- 25 July, 2006 23:33
The biggest thing separating the low-performing IT companies and the big boys is the percentage of their budget dedicated to repair costs. So said Don Rippert, CTO of Accenture, at his opening speech at his keynote address to the CIOs on Day One of the annual ITMA workshop. Clarifying his point, he emphasized that it wasn't so much the dollar-figure spend on repairs but rather the portion of the company's IT budget that went to it.
One key difference the statistics showed was that the high performers who spent five percent on repairs--compared to the 14 percent set aside by low performers--ended up having more to spend on exploring new technology. This focus on emerging technology, said Rippert, would pave the way for future growth, rather than spending money maintaining existing capability.
"This is more important now than ever, because new changes in new technological development are opening up a world of business opportunities," said Rippert.
The excess budget going into "enhancing, innovating and integrating," said Rippert, would give you the necessary edge over competitors in the long run.
Illustrating his point, he talked about several developments in the arena of elder-care, where video cameras monitoring an elderly person's movement patterns in a room would go far in eliminating the need for costly and inconvenient human intervention. Since the computer capturing the video signals is able to detect anomalies in movement (such as a fall), an alarm would sound upon detection of such, and appropriate help is called for.
"It's not just elder-care," he said, "We'd apply the same techniques in maintaining security for a company's IT network." An intrusion past the firewall registers as an anomaly, as does the massive downloading strain of someone intending to steal data, so all that is detectable and, as a variant of sorts to the aforementioned elder-care technology, a human network administrator is able to be relieved, to an extent, by the computer.
What to Look Out For
Rippert highlighted the Service Oriented Architecture (SOA) as the main technology to keep your eyes on in the next couple of years. Estimating true maturity of the system in three years or so, he said that investing now might ensure you don't get left behind when the time comes.
Seeing SOA development in four distinct phases, he described the first as "Organize and Strategize": get management buy-in and plan for SOA transformation, he said. The second phase involves "tactical implementations": embarkation on SOA projects and the conversion of applications into web-services, and the creation of business processes from such.
Phase Three: an emphasis on strategic and business services; consolidation of processes and services in creating an Enterprise Service Bus.
The final phase: "SOA is industrialized," he said. This will involve cross enterprise processes, federation, predictive IT and business insight in real time.
Rippert also recommended system consolidation. "I don't understand companies which run four or five different operating systems," he said. "You should standardize your system, because the sooner you do, the more you're poised for virtualization. And the more you virtualize, the more you'll save."
Rippert's main goal is to show the "large gulf" where CIOs are spending money. With the big hardware advances that have occurred, he said that CIOs cannot continually return to the system and get it recoded. "You've got to have stable software that you can use. That's what SOA's built on," he said.
By combining fundamental technology (now with the price of storage and bandwidth dropping drastically), new opportunities and continued growth may be assured.
When asked what his recommendations of other areas to invest in were, he said, "We're recommending virtualization of IT, Storage Area Networking (to use the same storage on multiple applications), Information Lifecycle Management and offshoring operations to low-cost centers. All of that allows you to free up more money without asking for real dollars.
"And those real dollars goes right into innovation and development, once again," he said.
The Show Must Go On
Is technical governance a business enabler or show stopper, asked George Wang, Group Head of Chief Architecture Office, Reuters Asia. Talking about several myths that have been held about the issue of governance, he said that the first assumes a "policing function" about it, as if it were a device to vet projects. Another myth is that it is an auditing function, that it is there to sniff out errors in a project. Yet another involves it replacing the business as a decision-maker.
The real need is to find that delicate middle ground, he said. Over-governance is costly, slow and complex, while under-governance is low in quality and merely arbitrary. A CIO ought to ensure that the IT strategy supports the company's, and to further ensure compliance of IT strategy in its implementation.
Technical governance, therefore, is a framework to ensure that such compliance is carried out, he said. "Look out for how decisions are made, who makes the decisions, who is accountable and how to measure effectiveness," he said.
"A company's IT strategy is about positioning," he said, "and that refers to a creation of a unique and valuable position, involving a different set of activities."
That position, that strategy, ought to fit not just the business direction but also the company resources, he said. It should be "organizationally unique and sustainable," referring to the commitment that needs to be made to it once it is decided upon. Furthermore, a CIO should participate in the strategy-setting process, always maintaining IT integrity, he said.
Wang went on to describe his "key ingredients" in the successful formation of a framework for technical governance.
The first, he said, is structure. Assigning decision rights is paramount, and keeping in mind that the correct business choices might not necessarily be an automatic by-product of such an arrangement. Accountability must be kept transparent as well, with layers ensuring that whoever initiates a decision is traceable, as well as the approval layer on top of that.
The second is service management--the sanctity of the Service Level Agreement is to be honored. Third is an incentive program to shape behavior, that is not just integrated into the decision-making framework, but also scalable and self-running.
Fourth: Risk management--identifying, tracking and managing risk. Setting up a service-based risk matrix, he said, would be a way of ensuring accountability as well as establishing a way to track key decisions for each IT service.
The fifth is "measurement": Setting up a "scorecard" for the staff, as well as a system of metrics and reporting to determine risk, as well as IT value.
"Most importantly," said Wang, "governance does not mean innovation gets stifled, as long as you select the right ideas for implementation, as well as provide the structure that makes innovation safe."
In a nation that has issued twice the number of Octopus cards as its population, the pervasiveness of Hong Kong's cashless payment card can only be put in perspective by its MTR rail system. Speaking in Hong Kong on Day Two of the workshop, Daniel Lai, Head of IT at the Hong Kong MTR Corporation Ltd talked about the extensive work needed to be done on the US$10.4 billion railway system, and how new technology like RFID can be used, on top of that, to make it work even better.
With 19 hours of continuous passenger service in 1050 carriages, continuing to exceed quality standards set by the government, winning awards for public service, they faced, head-on, needs that affected the related construction industry, such as materials testing, which was a manual and inefficient process.
In RFID, Lai found a solution for an old problem. By embedding a transmitter in blocks of concrete, identification of the blocks was made quick and eliminated the interference of human errors in getting the number down. Reports were also made electronically, not handwritten, for safekeeping and adhering more stringently to governance ideals.
The savings also came from manpower cost, which went down 15 to 25 percent. Lai said that the obstacles faced were numerous at the start, from small ones like finding the optimal design of the RFID tags and larger ones like discovering a lack of choice for available RFID devices back home, and the subsequent need to source for it.
Eventually, said Lai, MTR patented some of the processes used to manufacture the tag, propelling them to the forefront of technological innovation and recognition by the global community. "Finding the right partners, the right materials and devices takes time, and we have to be patient, always going in the direction we set out at the start," said Lai.
IT People and People in IT
When asked how the IT workforce is shaping up, Lai said that a decade or two ago, the acute shortage of IT professionals incited Universities to ramp up their corresponding courses. however, with the dot-com bubble bursting, Y2K and SARS, he sees an oversupply of IT graduates. "What the society needs," he said, "is a steady stream of qualified professionals, because IT is a young industry compared to others like medicine and engineering, and also constantly changes as such a pace that true competency is really needed."
In Hong Kong, he said, he sees a lack of senior technical people. While people are usually pushed into managerial positions in order to move up the ladder, he said that sometimes these people are better in higher IT posts, not ones in which they manage resources, because that is not where their competencies lie.
Said Rosina Howe-Teo, Chief Innovation Officer of Singapore's Land Transport Authority, in response to a question from the floor on whether IT is a competency or unique skill, "The 'innovation' in my title has worked as a sort of immunity card to introduce some new thinking into a relatively more static industry," reflecting a need for injection of new thought, and that the IT manager is shaping up as more of a thinker, a manager, than really a pure IT person.
With regards to the people working in IT, she said that in regards to business continuity, new meaning is grafted with disasters looming on the horizon, these days. "What is good enough in a crisis?" she said. "We will retain nimble people who can apply knowledge in a fast-changing environment, not just flexible people, per se. We need someone who's able to communicate technology in plain English too."
At a tour of his Disneyland theme park, Noble Coker talked about the initial cultural barriers that he faced, coming to Hong Kong to manage the large scale project and its people. With a laugh, he said that theme park food in the U.S. is not often expected to be of high culinary standards, but food in Hong Kong occupies a much higher position in the local eye, so good chefs and service crews were essential.
On managing people, he asked, "Do you want the best or the best available?" He went on to say that valuing the people working for you and going the extra mile to recruit that "best" crop of people was of utmost importance. Luckily for him, he said, the resumes literally poured in when he called for an online recruitment: "The site kept going down with people flooding us with their resumes," he said.
Talking about the culture of the Hong Kongers he felt was relatively reserved, compared to what he was used to in the U.S., he said that at the start, he thought he was meeting with full agreement at each decision meeting. He realized later that people did have other suggestions or opinions, but no one had the habit of voicing them out to him, at his level. Being approachable, he said, was therefore a key part of managing people better in his capacity as a CIO.
"Once there is trust established, and people are comfortable to throw out red lights--a practice not ingrained in the people here, to contradict one's boss--it's amazing what you can achieve at meetings," he said.
A Partner for the Rest
As Managing Director and Group CIO of DBS Bank, Steve Ingram reinforced the message of the speakers before him, talking about the alignment of IT and business; his method was to gather input from the business end, processing the ins and outs of options that the IT end could provide, and coming out with a portfolio of corresponding initiatives.
Categorizing that into a pyramid, the bottom being sustaining initiatives, then tactical initiatives at the middle, with strategic initiatives at the top, he said that building that base would be a solid foundation upon which IT can deliver appropriate responses to the business need.
Sustaining projects are utility in nature, such as reducing operational risk. Tactical projects reflect incremental improvements to existing operations or are triggered in response to unplanned developments. "Strategic programs at the top are then required to close the 'planning gap' between desired performance targets and what is achievable from continuous improvement and 'business-as-usual activities'.
"And we cannot achieve strategic, transformational change by technology alone," he said. "The portfolio of strategic initiatives are interconnected and interdependent on the business function."
He recommended the portfolio of initiatives to be sequenced within a rolling three year roadmap, continually refined and aligned to business imperatives. "Building technology capability alone is not enough. You need a portfolio of governance approaches to improve spending discipline and ensure continued sponsorship and alignment," he said.
That involves the tracking of success, ensuring that outcomes are delivered and aligned with corporate goals, he said.
"I have argued for a shift away from the traditional role of IT," he said. "We are now business enablers, not simply technology managers. To execute that, we have to refocus our competencies on what adds value, and to be a partner for the rest."
On Managing Outsourcing
Edward Nicoll, Director of Information Management and CIO of Cathay Pacific Airways, said that outsourcing providers can only be as good as the mission set. Outsourcing, he said, was the "best way to reduce risk".
Relating a story on management of an outsourcing partner where the goal was not 100 percent transparent, he talked about a contract in which his organization agreed to buy computers on an as-use basis. The contract was exposed for several flaws, but to compound that, the relationship with the contract partner was already less than optimal.
"We confused the 'what' with 'how'," he said, "We assumed that everyone shared a common vision for the betterment of our IT. When commercial reality loomed, people moved on, but the contract stayed. Because of that, IT suffered."
Eventually, they replaced that one master contract with three separate ones, each better fitted for the disparate needs of the company.
The lesson in outsourcing for him, he said, quoting Socrates, to "know thyself--Ask yourself why you want to outsource. It ought to be for access to better expertise or to enjoy economies of scale.
"We are in the real world, so there is no such thing as a strategic relationship with a supplier," he said. "You have to set that vision yourself, internally and establish it before moving out."
Identifying and measurement of the results hoped for is the next step, he said: "Focus on what you want, not how to achieve it, as well.
"Make sure both parties know the SLAs and what is important to you, the client.
With a laugh, he said, "Do not rely on human good nature with your outsourcing contracts. The contract is the referee. Have good governance processes set up and followed for each outsourcing partner."
As many of the speakers before him had belabored, he said, "You need company buy-in. You can't do anything without it.
"And finally," he said, "Be a good customer. How well your account representatives works with the vendor spells out how much you can get out of the latter. Outsourcing is never a one-off fling."