But, as Franklin points out, information technology is critical to its daily operations and sustainability."We have quarries but you can't work without technology. You can't work without knowing how many trucks are going on this route, how much material you will need for the concrete plants."
"Thirty years ago, probably, you would say we will put five trucks over there," says Franklin. But not at the company's current scale, with 500 employees across five subsidiary operations mainly in the Auckland Region, and further sites in Waikato and the South Island.
Franklin has a firm grounding in IT, having been chief executive of Vector, and general manager of IBM Global Services in New Zealand.
Chief transformation officer
In October 2010, seven months after Franklin moved to Stevenson Group, his former CIO at Vector, Andries van der Westhuizen, joined him as group IT transformation manager.Franklin says having "transformation" integrated into the CIO title "is a signal to transform the organisation". "IT was starting to become very decentralised and when Mark Franklin came on board, he moved towards a shared services model that will be run centrally not just for IT but also for other areas like finance," says van der Westhuizen. The vision includes changing the technology platforms.
"Mark knows the advantages from using the right technology and he is changing the company," says van der Westhuizen. "He sees IT as one of the building blocks to achieve what he wants to achieve.""When I arrived at Stevenson, IT was seen as, 'if you can bypass them, bypass them' because it was just a stumbling block," says van der Westhuizen.
The two executives say the group is already halfway through an exercise of the transformation programme for business technology across the group.The biggest change will be around the financial system, van der Westhuizen says. The group ERP, which is mainly for finance, is JDE 2000 version that was implemented in 2003, with F2 (two separate instances) and Accredo.
"We are currently looking at Microsoft Synamics AX 2012, the latest version of JDE and SAP All-in-One to replace the four financial systems and improve our capability on asset and customer management," he says.The group also replaced its "fragmented" WAN, a move that will allow it to consolidate its systems and share information in a cost effective and reliable manner.He says the group still has a mixture of Office programmes with the majority on 2000 and 2003, but with 2007 and 2010 versions also deployed.
A few "satellite" sites (companies) are running different versions of Microsoft Small Business Server."These sites will be collapsed and integrated into the 2008 Active Directory. We will then bring every site onto Office 2010. This is where we might follow a hybrid model between Microsoft 365 Office (the cloud version) and locally installed Office 2010, depending on the needs and mobility requirements of the users," he says.This was a much better situation than a year ago. There were, for example, eight different email environments across the group. "The email environment was in a shambles with different solutions in various stages of deployment or decay."
There was an MS 2000 on-premise exchange with an antiquated Mail Marshall, Lotus Notes deployed to a small number of users with BlackBerry phones and Gmail was used to push mail to the phones. The "satellite" sites were also running their own email on Microsoft Small Business Server.The first stage, he says, was to implement business productivity online services (BPOS) and give more staff access to mobile email (smart phones and iPad). He says this gave IT the opportunity to remove MS 2000 on-premise exchange, Lotus Notes, Gmail and the BlackBerry environments.
Stevenson made the bold move to be the first in New Zealand to migrate from BPOS mail to Microsoft 365 mail early in December. "Microsoft Office 365, Active Directory 2008 and the new WAN will give us the ability to migrate the remaining satellite sites into the new environment, where we can realise the synergies of the use of a standard commodity IT environment across the group," says van der Westhuizen.
Change management strategy
Van der Westhuizen was the first executive to look after IT as a group. "My function is mainly change, bringing new things, investigating new things.""The challenge for transformation and change [is] if you don't do it regularly, people will settle and they will be 'safe'. They will be able to build the walls around and live in this perceived utopia. Then it is so difficult to change."The way to manage this is to bring in change or transformation constantly, he says, and show the people the benefits of the change they will otherwise resist.Van der Westhuizen says the three pillars of a successful initiative are: people, process and technology."You need to keep people on board, and you need to make your processes clear," he says. Your technology or your tools -- can be a spade or an ERP system.
"But you need to have the right tools. If you have just got the tool but people don't know how to work it, then it starts to fall over."He took on a phased approach to change. "I didn't go and just grab everything," he says. "If something works right now, leave it until we have got the foundations right."He started "from the bottom", Active Directory. He says he checked out what was the best option for email as the whole group had at least four email systems. "It was just a bit of a nightmare and the first challenge was to move us to a single email platform as a group.
"The move to BPOS gave the staff immediate access to their email on mobile devices. "That was a small change from an IT perspective but the business benefit was huge."The same approach was used when he reviewed the desktop and mobile environment. He found most of the units were five years old. "I convinced a few guys to have just PC on their desktop and an iPad. I don't need to roll out a laptop and it is more or less the same price. They love it and it is cooler."A seat at the tableVan der Westhuizen finds it an advantage to work with a CEO who understands business technology. "Getting that [support] from the top just makes my life easier," he says, "On one hand, it makes my life a little bit more challenging because that means IT needs to perform."
Franklin recalls when he was with IBM, he met with some CEOs to discuss major technology trends, and got the response that IT was a "second order issue"."It is a code word for 'I have no idea about it', so it becomes a second order issue," he says. He is adamant CIOs must have a seat at the top table.
"They are an essential part of the executive team, he says. "I have seen many IT people who are part of the finance team, or the property group. The IT person is really critical because you [either] have got a clunky IT system or you have got something which works.
"When CEOs tell him that they have too many people reporting to them as a reason why IT is reporting to another executive like the CFO, he advises them to change the structure. "Have the important people report to you," he admonishes. "You can have one to three persons in operations reporting to you but you need to know how the rest of the business is going to work -- how do you look after your people (HR), your technology (IT), and what is going on with the money (finance)."
From contract negotiation to IT
Van der Westhuizen is from the growing breed of CIOs who have a business, rather than technology, background. Before he and his family migrated from South Africa to New Zealand, he specialised in contract negotiations.That was 15 years ago, and he considered the move as a "late OE" or overseas experience for him and his wife. His first local position was as contract administrator at Mercury Energy. He moved to IT when Vector and Mercury Energy split and he became project manager -- information systems at Vector, eventually becoming CIO, with the title GM information technology.He admits negotiations are almost like a "hobby" to him, and that his children sometimes "run away" when they walk into a shop and he starts talking to the seller. "They know how these conversations go," he says, smiling.
When he moved to IT, he saw some advertisements for jobs that would have used his skills in contract negotiations, but he decided to stay put in ICT. "I have started a new career," he says.Franklin describes a useful exercise conducted at Stevenson to underscore the role of IT in the enterprise and introduce some of the changes that are planned. The heads of the different businesses were asked to draw a graph of the IT systems they were using on the white board. The result, he says, was a "massive diagram". When they showed it to the group, some of the executives added some more items, and told them of spreadsheets they are using on the job.Franklin says it is important to show them the systems they currently have and then van der Westhuizen showed how the systems should look like after implementing the transformation programme.
Franklin says the problem is that some people may have "pet systems" that they have been using for years who would say the plan is good "except, don't touch [these] systems".But van der Westhuizen says that in this scenario, "you need to show them the bigger picture."Van der Westhuizen says a key part of IT's job is to educate people. "It is important for IT to tell people what they are doing."
"IT's attitude just needs to change," he says. "Mobility is almost a game changer for IT. Anybody who is a user of IT can pick up a device and can start working.""IT can not say 'you can not do that,'" he says. "What IT can do is explain how it will impact security or meet critical standards," and tell staff how it can get to this stage.
IT is like a balloon
As for key issues for CIOs in the upcoming months, van der Westhuizen says, "You need to show the benefit of that change at the end of the day."Do you spend a dollar on a concrete truck, on the tyres or on a PC? Which one will be the best for the company if we need that tyre to make more money we do that. If it is a PC to make money or better processes, then it is the PC."
"Since 2008 there has been a lot of cost cutting," he continues. "I think the next stage is this -- where IT can really play a good role is how we can do things better. Let us get rid of the clutter and be very clear on what we want to do."He says an area he is looking at in the next 12 months is the "hybrid cloud model", which applications should be on the cloud and which should be on premise. The "third leg" of this model is mobility.
"The workforce is getting more and more mobile," he says, and in the middle of this is information security. "The hybrid model is the most appropriate one for most businesses," says van der Westhuizen, but there is no single model and it will depend on the needs of the enterprise.
"A CIO needs to be flexible, adaptable to change."
"IT is like a balloon," he says. "You make sure the balloon is inflated and then you mould it depending on the needs of your company and your customers. If you want the company to expand, you can just inflate the balloon because your core systems are there.
"You can inflate or deflate a balloon without the need to change the inherent structure. The commodity portion of IT should have the same characteristics."
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