Public CIO of the Year: Wayne Saunders, Australia Post Wayne Saunders is almost halfway into delivering a radical $600 million technology-led business transformation project to resuscitate the fortunes of one of the nation's largest businesses.
In 2009, Australia Post proudly celebrated 200 years since its first postmaster collected mail but this year's financial accounts caused more anxiety than pride thanks to a slump in letter volumes that translated into a 35.7 per cent slide in pretax profit to $380.9 million.
Some of the decline in Australia Post's core letters-and-parcels business came from the rapid deterioration in general economic conditions over the past year, but wider systemic changes have also taken their toll as staples such as utility bills and bank statements continue their relentless march onto the internet.
"We cannot rely on mail volumes any more, to be the lifeline of this organisation," Saunders admits. "Clearly, we have got to move into new sources of revenue [and] service lines. That's most critical for us."
To facilitate that move into new business areas, Australia Post has embarked on an ambitious five-year technology overhaul that aims to retire more than 30 years of legacy applications and deliver a new core systems architecture that will last well into the future. Out of 500 applications, 300 will be replaced with new products that are interoperable and will comply with a base architecture model that allows the business and its services to be dynamically reorganised to respond to change and opportunities as they arise.
At the heart of the transformation is a new SAP-based applications suite that will integrate payroll, finance, business intelligence and other enterprise functions with other custom mail applications used to sort letters and manage the vast repositories of postal and address data on every household that are now resold to thousands of businesses.
Data centres are being rebuilt and Australia Post will also replace most of its legacy hardware infrastructure with new virtualised servers and storage that will not only run leaner and greener but also offer future scalability to allow the business to grow.
"We've basically recast our infrastructure - there has been a massive program of change. We are talking about a program of similar size to [the Commonwealth Bank of Australia's core banking overhaul]."
One noteworthy similarity with the CBA is that Australia Post has kept management of its transformation project strictly in-house, not just to keep the mega-project on track, but to ensure it can more fully reap the benefits.
Australia Post used to rely heavily on technology contractors but it has largely replaced these with full-time employees to restore its capability to execute technology initiatives in-house - a move that Saunders says has created jobs rather than led to their shedding.
However, it's the prospect of the 200-year-old service starting to reap the benefits of breaking out of physical services and into the digital economy that has him most excited, not least because new offerings will heavily leverage Australia Post's position of trust within the wider community.
So far, that has meant expanding what Australia Post calls trust-based services that link physical necessity with the digital world for services such as electronic passport application lodgement, including photos, and proof of identity checks for more than 75 financial institutions.
Ironically, many of those checks are for services such as direct banking, which are delivered online, but need a trusted broker to validate a client. Saunders sees plenty of upside.
"Clearly, there are two things that differentiate us: we are trusted in the community and we have 4000 outlets - in any community you can find [an Australia] Post outlet. There are 62 different processes you can execute in a post office," he says.
Although some details are still under wraps for commercial reasons, Saunders says that pilot trust services projects have included digital and biometric photos and signatures, but stresses any offering will be on an opt-in basis for consumers, businesses and government agencies.
Other opportunities include harnessing Australia Post's exclusive data holdings. One is the postal address file, a national master list of addresses that can now be integrated with other demographic information to provide highly targeted direct-marketing opportunities and purge costly errors from commercial databases.
It has also this year launched a parcel-tracking service that lets customers see the location of an item as it wends its way to its destination. It now processes a massive 1.5 million "events" each day, information that gives customers peace of mind and Australia Post vital logistical information.
But there's a balance to be struck between using such technology to drive new efficiencies that deliver value to customers and a perceived intrusiveness, which has created controversy for applications such as Google's Street View. But Saunders says Australia Post won't be digitally tracking individual posties from afar as they do their rounds with bags of letters through the suburbs.
More important are the 3500 private mail contractors who have been issued with FedEx-style handheld terminals that are used to dispatch drivers on the fly and optimise their runs so that the mail arrives on time.
Expect plenty more innovation to come from Australia Post. Julian Bajkowski
Private CIO of the Year: Jon Kenton, Corrs Chambers Westgarth
Some people would say Jon Kenton is a lucky man. While many information chiefs were forced to shut down major projects because of the global financial crisis, he received board approval to continue executing a strategy he had embarked upon 18 months ago. Born and educated in England, Kenton has spent most of his career on the market side of banking - most recently as head of technology for nabCapital - before joining legal firm Corrs Chambers Westgarth in September 2007.
He says he was attracted by the energy and drive of the people he met when he was headhunted for the CIO role, but although Corrs had a very clear business strategy mapped out, there was no plan for how IT could help it get there.
"There was a big disconnect between the IT and business functions," he says, "and no real engagement unless there was an issue. So it would just be a case of 'something's wrong, please fix it'.
"IT didn't have a clear view of where the business was going and how it fitted into that. This was a real worry."
Kenton's first order of business once he settled into his new role was to create a strategy and present it to the board. He implemented it across the firm and related each element back to the company's business strategy, which helped him to establish much greater visibility with the senior management team. He is also on the steering committee for the company's strategic review.
To improve business engagement, Kenton has created a clear governance structure for IT projects; sponsors are assigned to each one, and user acceptance is tested on completion.
"It helps build that link when you sit down and talk to people about how they work and what they're doing," he says. "In having that dialogue, you hear about other issues or concerns that people may have.
"We find that a lot of the time there are things we have solutions for right now but the users didn't know, perhaps because we hadn't communicated them very well.
"Being prepared to tell people that we can't do something immediately, as long as you explain why, is also an important part of that open dialogue."
While he admits that the economic climate has brought an increased focus on keeping costs down, the structure and visibility he has introduced has served him well, giving senior management the confidence to continue investing in the strategy.
From a project perspective, Kenton started off the three-year plan by addressing core infrastructure - four data centres have been collapsed into one, an offsite disaster recovery (DR) facility has been established and up to 90 per cent of the company's servers will be fully virtualised within the next six months.
The DR solution, which Kenton says can be activated at the touch of a button and takes just five minutes to fire up, recently won an award from VMware and EMC.
"The idea is that any idiot can activate it," he says. "In the event of a disaster recovery situation, we don't need a rocket scientist to execute the scripts."
Kenton has also upgraded Corrs' practice management system, which controls billing and other key financial aspects of the business, and its document management system. He is rolling out business intelligence software to improve access to data, and move away from a static reporting approach to one based on interactive analysis. As something he's been involved with in previous roles, Kenton is under no illusions about the challenging nature of the task.
"It's a very complicated world, not necessarily because the technology is complicated, - on the whole it isn't - but when you bring all the data of an organisation together, any issues in how that data is stored, entered or merged will mean you get gibberish at the end," he says. "I've seen CEOs look at reports and say, 'I don't know what the real number is but I know it's not that'.
"You need to understand the problem you are trying to solve, get quality data in, and make sure people understand how it works so that they can get the benefit from it."
Now halfway through his three-year plan for overhauling Corrs' IT systems, Kenton says his team is in the final stages of testing for a migration from Lotus Notes to Microsoft Exchange. They are also upgrading to Office 2007 and will make the leap from Windows XP to Windows 7 at some stage next year.
Other projects for 2010 include electronic document management and a greater focus on mobility and improved collaboration.
"The idea is that partners can fire up one-to-one videoconferencing on their laptop if they need to talk to someone," Kenton says. "We already have a wiki in place but having easy access to audio- and videoconferencing on the move will really help the whole collaboration drive." Brian Corrigan
Green CIO of the Year: Garry Whatley, Corporate Express
Being green used to be about sacrifice. It used to be about weighing up the balance sheet and then taking a transformative, often expensive, plunge. Green used to be the premium option.
In many ways it still is. But while today's greener information technology alternatives are good for the environment, they're also more compact, more efficient, more agile, often faster and - to the relief of IT budgets and Mother Nature alike - significantly cheaper.
Garry Whatley is chief information officer for business services company Corporate Express. He joined in 2003 from his previous position as general manager of IT for Sony's Asia-Pacific region - a role that lit the fuse for the environmental mission that has been executed in CE's IT strategy over the past two years.
"In those days, Sony had a very strong environmental view of what they were doing," he recalls.
His job required him to look at manufacturing environments throughout the region, which introduced him to production units where sustainability was integrated into everyday processes.
"I was fortunate enough, even in those days, to be exposed to green thinking," he says. "It has been something that, since then, has become part of my psyche."
CE has made some big green implementations under Whatley's leadership.
"We have set up a whole green IT strategy and a green IT road map," he says. "We're in the process of executing that at the moment."
The road map is focused on several key areas, the first of which is creating efficiency at the data centre, Whatley says.
CE has managed to reduce the number of its physical servers from 200 to just 16. It has two server racks where previously it had 20, and it has effected a tenfold decrease in its power consumption from 100 kilovolts to just 10 kilovolts a year.
"We have undertaken a massive journey around virtualisation," Whatley says.
CE has virtualised almost 90 per cent of its servers, he adds. The company has focused on creating a more efficient and targeted cooling system at the data centre end, with hot and cold aisles and better managed battery back-ups.
CE now exceeds power usage effectiveness best practice with a rating of 1.49, well below the 1.6 target figure as outlined by international IT energy efficiency consortium, The Green Grid.
"That's about the way you use power and your efficiency in the data centre," he explains. "We also have a DCiE [data centre infrastructure efficiency] rating of 67 per cent compared with the best practice figure of about 55 per cent."
Whatley says that the company has just completed the centralisation of its exchange servers, having previously had one at each of more than 30 locations around Australia.
"That has again reduced our footprint significantly," he says. "At the moment we are looking at the virtual desktop as a way to further those efforts."
The next step along CE's green road map will be a reassessment of its asset life cycles. "We'll be looking at the way we get rid of assets," he says.
"We will look at end of life and how that is managed. We're doing a number of things in that area already. Apart from donations, we're also working with a company called WorkVentures to recycle a lot of those units."
CE has implemented a staff engagement project in relation to its environmental initiative as well.
"We've set up green work groups within the IT area that have been evaluating concepts our own staff have come
up with, in relation to green IT," Whatley says. "For me, it's about engaging the staff in green IT, as well as generating some great, value-adding ideas. We're examining a number of those very closely."
While Whatley confesses the biggest challenge for the year ahead will be maintaining momentum and focus, he says CE's green commitment is already rewarding the company.
"The data centre was a big initiative but it just keeps repaying us with continual improvements, both in terms of its function and in terms of its environmental benefit," he says.
"A number of my peers are very keen on what we're doing. That includes customers. They're all very interested that while we're driving this initiative [and] getting results, we're also cutting costs at the same time."
Whatley says that without a doubt, the economic benefits of new, environmentally friendly alternatives have made selling the company's green direction to the board a whole lot easier.
"What we've found also is the technology today can really help drive your return on investment," he explains. "You can actually drive your green initiatives with the savings you make." Rachael Bolton
New CIO of the Year: Patrick Lilwall, Queensland Rail
For many chief information officers who have been around the block in the corporate jalopy, the next career move is to step into the world of consultancy. There are numerous former CIOs plying their trade in strategic adviser roles across any industry vertical you could mention.
Patrick Lilwall has taken the opposite journey, and with a wealth of experience earned with companies such as SMS Management & Technology behind him, he took on his first CIO role with Queensland Rail in February. His performance in leading the early stages of an organisation-wide technology transformation, which forms part of a significant refocusing within the business, has drawn praise from industry sources, who contacted MIS to nominate him as the New CIO of the Year.
Under chief executive Lance Hockridge, and with a largely new executive leadership team, QR has pledged to reorganise itself to run as a competitive business, in a transport and logistics sector that has undergone numerous changes.
Speaking at an ABN Amro Morgans breakfast briefing last December, Hockridge laid out his plans to overhaul the culture and operations of the 145-year-old company. It had earlier rebranded as QR in order to distance itself from the state-based rail image, to become recognised as a national transport and logistics company with operations in every mainland state.
"The markets in which we operate are changing fast - everyone here today understands that profoundly," Hockridge said.
"When I joined QR it was operating within the context of a broader rail industry in Australia, which was itself in decline ... we were carrying the legacy of the past, both attitudinally and substantively. Poor technologies contributed to an entrenched inflexibility in our operations. This in turn contributed to our lack of customer focus."
Hockridge went on to admit that as an industry, rail had dreadful pricing policies that were unrelated to commercial reality - due to inflexibility and uncompetitive customer service and cost structures. The CEO set out an ambitious transformation agenda and Lilwall walked straight into the middle of it.
Lilwall says his technology program will touch upon all areas of the business-change program. These areas involve a need to dramatically lift safety performance, deliver customer service excellence, enhance commercial capability and capitalise on growth opportunities in all markets.
He says his background has perfectly prepared him for the challenges he has met in his first stint as a CIO.
"I spent eight-and-a-half years in the Royal Australian Air Force," Lilwall says. "I've worked in the Queensland education system establishing IT capability for a regional TAFE, and then in [the] consultancy building business where I provided leadership in turning around projects. Stringing all of those together is what QR needs at this point in its life cycle with the transformation."
Lilwall says his role revolves around ensuring his team takes a customer-centric view of delivering information services. He says he has had to change the mindset of his department to think about the impact of their work on QR's paying travellers, and ensure the business views its information as a strategic asset.
He says the transformation project was at the strategy formulation stage when he first arrived, which gave him the opportunity to take a view of the overall capability of the IT department.
Lilwall's department has 233 staff and he says the real success of his first nine months in the job has come in the creation of a clear direction for the IT transformation, through open consultation.
"Essentially, the company has a different need for information services in the direction it is [now] going," Lilwall says. "The previous way that IT was set up needed to be turned on its head. It wasn't able to meet where the company needs to go and [it] had to be more agile.
"It needed to place a far greater value on its information as a strategic asset. We are underpinning principles that the new execs are looking for - the ability to have confidence in the information, for it to be timely, relevant and fit for purpose."
As a result of the organisation's transition to a commercially run government entity, QR decided to significantly expand its SAP footprint across the group, by streamlining business processes and replacing about 700 legacy systems.
The project is expected to deliver about $1 billion in savings for QR by 2014, with Lilwall leading the transformation and developing a roadmap with SAP to deliver business value to the organisation. "Patrick brings a mature, people-friendly style to his first CIO posting," one CIO of the Year judge told MIS.
"And, in our view, he brings a positive balance to the IT function and to how success is achieved, acknowledging that the journey is as much about the cultural change in order to achieve sustainable results - as it is about technology itself."
For Lilwall's part, the new CIO accepts that there is still a lot to deliver on the IT transformation, but says he is delighted with the foundation work that has already been completed. "We have shown that staff consultation works - they have been heavily engaged in every stage of the transformation journey," Lilwall says.
"We are painting a vision of where we want to be that is realistic and achievable. We are being very open and genuinely consultative." Paul Smith
The winners to the CIO of the Year in Australia were selected by the MIS editorial team following consultation with 20 senior IT industry executives:
- Accenture - Grant Barker, head of strategic IT, Australia
- CA - Brenton Smith, managing director, Australia and New Zealand
- Cisco - Les Williamson, managing director, ANZ
- CSC - Nick Wilkinson, CEO, Australia
- Data#3 - John Grant, managing director
- Dell - Bernie Kelly, public sector director
- Dimension Data - Gerard Florian, chief technology officer
- EMC - David Webster, managing director, ANZ
- Fujitsu - Rod Vawdrey, CEO Australia
- IBM - Peter Campbell, GM, global technology services, ANZ
- Microsoft - Colin Timm, director, enterprise partner group, Australia
- Oakton - Neil Wilson, managing director and CEO
- SAP - Tim Ebbeck, CEO, ANZ
- SMS Management & Technology - Tom Stianos, CEO
- Symantec - Craig Scroggie, managing director, Pacific region
- Tata Consultancy Services - Varun Kapur, general manager, ANZ
- TechnologyOne - Adrian Di Marco, executive chairman
- Unisys - Geoff Dickson, vice-president, systems and technology group, Asia-Pacific
- UXC Group - Nick Mescher, CEO Consulting
- VMware - Paul Harapin, managing director, ANZ
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