Wired reality

Wired reality

IT executives tell MIS what issues affect them most where government can make an impact, and the reforms they would want from whoever gets elected.

"Broadband costs, network costs, national calls... We are being held to ransom," complains the chief information officer of one major corporate. "They are bloody hopeless," continues the IT manager of another. Choice words these, and they are directed at Telecom. And these views emerge as MIS talks to a group of IT executives on issues that affect them most, and in which they feel government policies will have an impact.

Telecommunications, and more specifically Telecom, the principal supplier of telecommunications services in the country - a 'monopolist' to its critics - top the list. Software licensing, involving another 'monopolist' - Microsoft - is an issue raised by public sector CIOs. But there is one issue that resonates with both private and public sector CIOs - the difficulty of finding and maintaining skilled staff.

The IT executives quoted cover a range of public and private sector organisations, but fearful of possible ramifications, some declined to be identified. The IT head of one major retailer noted his firm's contracts with government, while government department CIOs typically cited civil service neutrality, so they did not take part.

Nonetheless, many of the executives were forthright with their views, in case political parties would listen and respond. After all, they have experienced business conditions under both Labour and National governments. Some IT leaders demand more government action, either to 'impose' competition or ensure things are provided, while others call for less interference.

Assessing current initiatives

Labour initiatives in recent years include the Digital Strategy and Project Probe to increase broadband access, but local loop unbundling has yet to happen and much needs to be done to achieve the goals of the "knowledge economy".

For Neil James, assistant director IT policy, Otago University, Project Probe gets mixed grades. He says the strategy contains many "good words" and the Broadband Challenge gets a tick from him.

"However, the ability to actually get things to happen is of concern. Project Probe has provided some much needed impetus in the rural and regional areas, but the vision has been set too low. Our schools should have much more bandwidth than can be made available through yesterday's technologies such as ADSL," says James.

Phil Brimacombe, chief information officer of Auckland-based healthAlliance, says while the government has promoted Project Probe as a national broadband solution, "Down at the coalface, GPs and DHBs have struggled to rapidly implement affordable and practical connectivity."

This brings us to Telecom New Zealand, their major bugbear, local loop unbundling and the lack of sufficient and affordable broadband.

Telco traumas

Even on the record, IT executives were direct on their views about Telecom, which has just reported a sharp increase in profits close to a quarter of revenues. While that might have pleased the finance markets, such "price gouging" as one IT director puts it, only fuels the anger of many.

Otago University's James accuses Telecom of "creaming off as much as they can while the going is good in the duopoly situation".

"Telecommunications technology has delivered dramatically lowered costs of provisioning, but these savings have certainly not translated into appropriately lower charges for the end user," James continues.

The local loop should have been unbundled at the time of the sale, he says, but this issue is becoming less relevant as alternatives become available, though it should still happen. The Telecom Service Obligation also needs to be reviewed.

"Providing services in rural areas should be guaranteed by the government tendering out the opportunity to provide services, and covering the shortfall directly. This would be a much more transparent process," he says.

James also alleges high costs for international connections (for data services) despite Telecom NZ's half-share of the main trans-Pacific (Southern Cross) cable. Research institutes in Fiji and Australia gain good access to it, while New Zealand misses out, he says.

Government, he adds, needs to ensure affordable bandwidth is available, claiming Kiwi businesses are already losing trade because of its high costs.

"There needs to be a structural separation in the telecommunications area. The underlying infrastructure, the ducting and the fibre should be viewed as must of us view roads - as part of the infrastructure for the whole of society. The market for services should be built above this.

"Telecom should get 10 out of 10 for the way they play the game as the rules are set, governments should get two out of 10 for their setting of the rules and Telecom should get one out of 10 as a good organisation for New Zealand," James concludes.

Andre Snoxall, out-going general manager of HealthIntelligence in Wellington, says at least the current government recognises issues around things like developing a sound broadband infrastructure but initiatives seem to be too little, too late.

"Bandwidth is a great enabler but the market is controlled, managed and manipulated by three players in New Zealand (Telecom, TesltraClear, Vodafone) who clearly do not have the best interests of the host country at heart; and who only wish to extend the life of and wring the very last drops of profit from the antique communications infrastructure they have in place," Snoxall continues.

"This must be brought to a close," he says. "Again, no one who is a shareholder can blame the big incumbents from maximising shareholder value, but someone and it is usually government, needs to impose a social conscience or at least a cost of not having a social conscience on the incumbent providers of bandwidth in New Zealand."

"My experience of Telecom is that they are only truly customer orientated when there is a genuine possibility their customer is about to go with the opposition," says Brimacombe.

Valerie Fogg, information services director at Simpson Grierson, says: "Talking to my colleagues in Australia, they have the ability to negotiate terms and conditions that we don't have here."

One CIO who prefers to remain anonymous says that Telecom is "lethargic, protected, cumbersome, frustrating and obfuscating".

Another says: "It wasn't a mistake to privatise but Telecom are very process orientated. If you want to do anything that's different to the process, then forget it. It is really difficult."

Telecom, however, gets a positive mark from Walter Chieng, IT manager at St Kentigern College, who says he gets "reasonable deals" from the company.

An eye for open source

Phil Brimacombe, whose healthAlliance is running trials in open source, says Microsoft's costs are very significant to the public sector and taxpayer and the government is missing huge opportunities in not promoting open source as a viable alternative. Government agreements with Microsoft do not provide sufficient flexibility and options for the health sector and he doubts this will be solved in the G2006 talks.

"Microsoft is an unfortunate fact of life," continues Neil James. "Without almost dictatorial central government control I don't believe it is feasible to avoid Microsoft.

Essentially, most countries now have a 'tax' levied by Microsoft. Microsoft has held back innovation from the 1990s onwards, just as IBM held innovation back through their dominance in the 1960s and 1970s," he continues.

However, as a G2006 negotiator, Steve Mayo-Smith, Auckland District Health Board chief information officer, says the government is becoming more organised to ensure New Zealand is "not captured" by the vendor.

"We also deal about value not just cost. It's about open, published standards, whereas other systems are proprietary and lock you in. Cost is a red herring. The true benefits are in having choice," he adds.

Andre Snoxall, largely agrees but sees little difference between the two. "There is nothing any less proprietary about one platform than another and probably bugger all difference in the total cost of implementing and maintaining them properly and well.

Both or all are dominated by interests that wish to control and restrict and minimise choice and maximise return on their investments. If CIOs have nothing more valuable to worry about than what they are paying for a platform, rather than what value they are helping their business to drive from it, then need I say more?" he concludes.

Pat O'Connell, chief information officer of Carter Holt Harvey, says while some organisations want open source, others "prefer the 'protection' of a substantial entity behind what is more and more critical - i.e. office products!"

IT bosses call for some government support for locally-made software, but notice its limits.

"Unfortunately, branding and the sales efforts tends to be much more important than the quality of the product. While New Zealand can expect to continue in niche markets for software products, the large multinational will continue to dominate the infrastructure end of the market," says James.

One IT director who declined to be named doubts the ability of government to 'lead' on software policy, but adds adding larger tax write-offs for his own firm's in-house development would be welcome.

Phil Brimacombe also notes government action on software development has sometimes had a reverse effect than intended, citing the creation of a cluster of health software producers, Overseas companies join the cluster, offer incentives for the local firms to partner with them, often gobbling them up, taking the jobs offshore and then reducing competition.

"This is a major concern for me as the overseas vendors have little interest in changing their systems to suit local requirements," adds Brimacombe.

Brain drain blues

Government initiatives to build up a local industry, attract and develop IT skills, curb the 'brain drain' has met similar challenges.

"My biggest issues were the ability to recruit really good professional ICT personnel in New Zealand. There is an enormous issue of supply and demand. I suspect some sort of a brain drain is a result of the existing student loan scheme coupled with the opportunities available overseas," continues Andre Snoxall.

"New Zealand's 'idyllic lifestyle' and greener than green image is oversold and overestimated as a source of competitive advantage and I think New Zealand needs to continue to focus its efforts on understanding how it can support innovation and incubate ideas, research and a brain pool that is second to none.

"There should be a massive and ongoing investment in enabling technologies and centres of excellence. There should be a focus on developing tax regimes that support innovation, technological and entrepreneurial activities such as those in Finland, Ireland and Malaysia," says Snoxall.

"Government policy is not effective enough in getting people attracted enough into IT and IT training. We still have enormous difficulty in recruiting people into specialist and technical roles. This is partly because the public sector struggles to compete with IT vendor salaries but also because good quality candidates are just few and far between. We have key projects being held up because of the lack of skilled staff," continues Brimacombe.

"Generally, we have struggled to attract the right people," adds Steve Mayo-Smith of the Auckland District Health Board.

"We will always be competing with the younger staff going to the UK for their OE. It is important to attract people to New Zealand and offer incentives, otherwise the shortage will continue," says Mayo-Smith, who came to New Zealand from Bath, England, for the lifestyle.

Valerie Fogg says better wages abroad are driving people overseas, creating skills shortages, and government needs to come up with something to attract people and new businesses.

"Perhaps more subsidies to assist these businesses to get them up and running. There are schemes, but they are minimal," says Fogg.

James says good, cheap communications would help the country attract and keep young people as they see these as a "must have".

For O'Connell, the issue sums up his view on the role of government. "Apart from some obvious needs in the telco deregulation area, I don't think government has a huge area to play, except with the exception of encouragement," he says.

"If we are to be serious about a knowledge economy and wish to foster a technology wave, then we need to do more than talking it up and wishing it into existence. We need to be practical about the steps we take - incentives, targeted immigration, specialisation, etc," O'Connell concludes.

James says there is little between Labour and National and they are wrong in believing "the market will provide". He wants the government to make strategic decisions and intervene to "advantage New Zealand" in terms of innovation.

For Mayo-Smith, the biggest challenge for health is funding. "Government needs to start leading and driving more change and go for a greater consistency through-out the country. A lot of where the drive comes from is the government bodies. Party labels don't mean anything," he adds.

Summing up, Brimacombe speaks for many: "When will they stop talking and start doing?"

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