What will be the standout business and technology challenges in the post-recessionary environment? We canvass a panel of executives and analysts on what to do now for the organisation, the ICT team and your career. Deliver customer valueJonathan Iles, CIO, Carter Holt HarveyDuring the financial crisis that saw enterprises pulling the plug or holding off on key programmes, Jonathan Iles and his team were working on "fairly major projects"."In fact, there will be more this year," says the chief information officer of Carter Holt Harvey. As he tells his team, "We are sailing into the perfect storm. So let us batten down the hatches, get those ships ready so that when we go into this, we are highly motivated, we know what we are doing, and we manage to hold everything together."He says with the past year the focus of ICT at CHH was delivering customer value, and this will continue in the next 12 months. "2010 will still be very much moving into value and improving the relationships with our customers."The projects around this range from an ERP upgrade to what Iles calls "very basic things", like CRM and pricing and invoicing systems. "This means our customers, people who buy our wood products, our pulp paper, our packaging; they have a better experience for us so we go for greater market share. That is what really drives most value to the business."As well, the team is preparing for shifts throughout the year. "I expect to see some major structural changes in the business over the next 12 to 18 months and that is going to add to a lot of projects at the same time," says Iles. "We need to maintain the high quality of infrastructure delivery, despite the fact that we are containing costs.""We are driving really hard on infrastructure," he says. "We have made some major savings that allowed us to spend more money on ERP, without increasing the budget.""This is about, 'How do I align with the business strategy? Am I implementing the right strategy to fit the business?'"Like his executive colleagues, the past year has delivered a handful of lessons for Iles. Foremost is, "You need to be ruthless with your business cases." The second is the value of having flexible contracts with key vendors. "This flexibility should enable no-penalty changes to be made -- including the ability to terminate services at no cost," says Iles.CHH renegotiated several key contracts at the beginning of last year to introduce competition into the relationships, with the result that costs for several services dropped significantly. This exercise will be done this year. "When the economic climate changes quickly, having long-term, inflexible contracts can be a major burden," he says.Another key lesson during the economic slowdown was the importance of having variable costs. For instance, says Iles, if the company sells a business unit, there is no proportionate reduction in software and hardware maintenance. "We would like to reduce the cost proportionally. The only way you can do that is by variable cost," says Iles. "Most of our costs are fixed, but we certainly want to move to a more variable cost model," which he notes is the promise of cloud computing.As for post-recession plans, Iles foresees a busier period ahead. "For me, post-recession means a surge of activity and I can see that that is going to be coming."Interestingly, one of his major activities last year was far removed from ICT. Iles joined Pat O'Connell, CIO of Rank Group, of which CHH is a subsidiary, and Glenda Mullany of IT firm The Tango Group, to complete a series of endurance challenges to raise funds for charity. The group's "final challenge was scaling the four highest mountains in the North Island -- Tongariro, Ngauruhoe, Ruapehu and Taranaki mountains. They achieved this in November and raised more than NZ$22,000 for the Kia Timata Ano Trust, a women's refuge in Rodney. (See http://cio.co.nz/cio.nsf/spot/AFD817D770AAD3B6CC25767D007DE7A1?Opendocument&HighLight=2,peak,stop)For Iles, there is a message here that resonates with his full-on schedule at CHH. "It just shows our team we can cope with a heavy workload and still have time to give to the community." Strengthen ICT engagement with the business Paul Nickels, partner, business assurance, PricewaterhouseCoopers NZ Everything is up for review and challenged constantly. This is the "new normal" for today's enterprises, says Paul Nickels, partner, business assurance at PricewaterhouseCoopers New Zealand. Nickels is referring to the McKinsey Report on the restructuring of the economic order and the constant change that lies ahead for everyone.So what will this mean for CIOs? "Get out of their office, connect more with their peers in the business, understand what is going to drive that change," says Nickels. The CIO's task now is to consider how, "they will engage more with the business," he says, and "how do they become a business partner and what areas of value do they see that they can add with their ideas."He says pressure is being placed on CIOs, and all parts of the organisation, as enterprises look at the value of operations and where they might drive costs down.So these types of engagement are important in the coming 12 months. CIOs have to be engaged in those upfront discussions on business strategy, he says. "The more they are engaged in those discussions, the better their ability to influence the direction and the better their ability to really execute what the organisation requires."There is, he points out, always a "strong healthy tension between IT and the business" that some call business alignment. This is manifested in CIOs whose portfolios have expanded to areas outside ICT. "I can think of a handful or organisations now where the CIO is part of the change agent group of the organisation, they are involved in all of the big projects."This is the space Nickels says CIOs should be working on in the next 12 months. It starts with having a bond with business peers. "There has got to be a level of respect for each other's disciplines," says Nickels. "You have got to understand the strengths of the parties and what they will bring."He says CIOs who have achieved this have made time for themselves and their teams to connect within the organisation. They are able to answers questions in regards to their IT spend, benchmarking and cost of service.He says PwC works with CIOs to create a "story board" discussion with their peers. The process enables CIOs to articulate their views on key questions such as, "What is going on in technology at this point in time and what is your plan and what do you plan to do? What has been in your agenda in the last period of time? Where are your areas of focus?"With a CIO's busy schedule, "there is often no time for self reflection". But Nickels says this exercise is important, and CIOs should be able to articulate these points to the business. CIOs who have already reached this stage can then take a closer look at the business model, and see where they can add value. "They need to be braver in experimentation, try new things, and be a little bit more agile."Those who have achieved this have the respect of their peers and their teams have a very commercial view and understanding of the business. "They know where the pain points are. They will be on top of those, and are in a position to offer alternatives and solutions."Throw out the old rules Peter Macaulay, principal, end user practice, IDC New ZealandThis will be a year of frustrating shifts and crazy trends, says Peter Macaulay, principal, end user practice at IDC New Zealand. "Most of the issues we have been grappling with will continue to demand attention, and in some cases evolve into fearsome monsters. Many will mellow and some will fade away," says Macaulay.Of these diverse issues, he picks up three fundamental shifts CIOs will be forced to adjust to -- mobility going "mad", CIOs being "kidnapped" by social networking and the CIO career path demanding attention."The evolution of the CIO into a more effective strategist will increase the risk/benefit spread in the ways that these shifts are addressed," he says.His views were shaped by his discussions with senior CIOs and industry visionaries, and the following IDC New Zealand ICT Top 10 Predictions 2010 (see IDCresearch.co.nz):
From an understood recession to an unknown future: Continued prudence amongst increased opportunities for 2010.
Consolidated buying to become the new government savings plan.
Deconstruction and reconstruction of the ICT industry for growth.
Use of ICT will become critical to CO2 reduction strategies.
The government's ultra-fast broadband initiative will need to be restructured.
Fibre for schools policy will put the use of ICT in education under the spotlight.
Technologies facilitating customer care and retention strategies will receive VIP treatment.
Mobility will enter a new growth curve.
The adoption of cloud computing will take baby steps amongst trophy wins.
2010 will see an increasing number of "managed business outcomes" contracts.
Macaulay says at least four of these predictions will contribute to the rapid shift of ICT to the edges of the business. He elaborates on three of these:Mobility goes mad: "We will see an increased number of personally owned devices with no employer control over brand, model or operating system," says Macaulay. "Just deliver the apps to my Inokberrydroid!"He says higher bandwidth and more capability will ensure that more than 60 percent of applications can be held in one hand. He points out security across diverse devices and platforms is already a headache. Vendors will deliver solutions, but for some external security will be deemed to be the responsibility of the device owner. He points out another trend, "The Disaster Recovery Manual could become two words -- 'Go home'."In many organisations, the decision has been made to pay for staff to provide their own personal computing devices. Often this is used to drive some standardisation. As this trend strengthens, organisations' ICT security and application delivery will become agnostic to operating system and brand. Moving into the cloud eases this issue as the responsibility for these components falls to the cloud application vendor. Says Macaulay, "As cloud applications are deployed the approach to transition becomes more mature, and is frequently easier than a traditional Windows major version upgrade."CIOs are kidnapped by social networking: It has happened, says Macaulay, as he points to the Queenstown Police running its own useful Facebook page (see http://www.facebook.com/pages/Queenstown-Police/36732244172?ref=ts)Enterprises use Trade Me to dispose plant and equipment, and for low volume procurement."The real business collaboration we have been muttering about for 15 years is being delivered out there," he says. "We need to get it in here and quickly for our customers [internal and external]. If we can't deliver, they will, using the tools they are already familiar with."The next demand, he says, is to use the same login and password and configuration tools they use everywhere else. "The shift in security and systems administration will initially be a complex matter, but will become clean and simple by the end of the year."The CIO career path demands our attention: "We need to identify the technical and strategy track leaders and provide the environment and tools to develop their skills. With the NZ Computer Society at last offering some useful qualifications, we have a wrapper to put around our training/mentoring/experience framework.""This year we will see several initiatives which will need CIO guidance to support these tracks," says Macaulay. "We must realign structure and offer better motivation to ensure we retain and develop leadership skills in both tracks while delivering real innovation and fresh thinking."2010 will pose a number of threats for the traditional Kiwi CIO yet an amazing opportunity for those willing to take risks, throw out the old rules and push more decisions out to the business units."Prepare for the new wave of business apps Sam Higgins, research director, LonghausIn discussing the key technology trends CIOs should keep an eye on, Sam Higgins, research director at Longhaus, interestingly starts his discussion on a topic many executives have put on the back burner during the economic crunch -- green ICT."What we saw last year is probably how it should have been -- green ICT is really just part of an overall business strategy, and so CIOs should really engage more broadly on that topic," says Higgins.The green ICT issue came out almost too late in the economic cycle, says Higgins. "The hardware refresh cycle peaked in 2007 according to our Technology Index. The fact that green was a hot topic in 2008 was almost a bit late. A lot of the people have already made their investments."But green technology does not always involve new and massive investments. Higgins notes that at the height of the focus on sustainability, a lot of the strategies cited were not particularly new. "Sustainability is almost a principle -- you should always be green," he says. There is, however, one thing that discussions on sustainability do not typically address -- that of rationalising business applications."CIOs have rationalised to less hardware, but they have not removed duplication within the application portfolio and that is not sustainable either," says Higgins. "You can't sustain multiple applications doing the same function in a business, so sustainability is as relevant in the business application portfolio as it is within the technology layer. CIOs should be looking at their application portfolio and asking the hard questions about what is their plan for renewal for business applications."An area that is also on the CIO radar is the increasing integration of business intelligence to what he calls "the information driven experience"."The modern application is a business intelligence-driven environment. It is information centric rather than process or transaction centric." He cites the case of an immigration case worker. In an information centric environment, the first screen will tell the worker how many applications are in the pipeline, whether there are applications that need to be picked up, or whether the department or business unit is meeting its service levels. For the worker, this means, "I know the context in which I am working, and I have data about the work that we are trying to achieve rather than a list of transactions or being given a hard copy file."He says the consolidation of business intelligence vendors in recent years was not just a competitive move to gain market share in BI. "What is actually happening inside a lot of those business application vendors, is the integration of business intelligence into the front end of the business application. "The information-centric experience is one CIOs need to learn more about because the applications [vendors like] Oracle, IBM and SAP are building today to roll out in the next three to five years will be in that flavour." An area for CIOs' attention is the "as a service" space. This includes infrastructure as a service, software as a service and platform as a service. "What CIOs should do is look for tactical opportunities to evaluate particular workloads and move workloads to the cloud."A migration to "as a service" is done by understanding what the workloads are and what tasks can be done in the cloud. "A lot of organisations are thinking of moving developing and testing in to the cloud. All the big platform vendors are offering those sorts of workloads," he says.This way, CIOs can learn about the business model with the cloud. "It is a great start because it is something the CIO can do in his own backyard and not upset the business. But it also has a direct impact on the business, because the CIO can reduce the time to make changes to the applications," says Higgins.He says people can then start to look at other areas of moving to the cloud like document management, portfolio management and business intelligence. "Anything that is spiky, that ramps up and then ramps down are all good workloads to start with," he says. "A good example I use is when there is a disaster relief. That is the situation where you need to get things up and running quickly."Cut IT 'MOOSE' costsTim Sheedy, senior analyst, Forrester"The CIO is at a point of exasperation about the terms and conditions dictated to them by vendors for the past 25 to 35 years. And they are looking at how do they take back control of the IT spending," says Tim Sheedy, senior analyst, Forrester.Sheedy says emerging sourcing and engagement models are providing a range of options for CIOs to do this. He cites at least three ways for enterprises to cut their IT MOOSE cost, otherwise known as spending to maintain and operate the organisation, systems and equipment.First stop is the cloud. "I believe the cloud has great technology delivery capabilities, as it is also about giving the control back to the CIO and back to the IT organisation, and giving them the buying power," he says. Sheedy does not see a wholesale shift towards the cloud in 2010. But he recommends: "Any CIO who is concerned about their operational spend should at least be piloting some cloud solutions within their business."He says the "real wins" from operational MOOSE are around virtualisation. "I think we are going to see virtualisation move beyond servers towards storage and the desktop in 2010. Some advanced CIOs would start to consider virtualising their desktop environments more so than they already do."Lean software, on the other hand, is basically just software that is fit for purpose and does the job it is required to do. "Typically you buy per component or per capability, so effectively it is suggesting a shift away from the big heavy application suite towards software that just does the job," says Sheedy. This shift in buying behaviours toward a more component-based [solution], as opposed to the suite solution, has been observed in North America and is starting to happen in New Zealand and Australia, he says.Lean software and software as a service (SaaS) go hand in hand, he says. "The idea of lean software means that you need to start looking at different types of ways of delivering and licensing software, and SaaS will become one of the ways that you could consider that."Another model CIOs should look at is managed outcome pricing for projects. Sheedy says in IT and business in general, the focus on contracts for projects is on price, at the risk of damaging the outcome. "You see projects delivering to original scope even though the business requirements have changed and business requirements change daily, weekly monthly, annually. So change is something that needs to be built into your contracts with your services provider," says Sheedy."With a fixed price engagement, you end up in either scope creep hell or you end up getting legal people, or paying extra charges within the contract." For instance, if the project is about decreasing customer churn, this should be the KPI for the service provider. "This model will typically cost more, but you get what you want out of it," says Sheedy. "You get what you want; you get what the business needs."There is incentive there for the service provider to ensure they continue to change the project as the business requirements change, to make sure they meet the final goal of reducing the customer churn.Big projects require a lot of cultural change, he says. "It is not just the IT bits they will deliver [but] the IT capabilities. But you have not made them responsible for driving cultural change. Whereas, if you're concerned about the business outcomes and that provider is also motivated in the same direction, then they will start to be concerned about the cultural change issues."Become the employer of choiceOwen McCall, chief information officer, The Warehouse GroupOwen McCall says when the economy turns around for the better, people will start looking for new jobs. And this has implications for business teams -- both positive and otherwise.Because job security has been "appalling" in the past year, "there have probably been a number of people who have stayed in jobs who have quite liked to leave." But they either couldn't or wouldn't risk making a move. "The positive aspect is when you have unengaged people, they may actually move on and find a job they like to do, and that is good," says McCall.Yet, as McCall points out, there is a downside to this because "you have talented and experienced and knowledgeable people in your business leaving".So what is a CIO to do? "If you haven't already done it, you need to start to build a culture that people want to work with so you can become an employer of choice," says McCall. This means, building a "highly engaged work environment"."It is really about a combination of being truly committed to a person's development. If a person sees that they are being developed, that sends all sorts of signals that they are being valued."He says this does not mean "throwing them on a whole bunch of courses, but really understanding who the people are and working from their strengths so they know where they want to go.""I'm not saying our model is perfect," says McCall. "So we are very focused on that development process on trying to understand people's strengths and aspirations and working on their strengths."The second important thing is recognising what staff actually do. "People won't necessarily admit it openly, but most people would like to be recognised and told that they did a good job.""We actively encourage a process of recognising and acknowledging your peers and the people who work with you, so we strive to get that right, we try to get that positive reinforcement culture," says McCall.At the Warehouse, he says, people can fill in recognition cards ("like little postcards") about a positive work of a peer or colleague. Within the IS team, Owen holds a monthly meeting with a morning tea and gets recognition notices from the rest of the business for the IT team. The Warehouse group also hands out a monthly award for a team that has done something notable. McCall says often it is project-related, but oftentimes it is also about operational improvement projects. He is proud to say the IT support office "has a very good track record" of getting these awards in the past two years. In discussions with his CIO colleagues, McCall says they have similar challenges on employee engagement, and some of them use the same tools and engagement surveys. A good way to start is to get feedback from staff, says McCall. But he has one caveat for CIOs who start this programme. "If you ask them and don't follow through, you are likely to cause more damage than if you never asked them in the first place."Gather more CIO successesRussell Jones, chief operations officer, ASB GroupRussell Jones, chief operations officer, ASB Group, is clear about what CIOs should strive to be better at. Foremost among these are customer engagement and people management. "It is about knowing your customers, service levels and management to support that," he says. "You need to recognise you are providing services to customers and you're providing those services through the efforts of the staff, the teams that work with you and the suppliers that support those teams. You have to have the appropriate levels of and understanding around customers and engaging with customers and providing those services," says Jones. "You can't go and buy a piece of hardware and get success. You have got to have the components and you have got to have the people to make components work. It is the people that are the biggest lever; they are the most important part.Vendor management is another important skill set. Jones notes it is unusual for a business today to do everything by itself, as a lot of the time they are using and working with third parties. "You need the ability to have good relationships [along with] good specifications and requirements, and to make suppliers work within your ecosystem as part of your team." Jones became chief of operations last year moving from the head of group technology position at the bank. "They are both about providing good quality, cost effective services in a systematic and well managed way to a set of customers within agreed service levels, and within agreed service levels and commitment."My role now is really about providing technology and back office support services to the rest of the bank," explains Jones. "Our customers are other parts of the ASB group and we need to provide services to them." The shift, he explains, came as the bank's new chief executive implemented a new management agenda, moving to a "value chain model as opposed to an organisation model of standalone business units".In a banking environment, he says, there is a need to understand risk management. "You need to be aware of good risk management practices, you need to have operational risk practices in place and you need to be able to organise around that and hold people accountable for that and have world-class practices in place."Speaking from the perspective of a head of technology branching into other areas of the enterprise, he says it is important to have "strategic agility"."If you only understand technology, then you are going to battle broadening your horizon. So it is better to have some kind of strategic agility. You can apply the same thinking to other [areas] than technology."Follow CIO New Zealand on Twitter @cio_n
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