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The rules of attraction

The rules of attraction

As long as technology's trajectory of complexity moves onwards and upwards, leading companies will battle for those with its most advanced skills.

If you flicked through the back issues of MIS, back as far as the days when its name bore some resemblance to the job title of its readers, there would be one topic guaranteed to leap constantly from its pages among the headlines of doom and exasperation. That topic is skills ... or, more importantly, the lack of them.

It seems that no matter what the prevailing economic climate, chief information officers are looking to hire experts with skill sets that are at a premium. Their cries are usually accompanied by a band of recruitment consultants skipping along beside them tut-tutting about the inflated salaries their customers will be forced to pay.

Then in 2009, amid the turmoil of a global financial crisis and concerns about tumbling technology budgets, CIOs were able to breathe a little easier about their workforce worries.

A government mandate to slash the number of contractors used, following the Gershon review of technology spending, was combined with a tightening of corporate belts to swing the balance of power back in favour of employers. People wanted the security of a full-time job, and weren't too keen on testing their popularity on the job market.

Or that is what we were led to believe. The reality for some was a little different.

What is clear now, however, is that the noise of the recruiters' drums is getting louder again. Whichever employment survey you care to look at will inform information chiefs that any respite they enjoyed will shortly come to an abrupt end.

On a positive note, CIOs themselves are also in big demand.

"I have been inundated with searches for senior IT executives, both in-house and on the tech-vendor side," executive headhunter from recruitment specialist Talent2, Paul Rush, says. "It has been really interesting to see companies fighting for key talent, and we are already close to being back in a skills shortage."

Rush says the quality of talent on the market has been unusually high in the last seven or eight months due to changes resulting from GFC job losses, both locally and internationally. However, the well is rapidly running dry.

"For every shortlist I present at the moment, I am losing a candidate before they get to interview because they have taken another job," Rush adds.

The storm gathering

This assertion backs up the findings of fellow recruiter PeopleBank Australia, which provides the media with a monthly snapshot of the hiring intentions of its biggest clients.

It has found that strong demand for IT skills in the banking, utilities and telecommunications sectors has caused an upsurge in hiring intentions that continued throughout the first few months of this year.

An increase in hiring activity on the national broadband network can be expected now that NBN Co, the company established to deliver the network, has contracted Accenture to help rapidly swell its employee ranks.

At the same time, core systems upgrades in many organisations, most notably among the top-tier banks, threaten to drain all of the country's leading technology talent.

"We now have a perfect storm of transformation and change, led by the Westpac-St George [Bank] integration and closely followed by the growth in NBN Co and at Origin Energy," Rush says (See "Origin recharges its talent battery", opposite.)

In addition, Telstra's mammoth technology transformation program is supposedly winding down, but is still being resourced, and with National Australia Bank's proposed acquisition of Axa still on the cards, the promise of talent-hungry IT challenges loom large.

"We have NAB reinventing itself following its old guard moving on, and ANZ [Bank] is also looking at how it wants to structure its technology business going forward," Rush says.

"We have some really big ASX top-50 companies all looking at large transformation programs within technology, and they are all fishing in the same pond for the skills to make it happen.

Research compiled by executive search specialists Korn/Ferry International, which featured in the February issue of MIS, found that three-quarters of those surveyed had ageing legacy IT platforms that required replacement in the next three to five years, with an average cost of $58 million across all business sizes.

Its report found that many boards did not have confidence in the effective performance of their technology leadership from a strategic perspective, and also advised that boards needed to recruit IT-savvy talent in order to get a better grasp of the skills and planning required.

"To ensure smooth delivery of transformation programs and realise the benefits, the CEO and board should ensure they have suitably qualified and experienced talent leading the transformation in both the business and IT," Korn/Ferry's head of CIO practice, Gail Pemberton-Burke, says. "The financial damages and delays that can arise as a result of inexperienced leadership can be very material."

talent must be rewarded

One of the first cabs off the rank in terms of the major technology upgrade projects spoken about by the recruiters is the $580 million core banking system replacement program under way at Commonwealth Bank of Australia.

In 2008, it announced a four-year combined services and software contract with Accenture and SAP, but built a senior internal team with ultimate responsibility for making the scheme fly.

As well as getting a jump start on its competitors from a technology standpoint by starting first, CBA was thinking ahead about the challenges of attracting the necessary skills, the bank's chief information officer, Michael Harte, says.

He says the current worries in the market about an impending skills shortage have not caused him any undue concern. CBA's core systems overhaul is fully staffed, which Harte says is down largely to investment in technology work and to the softer side of management related to career development and motivation.

"We knew that in order to attract the right people, we have to provide them with the most exciting projects and to continue to invest in those projects and in the capability of those talented people," Harte says.

"The clichéd war on talent is probably alive and well but people that have trained to get certain skills, invested in their education and worked hard to get good experience, want to get the highest reward. They naturally get attracted to larger, more exciting projects."

Harte says that by making big investments in exciting projects organisations can expect good talent to follow. He has little time for businesses complaining about an inability to attract good staff when they are offering run-of-the-mill work, with little in the way of professional development.

Two years ago, Harte sent 30 members of his team to the US to attend the Massachusetts Institute of Technology and take part in executive and management training, in a move that he says created a significant performance boost from those involved, and increased their attachment to the bank.

In the last two years, more than 200 staff and 50 partners from CBA's suppliers have attended the program in Australia.

It is this attention to staff retention that has often gone unreported in the wider discussion of volatile employment markets.

"We have a great workforce-management program where we make sure that people are happy in their roles and have opportunity to rotate into roles that will stretch them," Harte says.

"I would rather people stay and develop within the organisation than leave to go elsewhere for a new challenge. As long as we continue to invest in those areas, and continue to invest in the big, exciting projects, we manage the risk of people wanting to leave and work somewhere else."

Harte says the CBA is still constantly on the lookout for new staff, even though he is satisfied with its current levels.

SAP skills are in particular demand, as well as other development and technical workers. He says the other banks still come knocking with offers to tempt staff away, but he puts that down to "business as usual" rather than a more cutthroat market.

"There is always a risk that a few people will be attracted to alternative opportunities when the market improves, but we are not seeing too many people leaving," Harte says. "We are not particularly worried [by rival banks poaching], we haven't seen the other banks make significant investments in technology in a confident way."

act local, think global

But others are worried. In competition with many CIOs for the technology skills needed to feed IT programs are the services companies and IT vendors that businesses ultimately look to hire to help them out.

Local managing director of German technology giant SAP, Tim Ebbeck, says he expects to see "people churn" in 2010. Many employees have sat on their hands in the last 18 months, he says, so there will be a natural churn as opportunities arise and the market loosens up a little.

He fears that some have allowed themselves to relax too much during the GFC and have taken their eyes of the ball concerning the value of staff.

"To be honest, I thought people were misguided when they said the GFC meant the war for talent was over. I thought that was [inaccurate]," Ebbeck says.

"I think others will have problems. I don't think the skills shortage really loosened up at all in the last 12 months and I think it will continue to be tight. The reliance on the offshoring of work will continue."

This theme was supported by the heads of local services companies during the recent February financial results reporting season. Oakton chief executive Neil Wilson says the company's investment in its own offshore operations in India will prove to be a lifesaver as the availability of local skills evaporates.

Not only is his company sending work offshore at a lower cost in order to win business it wouldn't have been able to do before, but its Indian offices now also provide a vehicle to get access to skills. "We are now accessing an enormous pool in India of very experienced people that have worked around the world," Wilson says. "They come to Australia to do work onshore where the skills here just aren't available."

Chief executive of fellow tech services firm DWS, Danny Wallis, agrees that while everyone likes improved business confidence, the impact on everyone's ability to hire technology staff is almost unavoidable.

However, he says businesses must avoid the temptation of throwing money at the problem in a vain bid to attract the cream of the crop. "There will be a lot of staff moving jobs this year, which will add to business costs," Wallis says.

"You get worried by higher staff turnover, but you can't panic and give huge pay rises or send people on trips with unlimited credit cards. If you do that, you never get them back to normal. The pendulum is going to swing from one end to the other in a very short period of time and you don't want to overreact."  Origin Energy is looking for one more senior technology executive to complete a new leadership team as it works through a mammoth IT overhaul.

The company appointed Olaf Pietschner to the newly created role of chief information officer in April 2009, and he has spent the first year of his tenure assembling a team of well-regarded industry names to shoulder the burden of an information systems revamp, worth well over $100 million.

Origin has appointed former National Australia Bank IT executive Geoff Wenborn and former Insurance Australia Group CIO Larry Howard to its technology brains trust and promoted IT manager David Hancock to a more senior role.

A spokesman said the company was conducting a global search for a head of IT for its upstream business, to be based in Brisbane and reporting to Pietschner.

While Pietschner declined to comment on the progress of Origin's technology overhaul, the recruitment specialist who placed Wenborn at Origin said the hunt for staff indicated the size of the task still at hand.

Executive headhunter from recruitment specialist Talent2, Paul Rush, says Pietschner's appointment of industry heavyweights shows an acceptance that the program is too big for one executive to manage alone.

"Geoff [Wenborn] is one of the most well-regarded strategic architects in Australia and it was a bit of a coup for Origin to get him after all the work he did at NAB," Rush says.

Last year, Origin started a three-year software overhaul in the wake of an initial outsourcing phase when Indian services firm Wipro and Germany's SAP became its key technology suppliers.

It is likely to involve a replacement of its three billing systems and its customer relationship management software. MIS Australia

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