Change for the better

Change for the better

IT can be a significant factor in driving and enabling change and growth in businesses. At a recent MIS round table, sponsored by HP, leaders discuss technology's role in today's fluctuating environment.

Round the table * Michael Harte, CIO, Commonwealth Bank

* David Jacques, director, IT services, developing and emerging markets, Kimberly-Clark

* Michael Hall, head of information enterprise services, Deutsche Bank

* Hani Sedham, head of business technology,

Pfizer Australia

* Chris Holmes, director of business technology services, Allens

Arthur Robinson

* Peter Nimmo, director IS, Panasonic Australia

* Gordon Dunsford, CIO, TransGrid

* Carol Avis, manager of information management and technology,

The Australian Centre for Languages

* Matthew Harris, group general manager IT, Stella Travel Services

* John Duckett, general manager IT, DLA Phillips Fox

* Garry Whatley, CIO, Corporate Express Australia

* Sandeep Dharni, director IS, Norske Skog Australasia

* Stephen Bovis, director of enterprise storage and servers, Hewlett-Packard South Pacific

* Paul Smith, editor MIS - moderator

Unique concerns

Michael Harte: I've been at CBA about 18 months and we're undergoing fairly significant change. We're trimming the sails on infrastructure and trying to cut expenses to the tune of around $100 million a year. At the same time, we're investing in three new initiatives. We're footing about $500 million of risk to scale up in a number of key areas, particularly online, and also some significant business intelligence around customer satisfaction.

Garry Whatley: I've been at Corporate Express for eight years. When I started it was about a $200 million organisation. It's $1.3 billion at least today, so we've had significant growth. I think during that time I've been involved in about 45 acquisitions, so I've seen lots of change, and I continue to see lots of change.

Matthew Harris: We're at the finishing line of a massive trail of mergers and acquisitions, which means we now represent roughly 40 per cent of the travel industry. We are trying to make an infrastructure platform work across many varied business units that have all been merged together in a very short period of time. That's creating some challenges and excitement for us.

Michael Hall: Our technology is driven by new products, changes in the marketplace and changes in the mix of products being sold through our trading divisions. Most of my remit is about keeping up with the waves of transaction load, and keeping up with the new products and platforms that continue to come out and drive the business.

CIOs' roles in developing commercial avenues

Matthew Harris: Our customers are also our franchisees and for quite some time now we've been acting as an integrated services reseller to these businesses and providing niche solutions that meet their needs.

So as a franchiser we are meant to be providing solutions to help their business flourish. We've also been providing IT solutions and they are sold to the franchisees. So it means inside the IT department we actually have a sales and marketing section; we do research and development and we actually operate like a mini-company.

Paul Smith: Are these marketing staff that report to you?

Matthew Harris: More like IT experts that we try to teach sales and marketing skills, as opposed to bringing in sales and marketing people and trying to teach them the product knowledge.

Michael Hall: I don't think IT at Deutsche Bank is actually providing commercial advantage, in other words, it's not generating new products. But the point for us, and in most investment banks, is that the new product can only be put out there on a new platform, or a modification of a platform.

So the challenge for us is not so much generating new ideas for new business and new revenue streams, but making it so that the new revenue stream can get online as quickly as possible.

Garry Whatley: At one stage, I actually did have responsibility for the marketing function, under my CIO role, and at present I actually have responsibility for the customer side of our own business. Seventy-three per cent of our business goes through our e-business platform, and I'm responsible for not only the technical component, but the commercial component of that, and actually how we drive it into the marketplace.

Encouraging IT staff to contribute to growth

Michael Harte: Many IT people come up through a career path that involved running the system, or getting a project delivered, so they are used to the enablement model, rather than proactively thinking about methods of distribution or new products and services themselves. I think where significant advantage can be gained, and a much faster rate of growth, is identifying your top performing people that understand the markets, that understand products and services and that can actually run large teams.

These days, picking a particular vendor doesn't give you an advantage; quick decisions and the ability to deploy wealth is a human endeavour and the very best people will make a difference.

Sandeep Dharni: I think it's also an opportunity for IT leaders to actually pull people from other parts within the business. They already have a group of people who have the business knowledge. They know what is important and sometimes they're trained to think differently, rather than automatically restricting their choices from the general IT.

Michael Harte: So is it easier to make a good business person a good IT person, or vice versa?

Sandeep Dharni: To a senior role I think it's easier to bring a non-IT person and give them the technical skills, because the primary purpose of a senior IT role is not to know what the server does, but how do I get value out of it.

David Jacques: What I've found exciting lately in some of the emerging markets is if you give the people the opportunity and the time to go out and innovate, then they don't operate within the guidelines and the structures that we've traditionally operated within inside more developed countries. They're more willing to go out and mash some of these technologies together. We've got people combining widgets with blogs and internal capabilities for web deployment, and they are creating some unique tools for our customers to get insights back into their data within our corporation, and to improve our business processes.

Carol Avis: We have a very strong partnership between business and technology, so that every time there is a project there is a technology representative. Whether there is a technology component of the project is irrelevant. There may become an opportunity for a technology component, or an opportunity for technology in that project. So just sending people out to be part of those business discussions means that they understand the background and can begin to link business discussions. That is when together their creative discussions evolve into something pretty interesting.

Peter Nimmo: If people are stepping outside their comfort zone, there's got to be an element of trust whereby they know that they're not actually going to get kicked if something goes wrong. When they're going outside their comfort zone, initially they will start to make mistakes. So you've just got to get people in, have them present to a team and support them. They must understand that the first few questions they ask around a business area they're not acquainted with are going to be really silly questions. But that's OK, it's part of the learning curve, and slowly they build up knowledge.

David Jacques: People are always afraid of failing. But allowing them to fail and still have that support structure behind them, and allowing them to ask the stupid questions and make the mistakes, is the only way to really continue to spark innovation.

Getting new initiatives under way

Hani Sedham: I think one needs to recognise that if IT is a cost centre, then you're not going to be able to have that luxury to finally produce revenue. However, if you position IT as a strategic part of the business, whereby you get help to assist certain divisions or you get certain customers to generate revenue, then it's much easier to obtain funding. I think the challenge we have is that occasionally it's much easier to focus on the cost of IT. So you need to be able to articulate the benefits of what IT brings to everyone else.

Gordon Dunsford: One of the first things I did joining TransGrid was we got IT out of the ivory tower. We embedded them. Probably not like journalists going into Iraq, but guided embeddedness in the business. We changed the way we developed applications; we moved to more intuitive and agile types of methodologies, rather than monolithic long-term plans that are obsolete by the time you finally implement them.

Michael Harte: It is difficult to apply new business models to an existing customer base. We know exactly what our customers' preferences are and we know exactly what their behaviours are. But switching on new capability doesn't mean that they're going to change the way they do their work, or the way they want to transact, or the way they want to interact. So the best thing is to not assume that you know more or better than your customers, and actually involve them in early-stage innovations.

Garry Whatley: We've had a similar experience to Michael, especially in our web presence, where we thought we knew better. We put all these requirements into our plans and then got customer councils to advise us. And what we thought were our requirements and what our customers' requirements were turned out to be very different. So we scrubbed ours and just went with our customers', and we've found that to be the most effective way by far.

Hani Sedham: It is also important where IT sits in the organisation. If it positions itself effectively it can be seen as a strategic partner and almost as a revenue-generating division. The person you report to determines how much food and rations you get. If it is the finance guy, they are going to be focusing around cost containment, whereas the CEO might be focusing around growing the organisation.

Chris Holmes: Doesn't that sell CFOs a bit short though? I mean, most organisations look to their CFO to be the driver of finance and the driver of opportunity. So to suggest that all CFOs are blockers by nature, I think, is to underestimate them.

Do older systems inhibit innovation and growth?

Peter Nimmo: I don't think legacy systems necessarily hold you back. We've had the advantage that our existing legacy system is quite robust. The main issue is that the green screen applications have the information. So all we've done is we've mixed the old with the new and kept the best of both. From a transactional perspective, we've kept it and we've put Visual Basic over the top of it and have nice, flexible, easy reporting, pulling together multiple screens into one easy-to-use interface. If we had thrown away the whole box and dice and started from scratch, it would be years before we'd be improving the information flow to the business.

Gordon Dunsford: With things like web services and the like, we can change components. We don't have to worry about having to upgrade everything to achieve changes.

Matthew Harris: I've inherited a few systems that are actually, I think, older than I am. They perform really well for what they were originally designed to do, but by merging so many businesses together and fundamentally changing the way the industry works, the legacy systems just can't cope.

We're going through a process of trying to relearn what the legacy systems do, replacing them with something a little bit more modern and more flexible.

Impact of the skills shortage on IT initiatives

Matthew Harris: The skills shortage is certainly a serious impediment. Of the last three jobs I offered, only one person accepted. And if I look back over the last five jobs I've looked to fill, two have turned them down in favour of better offers elsewhere, one failed to pass the probationary period and only two are still working for me. It is very hard to get good staff and I'd happily poach from other companies.

Carol Avis: It highlights the importance of keeping your existing staff happy.

Michael Hall: Certainly, satisfaction is very important now, much more important than it was even 12 months ago.

Gordon Dunsford: We are having no luck at all. We can't compete with the Commonwealth Banks and the Westpacs in the world, who have much higher budgets to tempt staff.

Matthew Harris: There are large companies and even government organisations out there offering 20 per cent more than what I'm used to paying. I can't hire a new staff member and pay them 20 per cent more than the existing staff members who are doing excellent work for me and say, well you get paid 20 per cent less because I hired this person at a different time.

Michael Harte: I don't think it is an issue with Commonwealth Bank hoarding staff; all well-performing IT departments have a 20 to 25 per cent staff turnover rate. We do pay more money, because we can, and that is a problem for some, but there is a global shortage of very good talent. The best way of dealing with it is to keep hold of the really good ones you have and really looking after them.

Michael Hall: I think your profile has to be such that you're an attractive organisation to come and work for. That comes under how well your communications team markets the business as a whole and how people that move on talk about you.

There is so much word of mouth in our environment. Everybody gossips and there are a lot more people who know each other than you'd think.

Any bad things that are said about your organisation, and particularly your internal IT, will be heard by a lot of people.

Hani Sedham: We have a number of people who are going through MBA programs and we support them wholly through the entire course. We have opportunities where they're able to be seconded to other markets and develop their skills and cultural awareness in other markets. I, for one, returned to Australia late last year from an overseas assignment for 16 months.

Carol Avis: I think you can take people who come from a different, non-IT area, and groom them into technology. But there are only certain technology roles that they will work in. You can train them, but you must invest in them and see it through.

Michael Harte: I don't think that everybody we employ should come from an Ivy League college or a blue-chip school. They should come from a variety of backgrounds.

At the other end of the spectrum, we take about 30 managers to MIT in the United States. They've got to a point in their career where they think the opportunities are limited or they think that the level of development they're receiving is under what it should be.

It is remarkable to see an enormous performance boost in those people that get access to other educational institutes and they then go pursue something along the lines of creating another patent or creating another process or another idea.

In agreement

* Business growth and change comes from different sources, but the IT executive must be involved.

* IT staff must be encouraged to innovate and not be afraid of failure.

* Chief information officers can contribute greatly to revenue generation and bottom-line growth.

* Legacy systems needn't hamper a business from growing, but can be a barrier to post-M&A integration.

* The skills shortage is a big problem for CIOs looking to drive growth initiatives.

MIS is a sister publication of CIO New Zealand magazine.

© Fairfax Business Media

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