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One bit at a time

One bit at a time

An over-complex, unreliable IT infrastructure can make or break your business and your aspirations. CIOs Mark Wilkinson of Tenon and Andrew Cammell of DB Breweries have got it right and are reaping the rewards

You can’t touch it, you can’t feel it. It doesn’t bring any discernible benefits to your business. You might even have trouble defining it. We’re talking about infrastructure, of course, and two CIOs who have fought to tame it – and won. Mark Wilkinson of Tenon and Andrew Cammell of DB Breweries spent some time last year at a series of Microsoft gatherings explaining how their back-to-basics focus on infrastructure has delivered positive business benefits that everyone understands. Their innovations have earned them respect from their business peers and has enabled them to concentrate on building relationships and developing strategic issues rather than having to spend most of their time fighting forest fires.

In 2000 when Cammell started at DB Group, as it was then known, the company had a very different structure. Apart from the breweries, it incorporated Corbans Wines and Allied Liquor, effectively a distribution channel for a number of agencies. When the latter two businesses were divested, staff changes were inevitable. The company was geographically focused and had people skills duplicated throughout the regions. In other areas, there were big gaps. The result, says Cammell, was a loss of balance between resourcing and capability. Needless to say, the IT infrastructure was way too complex. IT had grown in the fashion typical of that time, with not enough thought or funds going into matching the underlying systems. A review performed by PriceWaterhouseCoopers found something like 55 critical systems in place – hard for a small IT team to manage. System reliability was poor.

“When I started, we had one server that fell over every single day, and it had been doing that for quite some time,” says Cammell. “People had just come to accept the situation as normal. That didn’t present a good picture of IT. It was seen as under-performing and the level of expectation had dropped.”

Well, that was then. Cammell got stuck into the task of developing a strategy that would take the business forward. “A manager at that time had a wonderful saying: ‘How is this going to help us sell more beer?’ But of course with infrastructure it is hard to say how it is going to sell more beer. Our focus was to provide efficient and effective services so that the business could focus on making and selling more beer.”

At Tenon, Wilkinson was facing his own set of challenges. As he points out, infrastructure is hidden from view of the business leaders. At the same time, it plays a key role in the cost of IT.

“I guess the problem is that you are trying to invest in something that’s invisible and yet will bear some benefits – but not today. And you are trying to set your infrastructure up so that when your business wants to move ahead or do something critical it can.”

Wilkinson’s comments are pertinent within the context of what has been happening at Tenon. Late last year Carter Holt Harvey agreed to buy Tenon's structural timber mills for $165 million to more than double its sawmilling capacity. Most structural staff would move to Carter Holt but some might be made redundant. Right now, Wilkinson is busy working on separating out parts of the operation that will go to Carter Holt Harvey from the parts that will stay with Tenon. After the job is done he will continue to be kept busy adjusting the processes and systems that remain to fit the new size and shape of the business.

It is perhaps fortuitous that his work on simplifying Tenon’s IT infrastructure was already well under way. Right from the start – and long before the sale – he knew he wasn’t going to get funding for a big bang approach to infrastructure renewal but there was never any question that the business would need to change.

Wilkinson took the only way open to him – he chose an incremental approach. First, though, he sold staff on the concept that upskilling in new products would put them in a better position to find a new job if they were ever pushed out into the marketplace. The incremental approach offered another benefit: the business would not have to be disrupted while the gradual changes were introduced. The new approach would also fit well with hardware replacement. Like systems would no longer have to be replaced with like systems. Instead, simplifying of the infrastructure could be timed with the upgrades to reduce hardware complexity and numbers. “The fewer the systems you have, the lower the cost – and the simpler IT becomes.”

At the time Wilkinson was doing his round of presentations at the Microsoft events he was also in the process of rolling out a 700-seat deployment using his own staff with a little help from Microsoft consulting staff.

As for DB Breweries, Cammell says he does not believe the big bang approach is possible any longer in IS projects. A big issue is how well a business can handle major change, he says. You can throw lots of people at a project but if the business can’t handle the changes it’s going to fall flat on its face.

“It has to be done one bit at a time. You can’t do anything else. That’s very much the approach we have used to develop projects at DB.”

Listening to Cammell and Wilkinson talking, it is evident that both have come to similar conclusions about their infrastructure. In both cases, it is evident that they believe in the old KISS principle – keep it simple, stupid. That way, it’s easier to show people what is actually happening. In Cammell’s case, keeping things simple and centralising IT as much as possible has also meant a reduction in support costs. For both CIOs, standardisation has resulted in significant cost reductions. When Cammell first arrived at DB Breweries, the organisation was employing a multiplicity of operating systems – Windows 95, Windows 98, Windows NT4, Windows 2000. You name it, DB had it. The same confusion applied to use of the various versions Microsoft Office.

“Rather than saying standardisation was important, we had just gone with the latest and greatest as new systems were rolled out,” says Cammell. Continuing to support the organic growth was not an option. Nothing was ever done about the old stuff. We needed a structured approach that focused on centralisation, rationalisation and standardisation.”. …”

Negative and positive

When it came to selling the new structured approach, the daily IT problems DB faced were a positive. Things had got to a point where the company was fed up with the fact that systems were falling over all the time and business focus was being compromised..

“The first task was to get rid of the firefighting,” says Cammell. “That was our strategy for 2000. By 2003 we were able to take more of a business focus. We got through that phase and said, ‘Okay, rather than look at systems now as an IS function, we ought to look at what the business is actually doing. What are your business principles and how can we improve those?’ That’s where we really started getting some interest back from the business leaders in terms of the business cases we were developing.”

At that point DB Breweries had three ERP systems. It still has two but it is working on cutting back to one. “That will be SAP,” says Cammell. The first discussions on rationalising centred on hardware. Now, four years later, the focus is on data and business processes. At present there are two totally different business processes used in purchasing. One centres on the commercial side of the business; the other on the manufacturing side. A similar rationalisation process has been underway on the reporting side of the business. At the start of the process there were five reporting systems. Having decided on an application under which all the information would be centralised, the IT team has been working at dropping off bits and pieces as they become redundant.

“We have got rid of a lot of Excel and Lotus 123 spreadsheets which had been around for too long,” says Cammell. “ Now we are focusing on stopping the use of Crystal Reports. It’s one step at a time.”

At the heart of the integration move are a range of Microsoft products – a BizTalk server, Windows 2003, SQL 2000… It has taken time to get over the mindset thatin the past had veered towards having “fixes” put in place rather than a comprehensive solution. After the four years, though, the business has gained trust in its IT division and now has a more forward-thinking, business-focused approach. .

Steps to success

Cammell has what he calls six steps to success. “Once we had the firefighting stuff done and everything under control, we were able to change the function set.”

The first step is to identify the business processes: “What do you want to do?” The second step is to work out the functionality required of every step. The next step is to provide that functionality. This is the point at which the computer system itself comes into the picture. The fourth part is to how to integrate the different systems, and beyond that the infrastructure. Finally, a decision has to be made about the presentation layer that hides all the underlying complexity from the business.

“We try to ensure it stays ‘business as usual’, while constantly improving the services we offer,” says Cammell. “

In order to ensure plans stay in line with this new architecture-oriented approach, Cammell has revised the structure of his IT team. He now has a business solutions architect whose role is to map out the business processes and provide a framework under which the business analysts will perform their role. This way, the company starts to build up a knowledge base and picture of how the business actually works. It’s an area that is still being worked on. “We don’t have that at the moment,” says Cammell. “We don’t have a process map saying this is DB, this is what we do.”

Under the new structure, four analysts look after different areas of the business. One does finance, another human resources, another looks after sales and the supply chain, and one looks after sales operations, effectively a sales team.

Meanwhile, two people are involved in integration. One of those is a business analyst; the other is a developer who spends all his time working in Visual Studio. One person looks after infrastructure. Everything the IS team does follows the six-step principle.

Training, testing

“I think the most significant change over the past year is that we now have time to stop, sit up and look around to see what is going on, which has helped us evaluate our process along the way.. Now we spend a lot more time testing, so when we put something in it works. We rolled out Office 2003 to 440-odd people in two days in 2003. What a great achievement. We have gone from seven Exchange servers to two . and we went from Exchange 5.5 to 2003 at the same time. It was such a clean transition that most people didn’t even notice.”

There’s more. Cammell’s team now spends a lot more time on training to make sure people are aware of what’s coming up and to show them how the systems work. “We are providing a lot more service than in the past, and I think the business now accepts that our judgment is worthwhile. The business sees this as a positive change, in fact, they’ve pretty much said we should be deciding where we are going with infrastructure from here!”

Cammell has also been doing a lot of work on the wholesale channel. Previously, the wholesale channel would take two weeks to provide information back to sales. In effect, by the time the sales team got the figures they were probably three weeks old – too late to be of much use. Today, it’s a different story. The sales teams now receive their updates every day, at the end of the business day, ready for the next.

“Most of the guys come in about 8.30am and then they are out for the rest of the day,” says Cammell. “They needed the data the following morning, which meant we had to have sales from yesterday available by 8 o’clock in the morning. We had four weeks to do it, and we achieved our goal as a result of having our infrastructure in place. Needless to say, the sales teams were rapt and so was the business.”

Compare this situation with what would have happened in the past. The business would have come to IT and put their case forward. After that, IT would have spent the next four weeks figuring out how to do it. Now, though, with the firefighting out of the way and the infrastructure in place, they had been able to see what was coming up. They were prepared. It was just a matter of making things happen according to plan.

Funding is another area that has undergone a change at DB Breweries. Under the new regime the IT team continues to look after the infrastructure but if a business unit wants to initiate a project it must pay the cost. Previously, the IT department had been hamstrung by heavy depreciation costs. With their own cash in play on a project, business units are more likely to take a project more seriously than in a past. If they don’t provide a business owner for a project – and take responsibility for it – then IT has better things to be getting on with.

Leasing has also worked to Cammell’s benefit. He smiles as he explains how there was a bit of stealth involved in the leasing strategy. “Yes, we are leasing our hardware and software. Leasing means that the expenditure comes out of the operating expenditure budget, and people can see IT via the purchase on their desktops.” The psychological implications are obvious: put an old, unreliable computer on a desktop and that is how users will perceive the IT department. Give them something reliable and their impression will be a good one. Many of Cammell’s users are on a Metaframe thin client platform.

Trusted partner

At Tenon, Wilkinson has been working equally hard at getting the engagement model for his business where he wants it to be. “Last year we wanted to reposition IT in the mind of our business,” he says. “Up to this point we have essentially been a service provider inside our organisation. It was a case of ‘Do this, do this, do this…’ You don’t get a lot of warning for things that are coming up. There has almost been a sense of mistrust between IT and the business. What we have been aiming to do is position ourselves as a trusted business partner.”

Wilkinson points to past problems as having been partly caused by a false sense of expectation among users. On the one hand, they had seen $999 PCs being sold at places like The Warehouse. They had heard people talk about Moore’s Law, commoditisation of PCs and more bang for their buck. On the other hand they got the impression from the IT department that all this computer stuff was too complex, too expensive. They saw a lot of hardware sitting around in server room, and a lot of it had been there for a long time.

Wilkinson believes trust is at the heart of the matter. Despite Moore’s Law et al, IT cost within the business was seen as being too high. The remedy for Wilkinson was to do some research and come up with a benchmark figure that is easy to understand. “We just took IT operating costs as a percentage of revenue and set ourselves a target. We were aiming for the lower quartile.”

That magic number: 1% of operating revenue. After going through that exercise, Wilkinson started on building an IT structure that would conform to his target figure. Once he had his consolidation effort out of the way, the cost factor – now that it was predefined – no longer figured as a roadblock on his agenda with the business team. “We got the trust back in,” he says. “Now we are part of the innovation team, which helps the IT team plan for what is coming up ahead.”

Wilkinson, who reports to the director of corporate and legal services, debunks the idea that it is important for the CIO to report to the CEO. Direct reporting to the CEO used to matter, he says. It doesn’t matter now.

“We can deal with anybody among the executive team on any subject. Prioritisation and governance are pretty easy to sort out now. Essentially, if we discover there is a problem with prioritisation we just facilitate a discussion among the executives to decide which project needs to go first and which one needs to wait, and why…”

Wilkinson says a lot of what has been done has been self-funded out of reductions and maintenance costs on hardware. Having fewer items of hardware means reduced maintenance and service costs. Networks are another area of savings. The introduction of IP networks has created new opportunities to remove unwanted items and expand services. The savings have expanded investment in other areas.

“The specifics of every dollar spent isn’t important. It’s the overall picture that matters.”

DB’s Cammell believes IT’s cross-departmental operations place it in a good position to get different parts of the business to talk to each other. Like most businesses, they are required to agree on a three-year schedule outlining future plans. With that in hand, IT talks to the business units and finds out how they intend to reach their objectives. Together, they work on a plan to meet these objectives and work them into a cohesive IT infrastructure.

New products management provides a good example of how the business units must form a unified approach. These products emerge from marketing incentives but must involve other parts of the business if they are to emerge as real items. At that point it is no longer just a marketing incentive. “I think IT is playing a key role in fostering cross-departmental communication and in ensuring an integrated team approach. .”

In the past DB had found that each department’s approach to a business case could be very different. A marketing view could be poles apart from a manufacturing point of view. Each unit spoke the language of its profession, which could cause confusion to those in other divisions. Cammell’s answer was to push for a project manager’s office. Now ideas are discussed first among the general managers. Once an idea takes flight a concept is put to each director and a steering committee is set up with members from each part of the organisation. At that point the concept goes to the project director. Everyone is forced to find common ground and agreement on details. That means no more non-productive grappling between competing departments.

Future trends

Both Cammell and Wilkinson applaud user input into decision-making. As Wilkinson says, computing is such a major part of everyone’s life today – whether at home or at work – that users can come up with good ideas based on their own experience or reading. Now that the basics are well on the way to being sorted out in Tenon’s business, it’s possible to find the time to talk to users about future possibilities and where technology could add value. IT now is about where the user wants to get to, as opposed to being a mere service provider or firefighter.

Cammell says his IT model for DB fits in with what Gartner has been saying. Gartner’s view is that over the next few years IT would find itself having more people in development than in support. “That’s where we are now,” he says. “We have eight people involved in development – I am talking about business analysts and those sorts of people. We are not actually coding anything. We have five people in service delivery. It’s almost as if there are two parts to IS: one group of five people is working on maintaining systems and alignment, while eight people look at how we can improve the business and move forward. That last bit is the part the business wants to talk about.”

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