Rocket science

Rocket science

If you're feeling frazzled by the pounding pressures of change management, spare a thought for someone who is probably in an even tougher situation than you are. That person is SkyCity CIO Damian Swaffield. In the six years he has been with the business it has gone from generating around A$350 million (US$257 million) in revenue to become one of Australasia's leading entertainment businesses with group revenues of A$680 million.

Swaffield attributes a good part of his team's success to a close partnership with leading supplier Hewlett-Packard, which is playing a key role in the group's rocketing growth on both sides of the Tasman.

"We want to become Australasia's most popular entertainment and leisure destination, and to be honest we are well on the way to achieving that," he says. SkyCity, listed on both the New Zealand and Australian stock exchanges, recently reported an annual profit of A$104 million.

That's only a A$4 million increase over the previous year, but Swaffield says the figure would have been A$10 million higher if new anti-smoking laws in both countries hadn't been put in place.

Purchases and openings in recent years included an Adelaide casino, a new casino in Queenstown and Hamilton, acquisition of Force Corporation, now rebranded SkyCity Leisure, and a joint venture with Village Roadshow to operate the Village cinema business in New Zealand. SkyCity also has business interests in South America and owns 40.5 percent of the Christchurch casino. It has an interest in the Victoria Hotels group and the Dunedin casino. A Darwin casino was acquired last year.

If that's not enough to stir you, remember that the SkyCity group must operate seven days a week, 365 days a year. Today, SkyCity entertains more than 17 million customers a year and employs more than 5000 people.

It's a scary thought -- huge growth, non-stop acquisitions, a vast increase in staff. And, to top it all, many of the businesses have little in common, except that they in many cases they provide some sort of entertainment. So, faced with all of this change, why is Swaffield still smiling?

SkyCity is made up of a whole range of smaller businesses operating under a single roof, he says. The challenge is to see the businesses operating seamlesslessly from the perspective of customer experience and as a business operation. Visiting a restaurant or hotel within SkyCity should be part of a single experience, as opposed to visiting separate properties on the site. The other challenge is to ensure business and IT are synchronized to capitalize on change, and to ensure that the business can adapt constantly.

"We are in a unique sector," says Swaffield. "We have lots of products, relationships and influences that other companies don't experience or aren't exposed to. We have a highly regulated environment, operating under numerous regulators on both sides of the Tasman. Each regulator has its own nuances and requirements, and we are required to meet every one of them. Sometimes those requirements are in conflict."

Swaffield lists the range of businesses at SkyCity in Auckland: a casino, a chain of restaurants, hotels, a convention business, a carpark and the SkyTower. Each of these vertical businesses has a highly functional fit of solutions to support its operations. Together, they present a mishmash of systems for the support team.

"Generally we deploy customer channel management or revenue management systems by physical property," says Swaffield. These are supported locally, with back office or account systems as a shared service run out of Auckland data center."

Swaffield says IS challenges are no different from those of other large organizations. "How can we ensure the correct skills are available 24x7 to support a complex system environment? How can we ensure we have the right people with the right skills available at the right time of day? How do we ensure our people can provide the right can-do customer experience attitude at 4 am? How do we focus our people on value-add customer-facing activities and not have them simply performing tasks that can be easily automated? Can we manage the limited number of scheduled downtime opportunities available to perform necessary system maintenance?

As with most large sites, SkyCity deploys a number of complex architectures that exist on different operating systems and databases. The fact that they don't necessarily coexist easily has driven Swaffield to look at consolidation strategies wherever possible. One point of focus has been storage and backup consolidation. Swaffield says investment on a new PeopleSoft ERP project has provided the leverage to deliver the storage area network backup initiative. The project, at A$1 million, makes up only a small part of SkyCity's total IT capital investment program across Australasia.

"Interestingly, since its launch in March 2004, the SAN has grown 130 percent and is now mad up of more than eight systems with more than 80 hosts attached.

"For us, one of the main criteria for this project was that it was a proven system. We are not a proving ground for technology," says Swaffield. "And basically we were trying to do an awful lot of stuff in and around the PeopleSoft installation. We had a rapid time line and little room for error."

Part of the challenge in the storage project was to justify the investments. That's why it was folded into a much bigger piece of work, the ERP project.

"We were delivering new technologies and new solutions, and we needed to acquire and develop new skills. Then we had the challenge of retaining those skills and making sure we used the investment as we went forward."

Ironically, one of the biggest challenges was to discover that the new gear was too heavy for the data center floor. A great deal of work had to go into strengthening and putting in new air conditioning to keep the overladen floor from overheating. Finally, having got everything in place, the team found it had to learn the new jargon that went along with the new technology.

"Did it really work? Yes, or I wouldn't be talking to you about it today. From a consolidation perspective we managed to reduce 10 systems down to one. From a backup and storage perspective we managed to reduce 15 distinct devices down to one."

Importantly, backup and restore times have been reduced significantly. What would have taken up to six hours now takes about one and a half hours. Swaffield talks about a 400 percent improvement.

"When you are operating 24x7 any downtime has an important impact on the customer experience and on revenues. The shorter the downtime the better off we are and the more we are delivering in support of our organization. The less interruption to our business, the less interruption to our customer base."

Swaffield says new technology in the storage area network created an infrastructure that facilitated faster transaction times. Those improvements translated into faster interaction for people on the gaming floors and in the restaurants. Further down the line, restaurant customers found their waiting time was reduced.

Meanwhile, total cost of ownership has been improved and storage costs have fallen. And, because backups can now be saved to one system, the overall cost of media has come down.

"We have been able to make utilization and efficiency gains around people. We are now redirecting people away from the non-value-adds, repetitive activity... They can now focus on customer service initiatives."

Importantly, the efficiencies have enabled Swaffield to redirect the service desk from Australia to New Zealand. No longer are people needed on-site in Adelaide or Darwin in the early hours of the morning. That translates to real cost-savings.

"A lot of the issues were not about immediate cost but avoiding cost downstream," says Swaffield. "We factored this aspect into our business case. The project provided a solid foundation for future strategies. We have invested in a well architected, scalable, agile technology that will provide significant opportunity for further investments downstream."

The gains have given Swaffield an opportunity to think about capacity on demand and high availability of the core systems. He sees opportunities to rationalize usage, keeping in mind that the corporate side of the business is the prime user between 8 am and 6 pm, while the gaming area and restaurants are at their busiest between 6 pm and 8 am. The question is how these two distinct sets of infrastructure and capacity needs can share core resources for peak performance. Again, Swaffield sees opportunities to reduce cost of ownership and increase the organization's return on investment.

He can't do it alone, of course, and that's where the partnership with HP assumes huge importance. It's an ongoing relationship that has been going on for several years.

"Some of our earlier initiatives in the strategic sourcing space were designed to remove some of the smaller players from the partner mix," says Swaffield.

"These were players who could not scale with SkyCity. We didn't want to end up outgrowing or outmaneuvering our partners. They had to be ahead of us and more scalable than us."

Swaffield muses on the differences between a vendor and a strategic supplier. The answer, it appears, is that there is a big difference. A vendor supplies products or services when requested to do so. It's a commodity-based relationship. In contrast, a strategic partnership is a voluntary relationship. Neither side needs to be in bed with the other: they choose to get together. Both parties are committed long-term and, to an extent, there is a mutual dependency. Both sides share risks, responsibilities and competencies. Importantly, their work is not based solely around the mighty dollar, nor is it based solely around receipt of IS services. Sharing of information on the way they operate is essential. Most importantly, there has to be synergy. Together, the partnership must add up to something greater than the sum of the parts.

"The relationship with HP is focused on creating value-based opportunities," says Swaffield. "It's not simply based on a contracted statement of work-based interaction. We share a common culture. We have an open relationship. We are good humored. We are good listeners. We are agile in our thinking and we are adaptable, and the work relationships go well. HP has clear insights into our business and that enables it to provide well aligned options and answers to our problems. HP understands our technology requirements implicitly, as it should do. It is engaged at every stage and at every opportunity. It is part of understanding how to address a question as well as understanding the issues in the first place. It is about committing time and effort to understanding our business culture. It's not about us paying for every transaction with HP. It's a win-win situation all round."

It's not all roses, of course. Issues do crop up, but the relationship has acquired coping strategies to work through whatever comes across the table.

Swaffield emphasizes that HP's size helps. It means that it has probably already travelled whatever technology path SkyCity will eventually take. One good example of this is the way HP has been able to benefit the Darwin operation. "The Northern Territory is an interesting place," says Swaffield. "It's a bit like the wild west, a very difficult employment market. It is very hard to get skilled, capable people, either as an employer or through the vendor market. HP has a presence in Darwin and we have been able to leverage our relationship. HP, with 70 or 80 people in the territory, is by far the largest service provider. This has worked fabulously for us, and that lets me feel confident and comfortable that we can deliver our solutions within the shortest possible time."

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