Menu
Menu
MIS100 2008: Critical issues, common concerns

MIS100 2008: Critical issues, common concerns

The CIO’s challenge is to work across the organisation to forge ICT’s role in the success of the enterprise, while preparing for a raft of issues including a shifting economy and staffing concerns. Nowhere is this multifaceted task more pronounced, or pressing, than for the CIOs of this year’s MIS100 organisations.

When it comes to sectors dominating this year’s MIS100 organisations, there were few surprises. Government, health and education comprise more than half of the list, as they have since MIS100 started tracking the country’s top users of ICT in the past 11 years. If at all, the variances that emerge from this annual report have been about the challenges faced by the heads of the ICT departments of these organisations, and their decisions about investments in technology and systems.

This year, the range of business challenges and ICT investments to address were more extensive than in the past two years. To top it all there were recurring themes, like the merger of software companies that some CIOs consider an inevitable issue they just have to grapple with. And for the third year, recruitment and retention of skilled staff is a key management issue facing ICT departments.

CIOs are also tasked to implement a raft of business projects with large ICT components. Virtualisation, consolidation, service oriented architecture, unified communications and business continuity are the most cited projects or investment targets by enterprises in both government and private sectors.

The result? CIOs, more than ever, are managing a complex set of activities to achieve business targets.

One CIO describes the task ahead: “Technically, the challenge is maintaining an effective balance between infrastructure maintenance and operation, replacement of legacy environments, as well as bringing in entirely new systems. Organisationally there is a huge challenge around change management.”

John Brand, research director of analyst firm Hydrasight, confirms this full-on agenda for CIOs in the coming 12 months.

CIOs in competitive industries will increasingly look to optimise technology support through greater emphasis on decentralisation of application development, delivery and support, he says. “They will however, be increasingly challenged to understand and implement the ‘centrally governed, remotely deployed’ model now required to keep up with changing business demands. This will require a strong focus on technology portfolio management, as shared infrastructure allows individual lines of business to become more flexible while maintaining an appropriate level of centralised control over data.

“Successful delivery of both internally and externally-sourced technology solutions, will be required to meet increasingly aggressive business unit timeframes. Where CIOs have previously focused on managing cost and complexity, the pressure will return on delivering functionally-rich, highly-reliable and high-performing applications/information systems for various lines of business — independent of where they are sourced. Both speed of delivery and speed of response will once again overtake cost, as the main business driver for the majority of Asia Pacific economies.”

Moreover, Brand points out IT executives will face ever-increasing scrutiny, not only from large-scale IT project failures in the media but also on issues of environmental sustainability and social obligation.

Corporate social responsibility like green ICT, work/life balance and support for the community, as well as changing workforce demographics, will force CIOs to consider new technology deployments including Web 2.0 and social networking, he says.

The significant numbers

We take a closer look at the working environment of the CIOs in this year’s MIS100.

The total number of screens of all MIS100 companies is 403,959, a huge jump from 376,514 in 2007. For the second year now, the New Zealand Defence Force reports the highest number of screens at 17,500. The average number of screens continues to grow annually. This year, the average number of screens for those in the top 25 was 9104, a jump from 8517 the previous year. This trend is exhibited all the way through the organisations in the next three quartiles (see graph A)

More than half of the biggest IT users are from the public sector. Notably, education has been dominating the list for the past 11 years. This year, there are 21 education organisations in the sector. Three universities — Auckland, Otago and Massey are in the top 10.(see graph B)

Nineteen organisations are from the government and defence. Health and community services, the third largest sector, comprise 12 per cent of the total. Manufacturing organisations slipped by two points and wholesale and retail trade gained one more point, with the inclusion of Bunnings, which in 2007 was in the ‘bubbling under’ category. This refers to organisations just outside the top 100. It’s the same with transport and warehousing, as Mainfreight joins this year’s list. In the regional distribution, Auckland (with 40 organisations) leads the list, as it did last year. This is followed by Wellington with 35 organisations. Christchurch has eight organisations this year, an increase of one per cent from 2007. Palmerston North and Dunedin remain constant this year, with three and five each respectively (see graph C).

Reporting lines and transitions

MIS100 tracks the reporting lines of the CIOs. This year, 34 CIOs say they report to the chief executive or managing director, a move up from 29 in 2007. Meanwhile, 18 heads of ICT report to the chief financial officer or the chief finance executive in the organisation, down from 25 the previous year. All the other CIOs report to a range of titles including commercial director, head of corporate services and executive director.

As in past years, MIS100 tracks the changes in ICT leadership. Four of the top 10 organisations have new CIOs: Chris Barendregt of Fonterra, Peter Thomas of the NZ Defence, Peter Lawrence of ANZ (in an acting capacity), and Greg Patchell of Telecom New Zealand. Other new CIOs in the list include Mark Marshall of the Christchurch

Polytechnic Institute of Technology, replacing Kevin Adamson who is now with the University of Waikato. Peter Winquist, former CIO of AsureQuality, is the new IT director of Unitec. Allan Dornan is the new CIO of IAG after James Dring moved back to the Australian office. Damian Swaffield, formerly of SkyCity, is now general manager technology at TVNZ. Alan Hesketh, formerly of Progressive Enterprises, has moved to the Ministry of Health as deputy director general of health, corporate and information.

Some of the shifts occurred after a major reorganisation of the structure of the IS department as in the case of Barendregt, who reports to Greg James, now director procurement IS and business processes. James previously held the dual role of chief information officer and general manager global business processes.

Vector restructured its ICT function, Andries van der Westhuizen is appointed general manager IT with the departure of CIO Hanno Schupp. Peter Thomas of Defence replaced Derek Locke, now CFO of FX Networks, and brings to Defence more than 20 years of general and executive management experience in the financial services industry.

As well, organisations in the MIS100 undergo changes in ranks. This year, the newcomers to the list include the North Shore City Council, Mainfreight and Bunnings.

Some new names on the list are a result of corporate rebranding — such as Stella Travel Services, formerly known as Gullivers Travel Group. Southern Alliance is the shared service organisation for the Southland and Otago District Health Boards. Silver Fern Farms is the new name of PPCS and the shift is part of a strategy to refocus the organisation — a meat marketing and processing company exporting its products to six countries — as a fully integrated marketing company.

Notable shifts in terms of ranking in the MIS100 include that of Lion Nathan, number 38 this year, up from 65 in 2007. PGG Wrightson moved up from 49 to 40 and Datacom went from 53 to 44. Goodman Fielder, ranked number 93 in 2007, is 54 this year. Freightways moved up from 89 last year to 69 this year.

IT staff and the end users

ICT teams continue to grow in number and this is true for both government and private enterprises. Zeroing in on sectors, health and community services had a 56 per cent rise in ICT staff in the past year; finance and insurance, and government and defence had 19 per cent and 15 per cent more staff respectively.

The MIS100 uses the number of employees as an indication of the number of users and IT head has to support. That is why we used EFTS numbers instead of employees for the education sector. This year’s MIS100 organisations employ a total of 17,315 ICT staff, with an average of 173 per site (see graph D). This is an increase from the 2007 count of 16,241 staff with an average of 121 IT staff per site. Had we included the number of outsourced staff, this number would no doubt be significantly higher of course.

Overall, each IT staff member supports on average of 23 screens (it was 31 in 2007). For those in the top 25, this figure is higher, at 27, but is highest, at 36 per IT person, for those in the 76 to 100 list (see graph E)

Help wanted

As CIOs list their goals and strategies for the upcoming 12 months, they expressed concern about the ongoing shortage of skilled ICT staff. Some CIOs implied this shortage could affect the schedule of implementation of these projects, as well as ICT capability.

The 2006 MIS100 report first touched on this issue, as CIOs then said finding quality staff was a business challenge.

Peter Rosewarne of NZ Customs does not see the problem easing soon. He says unavailability of IT ‘talent’ in the market place is a concern and like many public organisations NZ Customs Service will face “real challenges” attracting and recruiting IT staff over the coming 12 to 18 months.

At the New Zealand Defence Force, the problem is exacerbated by the fact that most of its ICT operations, implementation and development work happens in-house — and with smaller ICT remuneration compared with industry standards. “Remuneration is a big area of focus both for military and civilian NZDF staff going forward,” says Defence CIO Peter Thomas. He says while NZDF outsources few ICT functions, in the future this may need to change. “We will need to work more closely with the industry in future to achieve our operational outputs. To enable this we will need to build long-term relationships with many of our key suppliers. There will be benefit for both industry and NZDF in this approach.”

For Steve Sorsby, head of IT at the Universal College of Learning, ensuring the IT team is involved in the implementation and training of large-scale projects is one way to maintain interest and retain staff. The predicted economic downturn is expected to make staff recruitment that much harder. Organisations that can access staff from their offshore offices have an advantage, but are not immune from the problem. An example is IBM, and IT manager Doug Stuart says it is increasingly tapping its global workforce for this. EDS is another organisation with access to a global workforce, but Chris Mitchell, vice president, says recruitment and retention is a challenge. EDS will continue to invest in staff development and recruitment.

“We have a range of programmes, including a talent management programme driven by the senior leadership team,” says Mitchell.

“There’s no abatement to the skills shortage and there are a lot of big transformational changes. We are also looking at the generational aspect; keeping Gen Y and so on. We have also launched a Maori internship in New Zealand,” says Mitchell.

Mergers and other business challenges

An issue a number of heads of ICT in this year’s MIS100 are vocal about is the impact of the ongoing merger of software providers, particularly the global providers.

There are mixed reactions to the mergers. “Each merger needs to be considered on its own merits,” says one CIO who adds that the mergers have had no impact so far on the services provided to them. “Whilst there may be an impact in the future, the majority of mergers are likely to make economic sense and should provide additional benefits to their clients.” Another CIO points out the mergers may limit competition, but it also means more investments can be made in software applications. Smaller ERP applications may also find it easier to find IT expertise in the market. Another CIO adds that he supports the mergers, provided that legacy systems are not abandoned and future roadmaps are made clear.

One CIO says in some cases the mergers may reduce “competitive tension”, which can have unexpected positive outcomes. When its CRM system was bought by Oracle, he claims the latter paid more attention to them. “The market cake is small in New Zealand and if it is cut too many ways it becomes tasteless. But if you end up having a big enough slice, then merged vendors will pay attention to you and we can drive value out of that.”

A concern is having a reduction in choice and in some cases, this means having only one main player in the market. This is said to be already happening in an application that is very critical to one sector and an affected CIO finds this trend “disturbing”.

Some CIOs take a pragmatic view. “It’s a reality and you have to deal with it,” says a CIO whose organisation is in the top quartile. “The key is to maintain clarity surrounding environmental issues like data structures, system interfaces, migration strategies, product ownership lifecycles and preferred platforms. Linking this to a longer term vision, will support rational decision making when it comes to moving your business to the most compatible provider.”

On the other hand, some MIS100 organisation CIOs are managing the issues emerging from another form of merger — when their organisation acquires another, or are being acquired themselves by another organisation. One of these is Land Transport the agency formed in 2004 from the merger of Transfund New Zealand and the Land Transport Safety Authority. This year, it will merge with Transit NZ to create the NZ Transport Agency.

Land Transport CIO Tony West says while organisational direction and business strategies are reasonably well understood, the new organisation structure will bring further challenges. “The new organisation’s IT governance structures will take some bedding down and we are continuing the existing business planning process for next year, along with implementing the enterprise architecture.”

Promina is now Suncorp Group following the takeover by Suncorp-Metway. Aaron Barreto, executive manager, New Zealand operations, says key ICT programmes in the coming year include integration of legacy Promina legacy systems with Suncorp-Metway Systems.

Neil Kane, IT manager at Opus International says managing the consequences of growth targets is the key IT challenge faced by the group. The engineering consultancy is expanding through acquisition and organic growth in New Zealand, Australia, Canada and the UK. From an IT perspective, Kane says standardised systems and processes are important to help facilitate growth and ease the integration of new business acquisitions.

Taking care of business

Two years ago, MIS100 reported that server virtualisation has taken off, as enterprises reported increasing the resources allocated to the project. This year the trend continues, with the smaller organisations in the MIS100 reporting benefits from the technology.

Universal College of Learning IT director Steve Sorsby says virtualisation has enabled modest sized IT shops, such as UCOL, to implement failover strategies, which would have been out of reach two or three years ago.

Enterprises through a range of sectors, from the Ministry of Justice to TVNZ, are moving their servers to virtualisation.

HealthAlliance is continuing with its server virtualisation project, even as CIO Phil Brimacombe finds the move challenging due to the complex clinical applications used by the DHBs. “It’s quite easy for organisations with off-the-shelf applications to virtualise, but our specialised applications have challenging integration issues. However, we are proceeding because we have hundreds of servers,” says Brimacombe.

John Brand of Hydrasight says the use of server virtualisation has risen rapidly in the past four years within New Zealand and Australia organisations. Hydrasight foresees this trend to continue within the text/development and production environments, heralding what he calls “a new wave of virtualisation”.

Beyond server virtualisation, Hydrasight sees IT organisations increasingly exploring differing layers of virtualisation within the technology stack including storage, desktop, information and application.

Unified communications (UC) and related technologies, like VoIP and videoconferencing, are also top of mind in the list of investments or technologies being investigated by the ICT teams in this year’s MIS100 organisations.

The education sector is particularly active in this area, as it continues to invest in videoconferencing technologies. Otago Polytechnic says the technology will help generate new enrolments, while connecting remote students with local course content.

UC will gain increased attention from both business and IT executives in 2008, based primarily on expectations of increased productivity, says John Brand of Hydrasight. However, for the foreseeable future, the email inbox will remain the primary focus for the majority of employees — including information broadcast and task/event-driven applications. The driver for UC in most instances will be tied to meeting the desires and demands of tech-hungry knowledge workers and what Hydrasight calls “Generation i”. These, says Brand, refers to other (older) age groups that are displaying similar behavioural characteristics to the original Gen-Ys. These include demand for mobility, instant access to information and applications, personal devices access to corporate systems and emphasis on social media that are exhibited even by executives born in the 1940s and 1950s.

Mobility is a key issue as more CIOs this year report on increased investments to supply the out of office workforce with the level of mobile communications they desire. Nigel Bailey, group operations manager for Fairfax Media, says investments for mobile technologies will increase this year, with the organisation looking at wireless network technologies within the offices. “We see a need for far more flexible work environments, along with an opportunity to better utilise our office space with wireless networks.”

Mobility is a priority project for the New Zealand Police. Acting Police ICT manager Ian Smith says a key focus is increasing mobility at the frontline. “Police officers are a mobile workforce,” he says. “They need to be able to gain quick access to information in the field with the confidence that it is still secure.” A range of organisations, from Victoria University in Wellington, to the Inland Revenue Department, to Carter Holt Harvey are reporting plans to upgrade disaster recovery and business continuity systems. But as CIOs in this year’s MIS100 report a raft of projects, they are also bracing themselves for the implications of an economic slowdown.

One CIO says that investment in IT is key to the success of the business, so while an economic slowdown might result in greater scrutiny of investment, the business would continue to invest in key projects. A government CIO says the effect on the team is basic — “less ability to provide the same or more services”.

A CIO says ICT budgets are always under pressure, as businesses seek to focus on providing cost-effective systems to the customer.

The carbon footprint

Sustainability is one area that is gaining more traction this year. IAG’s Allan Dornan says ICT is doing its part through a number of initiatives to reduce power consumption, printing and travel costs.

Telecommunications cost and performance allowing, DOC is interested in the benefits of web and video conferencing to save on travel costs and lower its carbon footprint.

ACC continues to invest in video conferencing and collaboration tools to reduce travel and improve teamwork in a large national organisation.

IBM will also have a strong focus on environmental, workforce and community sustainability.

“It goes without saying that we’re continually implementing specific measures to reduce our own environmental footprint, as well as helping our clients reduce theirs. Energy costs are now one of the single largest operating cost increases for businesses. It’s a big topic of discussion with clients as they want to know what we offer in the way of energy-efficient hardware, software and service solutions — as well as what we’re doing to manage our own environmental impact,” says IT manager Doug Stuart.

John Brand of Hydrasight says the analyst firm believes more than 10 per cent of large Asia Pacific organisations, primarily high-profile corporations and some governments, will announce their intent to ‘go green’. Such announcements, he says, will tend to be driven by external drivers, such as the concept of being a “good corporate citizen”.

Hydrasight foresees the move to ‘go green’ will quickly extend to other aspects of the IT asset lifecycle, including safe disposal of old IT assets, introduction of corporate policy on the purchase of less harmful assets, implementation of waste reduction efforts (including reducing hardcopy output) and automated shutdown of unused computing capacity.

By 2009, he foresees significantly increased pressure being placed on IT suppliers, ranging from consumables through to external service providers, to conform to newly-established corporate environmental policies and guidelines. Though not strictly enforced, organisations will incorporate environmental impact measures as part of their supplier relationship and contract management processes he says.

Some things will definitely remain constant for the heads of the ICT teams of the MIS100 organisations: They will need to dig deep into their change management skills as they face more challenges with new technologies, people issues and a shifting economic environment.

This overview was prepared with additional reporting from Vikki Bland, who wrote the profiles of the top 100 organisations in the May 2008 issue of CIO New Zealand magazine. Sheila O’Brien, manager of Fairfax Business Research in New Zealand, provided the analysis of the MIS100 data and graphs.

Who made it to the list?

1 University of Auckland

2 Fonterra

3 New Zealand Defence Force

4 University of Otago

5 Fletcher Building

6 ANZ National Bank

7 Telecom NZ

8 Carter Holt Harvey

9 Massey University

10 Ministry of Social Development

11 AUT University

12 Inland Revenue Department

13 Air New Zealand

14 Progressive Enterprises

15 Bank of New Zealand

16 New Zealand Police

17 healthAlliance

18 ASB

19 Westpac

20 Land Transport New Zealand

21 The Warehouse Group

22 Department of Corrections

23 Auckland District Health Board

24 University of Canterbury

25 Te Wānanga o Aotearoa

26 New Zealand Post

27 University of Waikato

28 New Zealand Customs Service

29 Ministry of Justice

30 Canterbury District Health Board

31 Unitec

32 Foodstuffs Co-operative Society

33 Manukau Institute of Technology

34 Accident Compensation Corporation

35 Ministry of Education

36 Victoria University of Wellington

37 HealthIntelligence

38 Lion Nathan

39 Fairfax Media

40 PGG Wrightson

41 Silver Fern Farms

42 Waikato District Health Board

43 The Farmers Trading Company

44 Datacom NZ

45 IAG New Zealand

46 APN Holdings NZ

47 Auckland City Council

48 Vodafone

49 Foodstuffs South Island

50 Department of Labour

51 Waikato Institute of Technology

52 EDS New Zealand

53 New Zealand Racing Board

54 Goodman Fielder

55 Sky City

56 Fisher & Paykel Appliances

57 Opus

58 Southern Alliance

59 Ministry of Agriculture and Forestry

60 Suncorp Group

61 Fulton Hogan

62 TelstraClear

63 Lincoln University

64 Otago Polytechnic

65 Toll NZ

66 Saint Kentigern

67 Mainfreight

68 Christchurch Polytechnic Institute of Technology

69 Freightways

70 Whitireia Community Polytechnic

71 Ministry of Health

72 Universal College of Learning

73 Christchurch City Council

74 North Shore City Council

75 Transfield Services

76 Department of Conservation

77 Southern Institute of Technology

78 Wellington Institute of Technology

79 Vector

80 Bay of Plenty District Health Board

81 MidCentral District Health Board

82 Department of Internal Affairs

83 New Zealand Lotteries

84 New Zealand Fire Service

85 Stella Travel Services

86 House of Travel

87 Wellington City Council

88 Southern Cross Healthcare

89 TPF Restaurants

90 Television New Zealand

91 AgResearch

92 NorthTec

93 Housing New Zealand

94 Ministry of Foreign Affairs and Trade

95 New Zealand Steel

96 Beca Group

97 IBM New Zealand

98 Hutt Valley District Health Board

99 Kristin School

100 Bunnings

Bubbling under

The up-and comers just outside the 100 — watch out for them next year:

Downer EDI Works NZ

Manukau City Council

Diocesan School for Girls

Turners & Growers

Coca Cola Amatil

Statistics New Zealand

Ministry of Economic Development

MediaWorks

Tyco Fire & Security

Tait Electronics

The profiles of the top 100 and the 10 'bubbling under' organisations are in the May 2008 issue of CIO New Zealand magazine.

© Fairfax Business Media

Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

Join the newsletter!

Error: Please check your email address.

Tags leadershipnew ciocareerMIS100

Show Comments

Market Place