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Lessons from the recession

Lessons from the recession

In a CIO roundtable sponsored by Attachmate, ICT executives discuss the impact of the recession at the ICT shop and their preparations for when the economic upswing arrives.

Recession and the organisationGlenn Myers: Our focus has really been more on how do we deliver more efficiently. It’s not a case of recession driven, it’s good business practice. It has made us think carefully about what to prioritise, what is important to the organisation.

A key focus for us is naturally delivering good service to our customers, the ability to continue to grow our revenue, and also to look at what we’ve already committed to, what we need to do from a compliance point of view and then to look at how we can do things more efficiently and smarter.

Chris Wickham: I’ve been in IT a long time and I don’t think I’ve ever had a time when I don’t think we have had to be trying to do more with less or more with the same. In terms of what it has meant for us practically, it’s meant that we’ve had to really think very hard about the rigour around our governance models and about how do we get better engagement. If you’ve got good engagement, then you’ve got a lot of governance.

By doing the right things in the eyes of the business, then we’ve got that governance. Getting that rigour behind a lot of governance, and performing, putting the prioritisation principles right, and so forth, is key.

Clive Eastwood: A major part of our business is funded by border activity, so some of the challenges we face is how to cut our fixed costs when some of the business revenues are dropping. IT does represent quite a sizeable fixed cost. You can’t just turn part of a service or function off so its quite a challenge to manage down costs. But overall we need to manage our resources very tightly; however this does present us with sizeable opportunities to have a good hard look at the way we’re doing things.

Reviewing the project portfolio

Warwick Wright: I’ve never met an IT shop or a business that hasn’t had more projects on its list than it can do. So inevitably it comes down to prioritisation. Part of the prioritisation process is just stepping back and saying ‘well, actually, what is important, what are the businesses doing’? My predecessor had created quite a comprehensive list of projects and potential projects, and I’ve been talking to the business and finding out which ones really matter to them, which are nice to have. There’s always infrastructure projects that have to be done and don’t have a lot of visible outcome. That’s always a big challenge, because from a business point of view they don’t see why you should do it, or it’s not compelling. But you have to recognise the need to do those and sell the need for them.

Richard Hitchcock: We’ve established a number of committees that are reviewing our projects, and pushing back the decision on prioritisation of these key projects, through the business taking ownership of those, rather than the IT department doing it.

Martin Mooney: Before, projects would be driven maybe by technology or nice to have. [Now] it’s definitely got to be service delivery or some kind of value add to the business.

Working with vendors

Chris Wickham: I have rigorous conversations with my main vendors but I have those regardless of a recession. I was having those before this recession, and that’s just good business practice. They come up with a price and we say that’s a good start point but please go and sharpen your pencil and then we will talk more. And I think that’s just BAU [business as usual] as far as I’m concerned.

Warwick Wright: We are finding that our suppliers are willing to be more flexible when it comes to pricing and negotiation. They’re feeling the squeeze as well and they want to protect business. We have a number of contracts that are due for renewal so one of our aims is to get a better price out of the existing supplier. Or we find an alternative supplier and they’re all very conscious of that. And I don’t believe in just buying on price, relationships are very important.

But in this climate, there is recognition on all parties that the pencils have to be sharpened.

Martin Mooney: What we’re seeing as well is that internally that the customer may want not just a better price, but flexibility in when he drives down on licences or what type of licences that he drives down on, he has the flexibility over maybe six to 12 months so that he can associate that with better value within his business.

Vendor management to the fore

Glenn Myers: We are certainly focused on improving vendor management and we have looked to leverage more value out of our vendors in a way that delivers mutual benefit, not just one-sided. I think that is really important. If you want to get a vendor to work for your organisation and continually look or strive to improve the level of services they deliver, or the product that they deliver, to me the way to do it is to work with them, not just to make them work for you.

There are two approaches to take and sometimes you do take the latter approach when you have to. Invariably it is when it is very much a utility service, but when it is anything more than that, I think you do tend to look for the value. In terms of what we have done, a couple of things that we’re focused on, we’re focused a lot more on our enterprise modelling. The New Zealand Racing Board’s IT environment is reasonably complex. We have a secure environment.

But what we haven’t had for the last few years is that enterprise function within the IT team that looks at enterprise architecture, enterprise modelling, the ability to do sensitivity analysis, to run simulations, and it does come back to partly the fact that our environment is reasonably complex.

Critical collaboration

Warwick Wright: Piggybacking off syndicated procurement deals in the public sector in particular, has really got a lot of potential. And that’s one way in the tough times you can go and save money, without cutting your service or your facilities.

Richard Hitchcock: We’ve now got all their [Telstra’s] services coming off our main camps and bases. So we’ve got a huge amount of redundant fibre that sits there, and of course other business units are pumping in and using it to its fullest during the day, and then everyone goes home and it sits there empty. And when our people go home they’re just walking down the road because they’ve gone to their barrack or back into their housing units. So we’re turning it around and are now offering them broadband services, television services, telephone services into their barracks for half the price of what they’re now paying the local provider.

Relationships with the business users

Clive Eastwood: Our focus is on getting a better understanding of what’s coming down the pipeline to us, so we’re setting up a demand management processes to collect information to make better decisions on.

We are starting to get a really good handle on what the demand out there is for our services and setting up a prioritisation process strongly influenced by the business. We want the business to take a lead in making the call on what does go ahead and what doesn’t go ahead as you can’t do it all.

Alan Hesketh: I don’t think [the downturn] should change the way you run the organisation. I tend to think of the way we use resources in three categories.

First, what we define as our service directory are the services we have to repeatedly deliver every day. And we are increasingly looking at those in the sense of what are the things that we should be stopping doing, what are the things we should be looking to do more efficiently in terms of how we handle the productivity. So we’re actually driving down the unit cost of each of those services.

The second component is around the change portfolio and that’s looking at all the change activities the business is doing.

That’s around governance and priority setting, getting the executive leadership team of the ministry engaged in setting those priorities, so it’s really clear where the resource goes.

The third component is organisational development, in the sense how do we actually improve as an organisation at the same time, with things like management development training, [and] pushing our people’s capability right through this period. Each of those actually has different tactics around them, to make sure that we’re managing this effectively as we can.

Scrutinising ICT investments

Richard Hitchcock: Defence is now currently looking and investigating open source technologies.

Chris Wickham: The same with us. Yeah, we are quite close to certainly doing away with Software Assurance on Microsoft Office. When you do your analysis and you get quite into it, you find that a huge percentage of Software Assurance costs are just on Office.

We can make those savings, but our frustration in this area is based around the rest of the government agency sector doing something about it. We’ve got more power if we get together and unite.

Clive Eastwood: Cloud computing I see as maturing in industry. There are some very real offerings almost there; however it is still 12 to 18 months away before it really comes of age. Now is the time to be thinking very seriously about cloud computing so you can position yourself as contracts come up for renewal and leases expire to tap into that technology.

On security and risk management

Richard Hitchcock: Security has been around ever since day one for us and it’s a business as usual function. We have a group of people that are employed specifically to secure and harden our networks, and to fight off adversaries.

Warwick Wright: To me, investment in security is even more important than ever. I don’t think a recession is a reason to cut back on security. But I also think there is a significantly increased awareness at the board and governance level of security. I think once upon a time it was seen as a whole lot of geeks in a back room, and nobody knew what to do. It is on the agenda of boards and board audit committees, and I guess the increased use of the internet for business and some of the horror stories arising from that have made the governance level people much more aware of how important security is.

Alan Hesketh: This is part of the change that has been happening and is accelerating. There are two aspects. The professionalism of the attacks is increasing dramatically and it has gone from hacking amateurs to well-paid ‘professional’ hackers. And the other side of it then is we’ve got to be architecting our environments for security, not adding it on. So that when we are actually thinking about security, we are thinking about how we minimise threats.

How do we actually treat our local area networks within our organisations? Are they friendly or unfriendly environments?

Given that a significant number of your threats are actually from internal people, you need to think very carefully around how you are architecting where your servers are, where your client side is and how you protect some of your legacy systems. They are probably the most vulnerable and in some ways actually probably the most valuable to the organisation, because they are often running mission critical apps.

So how do you slot them behind a firewall or multiple firewalls? How do you isolate them on a segment appropriately that works with the application architecture? You can’t add these things on. They have to be designed in.

Chris Wickham: The Council is putting more of our city services online. We’ve had some external audits to look at our security setup. We are actually in recruitment mode for systems security architect people, because that is a specific role that we need to get. We have got to sort of architect this thing right from day one. It costs you 10 times as much to build it in at a later date. So as we’re deploying more and more services online, we have got to get the security right. That is fundamental. But that is not been our background. We need to get up to speed with that as an organisation.

Impact on ICT teams

Glenn Myers: Culturally it has been fantastic for my team. We have thought collaboratively about how we can do things smarter, better, differently and it has helped everybody to be able to feel like they’re part of determining the future and how we’re going to function. Ironically, it has probably levelled the playing fields across the organisation as a whole, and everybody who is looking for investment is on a level playing field. Because what it has done is it has brought the whole organisation together.

Martin Mooney: I’ve seen a big focus on value add projects, cost reduction and enhancing service levels and managing those service levels, both [from] internal customers and external customers.

Closer interaction with the business

Richard Hitchcock: This has now enabled us to push everything back to the business and saying you tell us what you want done, in what order and what’s the priority. And now we’ve got a much more focused team, and we can see the light at the end of the tunnel in terms of where we’re heading. And we’ve got vision and we’ve got strategic planning in terms of making an impact on the overall — and providing government best value for dollar.

Alan Hesketh: I’ve now been in Health just about 18 months and so we were going through a pretty significant change programme, because what I took over was a new directorate within Ministry of Health. So there was already a lot of stuff going on around role clarity and what do KPIs around success mean. The big difference I think we’re seeing is that it is focusing people’s minds wonderfully, and people are recognising that the way we used to do things, is not going to take us forward. We actually need to think about things quite differently and much more cooperatively across the whole organisation, than we had the luxury of doing in the past.

Clive Eastwood: It has provided an opportunity to get back to the grassroots and really have a good hard look at the fundamentals of what services we provide, and how we provide them. We have new IT leadership within MAF and that has provided a whole new fresh outlook. As a result of this we’re getting far better engagement with the business, having some real conversations with them, and looking at how we can provide our services more on demand and put them back in the driving seat.

Chris Wickham: What we talk about a lot internally is a thing called positioning for the future, and this is about making Wellington an affordable, internationally competitive city. And this is like a programme of work and it’s very much about engagement, and that’s not just engagement we talk about in terms of internal governance for IT projects.

This is about engagement with the community. We’ve had an incredibly rigorous six to nine months just up to recently, where we spent a lot of money and time engaging the citizens and the communities in the long-term council community plan, which is where we are going to spend the ratepayers’ money over the next 10 years. So we’ve been a lot more open and a lot more engaged with the citizens and with the ratepayers, about where we’re going to spend that money.

Warwick Wright: The Aviation Security Service has just come out of a long review period, where the government was considering whether to extend security to more airports. And the government have decided at the moment that it is not an economic thing to do, so they have given some business clarity about the size of our operation and the deployment of our resources, and so that will feed into some clarity about our IT. From an IT point of view, it means we have got some greater certainty about knowing we’re not in continuing big growth mode, therefore we have got to make the best out of the assets and resources we have at the moment.

Richard Hitchcock: Defence is very clearly focused on its vision in terms of what it needs to provide the government, and the recession has enabled us to again just review everything that we’re doing — making sure that it is right, fit for purpose and it’s still providing a valuable service to clients.

Upside of the downturn

Warwick Wright: A slightly different topic is this business of sweating assets. Yes, we want to sweat the assets and really understand what things are costing us, and whether it is more efficient to replace or to extend the life cycle. But you have to be very careful that you don’t end up in a spiral where it just becomes a bigger and bigger mountain to get your infrastructure back. I think a lot of organisations are in that [situation]. You’re so busy and at some stage you have to stop, and the current climate is just a good opportunity [to ask] where we are going, what are we doing and why are we doing it.

Glenn Myers: A recession is a wonderful time to position yourself for when you come out of the recession. I know that sounds like a conflict of sort, but it is true if you are going to invest now and position yourself to leverage that investment when the economy picks up. I think mature organisations operate in that way.

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