The era of change

The era of change

The CIO’s role in harnessing ICT to help the enterprise survive and thrive in constrained times, and more importantly, prepare for recovery, were the dominant themes at this year’s CIO Summit.

"It is important for you to see what others can’t see.” This insight from Graham Lowe, the renowned Kiwi rugby coach, definitely hit the mark for CIOs in these trying, uncertain times. CIOs are tasked to check out and harness tools, implement strategies and work across the enterprise to help them not just survive, but thrive through the economic downturn.

For Lowe, who spoke at the CIO Summit, this fortitude and foresight is one of the most important things. “Particularly at the moment, where so many people are distressing for whatever reason. At some stage somebody has to be able to see what others can’t see.”

John Gantz, IDC vice president, says the next four years will be a once in a lifetime opportunity for success or failure and a period of crisis and opportunity.

The two words, he says, are connected, “but you have to be proactive to get anything good around the crisis”.

“Those who get ahead of the transformation curve will be winners.” He says doing so requires “all hands on deck”, with IT working with the business units and suppliers as never before.

“IT needs to align with business objectives. You need to be integrated and exchange DNA with the business units.

“IT success will be driven by people outside IT, mostly from what happens in the business units.”

Gantz says challenges for CIOs include dealing with the economic crisis while “technology is bursting all over”, and also the necessary steps to take to prepare for the recovery.

Graham Kittle, managing partner, global business services, IBM New Zealand, echoes the message of Gantz as he talks about propelling business through the economic crisis. “Continuous change is the new normal,” he says. “Companies must abandon the notion of predictability in managing day to day operations.”

In this environment, traditional approa-ches to cost management will not work. He says a survey of companies in the S&P Index that grew by at least 5 percent, despite the economic downturn, deployed a strategic approach to cost cutting. Their moves can be grouped into three areas: focus on value, exploit opportunities and act quickly.

They looked at ways to partner with organisations to protect cash, focus on the core value and strip the non-value activities.

A critical step is taking a systematic rather than ad hoc approach to change, says Kittle. The successful organisations, he says, “manage change as a formal work stream, integrated closely with project management”.

Given that we live in exponential times, what are the new competencies needed by CIOs? This is how Brett O’Riley, chief executive of NZICT, started the panel discussion on the skill sets for today’s executives.

Enterprise thinking is key, says Allan Dornan of IAG. “You have got to take the enterprise view at all times.”

When Dornan meets with members of the executive team, he says, “I don’t go there thinking I am the IT guy. [It is] how do I make the business succeed to deliver great customer experience”.

Pieter Bakker of the Ports of Auckland says it is important to be a good leader of people and know how to keep them engaged. “We have to be excellent providers of technology services and deliver on budget.”

Ron Hooton, chief executive of ProCare Health, says, “CIOs are here to make change. The most important quality is being visionary and to set the vision for the organisation.

“We need to be inquisitive, online all the time, understand what is going on and what others are doing. You need to be a change agent within the organisation. If you are not a core part of change in the organisation, you are not a CIO, you are an IT manager and not a particularly good one at that.”

For Julia Raue, Air New Zealand CIO, it is important to have a natural style as a leader. “It is more real [this way],” she says. “You need to provide vision and paint a vision of what success looks like.”

Karl Wright, CIO of the Yellow Pages Group, says, “Don’t ever lose sight of who the customers are. Focus on the customers as everything else comes second at the end of the day.” “It is all about the business making money.”

This has to be balanced with people management. “People like to be genuinely appreciated. People smell bullshit a mile away and the real trick is how do you appeal to a wide an audience as possible, without being untruthful to yourself,” says Wright.

Raue says it is important to spend time with the business. “Immerse yourself in the actual business, it gives you an incredible insight to the things you thought you knew,” says Raue, who worked as an air hostess on a flight. Her team has also spent time at check-in counters, which helped when they were developing the new online check-in process for domestic flights.

Pieter Bakker agrees it is important for CIOs to get out and be with their customers and their customers’ customers.

“Don’t just meet the IT guy in those companies.” He had visited some ports in Asia and saw how they operate differently. “Understand it from your customers’ perspective.”

Allan Dornan of IAG says it is important to keep abreast of developments offshore and to pick the winners. “They presage what is going to happen here. [Are they] old ideas dressed up as new ideas?”

Karl Wright of Yellow Pages concurs. “Part of the challenge is filtering out what is real or not real, what is applicable and not applicable. Has it played itself in other parts of the world? What are the technologies that are adoptable?”

At the same time, he says, “Sources of revenue today are not sources of revenue tomorrow. We have a duty to make sense of that”.

Innovation in the corporate DNA

Russell Jones, chief operations officer, ASB, spoke on the challenge of managing change while also fostering innovation.

However, he first talked about the conundrum of defining innovation itself. Is it about generating lots of ideas? Building new and exciting products and services? Or, doing things first?

“We now strongly believe innovation is much more about the process than the outcome,” he says.

“It is about customer experience satisfaction and it is about customer engagement.”

The way his team does this is to identify new and unique sources of value for the company and the customers, with the output used to create customer experience.

“We design for function and we design for elegance,” says Jones. “User-based design is absolutely at the core of our innovation.”

He says in trying to please customers, ASB creates an IP borne through the ideas of its customers and colleagues. “It becomes part of our DNA, it makes replication more difficult.”

Jones discussed the “rapid, iterative development cycle” for innovation at ASB. First is generating ideas and this is done through different approaches, from getting customer insight to international research through to talking to smart colleagues. The next is testing the ideas and launching the beta, then seeking feedback through discussion forums and feedback loops. “Measure everything,” says Jones.

He says there should also be a “discard process”.

“The discard process is surprisingly important and hard to do when you have invested huge amounts of money.”

The next step is to build, which Jones describes as “refining the gems”.

He described a simple budget calculator his team developed that was quickly released in beta to get feedback. They received a number of requests to include a fortnightly option, along with the weekly and monthly options.

“We turned that into an opportunity,” he says, and the team built a version to accommodate those who are paid fortnightly and released it within two weeks.

Jones says innovation is a customer-centric process. But, he stresses, “It is not what you ask the customers that count, but how you listen to them and what you do about it.”

The evolving role of the CIO

Mike Clarke, CIO, SkyCity, also took on the imperative of being a customer-focused CIO.

“Our job is to make sure customer experience happens as smoothly as possible and [they do] not notice the technology behind it,” says Clarke. He says SkyCity is a multifaceted trans-Tasman business and users interact with their systems each time they book a room, use a car park or go to the gaming table.

“Our job is to make a seamless transition and that is exactly how we see ourselves.”

However, he says the business may not get this message and the job of IT as a group and industry is to communicate this in a way that their customers understand.

Building a great workplace is a work in progress, says Owen McCall, CIO, The Warehouse.

But first, what makes a great workplace? In his presentation, McCall draws from John Robertson and Associates, which lists the following characteristics: alignment to vision and values, a sense of community, developing people and a performance culture.

The Warehouse’s core purpose is to make a difference to people’s lives by making the desirable affordable and supporting New Zealand’s communities and the environment. “By putting the customer first, we will succeed. Everything we do flows from this principle.”

Transposing this to IS, McCall says, “our purpose is to support The Warehouse and ‘make the desirable affordable’ by becoming a world-class IS organisation.”

He says the Warehouse holds annual engagement surveys, and the results are used for programmes to help develop people to their fullest potential. These include recognition programmes for top performers and emphasis on developing leadership skills.

“It is much more fun working with people having fun than people dragging themselves around,” explains McCall on why the company emphasises these types of programmes. There is also a sound economic reason for doing so.

“If you have motivated, passionate employees, they provide excellent customer service and stick around longer. Lots of research show highly engaged employees provide better customer service. By providing great service to customers, they come back more often and spend more money and tell their friends.”

A game plan for mergers

Merging two separate organisations while reconfiguring the ICT to ensure it continues performing at an optimum level is a formidable exercise.

Lynley Lee, ICT manager for AsureQuality, faced just that challenge with the merger and relocation of the datacentres of ASURE New Zealand and AgriQuality, the two organisations that came together in 2007 to make up AsureQuality.

The first port of call is to secure a good project manager, says Lee. As well, it is necessary to empower key individuals from various parts of the organisations, who have a working knowledge of the ICT requirements of their team or department.

For this project a map was prepared of every piece of equipment in the datacentres, detailing their functions and physical dimensions. With that kind of detail at hand, the design and construction of the new datacentre was “like fitting together a jigsaw”, Lee says.

During planning care was taken in regards to the staff who would be working in the centre, with engineers involved to ensure there was sufficient room that two people working on adjacent racks would not bump into each other. This may seem an insignificant detail, but such an impediment has the potential to impact the smooth operation of ICT as a whole in the organisation, Lee says.

Importantly, the database of the location of every component was retained, so the inevitably flexible layout could be kept clean and efficient. “There are still no rats’ nests of cabling in our datacentre,” says Lee.

A decision was taken to bring inhouse some functions that had previously been outsourced, she says, so information pertinent to the IT operation’s smooth functioning stayed within the organisation and was not owned by an outsourcer.

Although the project was presented to the business as a successful IT project, reflecting kudos for the IT team, they never lost sight of the fact it is fundamentally a business project, directed to satisfying the needs of the business. “We no longer discuss with business managers what device they’d like to have, but what view of the information they need to have,” she says.

Collaborative communications

Dr Sid Ahuja of Alcatel-Lucent sees a time when digital sensors will be prevalent, relaying an ongoing stream of data about everyone and everything. This will make for a more powerful and relevant kind of collaboration among teams.

In other contexts, a network of co-operating digital devices will adjust their own configurations to suit the parameters they operate in. For example, the changing foot traffic in a public building, such as an airport with 24-hour access, alters the demand for wi-fi communication depending on the time of day; the wi-fi network should not remain static but reconfigure itself to automatically cope with the fluctuating demand, says Ahuja.

As a vice-president of Bell Labs, the research arm of Alcatel-Lucent, Ahuja admits he is one of the technologists who present CIOs with problems to solve; but he also gives them new technology to assist in the solution.

Bruce Gallie, chief operations officer, Colliers International, discussed how one mobility tool has helped the organisation cut costs while securing better revenue and improving collaboration.

Gallie says the property firm has independent contractors for its staff. They tend to be more demanding because they are paying for the devices they use, and the services provided by the devices are for generating revenue. These days, the staff use Blackberrys, which allow them immediate access to their clients and email. With the Blackberry, the broker can show a property to a client and get basic info on the property and send a PDF file of the record to the client.

“This is pretty powerful. Clients are impressed when you can show them the information,” says Gallie. An unexpected cost saving was the need for fewer laptops, which people had earlier requested so they could connect with their email accounts from home and when on the road.

Interoperability in government

Like many private organisations, government has developed separate infrastructures within particular units, tightly coupled to the individual agencies’ requirements for business information and business process. Government agencies have a considerable legacy of this separate development.

Over the past decade, we have seen the rise of concepts such as information architecture “to start unravelling it all and thinking about new ways of constructing our information services to provide a higher degree of flexibility”, says Stephen Crombie, newly appointed to head the Government Technology Services unit (GTS) that became part of the Department of Internal Affairs last month.

GTS looks after the operational side of all-of-government ICT. State sector interoperability, the subject of Crombie’s talk, is part of its brief.

He discussed the effort in regards to web standards, directed at presenting government information in a consistent and accessible way to citizens, and acknowledged “we have a long way to go” on that front.

The way a person identifies himself or herself securely to government services, the province of GTS’ igovt project, is another crucial element, Crombie says.

Deconstructing SharePoint

Microsoft SharePoint is capable of serving a wide range of the needs of an enterprise content management system, say Sarah Heal and Grant Margison of Information Leadership Consulting.

They rebutted criticism of SharePoint’s unsuitability, while acknowledging that in its “out of the box” form the software lacks some capabilities the enterprise is likely to need. However, with some configuration and minimal additional software SharePoint will be capable of meeting most organisations essential needs, Heal argues.

Julie Bedggood, CEO of Auckland-based Intellimin, gave the first of what were a number of presentations on the growing movement to “cloud computing”, demonstrating its application to an entirely online insurance policy administration system.

Intellimin provides the engine for the online insurance service Intelligent Life, sold by Pinnacle and Australia’s OnceOnline. There is naturally some concern about the privacy of customers’ personal details in the cloud, says Bedggood, but she argues that if the cloud in question is actually contained in one or more large datacentres, the physical security of such buildings makes it a better alternative than many architectures used for insurance and other financial systems.

Another speaker is David Allen, general manager of document services at Datamail. While Datamail has a reputation as a distributor of information on paper, it is also inevitably “heavily focussed in the online world”, says Allen.

So much business is done online and “in the cloud” that it would be a mistake to ignore it, he says. A great deal of customer response is in the cloud too.

Datamail is an agent for RightNow that provides “cloud monitoring”, scanning the social networking landscape and automatically recognising positive and negative comments about the client company.

But paper has not outlived its usefulness, he says. Paper statements have even become a serious vehicle for marketing through high-quality printed material in the same envelope, a technique known as “transpromo” (transactional promotion).

Seek and you shall find

In presenting a paper “Information versus technology: meeting the needs of competing customers in online businesses”, Cary Eaton, from international online recruitment agency Seek, told the conference how staff filter, prioritise and otherwise manage a growing volume of information.

One of Eaton’s central themes is that the kinds of information outside the firewall, in the world of daily experience, will seep irresistibly in behind the firewall to the realm of digitised business-related information. The same applies to the tools used to handle the information.

Portals in the wider internet show trends reflected much later in company intranets. “Intranets now are where portals were 10 years ago,” he says.

“Where is the information about jobs?” Eaton asks. Traditionally it came from friends and through advertisements placed in newspapers. These days it can be found at employment agencies, online and increasingly on the sites of the corporations themselves. Branding, which has always been used in the “real world” as a mental filter for what is worthy of attention, is increasingly important for directing a customer’s attention to a website. The priority of physical location (what we pay attention to is what is near to us) was eliminated by early use of the internet; now it is reasserting itself, with location-specific online services.

Management and those in marketing must stay aware of the picture presented of their company by such online commentators, and be ready to steer their message back on track using the same media, he says.

Elastic computing

Andrew Wilshire of dairy giant Fonterra discussed the upsides and the downsides of virtualisation. Rather than use the vague metaphor of “the cloud”, he calls it “elastic computing”. The essence of virtualisation is the ability to “rapidly reconfigure IT resources to meet business requirements”.

In this way, he says, it furthers two critical priorities concerning CIOs: reducing cost and demonstrating business value. The original advantage of reducing capital expenditure by increasing the utilisation of physical servers and storage has been supplemented by a reduction in operational expenditure, through increased flexibility and mobility of resources and reduction of lead-times in provisioning new resources. Part of this trend is the introduction of virtual clients as well as virtual servers and storage.

A show of hands among the CIO Summit audience revealed that about 90 percent are using virtualisation in some capacity. Virtualisation has reached a “tipping point”, says Wilshire. Those remaining will have no choice but to “join the party”.

Agility in action

Andy Neale, programming manager of the DigitalNZ project at the National Library, spoke on the value of agile development techniques in the DigitalNZ project.

It aims to allow users to search, select, combine and manipulate the stored information to reveal hidden historical material in the Library’s archives

Use of the agile methodology Scrum was a direction that came about during the choice of providers for the development, says Neale, though the original request for proposal did specify a flexible development method.

Scrum builds the application in small pieces that are as self-contained as possible, and are typically developed in a two-week “sprint” for each. This means even if the project is terminated, there is still some usable code at the end of it to incorporate into a new approach.

Security in the spotlight

After 27 years in the intelligence community, including a period with Britain’s government spy organisation MI5, Paul Blowers came to New Zealand to take up a job as enterprise security architect with Police. “So all I worry about now is spam, malware, phishing, pharming and botnets and it is all great,” he says. In his presentation he challenged the audience with progressively probing questions on security. He planned on tackling 10 security questions, but by the time he got to the third question, no hands went up. The question was, “Do you know what you spend on security and what your return on investment is?”

NZ Police has to be aware of Web 2.0 developments and risks. On the technical front, the Police network is fully protected with firewalls, authentication and encryption. “Technology is not the problem,” says Blowers, “people are.”

There are documents on government security available online, Blowers says, and these will be equally useful to CIOs. But his primary source is ISO standard 27001. This standard helps establish general guidelines, but leaves options open in a way many rigid codes of work practice do not.

“Security is business enablement,” he says. At the same time, security is a business challenge and the business should be involved in the strategy and architecture. “Don’t just rely on the security specialists, they’ll see it all as a problem.”

A presentation by Dr Murray Milner, principal consultant of Milner Consulting, highlights the impact on security for enterprises who work with external partners.

He says in the current business environment, no single enterprise can do everything in its value chain in an optimal manner. They need to look at the integration of customers and suppliers into their supply chain. But opening up network access brings substantial challenges.

“The increased security issue that arises from having more parties accessing enterprise applications and data, threatens the very existence of the enterprise,” he says.

Meeting the economic challenge

The elephant in the room is the current economic slowdown and this made for a lively panel discussion on how CIOs can and should deal with the recession. So how are CIOs facing up to the challenges of the economic downturn?

“You work with the business,” says Tony Wickstead, CIO of the Auckland International Airport. “This recession makes us focus on cost more. The recession has focused [us] on what’s next and we have reassessed what projects we will do.”

Andrew Crabb, TelstraClear CIO, says the economic slowdown is “making us look further afield”.

He says, “Understand the requirements of the business units, look for ideas and quick wins that win the confidence of the business.” His ICT team is working with the business, starting with finance around business intelligence. “There is a thirst for information and data so they can make better, timely decision making and deliver additional capability,” he says.

Crabb sees a positive impact from the constrained times. “It forces people to look outside the square and improve relationships between IT sales and finance units.”

Aubrey Christmas, CIO of the Employers and Manufacturers Association (Northern), says apart from “keeping the lights on”, he is working on “continuous business improvement instead of IT improvement”.

He says in working with the senior executives and the board, they discuss what is the strategic view in five to seven years, and what are the technologies out there that can be integrated.

Working with the CFO is important, says Christmas. Doug Wilson of the NZ Automobile Association agrees. “In times like this it is important for the CIO to be close to the CFO, to be seen as an ally of the CFO,” Wilson says.

Work with the CFO to help plan what needs to be cut or left alone, he says. “We need to delay what can be delayed. But anything that is delayed, get a commitment from the CFO or CEO that it is only a delay.” He says it is also a good idea to renegotiate long-term contracts with suppliers, especially those in telecommunications and hardware.

Robin Johansen, CIO of Beca Group, says having a strategic plan with a clear vision and strategy is important. “It is not a new thing that we turn on in times of recession,” he says.

Simon Gould-Thorpe, CIO of Honda New Zealand, says it is important to take the team on board. Any new cost savings they make are redirected to projects that allow the business to go forward. “You have to go with a bit of caution, you have to look long and hard,” says Gould-Thorpe. “The biggest thing we are finding is working very agile, realigning and looking for new business opportunities to realise revenues from other areas.”

The bear economy CIO

As for the formidable job of being a CIO and working in a bear economy, here are some more words from Graham Lowe. “Changes come in our lives in so many ways,” he says. The same is true for challenges.

“If you are leading or managing or coaching, and if you can’t remain positive and you can’t see what others can’t see, how can you expect to possibly get the best out of people that are working for you?

“We all at some stage in our lives face disappointment,” says Lowe. “We sometimes think we should be getting more and we deserve more than what we have been given. But if you are part of a team or an organisation, it is up to the leaders to recognise that, to see those people and make them part of the team so they do put up with the pain.”

The CIO Summit 2010 will be held on July 21 and 22 at the SkyCity Convention Centre in Auckland.

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