Document, Content, Knowledge: Part 1, Document Management

Information is every organisation’s most valuable asset and managing this information is essential. The amount of data and information within an organisation is growing dramatically. Efficient management of information can result in better customer service, improved internal communication, better decision making and enhanced productivity.

Information management systems provide the foundations to turn corporate data into intelligent, shared information by providing a central information source accessible to all. These systems have changed over time and evolved to meet various business requirements, such as remote working.

Document Management Definition: “Document Management is the process of managing documents through their lifecycle. From inception through creation, review, storage and dissemination all the way to their destruction” (Document Management Avenue).

Document management systems started to appear in the mid 1980’s. The original aim was to develop a system to enable the paperless office. Scanning all paper documents and retrieving them electronically was about as complex as it got. These early file and find systems were simply electronic filing cabinets.

The document management market has been revolutionised over the past 10 years by technological advances. Now document management systems capture almost any type of document not just paper but electronic documents, HTML, e-mails, EDI, XML, etc. They still allow you to store, search and retrieve documents, but the retrieval is now instant from anywhere and the search options much wider.

Another major enhancement to document management was the introduction of workflow. Workflow is defined as “an IT technology which uses electronic systems to manage and monitor business processes. It allows the flow of work between individuals and/or departments to be defined and tracked” (Document Management Avenue). It has become an integral part of many document management solutions and meant that it was possible to progress from simple file and find systems to a solution that could ‘manage’ documents; tracking the process of distributing documents, and monitoring and controlling work. The Internet is transforming the way that workflow is used and has led to a new term: eProcess. Research group Ovum defines eProcess as “workflow for the e-business. e-Process extends the concept of process automation to include a company’s partners, suppliers and customers”. Instead of monitoring organisation-wide processes, eProcess is extended to include any external organisations. For document management this means it is possible to effectively integrate documents with their partners, suppliers and customers. This increases collaboration between organisations and improves the efficiency of the supply chain.

Version Control

The definition of document management includes the ability to manage a document through its life cycle from creation to archive. While a document is live it may need to be worked on and altered by any number of people. Version control ensures you do not have clashing versions of documents. Version control gives “control over exactly who can edit documents and enter new documents into the system and avoids any update conflicts” (Cimtech). This involves checking out any documents that are being edited and locking them, allowing users to either save as newer versions or over-write old versions.

“In the future, document management will become established as a vital business tool for all organisations looking to share information on an enterprise basis” (Document Management Update)

Summary of document management:

Manage all types of document
Workflow and eProcess
Version Control
An evolved technology that forms the basis for content and knowledge management
Fast becoming a must-have for competitive business

Content management and knowledge management systems are basically extensions of the document management concept and this is where a lot of the confusion arises.

Content Management

Definition: “a set of tasks and processes for managing content explicitly targeted for publication on the Web throughout its life from creation to archive” (Ovum).

Content management solutions are essentially an extension of document management that includes managing web content. Some vendors simply re-badged their products without actually adding any functionality, but the true vendors of content management have added valuable capabilities that continue the scope of document management, beyond the confines of one organisation.

An area of much discussion in the market currently is personalisation of content. The prolific use of the Internet and the growth of customer relationship management (CRM) have made it much easier for companies to offer a personal service to customers. Content management systems often incorporate personalisation capabilities although the degree of personalisation can vary greatly, from referring to every user by name to offering the same content to a specific group of users. The technology involved today makes it possible for organisations to replicate the dialogue that a local shop owner might have with its customers, even though they may have many millions. A content management system can also be used like a document management system for capture, distribution and retrieval of information. Enterprise Content Management is a new term that is applied to a system that includes both content and document management capabilities. Content management solutions collect data or information from all required sources, organise it for ease of retrieval and deliver it using a web-compliant system. This can either be over the Internet or Intranet.

A content management solution is commonly used to keep a website up-to-date; it is likely to include web-based publishing, format management, revision control, indexing, search, and retrieval. A content management solution captures paper, media, graphic images, email, voice, video etc, and although it is usually associated with managing for the web it can be extended to include any structured and unstructured content for any channel.

Another vital difference between document management and content management is the way in which documents are classified. Document management is concerned with the external classification of a document, the index fields and keywords used to refer to it. Content management however, is concerned with internal classification methods such as author, date and time of creation and context.

Content management systems have become an essential part of a company’s IT infrastructure and this looks set to continue:

“Content management growth is slowed, not halted by the IT recession, while much of the IT industry is in recession, Strategy Partners analysis shows the CM market as continuing to display strong growth of 34.5% for software and services in Europe 1999-2003 after accounting for September 11th and current recessionary factors. This is faster than the worldwide market (29.5%)” (Strategy Partners, 2001).

Summary of content management:

Manages all content but usually focuses on managing web content
Web-publishing
Personalisation
A growing market that is becoming more established

Knowledge Management

Definition: “The process of capturing value, knowledge and understanding of corporate information, using IT systems, in order to maintain, re-use and re-deploy that knowledge” (Document Management Avenue).

Knowledge management aims to capture all the knowledge in an organisation, from paper documents, web information, electronic reports, employee knowledge or knowledge gained from informal meetings and discussions. Content or document management systems are often the backbone of knowledge management but there is a vast difference in the scope of information captured.

Knowledge management allows employees access to intelligent information and includes features such as collaboration, business intelligence, just-in-time e-learning and CRM. On an enterprise-level, knowledge management carries the largest change to the working practises of an organisation. IT solutions of this nature almost invariably require a change to the working environment. Knowledge management, is highly complex and Implementing a knowledge management solution brings about a large culture change at all levels within an organisation.

Interest in knowledge management has grown recently for several reasons; the Internet has raised users’ expectations of immediate access to relevant information; organisations are realising the value of their corporate knowledge; the shift in employment patterns, with people spending much less time in a company increases the chance of losing knowledge with an employee – it has been said that NASA wouldn’t be able to put a man on the moon now, as the knowledge was not captured at the time.

Knowledge management has a strong link with CRM, (customer relationship management) and a knowledge management system that contains all customer data can be used as a CRM system. This has made these systems especially popular in call centres. The ability to answer a customer query on the initial call not only saves time and the cost of a call back, but also improves customer relations.

Knowledge management systems are expensive and notoriously difficult to cost justify. The main reason for this is that a lot of the benefits are intangible. Improving efficiency, productivity, employee access to information and customer satisfaction are difficult to calculate. The benefits can be vast but the financial outlay and cultural change can be off-putting and hence the market is growing slowly:

“The KM market is projected to be worth between $1,500 and $4,000 millions in one to two years’ time, based on in-depth user surveys” (Strategy Partners).

Apart from the very largest of organisations, there has not been the take-up of knowledge management systems to match the hype.

Summary of knowledge management:

Manages all knowledge in an organisation
Often thought of more as a concept then a system
Strong links with CRM
Difficult to cost justify
A new market that is growing but slowly

Summary of Document, Content, Knowledge Management

Document management systems are now the definitive answer for efficient management of documents. The introduction of content management systems provided the ability to manage web content. Whereas knowledge management extends this concept to manage all knowledge existing in an organisation. So while all three manage information using similar methods, the scope and purposes remain quite distinct.

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Managing Risk in Financial Sector

Risk Management is a hot topic in the financial sector especially in the light of the recent losses of some multinational corporations e.g. collapses of Britain’s Barings Bank, WorldCom and also due to the incident of 9/11. Rapid changes in business condition, restructuring of organizations to cope with ever increasing competition, development of new products, emerging markets and increase in cross border transactions along with complexity of transactions has exposed Financial Institutions to new risks dimensions. Thus the concept of risk has captured a growing importance in modern financial society.

By facilitating transactions and making credit and other financial products available, the financial sector is a crucial building block for private as well as public sector development. In its broadest definition, it includes everything from banks, stock exchanges, and insurers, to credit unions, microfinance institutions and moneylenders. As an efficient service provider, the financial sector simultaneously fulfils an important function in the overall economy. Various types of Financial Institutions actively working in Financial Sectors include Banks, DFIs, Micro Finance Banks, Leasing Companies, Modarabas, Assets Management Company, Mutual Funds, etc.

Thus today’s operating environment demands systematic and more integrated risk management approach.

Risk:

Risk by default has tow components; uncertainty and exposure. If both are not present, there is no risk. Definition of Risk as per Guidelines on Risk Management issued by State Bank of Pakistan is, “Financial risk in a banking organization is possibility that the outcome of an action or event could bring up adverse impacts. Such outcomes could either result in a direct loss of earnings / capital or may result in imposition of constraints on bank’s ability to meet its business objectives. Such constraints pose a risk as these could hinder a bank’s ability to conduct its ongoing business or to take benefit of opportunities to enhance its business.”

Types of Risks:

Risks are usually defined by the adverse impact on profitability of several distinct sources of uncertainty. More or less all financial institutions have to manage the following faces of risks:

1. Credit Risk

2. Market Risk

3. Liquidity Risk

4. Operational Risk

5. Country Risk

6. Legal Risks

7. Compliance Risk

8. Reputational Risk

Broadly speaking there are four risks as per Risk Management Guidelines which surround Financial Sector i.e. Credit Risk, Market Risk, Liquidity Risk and Operational Risk. These risk are elaborated here under:

i. Credit Risk

This is the risk incurred in case of a counter-party default. It arises from lending activities, investing activities and from buying and selling financial assets on behalf of others. This risk is associated with financing transactions i.e.:

a. Default in repayment by the borrower and

b. Default in obliging the commitment by another Financial Institution in case of syndicated arrangements.

It is the most critical risk in banking and one that must be managed carefully. It is also the risk that requires the most subjective judgment despite constant efforts to improve and quantify the credit decision process.

ii. Market Risk

Market risk is defined as the volatility of income or market value due to fluctuations in underlying market factors such as currency, interest rates, or credit spreads. For commercial banks, the market risk of the stable liquidity investment portfolio arises from mismatches between the risk profile of the assets and their funding. This risk involves interest rate risk in all of its components: equity risk, exchange risk and commodity risk.

iii. Liquidity Risk

The liquidity risk is defined as the risk of not being able to meet its commitments or not being able to unwind or offset a position by an organization in a timely fashion because it cannot liquidate assets at reasonable prices when required.

iv. Operational Risk

This risk results from inadequacies in the conception, organization, or implementation of procedures for recording any events concerning bank’s operations in the accounting system/information systems.

Need for Risk Management and Monitoring:

There are a number of reasons as to why there is so much emphasis given to Risk Management in Financial Sector now a day. Some of them are listed below: –

1. Present structure of joint stock companies, wherein owners are not the mangers, hence risks increase; therefore proper tools are required to achieve the desired results by covering the risks.

2. The financial sector has come out of simple deposit and lending function.

3. The world has become very complex so the financial transactions and instruments.

4. Increase in the number of cross border transactions which caries its own risks.

5. Emerging markets

6. Terrorism Remittances

Risk monitoring in financial sector is very crucial and an inevitable part of risk management. Risk Monitoring is important in the financial sector due to the following reasons:

1. Deals in others’ money

2. Direct stake of deposit holder.

3. Much riskier sector than trading and manufacturing.

4. Previous / Recent problems faced by banks i.e. stuck portfolio that is credit risk.

5. Bankruptcy of Barings Bank due to short selling / long position that is market risk.

6. Operational risk does not has immediate impact, but important for continuity and progress of organization.

7. Appetite of a financial institution to take risk is related with the capital base of the institute so it caries a huge risk of over exposure.

Components of Risk Management Frame Work

Risk Management Frame Work has five components. First of all risk is Identified, then it is Assessed to classify, seek solution and management, after assessing quick Response and implementation of solution and the last phase is Monitoring of the risk management progress and Learning from this experience that such problem never occur again. Whole process is to be well Communicated during the entire process of risk management if it is to be managed efficiently.

The International Organization for Standardization (ISO) has defined risk management as the identification, analysis, evaluation, treatment (control), monitoring, review and communication of risk. These activities can be applied in a systematic or ad hoc manner. The presumption is that systematic application of these activities will result in improved decision-making and, most likely, improved outcomes.

Structure of Risk Management

Depending upon the structure and operations of organization, financial risk management can be implemented in different ways. Risk management structure defines the different layers of an organization at which risk is identified and managed. Although there are different layers or level at which risk is managed but there are three layers which are common to all. i.e.

Risk Management

For managing risk there are certain basic principles which are to be followed by every organization:

1. Corporate level Policies

2. Risk management strategy

3. Well-defined policies and procedures by senior management

4. Dissemination, implementation and compliance of policies and procedures

5. Accountability of individuals heading various functions/ business lines

6. Independent Risk review function

7. Contingency plans

8. Tools to monitor risks

Institutions can reduce some risks simply by researching them. A bank can reduce its credit risk by getting to know its borrowers. A brokerage firm can reduce market risk by being knowledgeable about the markets it operates in.

Functionally, there are four aspects of financial risk management. Success depends upon

A. A positive corporate culture,

No one can manage risk if they are not prepared to take risk. While individual initiative is critical, it is the corporate culture which facilitates the process. A positive risk culture is one which promotes individual responsibility and is supportive of risk taking.

B. Actively observed policies and procedures

Used correctly, procedures are powerful tool of risk management. The purpose of policies and procedures is to empower people. They specify how people can accomplish what needs to be done. The success of policies and procedures depends critically upon a positive risk culture.

C. Effective use of technology

The primary role technology plays in risk management is risk assessment and communication. Technology is employed to quantify or otherwise summarize risks as they are being taken. It then communicates this information to decision makers, as appropriate.

D. Independence or risk management professionals

To get the desired outcome from risk management, risk managers must be independent of risk taking functions within the organization. Enron’s experience with risk management is instructive. The firm maintained a risk management function staffed with capable employees. Lines of reporting were reasonably independent in theory, but less so in practice.

Internal Controls

Para one on first page of the ‘Guidelines on Internal Controls’ issued by SBP provides:

“Internal Control refers to policies, plans and processes as affected by the Board of Directors and performed on continuous basis by the senior management and all levels of employees within the bank. These internal controls are used to provide reasonable assurance regarding the achievement of organizational objectives. The system of internal controls includes financial, operational and compliance controls.”

The current official definition of internal control was developed by the Committee of Sponsoring Organization (COSO) of the Treadway Commission. In its influential report, Internal Control – Integrated Framework, the Commission defines internal control as follows:

“Internal control is a process, effected by an entity’s Board of Directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

 Effectiveness and efficiency of operations.

 Reliability of financial reporting.

 Compliance with applicable laws and regulations.

This definition reflects certain fundamental concepts:

 Internal control is a process. It is a means to an end, not an end in itself.

 Internal control is effected by people. It is not policy manuals and forms, but people at every level of an organization.

 Internal control can be expected to provide only reasonable assurance, not absolute assurance, to an entity’s management and board.

Internal control should assist and never impede management and staff from achieving their objectives. Control must be taken seriously. A well-designed system of internal control is worse than worthless unless it is complied with, since the assemblance of control will be likely to convey a false sense of assurance. Controls are there to be kept, not avoided. For instance, exception reports should be followed up. Senior management should set a good example about control compliance. For instance, physical access restrictions to secure areas should be observed equally by senior management as by junior personnel.

Components of Internal Controls

Components of internal control also depend upon the structure of the business unit and nature of its operation. The COSO Report describes the internal control process as consisting of five interrelated components that are derived from and integrated with the management process. The components are interrelated, which means that each component affects and is affected by the other four. These five components, which are the necessary foundation for an effective internal control system, include:

I. Control Environment,

Control environment, an intangible factor and the first of the five components, is the foundation for all other components of internal control, providing discipline and structure and encompassing both technical competence and ethical commitment.

II. Risk Assessments,

Organizations exist to achieve some purpose or goal. Goals, because they tend to be broad, are usually divided into specific targets known as objectives. A risk is anything that endangers the achievement of an objective. Risk assessments is done to determine the relative potential for loss in programs and functions and to design the most cost-effective and productive internal controls.

III. Control Activities,

Control activities mean the structure, policies, and procedures, which an organization establishes so that identified risks do not prevent the organization from reaching its objectives.
Policies, procedures, and other items like job descriptions, organizational charts and supervisory standards, do not, of course, exist only for internal control purposes. These activities are basic management practices.

IV. Information and Communication, and

Organizations must be able to obtain reliable information to determine their risks and communicate policies and other information to those who need it. Information and communication, the fourth component of internal control, articulates this factor.

V. Monitoring

Life is change; internal controls are no exception. Satisfactory internal controls can become obsolete through changes in external circumstances. Therefore, after risks are identified, policies and procedures put into place, and information on control activities communicated to staff, superiors must then implement the fifth component of internal control, monitoring.

Even the best internal control plan will be unsuccessful if it is not followed. Monitoring allows the management to identify whether controls are being followed before problems occur. In the same way, management must review weaknesses identified by audits to determine whether related internal controls need revision.

Tools for Monitoring of Risk

Management Information System

M.I.S or Management Information System is the collection and analysis of data in order to support management’s decision with respect to the achievement of objectives mentioned in the policies and procedures and the control of various risks therein.

It is this area i.e. M.I.S, where I.T can play a vital and effective role as with the help of I.T large information may be analyzed efficiently and with accuracy, so that effective decision may be taken by the management without the loss of any time.

Asset-Liability Management Committee (ALCO)

In most cases, day-to-day risk assessment and management is assigned to a specialized committee, such as an Asset-Liability Management Committee (ALCO). Duties pertaining to key elements of the risk management process should be adequately separated to avoid potential conflicts of interest – in other words, a financial institution’s risk monitoring and control functions should be sufficiently independent from its risk-taking functions. Larger or more complex institutions often have a designated, independent unit responsible for the design and administration of balance sheet management, including interest rate risk. Given today’s widespread innovation in banking and the dynamics of markets, banks should identify any risks inherent in a new product or service before it is introduced, and ensure that these risks are promptly considered in the assessment and management process.

Corporate Governance Principles

Corporate governance relates to the manner in which the business of the organization is governed, including setting corporate objectives and a institution’s risk profile, aligning corporate activities and behaviors with the expectation that the management will operate in a safe and sound manner, running day-to-day operations within an established risk profile, while protecting the interests of depositors and other stakeholders. It is defined by a set of relationships between the institution’s management, its board, its shareholders, and other stakeholders.

The key elements of sound corporate governance in a bank include:

a) A well-articulated corporate strategy against which the overall success and the contribution of individuals can be measured.

b) Setting and enforcing clear assignment of responsibilities, decision-making authority and accountabilities that are appropriate for the bank’s risk profile.

c) A strong financial risk management function (independent of business lines), adequate internal control systems (including internal and external audit functions), and functional process design with the necessary checks and balances.

d) Corporate values, codes of conduct and other standards of appropriate behavior, and effective systems used to ensure compliance. This includes special monitoring of a bank’s risk exposures where conflicts of interest are expected to appear (e.g., relationships with affiliated parties).

e) Financial and managerial incentives to act in an appropriate manner offered to the board, management and employees, including compensation, promotion and penalties. (i.e., compensation should be consistent with the bank’s objectives, performance, and ethical values).

f) Transparency and appropriate information flows internally and to the public.

Tools mentioned above can be utilized in identifying and managing different risks in the following manner:

I. Credit Risk

It is managed by setting prudent limits for exposures to individual transaction, counterparties and portfolios. Credits limits are set by reference to credit rating established by Credit Rating Agencies, methodologies established by Regulators and as per Board’s direction.

o Monitoring of per party exposure

o Monitoring of group exposure

o Monitoring of bank’s exposure in contingent liabilities

o Bank’s exposure in clean facilities

o Analysis of bank’s exposure product wise

o Analysis of concentration of bank’s exposure in various segments of economy

o Product profitability reports

II. Market

Financial Institutions should also have an adequate system of internal controls to oversee the interest rate risk management process. A fundamental component of such a system is a regular, independent review and evaluation to ensure the system’s effectiveness and, when appropriate, to recommend revisions or enhancements.

Interest rate risk should be monitored on a consolidated basis, including the exposure of subsidiaries. The institution’s board of directors has ultimate responsibility for the management of interest rate risk. The board approves the business strategies that determine the degree of exposure to risk and provides guidance on the level of interest rate risk that is acceptable to the institution, on the policies that limit risk exposure, and on the procedures, lines of authority, and accountability related to risk management. The board also should systematically review risk, in such a way as to fully understand the level of risk exposure and to assess the performance of management in monitoring and controlling risks in compliance with board policies. Reports to senior management should provide aggregate information and a sufficient level of supporting detail to facilitate a meaningful evaluation of the level of risk, the sensitivity of the bank to changing market conditions, and other relevant factors.

The Asset and Liability Committee (ALCO) plays a key role in the oversight and coordinated management of market risk. ALCOs meet monthly. Investment mandates and risk limits are reviewed on a regular basis, usually annually to ensure that they remain valid.

Risk Management and Risk Budgets

A risk budget establishes the tolerance of the board or its delegates to income or capital loss due to market risk over a given horizon, typically one year because of the accounting cycle. (Institutions that are not sensitive to annual income requirements may have a longer horizon, which would also allow for a greater degree of freedom in portfolio management.). Once an annual risk budget has been established, a system of risk limits needs to be put in place to guard against actual or potential losses exceeding the risk budget. There are two types of risk limits, and both are necessary to constrain losses to within the prescribed level (the risk budget).

The first type is stop-loss limits, which control cumulative losses from the mark-to-market of existing positions relative to the benchmark. The second is position limits, which control potential losses that could arise from future adverse changes in market prices. Stop-loss limits are set relative to the overall risk budget. The allocation of the risk budget to different types of risk is as much an art as it is a science, and the methodology used will depend on the set-up of the individual investment process. Some of the questions that affect the risk allocation include the following:

* What are the significant market risks of the portfolio?

* What is the correlation among these risks?

* How many risk takers are there?

* How is the risk expected to be used over the course of a year?

Compliance with stop-loss limits requires frequent, if not daily, performance measurement. Performance is the total return of the portfolio less the total return of the benchmark. The measurement of performance is a critical statistic for monitoring the usage of the risk budget and compliance with stop-loss limits. Position limits also are set relative to the overall risk budget, and are subject to the same considerations discussed above. The function of position limits, however, is to constrain potential losses from future adverse changes in prices or yields.

III. Liquidity Risk

The Basel Committee has established certain quantitative standards for internal models when they are used in the capital adequacy context.

a. Allocation of capital into various types of business after taking into account the operational risks i.e. disruption of business activity, which has especially increased due to excessive EDP usage

b. Allocation of the capital is also made amongst various products i.e. long term, short term, consumer, corporate etc. considering the risks involved in each product and its life cycle to avoid any liquidity crunch for which gap analysis is made. This is the job of ALCO

c. For instance Contingent liabilities not more than 10 times of capital,

d. Fund based not more than 6 times of capital

e. Capital market operations not more than 1 time of capital

f. However these limits cannot exceed the regulations.

g. Parameters of controls

o Regulatory Requirements

o Board’s directions

o Prudent practices

For liquidity management organizations are compelled to hold reserves for unexpected liquidity demands. The ALCO has responsibility for setting and monitoring liquidity risk limits. These limits are set by Regulatory Bodies and under Board’s directions keeping in mind the market condition and past experience.

The Basel Accord comprises a definition of regulatory capital, measures of risk exposure, and rules specifying the level of capital to be maintained in relation to these risks. It introduced a de facto capital adequacy standard, based on the risk-weighted composition of a bank’s assets and off-balance-sheet exposures that ensures that an adequate amount of capital and reserves is maintained to safeguard solvency. The 1988 Basel Accord primarily addressed banking in the sense of deposit taking and lending (commercial banking under US law), so its focus was credit risk.

In the early 1990s, the Basel Committee decided to update the 1988 accord to include bank capital requirements for market risk. This would have implications for non-bank securities firms.

Thus, the formula for determining capital adequacy can be illustrated as follows:

= Tier I + Tier 2 + Tier 3 *- 8% .

Risk-weighted Assets + (Market Risk Capital Charge x 12.5)

IV. Operational Risk

To manage this risk documented policies and procedures are established. In addition, regular training is provided to ensure that staffs are well aware of organization’s objective, statutory requirements.

o Reporting of major/ unusual/ exceptional transactions with respect to ensuring the compliance of the principles of KYC and Anti-money laundering measure

o Analysis of system problems

Conclusion

For any business to grow and stay in the market management style is a key and Risk management is basically the management style of managing the risks.

It is so important and that State Bank of Pakistan plans to replace Prudential Regulations with Risk management guidelines, which will be adopted by banks according to their size and complexity of operations.

Risk is inherent in every business and every organization has to manage it according to its size and nature of operation because without it no organization no organization can survive in long run.

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Current Management Opportunities and Challenges in the Software Industry

During the past 30 years the world went through a very dynamic technological transformation. In retrospective, it can be stated without exaggeration that the emergence of electronic devices and the Internet have greatly impacted daily life as well as managerial practice to an unforeseen extent. The computerization of multiple business processes and the creation of large scale databases, among many other radical technological advances, have lead to enormous cost savings and quality improvements over the years. The interconnection of financial markets through electronic means and the worldwide adoption of the Internet have greatly reduced transaction and communication costs and brought nations and cultures closer to one another than ever imaginable. Computers are now fundamental tools in almost all businesses around the world and their application and adaptation to specific business problems in the form of software development is a practice that many companies perform on their own. In the past, such computerization and automation efforts were very costly and therefore only practiced by large corporations. Over the years, however, the software industry emerged to offer off-the-shelf solutions and services to smaller companies. Today, having survived the massive dotcom crash of the year 2000, software development businesses established themselves as strong players in the technology industry.

The emergence of numerous computer standards and technologies has created many challenges and opportunities. One of the main opportunities provided by the software sector is relatively low entry barrier. Since the software business is not capital intensive, successful market entry largely depends on know-how and specific industry domain knowledge. Entrepreneurs with the right skills can relatively easily compete with large corporations and thereby pose a considerable threat to other, much larger organizations. Companies, on the other hand, need to find ways to reduce turnover and protect their intellectual property; hence, the strong knowledge dependence combined with the relatively short lifespan of computer technologies makes knowledge workers very important to the organization. Knowledge workers in this industry therefore enjoy stronger bargaining power and require a different management style and work environment than in other sectors, especially those industries that have higher market entry capital requirements. This relatively strong position of software personnel challenges human resource strategies in organizations and it also raises concerns about the protection of intellectual property.

The relatively young industry is blessed with sheer endless new opportunities, such as the ability of companies to cooperate with other organizations around the globe without interruption and incur practically no communication costs. In addition, no import tariffs exist making the transfer of software across borders very efficient; however, the industry with its craft-like professions suffers from lack of standards and quality problems. The successful management of such dynamic organizations challenges today’s managers as well as contemporary management science because traditional management styles, such as Weberian bureaucracies, seem to be unable to cope with unstable environments.

Challenges in the Software Industry

Many studies indicate that present-day software development practices are highly inefficient and wasteful (Flitman, 2003). On average, projects are only 62% efficient, which translates to a waste of 37 %. The typical software development project has the following distribution of work effort: 12% planning, 10% specification, 42% quality control, 17% implementation, and 19% software building (2003). There are many possible interpretations of the nature of this distribution of resources. First, the extraordinarily high share of 42% for quality control purposes can indicate a lack of standards and standardized work practices. This large waste of effort may also be the result of inefficient planning and specification processes. Because the share of 19% for software building is a function of software complexity, hardware, and tools used, there is a chance to reduce it by carefully managing and standardizing internal work processes. The disappointing share of only 17% for implementation, however, should be alarming to business owners, since implementation activities are the main activity that results in revenue. The relatively low productivity level reported by Flitman (2003) seems to be also reflected in the fact that the average U.S. programmer produces approximately 7,700 lines of code per year, which translates to just 33 per workday (Slavova, 2000). Considering that a large software project, such as Microsoft Word, is reported by Microsoft to require 2 to 3 million lines of code, it becomes obvious how costly such projects can become and that productivity and quality management are major concerns to today’s software businesses. The challenge for contemporary software managers is to find the root of the productivity problem and a remedy in the form of a management practice.

A plethora of recent studies addresses software development productivity and quality concerns. Elliott, Dawson, and Edwards (2007) conclude that there is a lack of quality skills in current organizations. Furthermore, the researchers put partial blame on prevailing organizational cultures, which can lead to counterproductive work habits. Of the main problems identified, project documentation was found to be lacking because documents are deficient in detail and not updated frequent enough. Quality control in the form of software testing is not practiced as often and there seems to be a lack of quality assurance processes to ensure that software is built with quality in mind from the beginning. Organizational culture was found to be deficient in companies were workers tend to avoid confrontation and therefore avoid product tests altogether (2007).

Since knowledge workers are the main drive in software organizations, creating a fruitful and efficient organizational culture constitutes a main challenge to today’s managers. The relationship between organizational culture and quality and productivity in software businesses was recently investigated by Mathew (2007). Software organizations tend to be people-centered and their dependency on knowledge workers is also reflected by the enormous spending remuneration and benefits of more than 50% of revenue. As the industry matures and grows further, the challenge to organizations is that larger number of employees need to be managed which brings culture to the focus of management. Mathew (2007) found that the most important influence on productivity was achieved by creating an environment of mutual trust. Higher levels of trust lead to greater employee autonomy and empowerment, which strengthened the existing management view that trust and organizational effectiveness are highly related. Those companies with higher trust and empowerment levels benefitted from more intensive employee involvement and thereby achieved better quality products (2007).

Product quality, however, depends on other factors as well that reach beyond the discussion of work processes. Relatively high employee turnover was found to have a detrimental effect on product quality and organizational culture (Hamid & Tarek, 1992). Constant turnover and succession increase project completion costs, cause considerable delays, and expose organization to higher risks because their development processes can be severely disrupted. While human resources strategies should help find ways to retain key personnel in the company, organizations need to nevertheless be prepared for turnovers and minimize their risks. One of the greatest risks for people-centered, knowledge worker organizations is the loss of knowledge when employees leave.

Knowledge management has evolved into a relatively new discipline in the last two decades but is mostly practiced by large, global organizations only (Mehta, 2008). As corporations realized the importance of knowledge management activities to mitigate the risk of know-how loss within their organizations, they started employing chief knowledge officers and crews with the goal of collecting and organizing information. By building custom knowledge management platforms, companies can benefit from increased transfer, storage, and availability of critical business information. Such activities can help companies innovate and build knowledge capital over time (2008). The challenge remains, however, to set up such systems and to elicit employee support for knowledge management systems. In addition, these systems leave another critical question open. What happens when top performers take all the knowledge with them when they leave?

Another crucial variable affecting software product and service quality is top management involvement. Projects in the software industry commonly fail due to one or a combination of the following three major causes: poor project planning, a weak business case, and lack of top management support and involvement (Zwikael, 2008). Software projects are similar to projects in other industries by focusing on timely project completion, budget, and compliance to specifications, the industry requires specific support processes from top management to facilitate projects. These processes are summarized in Table 1. Key support processes, such as the appropriate assignment of project managers and the existence of project success measurement, indicate that successful companies demonstrate a higher level of project progress control than others; however, Zwikael acknowledges that top managers rarely focus on these key processes and instead prefer to deal with those processes that are easier for them to work on personally.

Table 1

The ten most critical top management support processes in the software sector (Zwikael, 2008). Those processes marked with an asterisk (*) were found to be the most important.

Support Process

Appropriate project manager assignment *

Refreshing project procedures

Involvement of the project manager during initiation stage

Communication between the project manager and the organization *

Existence of project success measurement *

Supportive project organizational structure

Existence of interactive interdepartmental project groups *

Organizational projects resource planning

Project management office involvement

Use of standard project management software *

Opportunities in the Software Industry

The advent of low cost communication via the Internet and the diversification of the software industry into many different branches brought a multitude of new market opportunities. Some of the main opportunities are rooted in the low costs of communication, while others originated from the possibility of geographic diversification and international collaboration.

One major opportunity which especially larger organizations seek to seize is geographic diversification in the form of globally distributed software development. Kotlarsky, Oshri, van Hillegersberg, and Kumar (2007) have researched this source of opportunities that is mainly practiced by multinational companies; however, an increasing number of small companies is also reported to be benefitting from dispersed software development across national boundaries. The study revealed that software companies can achieve significantly higher levels of productivity by creating reusable software components and reducing task interdependencies. By reducing interdependence, the produced modules are more likely to become useful in future projects on their own; furthermore, this reduction of intertwined computer code also has a positive effect on project teams. Teams in companies that globally distribute their developments benefit from increased autonomy and reduced communication requirements. The authors point out, however, that the prerequisites to distributing software development are not only good project planning but also the standardization of tools and development procedures. Without such prearrangements it may become almost impossible to manage and consolidate the various distributed team activities (2007). Especially for teams working across countries away from one another, it may pay off to deploy video or other Internet-based conferencing technologies and exploit huge savings potentials. But are these means of communication effective?

In the last decade a new form of organization has emerged that has taken the most advantage of the Internet. Virtual organizations exist entirely in cyberspace and their team members communicate mostly, if not exclusively, via the Internet using webcams and messaging software. The challenge for managers in virtual organizations is to exploit the new technology but also to find ways to motivate and direct the workforce and work processes. A study by Andres (2002) compared virtual software development teams with face-to-face teams and identified several challenges and opportunities for virtual managers. Managing work from a different time zone can be problematic due to the lack of physical presence. Communication will need to be asynchronous or can only occur at work hours that overlap in both time zones. Virtual teams facilitate this process by using email and voice/text messaging but more importantly by reducing the interdependency of tasks. Andres (2002) suggested that these types of communication have lower “social presence” meaning that humans have a need and ability to feel the presence of others in the group. The problem with many computerized communication channels is that visual clues, utterances, body language clues and clues from the person’s voice are missing. When placed on a social presence continuum, the various communication types rank as follows from the lowest to the highest: email, phone, video conferencing, and face-to-face meetings. Andres’ comparison between development teams using video-conferencing versus face-to-face meetings revealed that the latter group was far more efficient and productive, even though the video-conferencing team benefitted from reduced travel costs and time.

The study conducted in 2002, however, has several shortcomings. First, it is already seven years old and Internet costs have dropped and speeds have improved significantly since then. Considering the improvements in video quality and availability and computer speeds, this form of communication became more feasible recently. In addition, today’s managers are just now starting to learn how to use these means of communication efficiently. For example, even though email technology has been around for two decades now, many managers still find that emails can create a lot of ambiguity. The challenge to future generations of managers will be to change their writing style to match the limitations of email and other text messaging technologies. Another important factor to consider is that written communication may be stored indefinitely and have legal consequences; hence, more often than not, managers may intentionally prefer to avoid such communication channels for political or legal reasons. The study by Andres (2002), however, resulted in a negative view of video conferencing probably because the technology was not yet matured and the team members were not yet comfortable with it.

For video conferencing to work well, all participants need to be knowledgeable of the peculiar characteristics of that technology and adjust their communication style and speech accordingly. Regardless of meeting type, another important factor is preparation. What could be researched in conjunction with Andres’ study in the future is the degree of preparation of the group. Do team members invest enough time in preparing questions and answers for their teammates before coming to the meeting? Video conferences may require more preparation than face-to-face meetings in some circumstances.

Another opportunity for software businesses and challenge for managers worldwide is outsourcing. In the year 2007, $70 billion were spent globally for outsourced software development (Scott, 2007). Given the extreme shortage of IT skills in the U.S. and Europe, many companies take advantage of globalization by choosing international suppliers for their software development tasks. Outsourcing, however, requires elaborate coordination between the organization and its many supplier groups. The idea is that in total, coordination costs and problems are less costly than in-house development; however, this goal is not always achieved. While outsourcing, when it is deployed and coordinated correctly, can result in 24 hour development worldwide and thereby provide continuous services to the organization around the clock, it may result in the loss of intellectual property. While mechanic parts are patentable in most countries that support intellectual property rights, software is not patentable in most countries outside North America.

In addition to the challenge of managing outsourcing, software organizations exploit technologies in various ways to save costs, for example by offering remote access, telecommuting, and service-oriented architectures (SOA) (Scott, 2007). Remote access and telecommuting has increased six-fold between 1997 and 2005 and resulted in $300 million annual savings due to a reduction of office space (2007). SOA is a similar concept and involves a software rental for customers. Instead of buying, installing, and maintaining software and servers, customers can rent a service online and reduce the total cost of ownership because these activities are no longer required on the customer side. Gradually the virtualization of the software business opens new horizons and provides further opportunities but it also presents managers with endless challenges.

Some of the strengths and weaknesses of offshore and virtual team development were studied by Slavova (2000). In the year 2000, India and Ireland were the largest offshore software development locations. Offshore companies can offer up to 60% cost reduction, a faster completion of development tasks by distributing them around the globe, and specific domain knowledge which they acquired over the years providing similar services to other customers. The integration of work from external sources, however, constitutes a major hurdle. Furthermore, language and cultural issues can cause serious communication problems that put the project at risk, especially when misunderstandings cause misinterpretations of project specification documents. Slavova (2000) found that the most common remedy and strategy avoiding problems with offshore suppliers is to visit them frequently face-to-face; however, this tactic results in higher travel costs and disruptions of the managers’ workflows and hence may offset the benefits gained for outsourcing altogether. Managers in the software business need therefore to balance the risks and opportunity potentials before engaging in outsourcing because for many companies this strategy failed to pay off in the end.

A huge opportunity that emerged in the last decade is online innovation. The collective innovation effort of many individuals and companies is generally known as open-source on the Internet and it has lead to many advances in the computer technology, such as the free Linux operating system. At first businesses felt threatened by this wave of developments on the market because the businesses perceived that open-source solutions were in competition with their products. In many cases this was and still is in fact true; however, a couple of companies, including IBM, are exploiting this new way of innovation for their own and for a common benefit (Vujovic & Ulhøi, 2008). Because software companies operate in an increasingly instable environment, they struggle to create continuously new and better products. By exposing the computer code to the public on the Internet, companies can benefit from ideas submitted by the public, especially other companies. Furthermore, companies benefit from free bug finding and testing by external users but one of the primary reasons for “going open-source” is the quick adoption and spread of the company’s technology at a relatively little or no cost. The spread of IBM’s open-source technology, for example, is also free marketing for the company. But how can companies make money by offering something for free?

The closed innovation model (the traditional model of providing software without revealing the software code) can be combined with open-source, so the company can charge for the product. In other cases, the company can reveal the technological platform on the Internet for free and then sell specialized tools which utilize the new platform. The big money savers are obviously the shared development, testing, and maintenance costs since many interested parties work on the same project.

The knowledge-sharing model of open-source is nothing new, however. The philosophy and the benefits of open innovation models have been already realized in the third quarter of the nineteenth century. Back then, open innovation was practiced in the UK iron and

US steel industry. The cooperation of many industry players ended the domination of proprietary technologies for which costly royalties were due (Vujovic & Ulhøi, 2008). Given the dynamic environment of the IT industry and the short lifespan of computer technologies, the adoption of open innovation models gained much more popularity. By analyzing the largest open-source players in the market, Vujovic and Ulhøi put together a list of supportive strategies, which is shown in Table 2. Several of these strategies are quite relevant from a top management perspective as well, such as deploying open-source to block a competitor and using the open model as a gateway for greater market share.

Table 2

Strategies for adopting the open-source approach (Vujovic & Ulhøi, 2008).

Business Strategy

Obtaining higher market share

Obtaining market power

Better adoption of a product and thereby establishing standards

Shifting competitive advantage to another architectural layer

Making the product more ubiquitous

Delivering faster time-to-market

Spurring innovation

Complementing a revenue core stream

Blocking a competitor

Conclusion

Reviewing the rather recent emergence of the IT industry and the software industry in particular, several parallels can be drawn to management history. While Taylor’s scientific management was a highlight in the evolution of management science (Wren, 2005), the software industry seems to be lagging behind such great advancement. Due to its high level of complexity, the software development discipline is still plagued with quality problems stemming from a lack of standardization. Similar to Taylor’s efforts, managers need to analyze software development processes and develop industry-wide standards and measures. Once such measures and procedures exist, this will help make software projects much more predictable.

Much of today’s software industry practices would have been a déjà vu for Taylor, if he was still alive. In addition, the anomie and social disorganization concerns during the social person era apply today more dramatically than in the past. Mayo described in the 1940s how managers overemphasized on technical problems in the hope of raising efficiency ignoring the human social element (p. 296). The same situation is now evident to a larger degree in the computer industry. The rapid technological advances have created many opportunities and changed the work environment drastically. At the same time, however, management was unable to prepare for these dramatic shifts technology would bring to the workplace. At best, managers are simply reacting to technological advances because the consequences are mostly unpredictable given the complexity of human nature. For example, email brought several benefits such as low cost and simple asynchronous communication; however, many email messages are misunderstood because they are not written appropriately. Moreover, IT knowledge workers are struggling to keep up with the vast number of messages received per day as they constitute a severe disruption of the daily workflow.

As knowledge workers are becoming more and more essential to an organization’s survival and as organizations in this industry mature and require greater headcounts, the span of control is becoming an issue for managers to handle correctly. As discussed in Wren (2005), as the team size increases, the number of interrelations to be managed rises astronomically (p. 353). Managing larger teams poses a great problem because the sheer number of interrelations makes it also more difficult to develop trust within the team. Motivating large groups of knowledge workers can hence be tricky, especially because creative tasks can require a large degree of collaboration. Work design is hence a major hurdle for future managers to overcome. Much emphasis has been on hygiene factors and not on motivators of the workforce. Flexible hours, telecommuting, empowerment, and increased responsibility may help in the short-term but for the long-term management will need to find new strategies for retaining knowledge workers.

Product quality remains a big issue. Deming’s ideas are good but quality assurance in the software world is difficult to implement due to the lack of standards and measures. The open-source innovation model may provide some relief in this respect because the greater involvement of external developers can help improve overall quality. On the other hand, however, open-source projects are hard to manage for the same reason. Since open-source projects are self-directed and not owned by anyone in particular, those projects sometimes suffer from uncontrolled, tumorlike growth.

Several of Deming’s deadly sins (Wren, 2005, p. 463) apply directly to the software industry. Most products are made from scratch rather than from components and there is little standardization in software organizations. Since software developers have a tendency to see their job as a craft they defy standards and procedures. In addition, the rather complex environment with its dynamic requirements and the push for meeting deadlines make it easy for practitioners to lose sight of quality improvements through the preparation of organizational standards. High turnover and individual performance measures continue to be industry practice, even though many scientists, such as Deming, have argued for long that such measures are counterproductive.

Future managers need to find ways to compensate for the high turnover, if they cannot find a way to avoid it. The division of labor might work well for the company but it is not well perceived by the workforce which tends to require constant challenge. Top performers disfavor mundane tasks and prefer to walk away with all their knowledge. IBM has successfully deployed job enlargement for some time to combat this phenomenon (Wren, 2005, p.332). Unfortunately, this strategy might not work for every company and it can only be used within certain boundaries of the organization. Given the developments of the last two decades, managers will need to confront the discipline of knowledge worker management and find a workable solution for their organization.

The integration of management science with the advances in psychology and sociology may provide a route towards the solution of the knowledge worker management problem. It is crucial for managers to have an accurate understanding of the motivational drives for this particular group of the workforce. These employees enjoy higher income, greater flexibility and freedom, and greater bargain power. This puts them in a gray zone between the traditional, lower skilled employee and an owner in the company because knowledge workers create intellectual capital in the company. Because most of this capital is lost and remains with the employees when they decide to leave the organization, turnover can be much more damaging than with traditional workers. Managers can therefore not simply apply conventional strategies to this dissimilar group of employees; rather, they need to seek for more creative incentives for motivating and retaining knowledge workers.

References

Andres, H. P. (2002). A comparison of face-to-face and virtual software development teams. Team Performance Management, 8, 39-49. Retrieved March 15, 2009 from ProQuest.

Elliott, M., Dawson, R., Edwards, J. (2007). An analysis of software quality management at AWE plc. Software Quality Journal, 15, 347-364. Retrieved March 15, 2009 from ProQuest.

Flitman, A. (2003). Towards meaningful benchmarking of software development team productivity. Benchmarking, 10, 382-350. Retrieved March 15, 2009 from ProQuest.

Hamid, A., Tarek, K. (1992). Investigating the impacts of managerial turnover/succession on software project performance. Journal of Management Information Systems, 9, 127-145. Retrieved March 15, 2009 from ProQuest.

Kotlarsky, J., Oshri, I., van Hillegersberg, J., Kumar, K. (2007). Globally distributed component-based software development: an exploratory study of knowledge management and work division. Journal of Information Technology, 22, 161-174. Retrieved March 15, 2009 from ProQuest.

Mathew, J. (2007). The relationship of organizational culture with productivity and quality; A study of Indian software organizations. Employee Relations, 29, 677-697. Retrieved March 15, 2009 from ProQuest.

Mehta, N. (2008). Successful knowledge management implementation in global software companies. Journal of Knowledge Management, 12, 42-57. Retrieved March 15, 2009 from ProQuest.

Scott, J. E. (2007). Mobility, business process management, software sourcing, and maturity model trends: Propositions for the IS organization of the future. Information Systems Management, 24, 139-146. Retrieved March 15, 2009 from ProQuest.

Slavova, S. (2000). Offshore software development: strengths and weaknesses. Academy of Information and Management Sciences, 4, 16-22. Retrieved March 15, 2009 from ProQuest.

Vujovic, S., Ulhøi, J. P. (2008). Online innovation: the case of open source software development. European Journal of Innovation Management, 11, 142-157. Retrieved March 15, 2009 from ProQuest.

Wren, D.A. (2005). The history of management thought. Hoboken, NJ: Wiley Publishing

Zwikael, O. (2008). Top management involvement in project management; a cross country study of the software industry. International Journal of Managing Projects in Business, 1, 498-513. Retrieved March 15, 2009 from ProQuest.

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4 Signs That You Are Not Working With a Professional Expert Witness and Need to Switch

Expert witnesses are integral to the success or failure of litigation. There’s much more to being an expert witness than offering an impartial, knowledgeable opinion at trial.

Experts should be able to communicate effectively with legal teams, meet court deadlines, and prepare accurate, well-written expert reports admissible in a court of law. Often, it can be challenging to find an expert who has all these traits and possesses the specialised knowledge appropriate to your case.

While factors such as experience, qualifications, professionalism, and fees are of course central to selecting an expert, they are not foolproof grounds for making a decision. Listed below are four clear signs that you’ve selected the wrong expert and need to source an alternative.

Your expert is not credible

A key part of expert evidence is the credibility of your expert both on paper and in the court room. Your expert needs to have sufficient training,education, and experience to convince the court that their opinion is well-substantiated and worthy of being taken seriously. If your case goes to trial, it is of paramount importance that your expert is comfortable with a trial setting and able to withstand cross-examination confidently.

If your expert does not have the education, experience, and confidence required to present a credible, qualified opinion, look for better alternatives.

Your expert spends a little too much time as an expert witness

Generally, leading experts gain their experience by spending the vast majority of their time practicing as a professional in their field. While a wealth of expert testimony is in itself a good sign, spending a disproportionate amount of time in the witness box, rather than in practice, should be a red flag. Ideally, expert witnesses should have both specialised knowledge and recent, practical experience in their field of expertise.

If your expert is more over-used than they are experienced, it’s time to search for another one.

Your expert lacks conviction

The foremost duty of an expert witness is one of impartiality to the court; witnesses should not be an advocate for either party – not even the one paying their fees.

If your expert appears easily swayed by your comments and is eager to change the substance of their report in order to align more closely with what they believe you are wishing to hear, it may be unwise to continue to engage their services.

Your expert charges an unreasonable fee

As with other consultants, experts set their fees based on the complexity of the case and the time required to review files, prepare a report and, if necessary, appear in court. Yet legal teams should be wary of experts who charge rates that appear at odds with the demands of the case at hand.

If you suspect that your expert is charging more than what could be deemed reasonable for the review of documents and preparation of an expert opinion, you may want to make the switch to another expert.

Conclusion

An impressive CV or extensive field experience alone do not qualify a professional as an expert witness. Rather, there is a broad variety of factors to consider when selecting and engaging an expert.

If your chosen expert shows one or more of the signs above, we recommend terminating your business relationship and approaching Experts to find a better choice.

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More About Interest Rate Cap And How To Take Advantage Of It

Borrowing money either for personal or for business use is now very common in most places. Financial establishments offer several different options for you to take advantage of. And as a borrower, you should know how you can greatly benefit from the options offered. One of the things that you should know about is an interest rate cap.

An interest rate cap serves as a hedge that protects the borrowers from rising short term rates. It works when a variable rate goes over the cap, the cap will be compensated for whatever difference may be between the cap price and the market variable rate. It can also be viewed as an agreement between the provider of the cap and the borrower. It limits the floating interest rate to a set level for a certain time period.

Additionally, an interest rate cap translates to a series of call options on an index of floating interest rates which normally involves 3 or 6 month Libor and it coincides with the rollover dates on the borrower’s floating liabilities. Knowing this will greatly help a borrower stand on his feet again knowing that he will be paying the same all throughout the time period of his loan.

The borrower can greatly benefit from having this cap especially if he is set to pay the borrowed money within a short period of time only. He is protected against the increasing interest rates that most financial establishments add on top of the amount being borrowed. And when the market rates go above the cap rate, you will no longer have to worry because the cap rate provider has to make payments to the borrower or buyer of the cap to bring the interest rate back to the cap level which is actually a very big help and a huge advantage on the borrower’s side.

The cap provider, on the other hand, does not need to make payments as long as the rates are below the cap, so the borrower is left to pay market rates. So now, you can rest assured that you do not need credit approval during this process, although it may involve an auction process with the help of a consultant. And this usually results in highly competitive pricing and terms.

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Should You Use an SEO Agency for Your Business?

8 Benefits of Engaging SEO Agencies to Boost Your Online Presence!

Advertising has transformed to one of the most demanding and crucial aspects of having to run a business. This ultimately means that the overall success of your business is going to depend mainly on the effectiveness of your advertising campaign.

Nowadays, online is where everyone’s at, which is also the reason why most businesses look to promote their products or services online. To do that, one needs to have a business website which will run their internet marketing campaign. With an abundance of spam links and countless other websites floating around in cyberspace, it’s easy for a business website to get lost or rank so low in the SERPs, that the chances of searchers to find the website are seriously diminished.

Since, paying a search engine to place your business website at the top of its list doesn’t come cheap, the next best thing one can do is to use search engine optimization or SEO techniques to increase the clicks to the website and help it work its way up the search engine’s results page.

Why You Should Hire a SEO Agency?

Optimizing a website for a search engine can be not only a tough, but also costly process, mainly because there is just too many business websites competing for the coveted number one spot on the page rank, by using the exact same keywords.

While businesses can opt to do their own SEO, hiring a SEO agency that has experienced search engine optimizers will no doubt, help businesses reap ROI in the long run. One of the best ways in which businesses can do that is by outsourcing their SEO needs to qualified SEO agencies.

The growing demand for SEO services has lead to a mushrooming of many a great number of SEO agencies fulfilling their business objective, which has lead many businesses seeking SEO services asking the question, “how do we find the best SEO service provider?”

Obviously, all those searching for SEO agencies will have to make their selection by passing SEO companies through careful and meticulous scrutiny, in order for them to get the best in search engine optimization for their business website.

Benefits of Using SEO

One of the most obvious advantages of using the services of SEO agencies is their ability to enhance the visibility of a business website, but that being said, business owners also raise concerns on affordability, which can only be analyzed when businesses know the benefits of using the services of SEO agencies. In more ways than one, the following are some of the benefits of using search engine optimization services, especially the right ones, which can allow businesses to enjoy the following advantages.

Target Traffic

While businesses embark on an SEO marketing campaign, they should realize that an entire marketing campaign can fall flat on its face if a business is unable to reach the masses, that is, their target audience. It doesn’t really matter whether your business website is attracting hundreds of clicks per day, if those visits are not from your intended target demographic, you will only be seeing them spending time on your website without actually buying anything, which is really the opposite of your marketing intentions.

Get a Well-Made Business Website

Even though, search engine optimization is necessary for businesses to compete with one another online, the importance of the website design cannot be undermined. While hiring the services of a good SEO agency can get you good marketing copy for your website and an effective use of the related keywords, having a brilliantly designed website will help a lot when it comes to attracting people and even the search engines to your website. This is true because search engines always take into account different aspects of usability and the overall layout of the business website.

Cost Effectiveness

The fact of the matter remains that while using radio and TV advertisements can be an effective means of marketing a business’s product or service, it still is very expensive, especially for start-up businesses. By taking their marketing needs online and hiring the services of an experienced SEO agency, a business is able to reach thousands, or even millions of people which they would have not been able to otherwise.

Using SEO Best Practices

Hiring an experienced SEO agency will allow you to get information on the various techniques they have adopted in their SEO tactics. Hiring a SEO agency that has been in the game for a while will also provide you with the added advantage of not having to worry about them using any SEO techniques while working on your business website.

Hiring experienced SEO experts will ensure that your website climbs the search engine ranks without using any illegal practices or short cuts that could produce short term spikes in the website’s ranking, but eventually lead to your website having to pay penalties.

Access to Latest SEO Techniques

Needless to say the field of SEO is constantly evolving, which means that it is important for businesses to stay abreast on all the latest SEO techniques that can help them stay in the game. That being said, businesses usually have little or no time to keep up with the latest developments in SEO techniques. However, an agency providing SEO services is all about being proactive in keeping up-to-date with the latest search engine news and changes in SEO techniques.

Cutting-Edge Tools

Keeping in mind the last point, SEO agencies are fluent in navigating through a wide range of online marketing tools that helps increase the value of your marketing strategy. Whether it’s using web analytics for carrying out research or conversion tools that monitor and report the usage of important keywords, SEO agencies know how and where to get the information they need to save time and reduce your in-house cost.

Comprehensive SEO Knowledge

As mentioned earlier, SEO agencies are usually the most qualified in dealing with various verticals of online marketing, mainly due to the nature of their work. Therefore, an SEO agency is able to solve a multitude of problems which a business simply cannot handle by itself. An SEO agency can work together with a business to provide an added perspective, when it comes to understanding and developing marketing strategies for different sectors and various types of business websites.

Bottom Line

Lastly, search engines like Google realize all too well that websites that don’t add value to a searcher’s experience on the internet are not worth a mention in their index. Furthermore, in some cases Google might also decide to drop your website from the SERPs altogether if you’ve used spam to get a higher page ranking.

The two main goals of SEO agencies who develop marketing strategies to push your product or service online, is to make sure online content is interesting and no techniques have been used for obtaining your goals. So, are SEO agencies worth it? Absolutely!

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10 Secrets to Hiring the Right SEO Company

Even if you are armed with an abundance of knowledge in SEO, you may still need the services of a professional SEO company. Having strong knowledge of SEO is hardly sufficient in some cases. Even if you are doing your best to attempt to obtain a good ranking for your website, you might still wind up wondering why your website is simply not doing well. For starters, you must understand that your website will have to be fully optimized in all elements. Not just that, but your website has to be maintained on a regular basis. SEO is a continuous process that includes a great deal of time and effort. To make things simpler, you will be better off utilizing the services of a competent SEO company to do the work for your website.

There are numerous SEO companies today, and there are a lot of trustworthy companies as well as unreliable ones. Thus, it is crucial that you select the perfect SEO Company. Here are 10 important points that you must keep in mind when selecting SEO services:

Site Evaluation Guide

Does the SEO firm offer you a site evaluation guide? A reliable SEO firm should have the ability to provide you with an extensive analysis of your site, regarding ranking and design structure. This can be done by performing a website audit. The result of this website audit will allow the SEO firm to offer you a proposal of how much work needs to be done to bring you to a certain level of ranking. They must be able to advise and troubleshoot all aspects related to performance, content, and design that might hinder the reading or indexing of your pages.

Tools in Figuring out Keywords

What tools does the SEO Agency use to look for keywords? Do they offer competitive analysis based on your chosen keywords? Understanding what methodology the SEO Agency utilizes for keyword evaluation or research is very important. It will be a great help if you perform your own due diligence using basic tools, such as conducting keyword research and analysis through the use of keyword planner in Google AdWords.

Backlinks to Website

Where will the SEO Company return links from? Backlinks are just as, if not more, vital in SEO than onsite optimization. The SEO Company should be able to obtain high-quality backlinks from reputable websites that are highly related to your niche. Ask your SEO Company what techniques they employ for gathering backlinks.

Cost Structure

A dependable SEO Company will not just give you a quote once they figure out how much work has to be included. Charging you high costs will not necessarily ensure you receive high quality services. It also doesn’t ensure that the rate being quoted is proportional and consistent with the services you anticipate the SEO Company will provide. A good SEO Agency should be able to give you a rundown of services to which the performance and price contract will be based upon.

The Timeline

Does your SEO Company provide you with a timeline? It is through hard work and correct planning that results can be attained on time. Some SEO Firms offer SEO plans that claim to put you in the very first page of search results in just a matter of 10 days. Realistically, however, no SEO Company can guarantee you the number 1 position in Google in as short as 10 days.

An SEO campaign will take 6-18 months to deliver the top outcomes you expect. Make sure you don’t give in to false pledges. Conversely, avoid SEO services that provide you with a time limit. A good SEO company knows that optimization is an ongoing process and they should be able to offer you regular maintenance, customer support and proper upgrading.

SEO Technique

What SEO strategy will your SEO Company use to raise your ranking? You should look out for companies that will utilize spam advertising methods to rank you on top in no time. If the strategy includes any form of dishonest practice, such as spamming or deceiving online search engines, then you should instantly turn away.

An excellent SEO company will certainly see to it that you will not be subjected to spam or misleading services. Keep in mind that if it is based on using deceitful strategies, your site might be taken out of Google’s indexing, which will certainly lead your site to being blacklisted. Knowing your SEO Company and doing your own research on how proper SEO is done is extremely vital in choosing the ideal firm.

Providing Targeted Traffic

Do they understand the distinction between plain traffic and targeted traffic? You will hire the services of an SEO Company mainly due to the fact that you need to attract traffic into your website. However, what you need is targeted traffic that gets you visitors who might be genuinely interested in purchasing your products or services. This is based on your desired keywords in order to generate leads.

You don’t want irrelevant traffic that comes to your website because of irrelevant keywords. Unqualified traffic only enhances your bounce rate (surfers that arrive on your page and immediately leave) and not your sales. The right SEO Company will create relevant content for your website and distribute it to relevant channels, social media and Press Releases (PR). This will potentially lead to natural backlinks that will enhance your overall ranking in the search engine.

Transparent Deliverables

A professional SEO Company should have a clear course of action to attain the desired results in a given time frame. They should be able to show the client what’s being completed for the first month and subsequent months. With this, you will be able to determine how much work is being done in relation to your costs, allowing you to determine your ROI. A clear outline of work in the proposal should be available at any time to show the extent of the campaign. This includes how much fresh and high quality relevant content they are going to publish on your website every week. How many distribution channels? What social media, article directories and websites are they going to use to distribute your content? How many PR submissions? And how many backlinks have been generated? These are the qualifying questions that need to be answered by a good SEO firm.

Reporting

A comprehensive report system should be provided to show the progress of the SEO campaign, as well as ranking status of the site. This reporting could be monthly or quarterly. The report should be clear and concise, using the right combination of graphics and texts. This will be the bench mark of how the firm is progressing towards your desired ranking status.

Performance Guarantee

Does the SEO Company offer some kind of guarantee, such as a percentage increase in traffic? Although there are a lot of factors involved in an SEO campaign, a professional SEO company will be able to give performance guarantees based on their years of experience and proven methodology.

These are the major considerations you need to look at when hiring an SEO Agency to make sure that you don’t pour your money down the drain. SEO is a vital marketing strategy to make your brand highly visible online to your target market and to grow your business. It is a time-consuming effort, but it has greater ROI in the long run when compared to other marketing options.

THE NEXT STEP IS YOURS.

Newman Ramirez is a Digital Marketing Consultant at Sakal Marketing Solutions, LLC.
At Sakal Marketing Solutions, we offer the best internet marketing and mobile marketing services to make your business grow by acting and deciding diligently and intelligently. We do the hard work to prosper your business because we love what we do and we care for you.
YOUR SUCCESS IS OUR BUSINESS.

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What is SEO Anyway?

Both pay-per-click and SEO are targeted to get your website placed as close to the top of search engine results as possible. Marketing and SEO are different, yet very, very similar. SEO are considered as the main factors in enhancing the traffic of one’s website. The concepts of good SEO are hardly a secret. The people who least understands issues with URL structure and SEO are the very people who create them: web developers, programmers, and software developers.

Many long-time SEO’s are now looking at the big picture and working with usability analysts. Some SEO are scam artists. I find it interesting that so many newcomers are given the wrong impression that there is one almighty answer to doing well in search engines. SEO are specialized techniques used to optimize your web site, to be Search engine friendly and increase your chances of placing well in searches. But SEO can also be the most profitable methods of driving leads because any leads you receive from SEO are free leads.

There are a large number of companies that adopt a fast and unethical approach to SEO known as Black Hat SEO. They employ unethical techniques that are against search engine policies. The best results from SEO are rarely achieved overnight. Black hat SEO are the techniques used to fool the search engines in order to bring in more traffic to websites. Website owners who unknowingly utilize black hat techniques of SEO are more vulnerable to changes in search engine algorithms and faced being banned.

Most hardcover books on the subject of SEO are best viewed as a vehicle to help the beginner understand the process of search engine optimization. This is because the principles behind SEO are not easy. They are very informative and most webmasters are involved in SEO and using it. White hat and black hat SEO are two opposing views of how to do search engine optimization. In a nutshell, SEO are methods that aim to improve the position or rank of a website in the listings produced by search engines. The benefits of SEO are almost unlimited.

Watch out for SEO Tools and software that is outdated and totally useless. Always research before you buy any SEO software because the search engine Algorithms are constantly changing thereby improving their search technologies to provide the most relevant results for their users. SEO tools for Google, MSN and Yahoo are numerous. SEO tools for press release optimization were also launched by PRWeb at the end of June called SEO Wizard. Search engine optimization is not easy, but with the right SEO tools, your website promotion task just got a lot easier. Blogs are one of the best SEO tools around and some like WordPress are free. Google Sitemaps’ are a powerful SEO tools which you can get free by visiting my website.

MSN has launched a suite of SEO tools to go with their Pay Per Click product Adcenter. There are many SEO tools available on the internet, some are better then others, and some are not. Header tags, proper Keyword density, proper text formatting fonts, start text key-phrase as whole phrases, alt image tag text, links pointing to your site and each page and your domain name itself are some things to pay attention too. Many specialized SEO tools can help you determine the popularity and the competitiveness of your possible keywords and can help improve your search engine ranking particularly in Google.

Writing fresh content for SEO plays a large role in keeping visitors on a web site. Let’s talk unique web page content and SEO content strategy. Finding a good SEO content writer is easier than you think. Just run a Google search or checkout elance.com. What is good SEO Content? It is unique, quality information that your visitors can use and is helpful to them. RSS feeds are an invaluable tool in the SEO content toolbox. If you scrape SEO content and end up scraping a couple spam pages, you may get noticed even more because someone is investigating the other spam pages.

The primary factor that will determine whether your SEO content is “good enough” is the content provided by competing websites. You need unique content that nobody has in order for it to pass duplicate content filters. That’s why it is important to get your content articles indexed before you submit them to the search engines. I think nowadays though search engine algorithms can trace back the content and see who published it first, so at least make sure you publish it to your website or blog before submitting it to article directories.

To strengthen the theme of your web site, you need keyword rich SEO content. SEO content writing tips content writer’s main aim is to create a new written piece which is original, simple, informative and also to the point. Write specific targeted SEO content for the independent pages. Unique SEO content remains king. Showing your visitors you can really write unique, compelling content, your traffic will grow very fast. Earlier it was just content writing but now it is widely known as SEO content writing. However there are some strict rules enforced on SEO content. Once you have visitors, your SEO content should be converting them into customers. With effective SEO content on your website, half of your search engine rank optimization work is done.

Ethical search engine optimization is a must or you will get banned. It’s not if, it’s when. Search engine optimization was and still is fascinating to me. Search Engine Optimization is a crucial part in a websites success. The objective of Search Engine Optimization (SEO) is to achieve high natural search engine placement for relevant keywords or keyword phrases. Hiring an ethical search engine optimization company to rank well in the natural results is essential to long term success.

Your white hat Search engine optimization (SEO) campaign will provide you with a long term increase in targeted traffic and qualified visitors to your Web Site. Visit my site often and add it to your favorites as I update you with the latest news and rumors in the search engine optimization industry everyday. The effects of bad search engine optimization are devastating and very depressing. Each website is unique in its own way and hence your (SEO) plans differ from website to website.

My site has some tips on how to perform search engine optimization (also know as SEO) on your website. I have a free, comprehensive guide to the practice of search engine optimization for those unfamiliar with the subject if you send me an email. There’s a lot of hype out there about search engine optimization (SEO) services. Some are good and some are bad. Read through Google’s terms of service as they have some information on their site about it.

Too often, visual design and SEO are perceived as a mutual sacrifice. Pay-per-click and SEO are targeted to get your website placed as close to the top of search engine results as possible. Pay-per-click cost money, but the clicks from SEO cost you nothing. SEO are considered as the main factors in enhancing the traffic of one’s website. Both, PPC and SEO are important. The truth is, the most rewarding part of SEO are often the slowest to reward. PR and SEO are based mostly on editorial credibility and relevance, not a direct payment for exposure.

SEO are specialized techniques used to optimize your web site, to be Search engine friendly and increase your chances of placing well in searches. There are a large number of companies that adopt a fast and unethical approach to SEO known as Black Hat SEO. The main components of on-page SEO are optimization of the title tag, the headline tag, the body text and the Meta tags. Companies interested in SEO are occasionally not very happy with how their website looks. Programmers with an understanding of SEO are in high demand. As a matter of fact, sites with excellent Search Engine Optimization are making giant leaps in rankings and getting a major boost in free traffic with Google’s new update.

Great web usability and SEO are wasted if folks who visit your web can’t tell that you are worthy of their trust. Those who specialize in SEO are in the unique position of understanding the web in a way that no traditional marketing agency can hope to. White hat and black hat SEO are two opposing views of how to do search engine optimization so if you use one, choose with great care. The second most important aspect for high SEO is the headers. Use H1, H2, H3, H4 headers.

Many of the techniques that can be used for SEO are banned by the various search engines. The benefits of SEO are almost unlimited. Bad techniques of SEO are a strict ‘NO’ – Like same color text as the background and Doorway pages can get your website banned. The five forces of SEO are relevant Keywords, unique Content, clean Code, relevant Links and proper use of Technology. Designing for users and designing for SEO are not mutually exclusive goals. There will be compromise. White hat SEO are techniques that follow precisely the rules and guidelines provided by search engines stand a better chance of receiving traffic and higher rankings than black hat techniques.

For this reason it is important to try to stay updated as far as new SEO are concerned. The off-page elements of website promotion and SEO are just as important. The majority of issues with SEO is very basic and just takes time to be picked up on search engines. Web design and SEO are two very different disciplines, but a certain degree of collaboration is required. It’s easy to see why effective SEO are now very much in demand. Black hat SEO is techniques used to trick or manipulate search engines for higher rankings.

If done properly, the results of your SEO efforts are very impressive. Those who practice what some refer to as “ethical” and “correct” SEO are called White Hat SEO’s. The most important for SEO is to follow the rules and you won’t have anything to worry about.

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