Embracing a changed world

Embracing a changed world

What does it take to step up to the new challenge CIOs face as business strategies? Speakers at this year’s CIO Summit share both practical and innovative insights.

The role of the IT leader is getting progressively more complex as we look into the future. But that doesn’t mean you can neglect fundamental things you had to achieve in previous times. This is how Dr Joe Peppard, professor of information systems at the Cranfield School of Management, tracks the evolution of the CIO role from chief technologist to business strategist.

CIOs face a raft of leadership challenges, he says. These include securing engagement and active involvement of business colleagues in IT issues, particularly in decision making and value realisation; demonstrating and “proving” value from IT spend; overcoming the IT stereotype and building the IT leadership team.

He also underscores the importance of having “the right conversations”, essentially developing relationships with “the right people”.

The CIO needs to answer the following question: “Are you a business leader with special responsibility for IT or do you see yourself as an IT leader who is delivering to a business?”

Peppard says a number of CIOs have innovation as part of their portfolio. He recommends launching initiatives to “spark” ideas from across the organisation, calling the process “manufactured serendipity”.

Another suggestion is to create a governance group composed of external and internal people.

“Bounce ideas around this group,” he advises.

The final lesson, he says, is about accepting failures and learning from what has not worked.

Innovation as a responsibility was raised at the conference in response to Peppard’s presentation. Ben Robinson, CIO of Paymark, asks: “Why do you innovate? Obviously not to lose money. You innovate in order to stay relevant.”

Owen McCall, ICT strategy consultant, says discussion on innovation is consistent with driving cost efficiency with IT operations.

“The starting point was about being an efficient and effective IT shop,” says McCall. “You keep the money so you can spend it on innovation and other projects.”

Laurence Millar, independent government advisor on ICT, says innovation need not be expensive. It could be done with a small number of people with lots of energy and dedication.

Peter Macaulay, conference chair, ended the conference with this call: “Innovate the living daylights out of your CIO role.”

Visit CIO Facebook for photos of the speakers and delegates at the CIO Summit.

Expenses leader board

Andy Lark, the expat Kiwi who has been heading large enterprise marketing for Dell, delivered his last conference presentation in that role to the CIO Summit. As of July 1, he is chief marketing officer for the Commonwealth Bank of Australia (CBA).

Speaking to the Summit on its first morning, he took up a number of themes that other speakers were to return to in the next two days: the need for today’s companies — “Enterprise 2.0” — to be more agile, to shift from day-by-day control to mature governance and to change from an infrastructure focus to an information focus.

“Consumerisation” of ICT through employees’ acquisition of smartphones and tablet computers is a related challenge. Communication is now done on Twitter, Yammer, Chatter and Facebook; email is moving towards the same obsolete status as the fax. Chatter is certainly the way to get a message to Dell founder Michael Dell, says Lark.

These media are where the company must listen, he says, for feedback about its reputation and products, as well as the challenges and successes its staff are facing. Lark referred to Dell’s initiative, subsequently mentioned by IDC’s Claus Mortensen, for monitoring any mention of the company on social media.

With all these shifts, it makes no sense to enclose the digital natives entering your company in an office cubicle and forbid them from using DropBox.

Expenses should not be controlled too rigidly, continues Lark, but simply exposed; every receipt should be scanned and IT should automatically put those records up and generate a leader board of people claiming highest and lowest expenses. “Believe me, people will become really efficient about how they expense their money.”

How should you control the inarguable risks around social media? Train your staff to work within sensible guidelines, he says, and give them a role in deciding those guidelines through a wiki.

Andy Lark was followed on the stage by Nick Holdsworth, CBA’s current executive general manager of enterprise services. He endorsed a lot of Lark’s messages about the need for change. Unfortunately, Holdsworth says, most organisations are dragging “a truckload of legacy technology” behind them. At CBA, the yearly IT cost, “just to keep the lights on”, is around $700-800 million — before any thought is given to change or innovation.

While the IT team used to have to persuade business to adopt technology, now business is coming to IT with demands. They regard IT as it stands as too slow, too complex and too expensive.

“The time is past when we could decide whether we’re going to do something about it or not,” he says. “The users are doing something about it already”, by applying their own devices and their own applications.

The fauna of social media

CIOs should adapt to the presence of social media in the workplace, says Claus Mortensen, principal of the emerging technology research group at analyst company IDC. The phenomenon is misunderstood and resisted in many organisations, he told Summit attendees.

Social media is a pervasive influence in the world, he says. If Facebook were a country, with 689 million active users, it would be the third most populous in the world.

If they’re not being used by staff, social media will surely be used by the organisation’s customers. It makes sense to absorb social media and turn it to the company’s advantage, Mortensen says.

The CIO can play the role of a “jellyfish”, a creature that adapts efficiently to its surroundings.

An alternative or additional role is that of a chimpanzee (an intelligent animal); the CIO applies intelligent analysis to the huge amount of information that social media make available. This is a rising discipline known as “socialytics”, aimed at deriving insight into trends and opinions from input concerning your company on Twitter, Facebook and the like.

The third role of the social-media-savvy CIO is that of a canary, in the sense that canaries were once used in coalmines to provide early-warning signs of poisonous gases.

Mortensen described how Dell and Pepsi-Cola set up specific units to harvest and analyse social-media comment about the company.

Digital natives all grown up

The so-called consumerisation of IT and the threats and opportunities it presents for the business is an increasingly frequent topic of discussion. Often, said Campbell Such, CIO of food delivery company Bidvest, it is understood in narrow terms, with undue focus on workers bringing their own devices to the office and expecting to connect them to the corporate network.

The challenge is also one of mobility and mixing of data, with personal data leaking onto the corporate system and sensitive corporate data at risk of becoming visible outside the organisation.

Organisations have displayed a range of reactions to the phenomenon, from trying to keep the introduction of unauthorised technology to a minimum, to allowing staff to acquire technology, on the assumption that it will increase productivity.

Trying to combat the incursion is likely to be a losing battle, he says.

“If we slow [forward-thinking staff] down, they’ll just work around us.”

The “millennials” or digital natives — those for whom their own ICT is part of life — are not kids any more, Such says.

The real challenge lies in successfully walking the fine line between some risk and the huge opportunity presented by social networking.

“So assess the risks, create a plan to deal with those risks, provide the environment to harness the opportunities and review your policies.”

The changing DNA of the CIO

Do we need a new breed of CIO, asks Kevin Drinkwater, CIO of Mainfreight.

“A lot of people talk about keeping the lights on,” he says. “If you are that kind of CIO, you are not going to add business value. Our job in a nutshell is to increase profit and reduce expenses. To me that is a critical thing as a CIO.”

According to Drinkwater, the task should be around being promoters of change and improvement, and looking for opportunities out there.

At Mainfreight, IT has been focused on customers for 25 years, he says.

Chris Quin, CEO of Gen-i, has observed CIOs are increasingly asking vendors how events, such as a server being down for two hours, might affect customers.

Quin has seen the CIO role at Gen-i evolve into being responsible for business outcomes. The CIO is also in front of a lot of customer engagements.

“That is a big shift from the bits and bytes and backroom roles of the past,” he says.

Richard Raj, manager of IT services and solutions at the Ports of Auckland, says one of the key features for CIOs is to have good relationship management skills with both vendors and suppliers.

At the same time, the CIO portfolio needs to change from the old classic ‘IT and infrastructure’ to a wider portfolio, including what Raj calls “the old hunting ground of the CFO”. These include risk management, auditing and corporate affairs.

Mark Conelly, CFO of Noel Leeming Group, is also the organisation’s CIO.

When he started at Noel Leeming, he remembers how eyes started rolling as soon as anything to do with technology was mentioned in board meetings.

“I took over the role of the CIO and in hindsight it worked pretty well,” he says. “One of the things we have done is integrate the IT function with the core business.”

Now almost all initiatives in the business have technology involvement, says Conelly.

Through the global financial crisis, the organisation took the approach that IT spend would not go down. Although this was difficult for Conelly — in his role as CFO — the company decided that cutting down on IT was not an option, he says.

“[To] come out of this economic malaise … really required the IT focus to be much more about innovation, encouraging the IT team to step forward in a more integrated way for the business, looking for opportunities and supporting the business.”

Quin says where IT is involved in a transformation, the responsibility for the outcomes should be jointly held. The business unit and the IT should jointly agree on the outcomes. Raj of Ports of Auckland calls it “joint success or joint failure”.

Quin adds that IT people should “get better at telling their stories, in plain English”.

Drinkwater concurs. He says CIOs need to find a way to communicate with the board in a “language they understand”.

They should also get feedback from the people they work with, says Drinkwater. “If not, you are building things for them they don’t want. “Find people who complain the most,” he advises. “Either they don’t understand what is going on in the process, or they know better than you do. There is an opportunity there to make something better.”

Shifts in CIO role

Roger Jones, manager of IT and business systems at Auckland Transport, was one of several speakers to highlight the changing, more strategic role of the CIO in his organisation’s experience.

The CIO has to shift from an IT service provider to a “business integrator”, Jones says; this is a matter of talking business language and of cultivating relationships and partnerships. This requires informal social and political skills, rather than being a question of whom the CIO officially “reports to” on the organisation chart. In fact, he says, the widely despised route of reporting to the CFO has its merits; it’s the CFO who controls the budget you’re going to need.

Today’s manager is used to buying applications on demand from an international supplier, and buying storage and processing capacity the same way.

“They go out and buy it with a credit card then ask us to integrate it.”

This, if nothing else, forces the CIO to shift into the role of a trusted consultant and broker.

“If you don’t perform that role, they’ll find someone who will; you’ve got to be cost-effective and do it very well.”

Today’s CIO also needs to have skills in education and selling, to convince management and staff that their ideas are the right ideas and that they are the person to come to for advice.

“They don’t have time to look [into the details of technology solutions],” Jones says. “Tell them what you can do — and, very clearly, what you can’t.”

CIOs are good salespeople, he says; they negotiate regularly with vendors. “We just don’t use those skills” when relating to management in our own organisations.

You have to clearly show the business where the value proposition is, he says. They have to be able to see why you’re doing what you are and what’s in it for them in terms of a measurable improvement.

If the project becomes a business-owned project, Jones says, it’s less likely to be seen as behind schedule and over-budget, even when it is. Projects perceived as “coming out of IT” are always open to those criticisms. “So there’s nothing wrong with letting the business take ownership.”

Reaching out to the community

Jonathan Iles, CIO of Carter Holt Harvey, shared his insights on how CIOs can be involved in more community projects, which he calls “the IT in charity.”

For the past two years, Iles, together with Pat O’Connell, Rank Group CIO, and Glenda Godfrey of Oxygen Solutions, have been raising funds for a women’s refuge in West Auckland.

The three, calling themselves ‘Delta’s Three Blind Mice’, were joined by 49 “Mouseketeers” and crossed the Tongariro Alpine Crossing four consecutive times in 29 hours last year. They raised $66,000 for the Kia Timata Ano Trust.

Owen McCall agrees. “We need to remember we are among the luckiest people in the world,” he says to the ICT executives. “There comes a time when you have to stop thinking about yourself and start giving back. However you do it, I encourage you to find your passion, find a way to get outside, and realise how lucky you are.”

McCall is involved in projects mentoring youths from disadvantaged communities, and using computer games to teach positive values.

Survey on digital privacy concerns

New Zealanders are not as nervous about government invading their privacy digitally as is often thought. This is one finding of a recent survey by researchers from Victoria University, Wellington.

Such a survey is especially topical, says VUW’s Dr Miriam Lips, because of the increasing trend towards shared services among government agencies. This means more personal information gathered by agencies will be shared.

But the idea of government as George Orwell’s “Big Brother”, seeking absolute control of information about citizens, is not widely held, she told the CIO Summit; it only appears in certain subgroups of society – though these, for example social welfare beneficiaries, are the groups that are likely to have had most interaction with government.

The VUW team was commissioned by Inland Revenue to gather information on people’s attitudes. Most groups showed a moderate and balanced attitude to the benefits and the possible negative effects of centralised information collection, Lips says.

A group of small-business operators in the South Island showed a low level of trust in government agencies.

Most suspicious were a Maori group from Auckland and a group of Pakeha beneficiaries. Some in the latter group said they did not have access to the information that was held about them and so were not able to vet its accuracy.

ICT governance versus management

ICT governance emerged several times as a topic at the Summit, a prevailing view being that it is not sufficiently well practiced.

Two experts in the field, Myles Ward of Inland Revenue and Alison Holt, who have helped develop an International Standards Organisation standard on ICT governance, spoke to the Summit.

“Every standards meeting I’ve chaired brings an argument about the distinction between ICT governance and ICT management,” says Holt.

According to the ISO standard, governance is the direction and control of ICT, while ICT management takes the course indicated by governance and “puts in place the stuff that makes it happen”.

Governance bears crucially on some of the other themes that were prominent at the Summit, such as cloud computing and the consumerisation of ICT. The way to encourage top-level management’s interest in ICT governance is to talk about risk in business terms, he says.

Holt said that drawing a hard and fast line between ICT governance and management can conflict with the trend to involve the CIO more in the top-level strategy of the organisation.

Various organisations have coped with this in different ways; expanding the role of the CIO into something close to that of the chief operating officer, or splitting the role into two — a strategy and governance function in the hands of one person and another to discharge the day-to-day management responsibilities of ICT.

Conference chair Peter Macaulay of IDC displayed the analyst’s statistics on take-up of the ICT governance standard, ISO 38500, showing less than 20 percent of local organisations had implemented it.

“We have a very significant gap in governance and it is beholden on all of us to get involved with that role in our organisations,” he said.

In the event of an ICT emergency

Gary Hinson began with two arresting audio-visuals; the message from hacktivist group Anonymous promising a takedown of the Department of Internal Affairs website, and pictures of the wrecked bus and victims in the London terrorist bombing of July 7 2005.

In the wake of the bombings, the Cabinet Office met quickly and within the hour the Home Secretary and the Metropolitan Police commissioner were making public and media statements; “the overriding message was that things were under control,” says Hinson, from IT risk management company IsecT.

“Now suppose your organisation was threatened; would you have been on TV, immaculately dressed, offering reassurance to the public that quickly?”

What happens typically is more along the lines of the management of the first phishing incident to hit a bank Hinson was advising. The IT manager was in a flap, “completely unfocussed and very confusing for the people around him.”

The bank’s first practical reaction was to take down all its online systems. There was a procedural manual for ICT emergencies, in printed form, but everyone was too busy to read it, Hinson recalls.

He presented an ideal sequence of reactions to an ICT emergency: a closed loop of “prepare [take preventive measures in advance], identify, assess, contain [take measures to stop the problem getting worse], investigate, resolve, learn.”

Awareness and accountability by top-level management is essential, he says.

IT team at core of strategic planning

Tim Carroll, former chief marketing officer of entertainment company Village Roadshow, gave an account of using the power of online booking to make purchase of tickets easier for existing customers and add new customers. The result was an increase in earnings in excess of the ambitious target set a year before.

The achievement was testimony, he said, to the “power of vision” and to marketing expertise and ICT working together.

After 20 years, Village Roadshow was a mature business, running theme parks on Queensland’s Gold Coast, and there was a feeling that there were “no more mountains to climb,” said Carroll, addressing the summit by a Cisco telepresence link from Melbourne.

The CEO set out to disprove this by establishing a target of $A25 million (50 percent) improvement in earnings in a year, from 2006 to 2007.

The CEO created a management team including the group’s chief operating officer and chief marketing officer “with instructions to really shake the tree; to think differently”. Research of its customers found they were already skilled in using the internet and there was a significant desire for convenient online booking, Carroll said.

To pursue the objective “we knew we had to culturally create one team and get them all thinking on the same page,” Carroll said. “Alignment” was the watchword. The IT team, which had been a “backroom” operation, was brought into the centre of strategic planning.

The new brand for the e-commerce site,, met with “phenomenal” take-up from customers.

“We had a $40m lift in receipts and, as a result of shifting to a direct selling model, we had significant margin growth. We had done the impossible and taken EBITDA from $50m to $80m a year.” Carroll left Village Roadshow in April to set up a company to provide technology-assisted solutions in the entertainment business.

Smart meters became tool after earthquake

“Smart” power metering company Arc Innovations lost major elements of its Canterbury regional network in the February 22 earthquake.

“Although we had a power outage, uninterruptible power supplies got us up quite quickly,” says general manager technology services, Neil Fletcher.

Smart meters provide digital information on householders’ and businesses’ power use to Arc, which passes it on to electricity retailers and potentially to the companies that run the power distribution lines.

While Arc’s central systems were back up and running quickly, “the radio network that gets all the data back to our offices was absolutely decimated due to power outage,” Fletcher told the Summit.

Once the network recovered, it became a tool for assessing the impact of the earthquake. It was the means of detecting inactivity, so authorities knew which sites were unattended and in need of particular protection, and for detecting wasteful consumption.

The rise of Ethernet

Nan Chen is president of the Metro Ethernet Forum and a one-time university pole-vaulting champion (CIO Summit MC Peter Macaulay delighted in finding out about each speaker’s non-ICT skills). Chen told the Summit of the rise of Ethernet in a wide-area-network role, as a credible competitor to more costly protocols.

The 10-year-old Metro Ethernet Forum is a group of more than 180 vendor companies, dedicated to defining and supporting “carrier Ethernet”, a version of the Ethernet protocol enhanced to make it reliable and scalable over a wide-area network with a straightforward Ethernet LAN interface.

Carrier Ethernet’s market is both in equipment manufacturers, who supply to service providers and in service providers supplying business users.

VectorFibre, the communications arm of power company Vector, is implementing Carrier Ethernet at the newly unified Auckland Council, to provide a single eLAN (multipoint service) network over the whole organisation — eight councils and 17 sites.

Six different classes of service are available, allowing business units to choose the most appropriate class for a particular application.

Chen also detailed a medical implementation of the point-to-point connection, to transmit CAT scan images (files of about 300 MB per image). This enables radiologists to work collaboratively on a single image.

Carrier Ethernet is also an excellent way of maintaining a private cloud, says Chen.

The 2011 Summit was organised by CIO Magazine, IDC and conference company BrightStar.

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