Budget constraints, broadband, VoIP, and the rise of wireless applications are perennial issues within the top 10 industry trends affecting CIOs, though the latest MIS100 report shows the recruitment and retention of staff remains the number one concern. “This was a far more prominent issue than it was last year,” says Computerworld editor Rob O’Neill, a former chief analyst at Fairfax Business Research. “Senior IT people are stumped. They are unable to find a solution to the problem of attracting and retaining skilled ICT staff.”
Meanwhile another issue, going green, has entered the MIS100 chart for the first time. “We’ve seen a level of concern here that is very new,” says O’Neill.
Tim Sheedy, senior analyst at Forrester Research, says that cultural changes such as the greening of IT are going to be the biggest challenge to IT managers over the next 10 years.
Sheedy reflected on the landscape 10 years ago, before making his predictions for the coming decade.
In 1997, Sheedy noted that most businesses were running Office applications under Windows 98 — or the operating system “where you clicked on things and they opened quickly”.
Browsers and mobile phones were already in widespread use, even though a lot of businesses still weren’t connected to the internet. The Y2K question was starting to be discussed, but most IT departments were engaged with “big fat enterprise applications,” automating their ERP, CRM and HR systems.
“When you ask what has changed in the past 10 years from the technological point of view, the answer is not a hell of a lot,” says Sheedy. “We are still running Office, Windows, browsers, mobile phones and enterprise applications.”
The internet has since become more significant of course, though Sheedy suggests some innovations such as wireless applications are “not a huge step” from their predecessors.
Cultural changes over the period have been more significant, he argues.
“The CIO is now a key figure in the organisation. The CIO talks to the board and the board at least recognises the importance of IT to the organisation.”
According to Sheedy the coming 10 years will see the increasing automation of IT, driven by ITIL and the adoption of global accounting standards. This will drive “huge efficiencies and make IT more effective and measurable”. The automation of decision-making through business intelligence systems will also help us make “fact-based decisions and not gut-based decisions”.
Alongside the growth in BI, Sheedy predicts there will be a continuation of the integration of IT and communications to the point where they can’t be separated any more.
Environmental pressures could have a significant effect on IT departments, says Sheedy.
“If there is anything that’s going to blindside us, it’s going to be this. In the past, Y2K, 9/11 and Sarbanes-Oxley took our attention away but green IT is something we can plan for,” he says.
Other challenges would arise indirectly from the technology and from changing demographics. While IT departments are being shouldered with the responsibility for business continuity planning across the whole organisation, the growth of software as a service will see power taken away from the IT department.
“A lot of people in the business will be buying software as a service that you don’t know about,” says Sheedy.
The next decade is also likely to see “an increasing probability of low-probability events happening,” says Sheedy. “It might be a tsunami, a hurricane, terrorism or a financial market crash. Planning for the unplannable is going to be a big challenge.”
Bennett Medary, managing director of Simpl, focused on the problem of recruitment and retention of staff.
“Everyone says how hard it is to get good people and for IT, the future doesn’t look too bright,” he says.
Medary cites a Department of Labour estimate that 66,000 IT staff would be needed in New Zealand by 2010, but he says that currently there were only 22,000 people working in IT, and by 2010 there would be only another 3500 entrants to the industry from the entire university system in this country.
At the same time, IT managers will have to grapple with a number of other constraining and influencing factors, Medary says.
One of these was a general dissatisfaction on the part of employees across all businesses. US surveys showed one in five executives were unhappy in their jobs and 40 per cent per year would leave, if everyone who wanted to change jobs did so.
“IT’s needs have become more granular and niches have become harder to fill. Five years ago companies were looking for anyone who had any experience of CRM. Now they are more specific, for example they need experience of CRM in a pharmaceutical environment.”
But Medary says this is not the first time the IT industry has faced a staffing crisis. “It happened before in the 1970s and again in the late 1990s.”
According to Medary the answer is to fight the ‘war’ for talent inside the company.
“Instead of focussing on new hires, businesses should focus more on retention, identifying and keeping the critical talent that already exists in the organisation.
“Talent poaching is simply recycling the same people who are already in the industry in ever decreasing circles. It doesn’t increase the supply, it just pushes salaries up, and the cost of replacing each person has been estimated at 1.5 times their annual salary.”
An agile world
Steven Graham, general manager of Fronde, looked forward to a world where software as a service would allow companies to be more agile and also help IT departments to complete projects on time.
At present the picture is hardly rosy, he says. According to Gartner 66 per cent of IT projects fail to meet their objectives, are over budget, or are late. Vodafone’s billing system, which was two years late and millions over budget, was a glaring example of an IT project that ran into problems.
“Stories like this are the reason why IT gets kicked,” says Graham.
Graham contrasts the performance of two big building projects in the UK; the Wembley Stadium upgrade and Heathrow’s Terminal 5 project. The first project was notorious for its delays and ballooning costs, while the Terminal 5 project, valued at US$12 billion, came in on time and under budget.
The difference between these projects was that with Terminal 5, the managers had signed off an agreement that was based on honesty and trust. “The Terminal 5 managers allowed their subcontractors to be profitable but they had to be transparent.”
Graham says that software as a service will allow more projects to come in on time, as it will encourage collaboration between project managers and contractors.
Business continuity is important to TelstraClear according to its CIO Andrew Crabb, not just for internal business needs but because of the effect on customers if the network was compromised by a major disaster. Telecommunications is as critical to most users as the electricity supply and the government has laid down some rules on how telecommunications companies should manage disaster recovery.
TelstraClear has already established crisis teams, alternative sites and conducts regular disaster recovery tests. Crabb says TelstraClear has identified its own reliance on telecommunications as well as on third parties.
“Business continuity is very dependent on your arrangements with critical partners,” he says. “You need to look further than your own four walls.”
Crabb says Y2K and 9/11 both had a big influence on business continuity planning. Y2K meant a lot of hardware was refreshed in 1998/99, while 9/11 had stimulated the drive towards replication and the ability to be able to recover quickly from a disastrous event.
Expect the unexpected
Companies should adopt a ‘business as usual’ approach to business continuity planning, says Crabb, and recent technological innovations could be helpful in this process.
Twenty-four-hour, seven-day-a-week systems that could be upgraded non-destructively and remote working, were two examples that had important dimensions in disaster recovery.
In one of TelstraClear’s latest business continuity planning tests, the company was able to get its entire CRM system up and running in another city within 24 hours.
Crabb likens a disaster recovery strategy to an insurance policy. “The issue is how far do you cater for the unknown. The technology is all there, it’s how you put it together.”
However, Crabb cautions that the “emotional side” was just as important as the technology in the event of a major disaster. “You have to recognise that people are going to be far more concerned about their families than their day job,” he says.
Captain Roger MacDonald, director of the Joint Information Services Agency at the New Zealand Defence Force, related how the New Zealand Navy is achieving efficiencies, as well as reducing its carbon footprint through a server virtualisation programme.
The Navy’s main data centre is located in Wellington with a secondary tactical network based in Auckland. MacDonald says before the server virtualisation programme, dubbed Project Genesis, the Navy was running a complex IT environment with a proliferation of vendors.
Altogether there were 15 network layers, plus 10 voice networks and three video networks. All this was run on 790 servers in New Zealand, and a further 100-plus servers located overseas.
“There was a clear case for convergence and consolidation,” says MacDonald.
A preliminary test on one network, which was running over 390 servers, showed the average server CPU usage was only 2.85 per cent, with occasional peaks at 35.3 per cent.
“These figures suggested an environment that was ripe for virtualisation,” says MacDonald.
Using VMware as the server virtualisation software, MacDonald says when the project is complete it will free up the equivalent of 25 fully-populated server racks. The Navy also expects the project will save 143 kilowatts in power consumption annually, cut software licensing costs, and allow more than 300 servers to be recovered.
However, MacDonald admits Project Genesis might have one drawback. “It’ll probably mean that we drop out of the MIS 100 next year.”
The third wave of collaboration
Stephen Whiteside, CIO, University of Auckland, says that technology in education, in particular Web 2.0, is leading to a third wave of collaboration.
“The first wave was ‘chalk and talk’ that dates back to the Greeks, the second wave was the Gutenberg press. Now students are googling during lectures to check up on the lecturer’s credentials.”
Whereas institutions like the University of Auckland had previously been accustomed to being the sole provider of information, Whiteside says universities are becoming more outwardly focussed through IT. For example, increasing adoption of service orientated architecture is allowing the University of Auckland to collaborate at a much more profound level with other universities.
• Simpl, Fronde and CDP kindly sponsored the 2007 MIS100 event.
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