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Staying the course

Staying the course

The global economic crisis has increased focus on technology budgets. CIOs discuss their straegies for managing in a time of economic change.

Around the table Kevin Bloch, chief technology officer, Cisco

Brian Corrigan, editor, MIS Australia

Gerard Florian, chief technology officer, Dimension Data

Dennis Harris, SMEC Holdings

Mark Henley, chief information officer, Fairfax Business Media

Chris Holmes, Allens Arthur Robinson

Chris Jenkins, online editor, MISaustralia.com

Chris Kennett, Mirvac Group

Greg Naimo, chief information officer, City of Sydney

Bruce Nicholas, chief information officer, Network Ten

Barry Simpson, chief information officer, Coca-Cola Amatil

Sonny Susilo, information systems officer, BDO Kendalls

IT departments will have to work harder to justify their spending plans in 2009 as organisations across a broad range of industries buckle down to the possibility of a long and deep recession.

But there’s a feeling that things are very different to the dotcom crash at the start of the decade when the IT industry itself was in the eye of the storm. This time around, technology is more entrenched in business operations and will be used to drive efficiencies wherever possible.

While some non-essential projects will be cancelled or postponed, key transformational work is likely to proceed at full-speed ahead and some companies are looking to accelerate in an attempt to maximise competitive advantage over rivals that are feeling the economic strain.

Coca-Cola Amatil is currently in the middle of a $65 million business transformation. CIO Barry Simpson says it has no plans to put the brakes on because of the current economic climate and may even look to complete it sooner to turn up the heat on other beverage firms.

“At the end of the day you’re supposed to be driving efficiency whether the economy is good, bad or ugly. So you’re responsible for performance, reliability and delivering services at the best possible costs,” he says.

“If you’re doing projects that aren’t adding value then you’ve got to ask yourself why you’re doing them anyway. If anything we’re being asked if we could go faster.

“When business is tough, and the economy is tough, that’s when strong companies get stronger. I think that’s where the opportunities are. This is when you want to be investing in people and investing in your business to drive that growth and take advantage of weakened competitors.”

Ten Network has content management and a move to digital top of its IT agenda as it looks to continue feeding its growing number of channels. Its manager of information systems Bruce Nicholas expects no change to its core projects but admits there will be more scrutiny of projects to make sure they are core to the business.

The property market has been one of the hardest hit by the economic crisis. Mirvac Group’s general manager of IT Chris Kennett says some projects deemed not to be crucial, such as updating software to the latest versions, were being put on hold.

”The company is refocusing on getting back to its core business, so a number of projects have been pushed back because you can do without them for another year and or because there are other more important things that they want to concentrate on,” he says. “This whole environment is actually very useful for us to make sure that we just work on things that really matter. From my point of view it’s a good thing.”

It’s a similar story in the public sector, with City of Sydney’s manager of information services Greg Naimo reporting that his budgets are unchanged but that there has been an increased focus on prioritisation.

“There’s a lot of pressure to deliver more. The dollars are there for the appropriate projects but people want the deliverable as soon as possible,” he says.

Travel versus video

Accounting firm BDO Kendalls has state offices all over Australia and regularly flies its executives around for meetings that typically last just an hour or two. Senior management wanted to reduce travel costs and turned to IT for possible solutions, which led to the deployment of videoconferencing. Despite significant set-up costs, information systems officer Sonny Susilo estimates it has reduced travel costs by at least 25 per cent in just three months.

SMEC Holdings IT manager Dennis Harris is under pressure to deploy videoconferencing across sites in Australia, India and Malaysia. However, having seen so many units gathering dust over the years, he is not convinced it will pay for itself in reduced travel costs within three years. Coca-Cola Amatil’s Simpson is also sceptical.

“I couldn’t care less if people travel or use videoconferencing,” he says. “We’re in the consumer products business so it’s all about the service we provide to our customers and consumers. If people need to travel to do that, so be it.”

Dimension Data’s chief technology officer Gerard Florian has been involved with video technologies for almost 15 years and admits he has seen many “dust gatherers”. He argues successful deployment comes down to two factors – useability and availability. In essence, the technology needs to enable people to do something they couldn’t do before and be available to a large number of users, so that it becomes culturally engrained within the organisation rather than being restricted to the select few.

Allens Arthur Robinson took a conscious decision to operate without a headquarters when the law firms merged about eight years ago. This created a situation where its board members, management teams and heads of department are spread around the network.

With offices across Australia and Asia, collaborative technologies have become central to its operations. It has at least two videoconferencing units in every office and can have up to 160 people dialling in to a multi-camera, theatre-style conference from numerous locations.

“It’s all about the useability and reliability because the thing has to work and people have got to be comfortable with it” director of business technology services Chris Holmes says. “The biggest problem is making users aware of the technology etiquette, how to project and how to be aware of people at the other end.

“The other thing about a video conference is that the lowest common capability dictates the quality and outcome of the whole environment. If you’re running multi-point, you’ve got to make sure that the worst is as good as you want the whole conference to be.

“It was only when we went to installing good quality, fixed equipment in rooms that we really got it to a level where we could successfully run these four- and six-way meetings without a hitch. But our business wouldn’t survive without it.”

Cisco is obviously a major proponent of video and tries to lead by example in convincing its customers to embrace the technology. It has eight of its Telepresence units set up in its Australian offices and, according to chief technology officer Kevin Bloch, has budget for another 30. Globally, it is operating more than 300 videoconferencing rooms and claims to have wiped $US180 million of its travel budget during the past two years.

The search for skills

Widespread job cuts and general nervousness in the market have also had an impact on the availability of skills. There are certainly more people looking for work, but round table attendees were divided on whether this has had a positive impact on their ability to find talent.

Mirvac’s Kennett says there is more scrutiny of cost justification when looking to make a new hire, but that he is still able to bring in specialist skills when necessary, while City of Sydney’s Naimo has seen the workforce pruned considerably but reports that he is now able to find staff with particular skills, which might not have been the case three or four months ago.

In conversations with Brisbane customers, Dimension Data’s Florian says they were getting 40-50 responses to job ads as opposed to two or three resumes for similar roles earlier this year. In one example, a candidate with a master’s degree had applied for a job on a helpdesk.

Florian also notes that Australians are coming beck into the local job market after returning from stints in the US because “the party is over”.

But is the rise in resume volumes delivering the required quality of candidate? Fairfax Business Media’s chief information officer Mark Henley thinks not.

“We’ve seen the ratio of applicants for our jobs shift, particularly for the higher end stuff where we’ve got refugees from the finance industry,” he says. “They’re well qualified but they don’t fit the profile very well for our media needs. So we’re not any better off, we’ve just got more CVs to wade through.

“The upside of that is I’m getting pickier about it because I know the market has come back. We’ve got agents from recruitment agencies all over us and are having to fight them off.”

SMEC’s Dennis Harris had been trying to find an ERP specialist for three months as we went into December but was yet to have any luck. Allens Arthur Robinson reported similar woes, having been unable to fill three roles in a couple of months.

Business alignment

Discretionary spending might be a thing of the past, at least for now, but round table attendees were in broad agreement that they will continue to look for opportunities to drive business growth in 2009.

“We’ve got to be in a position to respond quickly as the economy moves in a positive direction,” Dimension Data’s Florian says. “From a maturity point of view, it’s quite different to 2001 where there were quite a few interesting projects that could suddenly get scrapped.”

Coca-Cola Amatil’s Simpson says a lot of projects during the dotcom boom and eventual bust had questionable value, whereas people are typically doing fewer, bigger projects today that deliver better outcomes. He also says taking a longer term view has helped IT but that there’s no substitute for delivering on your promises.

“You’ve got to have that longer term outlook, otherwise everything is just a discussion about a project and no-one understands the context of it,” he says. “The other thing that makes it a bit easier is delivery – if you are not delivering, you’ll get cut quickly.”

IT has moved away from being an isolated discipline in the business to become mainstream, according to Allens Arthur Robinson’s Holmes, and leaders within different sections of the business feel they have ownership of their technology component. While this has largely been positive, it has created some tension.

“As the ownership of the IT component is devolved, a lot of business units want to see an implementation as a program, and they like the idea of having an implementation team there to solve problems pretty well forever,” he says. “They never want to plan for a project to finish.”

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Tags skills shortageeconomic crisisstrategy

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