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Forecast for Management 2002

Forecast for Management 2002

The ingredients

Forecast for management survey —2002

• 6000 surveys mailed (March 2002) — over 300 replies

• Localities were NSW (30%), Victoria (12%), New Zealand (30%)

• 18% of New Zealand respondents had over 1000 staff

• 30% of New Zealand replies had under 100 staff

• New Zealand industry spread:

— Distribution (19%)

— Production (26%)

— Public Sector (36%)

— Leisure & others (3%)

— Finance & business services (16%)

The job market

One of the swiftest changes that has happened to the IT industry has been in the IT job market. Where once the common lament was of CIOs bewailing the lack of workers to fill strategic positions, now the complaint is from workers anxious for any suitable employment. Forecast for Management reveals that recruiting and retaining skilled staff dropped from being the fifth-biggest challenge on the New Zealand CIO agenda in 2001 to 16th place this year.

This is reflected in several areas of the study. Staff turnover experienced a slight drop. This went down from 11.97% in 2001 to 11.11% this year. Moreover, this is notably lower than the figure reported by New Zealand respondents back in 1996. Then there was a 21.14% loss of IT staff in the preceding 12 months. However, perhaps the biggest change in local IT departments has been the dramatic drop in the use of freelance contractors. Clearly, many of these people have recognised that with companies aggressively minimising IT expenditure it is in their best interests to change their employment status to full-time rather than contractor when their existing contracts expire.

This, coupled with a growth in IT graduates and immigration, is seeing many longtime professionals in the industry grapple with the prospect of long-term unemployment. Forecast for Management offers some insight into where CIOs go to hire new staff. Over 50% still use recruitment agencies, though there was a drop in the use of online recruitment sites. Most worryingly, there was a significant drop in those hiring graduates from university, polytechnics and further education colleges. In 2001 13% of IT department hires came from this avenue. Today that declined to just under 7%. Hopefully, this will turn around when the IT industry starts to pick up again. Otherwise, talented young people might start to question the value of an education and a career in IT.

(GRAPH: Staff attrition in Australia and New Zealand)

How will you pay for it?

One of the great dilemmas that has faced CIOs over the years is whether it is better to buy IT products or to lease them. Many arguments have been given for the value of leasing. Leaving aside any possible tax advantages, the two IDC hears most frequently are that leasing encourages an asset management discipline and that it provides a simple upgrade mechanism that frees the CIO from having to go cap in hand to the executive every three years for funds for technology refreshes.

CIOs see that leasing helps with asset management because it is tied to the serial number of a specific item of equipment. This equipment is then allocated to an operating unit within a company, which pays the lease on a monthly basis. The contention is that unless that department tracks the movement of equipment under its control it will end up being saddled with paying out the residual lease values if it cannot locate these items when the lease has expired. However, as one CIO told me in Auckland recently, this can be easier said than done. She is the CIO in a construction company where locations and workers are highly fluid. The dynamics of the business means that it could be very easy to overlook paperwork disciplines.

Similarly, the other great claim for leasing is also being challenged right now. With tight economic circumstances most organisations are anxious to avoid being locked in to recurring expenditure. In fact, the percentage of New Zealand CIOs reporting that they financed the majority of their IT equipment by up-front, outright purchase has increased markedly in the past 12 months from just under 76% to over 90%. This growth has been almost entirely at the expense of leasing. While this probably only affects new acquisitions, the challenge for finance companies will be to convince CIOs to keep using leasing when their current leases signed around Y2K begin to expire.

Top 10 challenges on the NZ CIO menu

1996
1997
1998
1999
2000
2001
2002
AUS
Reducing costs
10
5
5
1
2
1
1
1
New hardware/software
2
2
4
1
7
3
2
2
Meeting user expectations
1
1
1
5
3
4
3
4
Aligning IT with the business
2
2
4
3
1
2
4
3
Change management
4
4
7
8
10
8
5
6
Developing IT investment cases
8
7
6
9
8
9
5
5
Systems development quality
12
16
15
6
10
7
7
9
Connecting to partners online
8
12
4
6
8
15
Effective desktop computing
6
13
9
13
12
14
9
11
Organising and utilising data
12
11
9
11
10
19
Keeping abreast of technology
5
6
14
9
5
10
9
7

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