I.

A short history of Gulf Finance House Gulf Finance House (GFH) is one of the most successful and innovative Islamic investment banks in the Middle East. GFH specializes in the identification and development of initiatives that unlock opportunity and accelerate economic growth. With a focus on the conception and delivery of high value economic infrastructure projects currently valued at over US $20 billion GFH is set for another watershed year (GFH official website). GFH pursues a unique business model that consistently outperforms the market, delivering high returns on client equity in successive projects as evidenced by the 61 % increase in profits to US $340 million during 2007. The GCC investment community holds GFH in high regard and continue to demonstrate the faith they hold in our ability to maintain a pipeline of high value initiatives. GFH has several product lines, ranging from retail banking up to highlevel investment banking. However, the current thrust of the business lies with its high value projects, which are both extremely visible as well as beneficial to the communities where these are located. II. The focus of this paper The author has been given the freedom to choose the thrust of this paper; and as such, this paper then focuses on operations management improvement and implementation. However, with such a broad topic, it would be best for subdivisions to be delineated, thereby creating a more profound appreciation of the specific application of the theories discussed in the classroom. A. Introduction Obstacles facing companies in today's hyper-competitive global markets are seemingly more complex than ever, to the point that managers must rethink many of the basic principles of good operations management, (Hayes, R. et al, 2004). Operations management is a systematic process of managing routine and non-routine operation and maintenance tasks in order to achieve desired results (Arasmith, S. et al., 2004). Based on what has been mentioned organizations today must be able to deal with their growing complexities in management using effective Operations management. Gulf Finance House, is not an exemption, in order to compete in the ever changing and ever challenging business world operations management must be employed.

The following discussions, presents strategies on how GFH implements operations management in its organizational challenges, which are beneficial to the company.

B. The Problem encountered by the organization At the onset, it must be understood that GFH encounters several problems all throughout the organization and all throughout its product line. However, in the interest of brevity and this paper, only a specific problem will be tackled. The very nature of investment banking lends itself to a project-based operational environment, thus increasing the complexity of the tasks themselves, as well as the requirements on the personnel involved in each project. The problem is simply said: What are the processes required in order to support the development of products and services that meet the requirements of the project? However, the problem is magnified by the number of concurrent projects and further made more difficult by limited resources and the extent of the company’s infrastructure. Dr. Wong (2007), in the instructional module, points out the fact that investment banking requires a larger amount of product (and coincidental process) variety and coordinating a variedly skilled support workforce. Specifically, the problem lies not solely in creating the desired product variety, but also in the availability of qualified skilled personnel and structuring of their tasks in order to maximize the current skill set while allowing for further growth. Operational Management plays a significant role in this case through process design as well as job design. The module acknowledges this fact by highlighting the relationship between these two (Wong, slide 71). Additionally, OM theories are applied to make available all the necessary inputs required to complete a project, within the specified time and budget (Cohen, M. A. and H. L. Lee. 1989) C. Analysis of the Problem It would be easy to dismiss the problem as one simply caused by the lack of skilled personnel or the lack of commitment, but there is more to this problem than shortages or absenteeism. This is in itself not the cause, but a complicating factor that highlights the underlying problem.

In the several projects of GFH, there have been several instances wherein the company has been tasked to manage the entire project, from design all the way to completion, including all related supply and value chains. The heart of the problem lies in the specific design of the processes and supporting jobs for each project among a plethora of other projects. While customization may be strength of the GFH portfolio, it also brings its share of pitfalls and constraints. Each project is in itself unique, even though designs may be shared, the circumstances and very nature of the project would set it apart from the rest. In this sense, creating a project would also mean the creation of tasks that are unique to it. It must be made clear that GFH is not involved in the actual construction of the infrastructure projects; rather, it plays the role of both broker and client at the same time. And in all cases, GFH also plays the part of service and product provider to its own clients, lending itself to the application of vertical integration. Operations Management, in each individual case, is then tasked to create supporting work methods, drafting of procurement policies and corresponding standards, and the design of the supply chain in order to ensure that the project will meet its deadline. With this perspective, it may be as well possible for each project to have its own set of operations management processes, policies and guidelines. The very cause, then, is in the lack of a set of standardized procedures and common work processes that are needed to ensure that the necessary resources are scheduled and allocated properly across the different endeavors. The problem does not lie with the operations management in an individual project; the problem lies in the operations management of the collective projects at the back office level. The coordination of several disparate tasks over multiple concurrent projects would make for a herculean task of monitoring, tracking and reporting the progress in each, and not to mention the task of allocating and rotating key resources among and between each project. Back office tasks concerned with the coordination and allocation of resources usually conform to the project, instead of the opposite. As mentioned earlier, this is further complicated by the inclusion of human factors into the project itself. In the case of GFH, several other unrelated factors leading to the shortage or unavailability of key

human resources only serve to underscore the lack of standardized procedures and common work processes. Reliance on key human participants concentrates responsibility and accountability on these individuals, and the subsequent unavailability of a single key person would cause a cascade of delays and/or failures on the dependent processes and personnel. Other complicating factors would be the geographical and temporal distribution of the projects, as distance and time zones would also have to be factored into the complexity of the entire projects team. For example, multiple construction teams in different time zones would have to coordinate with back office operations in a different time and place, and then consequently require design supervision or executive approval from individuals in a different geographical region and time zone. D. Prospective Solutions The simplest approach would be to manage each project separately and autonomously, but this would entail much more manpower and financial resources. This would also create widely varied processes that will make it difficult for management to monitor and report on progress. Also, this would make operational management conform to each of the individual projects, which then makes it more difficult for coordination. Even though each project may be unique, the core tasks that need to be accomplished by the back office in each remain essentially the same. Infrastructure projects may differ in design and location, but the tasks needed to initiate, plan, develop and operate the project share more commonalities than would initially appear (Carter,M 1997-2008). Simply stated, the common core tasks of each project should conform to a standardized back office operation, as operations management enables better coordination between core businesses, by employing scientific methods and techniques to predict future requirement, both qualitative and quantitative (Cooper, M. C., and L. M. Ellram. 1993) This has to be taken with a grain of salt; the conformity to the back office operations by project management should not be based solely on the internal workings of the back office. There should be a compromise point for all the commonalities between projects and the back office. In many mega projects, Operations Management involves the setting up of effective control measures in the initial stages. This helps to assess the performance of the installed systems and components. The main aim is to ensure that the project has been executed as planned and has the capacity to deliver the predicted results (Tandem,1996).

To this effect, standardization of tasks, the creation of commonalities, and the modularization of work of each entity involved should be the proper approach. Proper job design and work organization are key to understanding the commonalities that exist across the different projects, and would serve as a basis for the work assignments for subsequent ones. Inasmuch as the back office provides support, that support should not blindly conform to project management nor should project management blindly conform to the processes of the back office, as another important aspect of OM is coordination. It strives to achieve better coordination between the various entities related to the project. These include the suppliers, project managers, site engineers, technicians and others (Schwarz, L. B. 1981). Moreover, though it may be frowned upon, a kind of redundancy of work should be implemented; rather than using the term redundancy, a system of shared responsibility and knowledge must be put into place in order to alleviate the effects of other complicating factors. In essence, the sharing of responsibility and knowledge across several members of a team reduces the reliance on any one single person (Tandem, 1996). Doing such allows GFH management to proverbially hit two birds with a single stone, as understanding the commonalities allows for proper process and job design at the support level. Documentation of the operational processes is also of paramount importance. Operations documentation is online or hard-copy information the staff needs to run the systems, including manuals, contracts, standards, procedures, service-level agreements, online help files, system configuration diagrams, schedules, and recovery plans. This documentation will prove invaluable in instances wherein problems are encountered, as well as when new staff members are brought on board to join projects in mid-stream. Lastly, one of the highlights of operations management is the development of contingency plans, in order to provide a heads-up in the case of untoward incidents. In the case of GFH, contingency plans are not only limited within a single project, but extend across the entire project portfolio, including the shared infrastructure between each project. E. Considerations in the Implementation of the Prospective Solutions There are several real dangers in trying to implement the prospective solutions, and each of these shall be discussed briefly.

1. Spreading of human resources too thinly. While it may be desirable to have a single, well-coordinated team handle all of the concurrent projects, one has to understand that people, no matter how smart or talented they may be, can only handle at most two large and complex projects at a time. One may be tempted to allocate one project management team, for example, into several infrastructure projects. In fact, several small projects may as well be more tedious that one single large project, as attention and time has to be distributed in such a way that no project would suffer. Proper job design (Wong, 2009) not only involves the tasks that one must perform, but also the environment and circumstances in which and by which the jobs will be performed. 2. The scheduling of resources. One project requires the careful monitoring of the resources allocated to it; but in the scenario involving several concurrent projects, the juggling of resources becomes an even more difficult task. In an ideal world wherein resources may be allocated solely to one project, several concerns such as the scheduling of financial resources is negligible, as it is only limited to one. But in the case of GFH where several projects share a common financial backbone, the scheduling of receivables and payables among and between the different projects is a major cause of concern. 3. The under-appreciation of how the back office supports large highprofile infrastructure projects, and vice versa. One of the key problems for operational and strategic managers is letting employees and first-level management appreciate the interdependence and interrelationship of the back office to the flagship projects, as well as letting project management personnel understand and appreciate the standardization and support of the back office personnel (Gaither,N. 1987). Traditionally, the back office of banking institutions has been linked to the image of retail banking, while project management in investment banking remains separate. In the case of GFH, where retail banking takes a back seat to investment banking, the back office takes a more pre-eminent role in the support of such highprofile endeavors. Developing a central operational strategy to accommodate both and find a means to get all employees on board is a more delicate and difficult task than appears, but is also beyond the scope of this paper.

4. The design of the contingency plan. A balance between economics and contingency has to be struck as it would become immoderate, in terms of economics and resources, to create contingency plans for each project and allocate resources to each. It would also be against best practices for all projects to share only one contingency program, as this may reduce the effectiveness and responsiveness of recovery teams in the event of failures in one or more concurrent projects. 5. Flexibility to accommodate changes. In the world of investment banking, changes in the economic conditions would thereby force GFH to conform to these aforementioned changes. This is more evident now as the world faces the global financial crisis, where projects and financing become more sensitive to any small fluctuation. Changes may also be introduced by the changing needs and demands of the clients and their willingness to continue with the current projects. Changes to other entities in the value chain, such as contracting and design companies, affect GFH quite significantly. As such, the back office operations of GFH should be able to cope with the changes in a responsive and cost-efficient manner. The design of operational processes should allow for enough flexibility to accommodate the changes in and to any one of the entities involved in the GFH value chain while allowing for consistent operational efficiency. F. Perceived Benefits It must be understood that there is no one single way of tackling and solving the problem, as there is no one best way to do anything (Tandem, 1996). Operations management is thus the day-to-day implementation of business strategies and tactics on the ground. It seeks to reduce costs, enhance quality of products and services, and thus gain a competitive advantage. It calls upon different branches of engineering and even mathematical modeling to develop the best operating environments and practices. (Thackhapilly, G. 2009) By finding a compromise point between project management and the back office, the standardization of tasks will provide a common, stable platform that will provide efficient and effective support to project management. Further refining these support processes to provide the same kind and type of services despite the type of project involved

will, in the long-term, enable project managers to have a stable and consistent base for all their prospective and current projects. Moreover, the information gathered from understanding the operations of the back office with respect to supporting project management will provide operational strategy planners with a more realistic idea of what actually happens at this convergence point. This, in the hands of empowered management, would assist greatly in the development of the over-all corporate strategy of GFH. In closing, this paper would like to borrow the words of the Economist Intelligence Unit (2007), by stating that: “Future success requires inspiring leadership from men and women who believe in the power of operational innovation. But it also requires better training of managers in operational skills. Unfortunately, operations are often perceived as being less than glamorous because they are frequently associated with cost reduction rather than revenue growth. This is a shame—and, perhaps more to the point, a misperception.” And finally, “Companies need to think about their operations in a new way. They should look at the extraordinary examples of firms like Dell, Toyota and Southwest Airlines, and realise that these businesses are beating their competitors not so much because of what they do but because of how they do it.”

References: 1. Arasmith, Sk et al., (2004), "Operations Management Part 1", ACR Publications, Elm St. SW, Albany 2. Carter, M. (1997-20080. “Field Guide to Nonprofit Program Design, Marketing and Evaluation”. Quorom Books, Westport Ct. 3. Cohen, M. A. and H. L. Lee. (1989). “Resource Deployment Analysis of Global Manufacturing and Distribution Networks’, Journal of Manufacturing and Operations Management. 4. Cooper, M. C., and L. M. Ellram. (1993). “Determination of NearOptimal Stock Levels for Multi-Echelon Distribution Inventories”. 5. Gaither, N. (1987).”Production and operations Management – A Decision making and Problem Solving Approach”. International Thompson Publishing. 6. Gulf Finance House. 2007.Strategic Human Resource Plan. Kingdom of Bahrain 7. Gulf Finance House.2005. Why People leave. Kingdom of Bahrain 8. Hayes, R., Pisano, G. Upton, D. & Wheelwright, S., "Operations and the Competative Advantage", 2004, Harvard Business School. 9. Schwarz, L. B. 1981. “Studies in Management Sciences”. Sine Nomine. 10.Tandem Non-Stop System. “Introduction to Non-stop Operations Management”, Release ID 125507, USA. 11.Thachapilly, G. (2009), "Operations Management Enhances Competativeness in Business Managemen." Suite101. 12.The Economist Intelligence Unit (2007). “Operational Innovation: Fortune Favors the Brave”, The Economist. 13.Wong, C. (2007). “ Introduction to Operations Management “. Module Overview. The University of HULL Website. Gulf Finance House official website.2008. Available at: http://www.gfh.com

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