Jason Lloyd

Thursday, 21 September 2006 10:16

Signs of dementia

Watching parents grow old is never easy, but there are certain warning signs in aging parents that adult children should be aware of.

Sure, everyone forgets car keys now and then — but paranoia, refusal to take medication, and a sudden disinterest in hobbies or activities are all possible early warning signs of dementia and Alzheimer’s disease.

“Sometimes it’s a result of normal aging, but more often than not it’s a result of some mental disorder,” says Dr. Daniel Chueh, a Santa Ana psychiatrist. “With the elderly, Alzheimer’s is the most prevalent type of dementia. We try to assess the behavior and find out if an obvious behavioral change is the normal effect of aging, depression or dementia?”

Smart Business spoke with Chueh and his colleague, Dr. Mike McKinnon, co-medical directors of the Golden Years Program at Coastal Communities Hospital, about warning signs of dementia and what an adult child can do to help a parent who may be suffering from a mental illness.

What is dementia?
McKinnon: Dementia is declining cognition and a declining ability to care for one’s basic needs. There are 300 types of dementia, of which Alzheimer’s is probably the most common. At the very extreme end of the definition are ailments like mad cow disease, which is actually a type of dementia.

What are the significant warning signs that one or more parents may have a mental illness?
Chueh: If they have any type of physical decline, they should be evaluated. Behavioral changes or changes in attitude are major signs that something is wrong. An example might be a mother who used to be very active and going out all the time with friends but now doesn’t leave the house very often.

Not doing things they enjoy or not wanting to be with the people they normally care about are significant signs of depression or dementia. Other possible signs might be a declining loss of some normal physical functions, such as not driving a car well (or not driving at all), unsteadiness on their feet, or impaired vision.

Early signs would be not doing their hobbies as much, loss of interest in food, decrease in appetite, not going out as much — things along those lines. Of course, there are many more obvious signs like short-temperedness or loss of memory. When they start having memory loss or they wander off away from home and have to be returned by the police, those are much later signs. It is always a good idea to have your loved one evaluated whenever you sense changes in behavior or attitude.

How do you suspect that someone has dementia?
McKinnon: Strong signals of possible dementia include repeating questions, forgetting answers, or becoming more suspicious of others. Another example would be that the person starts accusing people of stealing things from them. A lot of times patients will hide things away, they can’t remember where they’re placed, and they start making accusations that someone has taken those things from them.

Another example is they can’t balance their checkbooks or they can’t make it to their appointments that they normally have made in the past.

In Alzheimer’s, a person’s short-term memory is more impaired than long-term memory. A person with Alzheimer’s will see a family member and won’t recognize him or her because that person has changed as he or she has aged. The parent might recognize a picture of that person from 20 years ago, because that’s in long-term memory, but he or she can’t recognize that person now because it’s in short-term memory.

I often see a patient looking at his daughter and thinking it’s his wife because the daughter looks like the wife did 30 or 40 years ago and he doesn’t have the recent memory of what the daughter looks like.

Something family members can do when that happens is show the parent a picture of the person from 20 years ago. That might help re-orientate the parent a little bit.

How do you assess or evaluate someone for dementia?
McKinnon: A patient needs a global assessment. You need a third person to provide a history of the patient, like a family member or friend. The patient will need an MRI of the brain and lab tests to rule out different ailments that might cause memory loss or confusion. In addition, the person usually needs near-sight testing, which measures memory impairment and helps pinpoint exactly where he or she is having problems and what might be going on.

Is there any way to treat dementia or improve a parent’s situation?
McKinnon: Two classes of FDA-approved medications do help slow the progression of the symptoms, but they are not a cure. Some studies show that a change in diets or supplements can slow the progression of the illness. If a patient has dementia related to Alzheimer’s, sometimes there is treatment.

DANIEL CHUEH, M.D., and MIKE McKINNON, M.D., are psychiatrists on staff at Coastal Communities Hospital. For a patient evaluation, the physicians can be reached at (714) 754-5503.

Tuesday, 29 August 2006 20:00

Commercial properties

Purchasing a piece of commercial real estate today is far different than trying to purchase a home. The number of properties in the commercial world is much more limited, the priorities tend to change, and the amount of renovations that need done are usually much more extensive than changing the carpet or painting the walls.

That is just part of the reason why it is so important for buyers and sellers to seek professional help before entering the commercial real estate market.

“Too many people buy things thinking they don’t need somebody to help them,” says Ron Sparks, president of Colliers Arnold’s Valuation Company. “And then they often don’t make the best decision.”

Smart Business spoke with Sparks about what to look for when appraising, buying or selling a piece of commercial real estate.

How do you estimate the value of commercial real estate?
In today’s market, a lot of segments are appreciating faster than others. Working with a good broker is critical. Make sure you get a broker that represents you and not someone who is just representing the transaction. Make sure they’re looking out for your best interest.

How do you find a good broker?
A lot of people, when they’re buying their first small office or commercial property, make a mistake because they might know a residential broker or two. Some buyers start there, and that’s usually not the best decision.

People who specialize in residential should stay in residential, just like people in commercial, generally speaking, shouldn’t try to sell houses.

Try and get someone who specializes in the product you’re looking for. If you’re looking for an office building, find a broker that specializes in the office market, not one that sells houses or retail properties.

Why is it important to seek help when looking to buy or sell?
The first thing is you want to make sure you don’t pay too much for the property. You want to get something that suits your business today and something that takes into consideration your growth, whether that’s over the next three years or it’s the next seven to 10 years. Just make sure you’ve considered what you need today and what you’re going to need in the future.

What is the most important key when purchasing commercial real estate?
Real estate has always been about location, and I think that’s still the primary driver for someone looking to buy a building. Make sure it’s in a good location, not just for your needs today but for your needs in the future. For some businesses, especially with what the price of gas is now, you don’t want your employees driving any farther than they have to.

What’s the difference when you’re shopping for commercial property and when you’re shopping for residential?
In general terms, you’re going to have a larger market area and you’re going to have fewer options. In any geographic area, there are hundreds if not thousands of houses, with maybe 10 percent of those on the market at any one time. You’ll have dozens of properties to consider.

For a commercial property, especially in the last three to five years, there aren’t that many options. Someone who is looking in a submarket for a particular property of a particular size may very likely have only two or three options. So it’s trying to help them figure out if those are viable options, or if they need to either expand the search area or change the criteria they’re looking for, or simply choose to wait.

In today’s market, it’s much more difficult to find that property to buy commercially than it is residentially.

What is the most important issue buyers and sellers must realize?
For buyers, make sure the property works for you, or make sure it has the potential to work for you. If you buy something and it’s going to take extensive renovations to work for you, that’s fine — just understand that, and understand how long it takes to implement those changes, and how much it’s going to cost.

When you work with sellers, you just have to educate them on the other side of the deal. When a buyer looks at the property, he or she is going to need to make some changes and renovations, and that has to be reflected in the price.

RON SPARKS is president of the Valuation Company at Colliers Arnold. Reach him at (813) 221-2290.

Monday, 28 August 2006 20:00

Grabbing the brass ring

 It was 1982, and Wayne Ferguson was out of work after his former employer went into bankruptcy. But instead of moping about it, Ferguson sold his 1966 Corvette Stingray for seed money and went into business for himself.

He had already spent 17 years in the metals business, but with the economy still digging out of a recession, it was a dangerous time to be venturing out on his own.

“Let’s say I had some trepidation,” Ferguson says. “But I felt good about my customers. They were behind me. Even though they had been doing business with the company I was representing, they made it quite clear they were doing business with me no matter what name I worked under.

“When we did make the jump, we were able to take all the business we’d previously had and really expanded on it.”

Twenty-four years later, Ferguson Metals has survived two more recessions and last year posted revenue of $42 million.

Smart Business spoke with Ferguson about how to survive during hard times and why education has been the backbone of his business.

What is the biggest issue facing a company trying to grow?
You’re always going to have the problem with financing. You have to make sure your growth stays within your fiscal means.

That’s difficult because most of the time, you’re using leverage, and you have to be very careful. You have to be aware of market conditions and not be in the position where you’re too light and not able to cover yourself.

The first time you’re guiding the company and the country goes into a recession, that’s when you really see what you’re made of.

How do you handle recessions?
We weathered (2001) particularly well, but I think the reason for some of that was the ability to get through the recession we had right around 1990 when we were doing an expansion project. While you’re doing the construction, you’re borrowing.

Even though this place was not operational, we still had a payment to make. And everything was taking longer than anticipated. That made it difficult.

How can a company continue to grow during difficult times?
You have to ask, ‘Who are the major players? Who are their subcontractors?’ You break all these things down and go to what I would call the hot businesses, where the quantity is good and the markup is nice.

That’s key to what we do. Knowing the demands our customers have, and for what products and services.

How do you continue to grow Ferguson Metals?
Word of mouth is big. Over the last seven or eight years, we’ve adhered to the Malcolm Baldridge theory, which is the highest award of quality in this country.

We call it the roadmap to excellence. We feel if you are the best at what you do — whether you’re in landscaping or playing baseball - if you’re the best, you will be recognized and have business because people want to deal with the best.

How do you attract and retain employees?
The normal way is to ask for referrals. Depending on the position we have, certainly we try to find acquaintances of people who already work here because they know we give them cash if the person works out.

They also know it’s a direct reflection on them, so they are very careful in who they recommend.

In terms of retaining, we have a liberal tuition program. Each and every person that works here for six months is entitled to a minimum of $3,500 a year in college tuition or training dollars.

We’re saying to people, ‘We value you. We’re committed to the process. If you’re committed to the time, we’re committed to the dollars.’

I’m a firm believer that with education and direction, people are able to achieve things they never thought they could before.

How has educating your employees benefited your company?
If I see something good, I steal it. One guy I know was talking to a buddy of his and knew this guy did a lot of training.

He was spending $8,000 in training. He said, ‘You’re spending all this money on training, what happens if this guy decides to leave?’ His buddy said, ‘What happens if I don’t train him and he stays?’

Think about it. I think we’ve raised the bar for our employees. We’ve raised the bar on things for them to accomplish. And that’s good. I want smart people around.

HOW TO REACH: Ferguson Metals, (800) 347-2376 or www.fergusonmetals.com

Friday, 30 June 2006 07:40

Bleeding-edge technology

Information technology solutions allow companies to empower business. Data is transformed into business intelligence which is crucial for business success. IT solutions can automate and streamline business processes, minimize human error, increase productivity, enable better customer service and guarantee business continuity. The return on investment (ROI) should provide customer satisfaction and contribute to increased revenue. Many companies find themselves wasting money on projects that fail to meet business and customer expectations.

Smart Business spoke with Ryan Stephens, president and CEO of Perpetual Technologies, about how businesses can ensure they are getting a return on their IT investment.

Why are companies struggling with IT?
It is easy to be lured by the hype of bleeding-edge technology while not fully understanding how it relates to a company’s needs. Certain risks are associated with new technology. New technologies often are not fully tested and can introduce unexpected problems. Expert assistance may not yet be available. Deployment costs such as training, testing, implementation and upgrades may be significantly higher.

IT initiatives are not properly aligned with business objectives. Information systems exist to support business internally and externally. Business units and executive management have to be involved in making IT decisions. Regular meetings must be conducted between IT staff and management to ensure that projects stay focused on satisfying actual business requirements.

Companies frequently have no mechanism to measure success. This implies there is no accountability, realistic benchmarks or expectations for future projects. Implementing a grading system will help ensure projects stay on track and within budget.

How do you know where to draw the line with spending?
Definition and control. IT options are endless, but budgets are limited. Companies must analyze their needs and establish goals based on those needs. Once goals are established, a risk assessment is done. Projects should be well defined and opportunity costs weighed.

Some expenditure cannot be avoided. Any significant expense should be clearly defined, analyzed by management and financially justified. By taking a proactive approach to spending, it will be easier to maintain control as your IT needs grow. It is important to note that the newest technology is not always the best. Technology investments that don’t contribute to business success should not be considered.

How do you compute ROI?
Returns are computed based on a comparison of benefits and results versus the total investment. Methods for computing these returns differ among companies. Benefits consist of customer and employee satisfaction, streamlined processes, and enterprise protection among others. Regardless of the method in use, hidden costs must be considered. Hidden costs may include operations, maintenance, training, licensing, hardware, upgrade requirements, data migration, risk of system unavailability and labor.

How can IT success be measured?
Informally, the best indicator that your investment is a success is customer satisfaction.

Formally, there are frameworks for measuring and even managing IT success. The basic return on investment approach, the Balanced Scorecard and Six Sigma are examples of these frameworks. There are numerous resources available that can help you tailor a framework or approach to your business needs.

RYAN STEPHENS is president and CEO of Perpetual Technologies. Reach him at mailto:rstephens@perptech.com or (800) 538-0453.

Wednesday, 24 May 2006 11:45

Data storage management

Network administrators face difficult challenges when dealing with storage management. As businesses grow and evolve, data and the ways to collect it become more complex. As a result, the need for proper storage management becomes even more critical.

“Today’s businesses are highly dependent on their data,” says Dan Wilson, a technical manager for Perpetual Technologies. “As a business grows over time, so does the amount of data and the amount of storage required to maintain that information.”

Smart Business spoke with Wilson about the importance of storage management.

What is storage management?
I’m sure every storage vendor has its own specific definition, but in my experience storage management is a series of policies, processes and tools that an organization employs to optimize and organize its storage resources across the enterprise. It addresses storage resources, data integrity, performance, capacity and disaster recovery.

Why is storage management valuable?
As we are all aware, today’s businesses are highly dependent upon their data. As a business grows over time, so does the amount of data and the amount of storage required to maintain that information. Vendors are fully aware of this and have offered solutions to both manage the volume of data and the costs associated with this growth.

Storage tiers are an example of this. A business can place its most important and/or active data on a high-end Storage Area Network (SAN) and place less important and/or active data on less expensive storage devices. The data is accessible to the business applications regardless of where it physically resides. Tiers such as this can save an organization money as well as allow it to meet its operational requirements and Service Level Agreements.

Vendors offer Virtualization support that enables various storage devices from competing vendors to be managed as a pool of storage. These tools will have a major impact on the storage market. Businesses should strongly consider using these tools when designing or enhancing their storage management approach.

How can a company improve its storage management?
First, I would ask them to assess their storage needs to determine if their current policies and technology are serving them. There must be a process by which they can evaluate their current storage costs with the true business value of the data. Questions such as, ‘Are we storing old and little used data on our high-end storage devices?’ would be logical to ask. An enterprise-wide capacity-planning effort would help to align storage costs with the businesses priorities.

How does security factor in?
While everybody seems to be discussing security regarding the organizations servers and networks, I don’t see a lot of attention being given to storage devices. Information spends the majority of its time on some storage device, for example a SAN. If someone were to make an unauthorized change to the data or find a way to make that data or storage device(s) unavailable, a business could suffer financially as well as legally, to say the least.

Personnel responsible for security must understand each and every component in the enterprise to make certain that everything is being done to ensure adequate security measures are in place. If a component is not being measured or monitored, then it is not being properly managed.

Storage management should be on the minds of every CIO or CTO. On top of what exists today, newer devices like smarter cell phones, PDAs and digital cameras are being delivered to the market place. These devices enable people to collect data in ways that did not exist until recently. This data needs to be processed and stored as information. Each business needs to classify its data and determine its true business value in order to meet its current and future needs.

What data is kept? How it is stored? For how long? What must a business do to comply with legal and business obligations? How will the data be used and by whom? The answers to these and numerous other questions depend on an organization’s approach to storage management and the technology surrounding it.

It helps an organization determine how it can successfully manage ever growing amounts of information. The technology exists today to give managers everything they need to deal effectively and efficiently with their data. Building and maintaining confidence in our business systems is a critical goal for any manager. Properly addressing storage management will go a long way toward achieving that goal.

DAN WILSON is a technical manager for Perpetual Technologies. He can be contacted at info@perptech.com.

Wednesday, 17 May 2006 05:40

Jim Abrams

Jim Abrams had built the world’s largest Weight Watchers franchise and one of the most profitable HVAC companies in the country, and he was ready to retire.

He bought a house in Siesta Key in the 1990s, but after a year and a half, he was bored — and ready to return to work and start over. He founded Clockwork Home Services Inc. in 1998, and the company anticipates 2006 sales of $180 million.

Clockwork builds branded companies in the home services market, focusing on plumbing, electrical, HVAC and roofing. One Hour Air Conditioning, a Clockwork franchise, is the second-fastest growing HVAC company in the world. Another franchise, Benjamin Franklin Plumbing, is the third-largest plumbing company in North America, behind Roto-Rooter and Mr. Rooter.

Smart Business spoke with Abrams, chief operations officer, president and CEO of Clockwork Home Services, about how he defines success and how he finds the right employees to grow his business.

Make a decision, even if it’s wrong. I like to get away from it before I make a huge decision. That’s the most challenging thing in business — that and dealing with personnel. I had an early mentor in life who said, ‘If you went to the track every day and bet every race and you won 51 percent, you’ll be all right.”

If you go into business, you have to be willing to make a lot of decisions and have to accept the fact that a lot of them will be wrong. In the decision-making process, I’ve lost count of wrong decisions I’ve made. In the big ones, there’s always reluctance and always fear of change, but that early guidance resonates in my mind. I’ve missed opportunities and done things I shouldn’t have done, but the next big decision is correcting an earlier mistake.

Lead by setting goals. My business has great people as divisional presidents, and I trust them a great deal. I’d call myself more of a guide than a leader. I help them assist what they want to achieve as opposed to necessarily leading them to that.

I would define leadership as the ability to set goals and put a team in place that’s necessary to achieve those goals and coach the team to the successful completion of those goals.

Define success by your own standards. I read where Vince Lombardi said there’s three things important to him — his relationship with God, his relationship with his family and his career. And the measurement of each of those things over the course of a life will determine success.

That’s a pretty good answer for me. I consider my father, who is 82 years old, one of the most successful people I’ve ever known, and he didn’t achieve great wealth. He’s a very happy man, he served his country in World War II and he’s definitely a contributing American and an individual I’m proud to call my father.

You can’t say ‘Here’s my success, now you must have the same.’

Implement core standards. We have five core standards. One, we practice superior business ethics; two, we guarantee service excellence; three, we want to be the place to be, we pay our people more than anyone in the industry and we offer better benefits; four, we want to provide an equity opportunity for employees that share the vision and passion; and five, we want to become the largest and most profitable home services company. From the beginning, that’s been our foundation. That hasn’t changed since Day One.

Find the right employees for the job. We’re a drug-free company, so that makes it difficult for us in today’s world. We have ongoing drug testing on an every month basis — one-fourth of our personnel is tested each month.

But I’m putting people in other people’s homes. If a consumer is harmed in their home, it almost always leads back to drug use by the workers. That makes it difficult for us. Of 100 people that might respond to an ad, less than five will meet our standard of a drug test and criminal background check.

After that, second is the competence level necessary for the job you’re applying for. Third is I’m looking for people who like people. We’re in the service business. If you can’t smile and aren’t friendly and don’t like people, you’re probably not going to thrive here.

We serve people here at every level. This is truly a service business. At higher levels, I want people with very strong ambitions and a sense of purpose looking to get something big accomplished in their life, because we’re looking to do some really big things here.

Keep the right people when integrating companies. I have had businesses that I’ve acquired that, upon acquisition, my manager had to lay off people. It’s never a pleasant thing, and what dictates it is the amount of work available.

We may buy a company that is financially troubled and tremendously overstaffed. One must correct the mistakes of prior ownership, or else you’re just destined to repeat them again.

Find a balance between work and play. I definitely need the time away from work. I go back to that Lombardi quote again. Having piled up a great deal of money and no one around you to enjoy it with would be a wasteful life.

I do not work 16 hours a day. I will if I have to. But generally speaking, if you have the right people in place, the mark of a really good GM or president or CEO of a company is that freedom of time.

How to reach: Clockwork Home Services Inc., www.venvestinc.com

Thursday, 27 April 2006 11:18

Who will succeed you?

Any owner of a closely-held business should be planning for the day when he or she no longer owns the business. Many business owners, for good and bad reasons, do not take the time or invest the resources needed to put a sound plan in place to transition the ownership of their businesses.

The issues can be particularly acute in family-owned businesses. Statistics show that a large percentage of these businesses do not survive the transfer of ownership to a second generation, and an even larger percentage does not survive the transfer of ownership to a third generation.

“But if the business owner is willing to invest the time and the resources to develop a sound business succession plan,” says Jeff Leonard, an attorney with Roetzel & Andress LPA, “the chances of a successful transition of ownership and control are greatly increased.”

Smart Business spoke with Leonard about succession planning.

What is succession planning?
When most people use the term “succession planning” in the context of a closely-held business, they are talking about a process through which the business owner, with input from professional advisers and sometimes family members and key employees, develops a plan to transition ownership and/or control of the business to someone else.

How can a business owner go about putting a plan together?
Business owners need to clarify their personal goals and the goals for the business. Those goals are the foundation of a good plan.

Some of the questions that need to be asked and answered are: How long do I want to stay active in the business? What are my personal financial needs after I am no longer active in the business? Do I want to keep this in the family? If so, are there family members active in the business, and which of them, if any, can run the business when I am gone? Are there key employees who need to be retained to make sure the business can run effectively? What is the relationship between family members and key employees? Where is this business going? What is the business worth?

The answers to these questions aren’t easy, and they require the business owner to make a very honest assessment of existing resources and potential gaps.

How long should an owner wait before putting a plan together?
It is never too early to start the process, and it should be an ongoing process. As situations change, the plan needs to change. The plan should become very concrete and in advance of the time of the actual transition or beginning of the transition. The other people who will be affected by the transition need to be aware of the plan and, as appropriate, have input.

How many options are available?
Options depend on the goals of the business owner. If the goal is to keep the business in the family, then there are techniques for transferring ownership and/or control to other family members. The ownership can be gifted and/or sold to the family members who will be active in the business. This does not need to happen all at once, but instead can involve a transition of ownership and control over time.

If the goal is to transfer ownership to non-family management, other techniques are available, such as transfers of options to acquire ownership interests, outright transfers of ownership interests, and phantom ownership plans that give the employees the economic equivalent of ownership but not actual ownership. Another technique is an Employee Stock Ownership Plan, which can have some significant tax advantages to the business owner and the business — but being a qualified plan under ERISA comes at an administrative cost.

Another option is to transfer the business to a new owner. This could involve selling to a strategic buyer — one who is in the business — or to a financial buyer. It makes sense to hire an investment banker with experience in the industry to assist in evaluating these options and to assist in evaluating these options and in the sale process.

With transitions that involve selling the business, how the purchase price is going to be paid and by whom needs to be considered. Particularly when selling to family members or othe key employees, the owner will be asked to finance all or a portion of the sale. How to make sure the owner gets paid or what happens if he or she doesn’t needs to be considered.

Who should be involved in putting the plan together?
Owners must realize that they probably do not have the skill set to figure this out on their own. It is particularly hard for the owner to address family issues objectively, so it often makes sense to employ a family business counselor with experience in these types of issues. It costs money — but if done well — it is money well spent. Members of the team should include an attorney, an accountant, a business valuation expert and an insurance expert. As the plan evolves, other professionals — such as investment and commercial bankers — may be needed.

JEFF LEONARD is a partner and business services group manager for Roetzel & Andress LPA. Reach him at (330) 849-6703 or jleonard@ralaw.com. Roetzel & Andress (www.ralaw.com) is a full-service law firm with 10 offices in Ohio, Florida and the District of Columbia.

Sunday, 24 April 2005 20:00

Gut check

Call it a hunch, or maybe a gut instinct, whatever word you use to describe that thing most people ignore. But if Peter Karmanos Jr. had ignored that feeling, he'd likely be dead today.

Karmanos, who turned 62 in March, had the savvy to build Compuware Corp. into one of the world's largest independent software leaders. And along the way, the chairman and CEO had the good sense to save his own life.

He took his mother to Las Vegas in early 2000, just as he does every year. He woke up one morning with a strange feeling, one he couldn't really describe to the golf buddies who would eventually take him to a Nevada hospital at his request -- and those close to him will tell you how strange it was for Karmanos to ask to go to the hospital. But the feeling inside of him was equally strange.

As it turned out, a blood clot was ready to enter his heart. Karmanos easily could have died.

"It took them several hours to figure out what was wrong," Karmanos says. "I passed a treadmill test while I was there, then they decided to do that iodine test. The minute they did that, they wheeled me into the operating room."

After successful double coronary bypass surgery, a surgeon asked him why he had decided to go to the hospital in the first place.

"I really don't know how to describe it," Karmanos responded.

The surgeon told him of another patient who described it as a feeling of imminent doom.

"That's exactly it," Karmanos says, looking back. "Half the people that get that feeling ignore it, and all of those people die."

Five years later, Karmanos laughs about the change -- or lack thereof -- in his lifestyle. But he still listens to his gut.

"I lived healthier for a couple weeks," he says. "Not that it shouldn't have (changed much), but it didn't."

Karmanos has built an impressive history of making just the right move at just the right time. In 1973, he and two friends, Tom Thewes and Al Cutting, each with $3,000 in tax refunds, pooled their money to begin Compuware. Since then, he has expanded the company from a three-person operation into a $1.3 billion IT juggernaut.

Karmanos is also active as a civic leader. He donated more than $26 million to build the Barbara Ann Karmanos Cancer Institute, named after his wife who died in 1989 of breast cancer; the center has been designated by the National Cancer Institute as among the best cancer centers in the United States.

And as an avid hockey fan, he purchased the Hartford Whalers in 1994 and moved the team to Raleigh, N.C., in 1997, renaming it the Carolina Hurricanes. Now, he's entrenched in the bitter NHL labor dispute that threatens the very future of the game he loves.

"I think all sports fans are fed up with the current economics of sports and fed up with the fact small markets cannot keep players," he says. "Can you imagine Ernie Banks not playing for the Cubs or Mickey Mantle not playing for the Yankees?"

Karmanos is part of a stubborn ownership group that is prepared to take back the game, regardless of how long it takes.

"As sports have progressed, it's become more of a business than a sport," he says. "Hopefully in ice hockey, we'll be able to break that trend and go back to running a sport. We have a pretty determined commissioner and a very determined group of owners."

Back to reality

It was Karmanos' determination in the business world that made Compuware what it is today. Now, much like with hockey, Karmanos is trying to break with current trends.

Compuware suffered the same financial hits that bruised other IT companies after the dot-com crash, and saw revenue drop from more than $2 billion before Y2K to about $1.3 billion today. When companies were concerned with the great Y2K conversion, they called Compuware; when the calendar changed and the computers were still running, the calls stopped.

As a result, the Detroit Free Press reported last spring that Karmanos' stake in Compuware was valued at $160.7 million. In December 1999, when the stock was at an all-time high, those stock holdings were valued at $836 million.

"We have an awful lot of people who grew up in what I believe was an artificial environment," Karmanos says. "The anomaly is not the economy we currently live in, the anomaly was 1996 to 2000, when people would call you up and ask you to supply 48 people to help with the conversion."

That change has led Karmanos on a mission to pull people back to reality.

"I keep explaining we have an entire generation of workers who cut their teeth in this business in an artificial environment," he says. "Now we're in the real business environment. Getting the 30-some-year-olds to understand this is the real world is difficult. You have to work harder and smarter than you did before if you want to be successful. It's tough for people to swallow, and I don't blame them. I wish it would've stayed easy, but it's not."

To combat the problems, Karmanos has reinvented Compuware and the way it does business.

"We're more closely aligning professional services with our products, and we're one of the few companies that can help people develop, test and implement major systems," Karmanos says. "We've had to change the way we do business."

When Karmanos founded the company, no one was looking for anything like this. Somewhere between 20 and 25 employees would be just enough to have a successful company without getting too big.

"But I realized that if you have a business, you have an obligation," Karmanos says. "Laws of nature say you either grow or get smaller, but it's very hard to remain status quo. As we became more and more successful, it became more and more obvious we either had to grow the business or make it smaller. You can't have a business plan to remain exactly the same."

So Compuware continued to grow. In 1992, it was a private company that employed 700 people and generated revenue of about $250 million. That year, it went public, and profits exploded. Compuware surpassed the $1 billion mark in revenue in 1998, and by 2000, revenue had soared to nearly $2.5 billion and Compuware employed more than 14,000 people.

"When I first started the company and through the early years of growth, there were about 250 to 350 people that had really bet their careers in this business," Karmanos says. "Over the years, in lieu of large cash bonuses, they took what we called fan stock. In a privately held company, it's worthless. We had never promised anybody we were going public. When we did, that stock ... ended up being real stock, and they made some real money on it.

"And most of them kept working. So they hit the lottery several times over, and they kept working. The world should always work that way."

Back to the top

Reality in the business world usually means the celebrations don't last very long. Following Y2K, when the phones stopped ringing, Karmanos was faced with a gut check once again. This time, he was forced to lay off employees for the first and only time in his life.

"That was the hardest thing I ever had to do," he says. "We had outgrown our ability to keep people."

For once, Karmanos was regarded as the villain with an ax, swinging and slicing at will. But in reality, the cuts were necessary to survival.

"It's much easier growing than shrinking," he says. "When it's good, everybody is happy-go-lucky. Then it starts to shrink, and you end up being a shmuck. The company changed, and suddenly I don't care for the company as much. I care just as much, I just can't afford them, so you have to take the proper steps to keep the company healthy."

But with those cuts behind him -- and a bevy of new ideas in the funnel -- Karmanos says Compuware is poised for an explosive return. The company reported fourth quarter 2004 revenue of $330 million, and Karmanos expects the growth to continue.

"We may never see Y2K quarters again because everybody in the world decided they needed our products," he says. "But it's coming. We're very close."

To truly understand Karmanos, you only need look at how he responded to his wife's illness and subsequent passing.

When Barbara Ann was dying from breast cancer in the late 1980s, all the memories of Karmanos' father came flooding back. Peter Karmanos Sr. had heart trouble and was supposed to be released from the hospital. But he never was. Karmanos Sr. died before his son could do and say all the things a son is supposed to tell a dying father.

Things would be different with Barbara, he thought. So he gave $15 million in her name to the Detroit Medical Center in 1995 to create the Barbara Ann Karmanos Cancer Institute. It has since become an internationally recognized research and treatment center for cancer.

"Their goal is to become one of the top centers in the country," Karmanos says. "At the time, there were only 28 or 29 in the country. There's probably 36 or 37 now, but it's still the only one named after a woman."

Karmanos' work in cancer research extends beyond the center. In 2003, he was named to the Adherex board of directors, a pharmaceutical company that specializes in cancer-related drugs. And in 1996, he received a lifetime membership to the Jimmy Fund, which works to prevent, treat and eliminate cancer in children and adults.

With this giving philosophy to keep him grounded, Karmanos views his business life through a unique lens. There's still plenty to keep him busy, though, beyond his civic responsibilities.

Aside from his company and charities, Karmanos owns two minor league hockey teams, in addition to the Hurricanes. He's also sponsored youth hockey in Detroit for more than 30 years.

Moving Compuware's headquarters from Farmington Hills to a $350 million complex in Detroit in 2003 ignited excitement and hope of rebuilding downtown Detroit. Karmanos is fiercely loyal to the city where grew up, and he claims to have never left Detroit for more than a few weeks at a time.

Karmanos is the only member that remains at the company from the original trio. Cutting died of a genetic kidney disease, and Thewes retired, although he still attends board meetings. That leaves Karmanos to lead the company, guided by decades of experience and his trusty gut.

"I have a solid three, four or five years left, at least. Maybe more," he says. "Some days I wish I was retired, but I still have a lot to do. I have 30 years wrapped up in this. I don't want an artificial day to decide to leave. I want to work our way through the current environment most tech companies are in and get back on a solid growth path and implement the things we've been working on the last three or four years. There's still plenty to do, and I want to be here to see it."

How to reach: Compuware, (313) 227-7300 or www.compuware.com

Thursday, 21 September 2006 13:33

Grid computing

In the past several years, scientific and information technology publications have either encouraged or debated the use of grid computing. Major hardware and software companies have tried to take advantage of this discussion to promote their own “grid” products.

How does a CIO or IT director go about implementing an enterprise grid? Are the grid products showcased in television and magazine advertisements the answer?

With the promises of dramatic IT cost reductions, increased system performance and increased productivity, grid computing is an option that needs to be explored in order to answer these types of questions.

Smart Business asked Paul Singleton of Perpetual Technologies, Inc., about the benefits, challenges and misconceptions of grid computing.

What is grid computing?
The phrase ‘grid computing’ came about from discussions of how the accumulation and delivery of computing power to applications should function similarly to the delivery of electricity through an electrical grid.

Grid computing allows a company to share its data-processing workload among its servers, workstations and storage, as long as excess capacity exists on each of these resources. As workload increases on one server, any grid-related tasks on that server can be allocated to another, less busy server. A true grid can utilize resources regardless of hardware vendor or operating system. No proprietary tool is required for participating in or managing the grid.

How are grids helpful?
Grids allow companies to fully utilize their resources rather than having excess capacity. Grids take advantage of different peak-load times of systems, including differences in time zones. This resource sharing and increased utilization reduces the rate at which companies need to upgrade and replace hardware. Large, expensive servers can be replaced with commodity hardware. More work is done with less equipment, reducing administration and maintenance costs.

Improved resource utilization has another benefit. It allows companies to proceed with strategic initiatives, previously delayed due to the cost of acquiring new, dedicated hardware. In a grid environment, these new systems require less powerful hardware because they can use the excess capacity of existing systems. Likewise, the extra capacity on the new system can be used by existing applications.

What are some common misconceptions about grid computing?
A grid should not be confused with a cluster. A cluster is a set of computers that work together as if they were a single system, but each node belongs exclusively to that cluster. They are not added and removed dynamically. Clusters use vendor-specific cluster management software to coordinate their work, and the cluster administration is performed centrally with the vendor’s tools. A number of these clusters may exist within a grid, along with other stand-alone servers and storage devices, but the clusters themselves are not grids.

A product might make use of multiple servers, but if the product is vendo-specific, uses proprietary protocols to work, or is centrally managed by the vendor’s tools, then it is not a grid.

What are some of the challenges to widespread adoption of grid computing?
For commercial, off-the-shelf products, licensing is probably the biggest challenge. Traditional licensing models include licensing an application for every system on which it runs, or licensing based upon the number of CPUs in the customer’s server. These are not well suited for grid computing. Throughout the day, an application might run on hundreds or even thousands of processors spread across dozens of servers and hundreds of workstations.

Other mechanisms for measuring usage will need to be developed. Creating licensing models that are simple but still acceptable to customers and vendors could prove difficult.

Companies developing their own grid applications face several technical challenges. For example, in a traditional architecture, an application has fast access to the data it requires. Storage and data are shared in a grid environment; this poses a challenge in keeping data close enough to the application so that data access doesn’t become a bottleneck.

Grid security can be more complex than traditional computer security, especially in environments where workstations, as well as servers, provide computing resources for applications. Protocols such as ‘grid security infrastructure’ are being developed to address authentication and secure communication between grid components.

Grid deployment within a company might face internal political struggles, as department heads try to maintain control of their assets, fearing reductions in their head count or budget. These issues are similar to those faced by companies as they centralize data processing resources. As a company adopts grid computing, application users and their managers might also have concerns about sharing their server’s resources with the rest of the company, especially when it may impact application performance. In reality, a grid only uses the server when that server has excess capacity.

PAUL SINGLETON is a senior Oracle consultant for Perpetual Technologies. Reach him at psingleton@perptech.com.

Thursday, 21 September 2006 10:11

Strategic planning is key

With office space at a premium and no signs of a softening market, strategic planning has become critical to companies wishing to lease or purchase a new building. And the sooner the process begins, the better.

“Tenants should be prepared to strike a deal with a landlord or seller far in advance of their projected timing goals,” says Wes Hunnicutt, vice president of CRESA Partners, a corporate real estate service adviser. “Many times, when faced with this scenario, an impulse decision is made without the proper planning and thought process required to make the most educated and important business decision. This places the tenant/buyer at great risk for inefficiencies in the space, building and workflow.”

Smart Business spoke with Hunnicutt about the importance of strategic planning and when the process should begin.

Why is strategic planning important?
In this market, with vacancy rates reaching an all-time low of 6.7 percent for Class A office space, it is critical that tenants begin evaluating their business and surface the internal business factors that are driving their real estate needs. With little space coming on line within the next 18 to 24 months, a softening of the market is not in the foreseeable future. A company’s real estate service provider should be pro-active and intimately understand the company’s direction as it relates to lease expirations, market inventory, and expansion or contraction goals, along with other important key factors.

How will strategic planning shape a company’s future occupancy?
A company should look to its real estate service provider to perform services that extend far beyond surveys, market information, tours and proposals. The companies of today are faced with making difficult assumptions on ‘where the market is heading.’

Professionals providing real estate services can begin evaluating a company’s efficiency in layout, specific placement in product type, and overall company workflow — all factors that shape occupancy costs.

This strategic evaluation typically takes place one to two years in advance of any lease expiration. This exercise with the real estate professional and the company will produce the company’s current and future projections for its specific space needs.

Why is it important to begin the process so far in advance?
As vacancy rates and available buildings decline, fewer options are introduced to the market. Larger users of space are typically more impacted due to the already minimal alternatives.

Tenants should be prepared to strike a deal with a landlord/seller far in advance of their projected timing goals. Many times, when faced with this scenario, an impulse decision is made without the proper planning and thought process required to make the most educated and important business decision. This places the tenant/buyer at great risk for inefficiencies in the space, building and workflow. It is essential to have conducted this exercise prior to any consideration of evaluating the market. This will ultimately reduce variation and improve the quality of the process.

Does strategic planning solely emphasize on the amount of space a company should occupy?
Strategic planning will emphasize many different characteristics of an organization. It is oriented toward the future, and focuses on the anticipated future of the organization. The premise is based on the analysis of foreseen and predictable trends, as well as the analysis of internal and external factors that shape the company’s real estate.

Strategic planning will not only shape and define the future real estate goals in an efficient form, but will align an organization with its environment. This will provide a framework and direction to achieve the organization’s desired future.

When strategic planning is most successful, it will influence all areas of operations, becoming a part of the organization’s philosophy and culture.

What would be the first step for an organization to begin this process of strategic planning?
The organization should interview different real estate service providers that are familiar and capable of establishing a comprehensive approach to strategic planning. Once the organization has selected a preferred service provider, the real estate team should become intimate and fully understand the companies’ business goals and objectives. An effective strategic plan develops a real estate model that supports and connects the real estate objectives to the corporate business plan. The organization and real estate service provider will then collectively work together to establish goals and objectives that are important to the company. The strategic planning phase is a process and not an event.

WES HUNNICUTT is vice president of CRESA Partners, specializing in the acquisition and disposition of space on behalf of office and industrial users. Reach him at (949) 706-6600.

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