator. I was told that this identity was part of an
ill conceived plan to outsource IT from the Emirates Group – a plan which
(again, I was told) was enthusiastically supported by Gary Chapman but was thankfully
vetoed by the Chairman at the eleventh hour.
Once EG-IT was formed in 2006, Mercator was clarified as a separate
entity for external sales, under the EG-IT umbrella.
Prior to joining Emirates, I
read about the Mercator arrangement which generated income by providing solutions
and services to third parties. Initially
I flinched at the proposition.
Supporting your own customers’ IT needs is always a challenge so I could
not see the logic in introducing a conflict of priorities. My previous experience of such an arrangement
was limited, but lasted long enough for me to appreciate the challenges. In a company I had worked for previously we
tried to utilise spare consultant capacity when our own business went through a
difficult period. We tried to keep our
resources utilised so we could retain them during what we thought (wrongly as
it turned out) would be a temporary situation.
The immediate problem was to balance the need to offer our more
experienced staff to external clients (to get the initiative rolling) versus
the internal demand for the most efficient solution at an extremely difficult
time for our business margins. It was
not long before each of our two sets of customers felt that they were getting a
raw deal!
But once I had understood the
concept of Mercator within the structure of the Emirates Group, I felt a bit
more relaxed. The idea, initially, was
simple – generate income (from external sources) from applications which had
already been developed for our own internal businesses. However, Gary Chapman showed a strong desire
to ‘grow the external business’. I am
not sure how much enthusiasm for this impetus came from Patrick Naef. As was
often the case in the duplicitous world of Patrick Naef, we never knew where
the direction was really coming from. If
challenged, Patrick Naef would say that the target (as well as the overall
EG-IT/Internal/Mercator financial model) came directly from Gary Chapman and,
if anyone had a problem with it “you should talk to Gary”. As always, Nigel Hopkins agreed with Patrick
Naef. All of us in the IT Executive signed
up to meeting the targets that had been set.
Indeed some of us even expressed an (admittedly very long term)
aspiration to recover all our IT development costs through Mercator. An ideal business model – get others (many of
whom were our industry competitors) to pay for our own developments.
But, as most of us are able
to recognise, the real world will throw up many challenges. An obvious one was balancing priorities, but
the most fundamental one was the allocation of costs and income. As the business areas regularly pointed out
to me – they paid for the development, but Gary Chapman took all the income.
Unsurprisingly, I never heard anyone in the Emirates Group business areas
support this approach. Yet we were
reliant on their support, not just on the issue of competing resources but also
on agreeing the specifications of developments.
As an example, if we (EG-IT) only had enough resource to implement one
enhancement to a product, which one would we choose? The one requested by internal customers or
the one that Mercator felt would make the product more marketable
externally? Either way the internal
customer would pay for the enhancement, but any subsequent income generated
from Mercator would appear on Dnata’s bottom line.
As was often in the case in
EG-IT, a sound basic concept was totally unhinged by a narrow approach which
allowed no flexibility and no debate.
Patrick Naef overflows with contradictions: he speaks in five languages, but listens in
none; he craves friendship, but treats
people like dirt; and, although he is
intelligent, he often acts like a complete clown. And when Mercator was involved, he certainly
had his clown hat firmly on, the one fitted with added blindfolds and ear
defenders. It is good to set demanding
objectives and often valuable to have some form of conflict built in to
them. Patrick Naef’s favourite
consultants had a term ‘conflict by design’, but they weren’t dressed up as
clowns when they explained it. There has
to be compromise and flexibility as options.
All of us in the IT Executive
had shared responsibilities for delivering EG-IT’s objectives and we were
formally measured on them. This was
Patrick’s idea and one which I fully supported.
None of us could just focus on our own patches and objectives – if any
one of our own objectives were not met, all of us were given a ‘developing’
score in our annual appraisal. It
naturally meant that if Mercator did not meet its profit targets, then all of
us were penalised. I had no problem with that, after all we all signed up to
the target. (As an aside, it also gave
Patrick Naef an excuse to fire someone – I have no doubt that he fobbed off the
legal department when disposing of me by saying I had failed in one of ‘my’
objectives, i.e. the Mercator one.
Whether that is the prime motive for his approach to shared objectives one
will never know. There is no point in
asking him!)
Here is an example of how
challenging it was working in the Mercator framework. We had a member of staff who was an expert on
one of our applications and well respected by our customers, both internal and external
– I will call him Fred. One day, I was
sitting with a business leader in EGHQ who demanded that Fred should be
assigned to his business’s latest project exclusively. I knew I could not meet that request because it
was inevitable that Fred would be needed for external Mercator work too. As always, a difficult conversation ensued
but I had to stand my ground – high priority, yes; exclusive, no. Meanwhile, on the same day but in another
continent, a colleague of mine in Mercator was closing a sale to an external
customer who had a demand. They wanted
Fred to be exclusively assigned to them for the duration of the project and it was
not negotiable – full time Fred or no deal.
So it was agreed. Now this should
not have happened and I had a right to be somewhat miffed, but this sort of
thing does happen when unworkable structures are set up and set in stone. It is all very well churning out the same old
macho stuff – ‘the target must be met’; ‘aren’t
you up to it?’; ‘failure is not an
option’; etc. but, meanwhile, back in the real world, we are dealing with real
customers and real staff. In this case
we were left with no option but to fudge the situation. I had to go back internally and clarify the
word ‘priority’, Fred was told that he needed to be (even more) flexible and
not to tell any of his customers what he was doing when he was not with
them. Understandably this put him in a
very difficult situation and thinking all sorts of negative things about his
management (none of which I could disagree with!).
Such events had a serious negative impact on our
internal businesses and created a lot of strain in EG-IT’s relationship with
its business colleagues. Another example was the Tour Operating System (holidays
etc.). I will just summarise, because to
explain the fiasco in full detail here is not practical. The project started before I joined the
company and was still going (nowhere) when I left nearly five years later.
The business wanted to
purchase a package, but the IT department at the time favoured developing it in
house (the usual argument!). IT’s rationale
was that an in house development would give their colleagues all the functionality
they wanted, but the business believed that IT would take too long and it would
cost too much. And, critically, IT saw
an opportunity to market this system through Mercator. As always with such a conflict in the
Emirates Group – IT won the argument.
One internal business leader described the group finance model to me – ‘IT
does what it likes, sends us the bill but gives any external income received to
Gary Chapman’. Naturally, the TOS
specification would be set by the business, but also by Mercator (based on what
they believed the market would want). So
the internal business had to pay (and wait) for the system which was intended
to give them a competitive edge. But,
crucially, the system would also be developed with Emirates’ competitors in
mind, thus nullifying one of the main objectives of the initiative –
competitive edge. Finally, to add salt
to my business colleagues’ wounds, any income from Mercator sales of their
application (which they paid for) would go to Dnata.
There were numerous problems
with the project and many of the delays cannot be laid at the door of
Mercator. Once EG-IT was born it was
clear that there was an enormous gap between demand and our ability to deliver
(across all business areas). It is true
that Mercator put additional strains on resources but, even without Mercator in
the equation, projects like TOS would have suffered. We tried a number of solutions to our
resource problems, including engaging off shore partners, and some of these
worked better than others. Unfortunately
for our business colleagues, our chosen partner for TOS was not one of the
successful ones. I know everything always
looks much clearer with hindsight, but I do not believe any individual could be
blamed for the TOS debacle. Certainly,
my business colleagues felt that one or two individuals in IT were responsible
for making the wrong decisions when the project was first conceived. But, for me, failure was inevitable because
of the impossible attempt to satisfy too many masters at the same time. Without the demands for Mercator income, my
predecessors in IT would surely not have pursued the proposal for an in house
solution.
TOS was just one example (of
many) which made life with our business colleagues more difficult than it
should have been. My internal customers
generally supported the principle of bringing in additional income to the
Group, but not at a net expense to the Group and certainly not at a direct cost
to their own bottom lines. The demands
of Mercator cemented what was a deep seated level of mistrust regarding costs between
the Group’s businesses and EG-IT. I
think there were those who felt that some EG-IT senior personnel had often put
their own personal needs above their customers’ requirements but, generally, I
think they knew that the vast majority of EG-IT staff wanted to do what was
best for the Group. But that sentiment
did not extend upwards. I heard only
negative comments about how Gary Chapman controlled the IT finances within the
Group. As an example, when I was in
front of a senior business leader defending our need to make EG-IT staff
redundant (and thus reduce the level of support to his area) in order to meet
Gary Chapman’s reduced budget, he responded with scorn – “Go ahead, save Gary
Chapman his money. And what will he do
with it? I’ll tell you. He’ll go out and spend it on a ****ing
cricket pitch.”
As in any company, the model
in Emirates (at least on paper) was that internal business units had strong
partnerships with their colleagues in EG-IT.
Requirements identified by the business were developed by EG-IT, but IT
staff should have been heavily involved in that identification process. Therefore it was vital that EG-IT was fully
engaged when the business set its strategy.
When I took on responsibility for Customer Solutions I discovered that
one business unit held its departmental strategy planning meeting without the
involvement of anyone in my team. I
found this oversight strange and met with the appropriate business leader to
express my concern. I went primed with
the obvious question “As it was an all day affair, why didn’t someone realise
the error and call us in?”. I was
horrified to discover that it was not an oversight. EG-IT was specifically excluded from such
meetings! The key people needed to help
in scoping, prioritising and delivering IT projects were barred from discussions
about the overall business strategy.
The reason was Mercator. That particular business unit took great
exception to the fact that they came up with industry leading initiatives which
were designed to give them a competitive edge, only to have the resulting
application sold to its competitors. But
they could not do anything about this.
If they had a problem with it, the answer was “talk to Gary Chapman”. And it could have been worse for them. During the strategy meeting they would
naturally come up with more ideas than they had the budget to develop, so some
would be shelved for the following year.
But they felt that, given EG-IT had an objective to grow the Mercator
business, it was possible that we would use that intelligence to initiate our
own development. The ‘good idea’ that
they could not afford may have ended up with their competitors before them! Obviously that would not have happened but, to
put it bluntly, our business colleagues did not trust us and it was the
Mercator model which provided the foundation for that mistrust.
The Mercator strategy
included ‘growth by acquisition’ and Patrick Naef was very keen to find
companies to buy. At a high level it
made sense as, when organic growth is likely to be too slow, acquiring another
company may be a good option. I am sure
many of you have done what I have - gone to the mall with a loved one who has a
specific purchase in mind. Before the
tedium sets in I take an interest so that, by the time we leave the third
store, I know roughly what we are looking for and that, so far, we have not
seen it. Gradually patience wanes, my interest
takes a dive and we end up, late in the day, revisiting stores that earlier did
not have what we were looking for. I am
now expected to know the entire layout of the mall and, not only know the
quickest way between stores, but also which shop had “that blue one that was a
bit dear but not a bad fit”. The first
thing we ask as we enter stores now is “What time do you close?”. It is at this time that I realise that we are
no longer shopping for a specific item – we are going to buy something,
anything!
This is exactly how Patrick
Naef behaved when he ended up in Bangkok.
He had been looking for months, time was running out (out of what, I do
not know, I can only assume he had given Gary Chapman some sort of promise),
there was nothing else available so it was this company (which became Mercator
Asia) or nothing. And it certainly was
not going to be nothing. We were going
to buy something, anything! It was the
wrong choice but once Patrick Naef decides that something is going to happen,
it has to happen. Out comes the clown’s
outfit, on go the blindfolds and ear defenders.
I know at least three business
cases were put together. The first two
were signed off by Patrick Naef but rejected by Gary Chapman. Both were described as “rubbish” by Patrick
Naef but I do not know if that was his view, or Gary’s. Certainly Gary Chapman was not happy with
them and Patrick Naef was obviously happy with them before the presentations. (I can hear that age old question being
raised again – ‘Why on earth does Gary let him get away with it?’.) After each of the so called “rubbish”
business cases were rejected, Patrick Naef made changes to the team involved in
the project. He removed anyone that did
not come up with the answer he wanted (‘buy it’) and who presented anything
other than a rosy view of the benefits to Mercator. This left a small team limited to individuals
who Patrick Naef knew would do exactly what he told them to do. Incredibly, the acquisition was made without
the involvement of the head of Mercator!
Although the head of Mercator
had the biggest right to be concerned, there were also three others (I was one
of them) who were very interested parties in any acquisition. In my case, the biggest concern was adding
demands on an already strained department and the inevitable negative impact
that would have on my internal customers.
I know for a fact that one other person, in addition to me, raised
concerns to Patrick because I witnessed it.
I would be disappointed if the other interested party did not do the same. I was told that the project was nothing to do
with me and it proceeded in secret. In
the make believe world of Patrick Naef, every major decision is supposedly
taken after full discussion within the IT Executive team. This is where the true meaning of ‘rubbish’
comes into play. In the IT Executive there
were seven individuals (not including Patrick).
Clearly, we all had an interest and responsibility for everything that
EG-IT was involved in but the weightings of interest would obviously vary
depending on the topic. If you ranked
our interest (1 to 7) in the Mercator Asia acquisition then the head of
Mercator would naturally have been number 1.
The order of numbers 2 - 4 could be argued about, but the three members
would not be up for debate (I was in this group). But who did Patrick Naef include in his
project team? The answer is - numbers 5
and 6. He specifically excluded numbers
1 to 4.
The timing of the Mercator
Asia purchase was very unfortunate as it was just before one of our regular
‘reflections’ meetings. I have covered
these meetings in an earlier update but, in summary, they were how we (the IT
Executive) spent the last afternoon of each working week. There was never a formal agenda but we did
have a list of topics which we wanted to discuss and the format evolved
into: first a social chat as we devoured
the food we had picked up on the way to EGHQ, then we would go through our list
of topics and decide what we wanted to talk about that week, then we talked for
about three hours and, finally, we would go away and get on with some real
work.
This ‘post Mercator Asia
agreement’ reflections meeting was, for me, undoubtedly the worst ever. The initial social chat immediately focussed
on the recent acquisition and we never moved off the topic. We had to endure three hours (though it felt
like 33) of endless self congratulating anecdotes from the recent venture to
Bangkok. I did understand their elation,
it is a feeling we all have when a challenging project is completed, or high
impact incident is resolved. And they
firmly believed it was the right thing to do (albeit because Patrick Naef was
wearing his clown’s outfit and the others were doing what they were told). But thirty minutes would have been more than enough. Inevitably a few meaningful details emerged
from the anecdotes and alarm bells began to ring. Exchanges of concerned glances (within the ‘1
to 4 group’) were followed by Patrick Naef swiftly moving the conversation on.
In the following days those
alarms bells became more frequent and louder.
Someone outside of EG-IT who had involvement was quoted as saying the
whole episode had been “totally unprofessional” and being extremely concerned
about matters. There was one clause in
the contract (which I cannot elaborate on as it would breach an individual’s
confidentiality) that was, in my experience, unprecedented and not at all in
the interests of Mercator, Dnata or any part of the Emirates Group. I am told that the ‘external to EG-IT’
individual was as horrified by this clause as I was. In due course, the alarm bells proved
justified as problems surfaced. I will
not identify these because they all crystallised after I left, so I would have
to rely on evidence from others. (Make
no mistake, those individuals are totally reliable and I am in no doubt that
what they tell me is true, but nothing ever goes into this blog that I am not
personally able to defend in any forum, even in a court of law. I will never rely on evidence from others,
even if they are willing to publicly support me. This is my blog and I will stand by
everything in it on my own.) I also
heard later that, across the industry, surprise was expressed about this
acquisition along the lines of ‘it just does not make sense’.
As problems emerged, Patrick
Naef’s usual approach of ‘blame everyone except me’ kicked in. He is forceful and manipulative enough to
make that stick on post acquisition events (such as poor sales) but anyone who
has accepted any claims from him that the acquisition was not his
responsibility is a fool. The
acquisition and formation of Mercator Asia was totally Patrick Naef’s
idea. Gary Chapman may have initially
rejected “rubbish” proposals but he was totally supportive of the acquisition. I was present, at the regular Dnata senior
management meeting when Gary Chapman proudly announced the acquisition and
complimented Patrick Naef on ‘his determination to achieve something that he
believed in’. Inevitably, Mercator Asia
was a total failure and eventually disposed of at considerable cost to the
Emirates Group. And, I understand, at considerable
embarrassment to the Group too, as the transfer process was riddled with errors
and became a farce. Right up to the end
of Mercator Asia, Patrick Naef could not get it right.
And Mercator itself failed to
meet its objectives. I do not know how
much money Gary Chapman paid his brand consultants to come up with the idea of
dropping the well established tradition of ‘first capitals for proper nouns’. Indeed, when he told us that he would fine
anyone caught typing Dnata instead of dnata, I wondered if his plan was to make
us pay for it. I guess my account
regarding this folly will not look too healthy, but I am quite clear – Dnata recruited
me, Dnata fired me and Dnata broke its contract with me. Dishonest, with a capital D. Those of you who know me will not be
surprised that I do not have a lot of time for ‘brands’. I concede that, regrettably, brands matter a
lot in the artificial world that we find ourselves in, but I always thought that
doing something as trite as using only lower case characters would be limited
to encouraging teenagers to buy something that they don’t need to impress
people they don’t like. Handbags -
yes. Airport services – surely not. So, overnight, Mercator became mercator, but
CIO’s were not seduced and sales figures did not improve.
Obviously, I was not party to
any discussions that led to the abandonment of Mercator, but it seems that Gary
Chapman finally got the plot. When I
went through the farce of my appeal meeting, I had hoped to explain a few
things to Gary that he obviously was not aware of. But he was not interested. It is a shame really, because in about half
an hour I could have told him what it seems to have taken him several years to
discover. Had Mercator been allowed to
sit (in terms of priority) sensibly in the Emirates Group and had the greed for
profit (which, in Group terms, was paltry) been subdued, it could have made a
valuable contribution to the Group in terms of product development, staff opportunities
and a measurable contribution to cost containment to our businesses. Instead Mercator had to be sold.
But Patrick Naef sees every
event, even a disaster of his own making like this one, as an opportunity. He will have seen that whilst disposing of Mercator,
he had an opportunity to dispose of some people he did not like too. From a management point of view, working in
the Emirates Group is very much like it was working in the UK in the late
1980’s. Macho management techniques
ruled, the Trade Unions had been neutralised and employment laws had not yet
caught up with what was going on in the real corporate world. Patrick Naef would have had a field day,
though not had such a free hand as he has today. After all, the UK did have employment laws
then and no company was in a position to ignore them. So, back in those days, when an outsourcing
deal was on the horizon, no-one had to say anything but the goal was obvious –
move all the good people out of the area to be outsourced and move all the dead
wood and trouble makers into it. A sort
of ‘virtual sheep dog’ emerged and, as if by magic, by the time the outsourcing
plans were crystallised and in the public domain, as far as the company was
concerned, everyone was in the right place.
Fair minded managers and effective HR departments did their best to
ensure fair play and eventually legislation was introduced to outlaw the
practice. Of course, in the Emirates
Group, Patrick Naef does not have to concern himself with employment regulations
and the HR department, which is charged with the responsibility to apply
effective governance and support for staff, is not fit for purpose.
(I must provide some clarity
about Emirates HR department. I will
identify a couple of examples that demonstrate that it is not fit for
purpose. It fails to protect staff from
bullying managers and it does nothing to enable staff to have an effective
voice in the company. Worse still, it
pretends it does do those things by maintaining comprehensive employee
regulations (which can be ignored at the whim of any senior line manager) and by
carrying out a supposedly open staff survey (only to bury the true results and
produce nothing more than a cynical summary).
But that is the fault of the senior managers, there are some wonderful
people working very effectively nearer the coal face in HR. I worked closely with many of them and they have
my respect. These include two HRM’s (who
were very effective, committed to supporting staff and were willing to
challenge Patrick Naef – sadly, both left the company), numerous HR support
staff and members of the recruitment department who not only supported my
desire to appoint people solely on ability and merit, they championed that
approach anyway. Certainly in the HR
Business Support area, people deserve to be praised for their professionalism
in dealing with the EG-IT redundancy exercise in 2009. This was the first time for them and
therefore particularly challenging.
Thankfully, they were given strong support and guidance from the HRM at
the time (who was, in turn, well supported by Malini Johnson) and I tried to
assist where I could. However, I never
saw Sophia Panayiotou anywhere near this exercise - I assume she was playing
the ‘nothing to do with me, this is too messy’ card that Patrick Naef was
playing. So, I stress that it is the
management of HR, right up to and including Gary Chapman, who are responsible
for HR not being fit for purpose. The
staff in HR, as in EG-IT, deserve much better.)
Not being present, I do not
know exactly how he went about it, but certainly Patrick Naef has left a lot of
people feeling very bitter about how they were manoeuvred into positions that
did not want to be in. There would have
been no need for any sheep dogs – the rottweiler is far too efficient to require
assistance! As always, Patrick Naef’s
motives would have been totally self centred with the needs of staff and the
company being of no consequence to him. Patrick
Naef’s criteria in assessing the value of staff is also out of line with
reality so, as well as wasting many years on a doomed mission, pouring even more
money down the EG-IT drain, Patrick Naef has caused the Emirates Group to lose
yet more valuable staff. I have received
a number of complaints from people feeling that they have been badly misled by
both Emirates and the new owners. Given
no choice but to sign up to the new company or resign, some found their jobs
under immediate threat as soon as they joined.
Someone summed it up to me by saying that, in contrast to the regular
claim from Emirates of taking pride in supporting its staff, in reality EG-IT
staff (Mercator or not) were treated like commodities whilst Patrick Naef,
along with others responsible for the failure of Mercator, survived.
At least the Group’s businesses
will be better off without the distraction of Mercator. But yet again we have failure, money wasted, unsavoury
practices regarding people and claims of unfulfilled promises and misleading
information leaving a very bad taste. And,
yet again, Patrick Naef is at the centre of it all.