For any manager, general business goals are pretty much no-brainer: profitability (or sustainability), customer satisfaction, staff satisfaction, manageable growth, perhaps community or charity involvement, and saleability. It’s in the attempt to achieve these goals that information and communications technologies (ICT) grab the spotlight; harnessed in the right place and at the right time, significant business goals can be realised through ICT. But which technologies should be point of focus going forward, and at what price and risk? On whose advice should business act, and is ICT driving business or the other way around?
Tony Wickstead, chief information officer for Auckland International Airport (AIAL), says ICT capacity and innovation is inexorably linked to business health, but is even more critical for transport hubs like airports – flight information, baggage handling, air traffic control, building management systems and corporate systems are all heavily reliant on ICT.
“We also work with the various airlines to assist in the reticulation of the network background; there’s car parking systems, we’re knee deep in IP telephony planning, and engaging in an enterprise architecture review for what I call ‘the airport of 2012’ – looking at how the technology will scale and cope,” says Wickstead.
So how does Wickstead ensure ICT and business remain aligned and new opportunities are not missed? He has help – executive colleagues from other areas of the business as well as ICT vendors and consultants all contribute to eventual ICT decisions.
“We are very open to letting ICT consultants have access to the business upfront through interviewing our business leaders. If you’re not doing that you are playing with danger because lot of ICT projects will fail,” says Wickstead.
AIAL has corporate master plan that looks out to 2025 and which is reviewed by ICT management before draft ICT strategic framework is given to business managers to check it makes sense and to discover any business perspectives that may have been missed. Ignoring this step is ‘dark science’ warns Wickstead – ICT managers tempted to invest in technology for its own sake quickly lose credibility. He says while the future of business drives new ICT initiatives and projects in many organisations, it can also happen the other way around.
“ICT can definitely drive business strategy. Look at Air New Zealand – about $1 billion of their revenue is now achieved through online sales because while their [web project] was executed to reduce costs it redefined how they interacted with customers,” says Wickstead.
Lee Boell, consultant for large ICT vendor Fujitsu, says the answer to the question of whether ICT drives business or vice versa is “a bit of both” – through ICT initiatives businesses can create agility and leanness which drive business change, but it is rare to see new technology enable completely new business venture and wiser to view ICT as business enabler rather than business creator. He says businesses today need to be prepared for an escalation of demand for ICT enablement of their business processes by customers and business partners, and need to think about ICT system availability, security, and access.
“A key plank is agility – the ability to change critical applications from time to time. Locking everything down may appear to be synonymous with building secure ICT infrastructure, but ICT processes need to be able to change as the business changes to respond to competitive influences,” says Boell.
Chris Quin, general manager, for ICT consultant and implementer Gen-i, says technologies can and do drive business strategies when business leaders only see new business objective as result of seeing what new technologies are capable of. However, he says transitions between technologies need careful management and flexibility is more important than focusing on the next ‘big thing’ in ICT.
“It’s not practical for businesses to make big [ICT] architecture changes every six months. They need to be flexible and robust so if business doubles tomorrow, then IT can go with it. And they want their total cost of ownership improving,” says Quin.
An ICT check-up
In July presentation titled “Restructuring for alignment”, Johan Vendrig, CIO for the Auckland District Health Board (ADHB), told Brightstar CIO summit that recent ICT restructure at ADHB had felt like “a scary jump”.
“Historically our culture was systems instead of customer focused, and IT systems were designed by IT people. We had silo mentality and high reliance on IT individuals. There was lack of process documentation, and flexibility and scalability of IT support,” said Vendrig.
He said ‘business’ objectives included compliance, better collaboration between primary and secondary healthcare providers, increased productivity against backdrop of limited health funding and better measurement of outcomes.
“Before jumping into restructure it’s important to think ‘what are you there to do?’ We developed an information management framework and strategy [but] it’s no use producing management report if you can’t translate that data into how it will make coalface difference – bringing it back to individual impact is quite tough to do from an IT perspective,” said Vendrig.
As result of realigning its organisational goals with forward-facing ICT strategies, ADHB experienced staff turnover that was higher than expected, says Vendrig. However, he says while the “pain of change” lasted little longer than hoped, gains include barriers between organisational teams coming down and business teams taking more shared approach to business and ICT strategy development.
“It is very important to get the CFO and CEO in the mind of what we are trying to achieve, because they have to back you up. I also had 50 plus one-on-ones with key staff and that is great way to learn lot about your organisation. You have to listen,” said Vendrig.
Alignment attacks
Given the established, if not prodigious, practice of ICT outsourcing in New Zealand, is it easier or harder to achieve IT and business alignment when the ICT components of the business are hosted and managed externally? (The local market for offshore IT outsourcing is growing by over 20 percent per annum, compared with the mature US outsourcing market, which is growing at only 7.5 percent.)
Quentin Lowcay, partner at Kensington Swan who is experienced in negotiating ICT outsource contracts, says businesses that outsource ICT normally do so to save costs or to gain access to ICT expertise not available internally. This brings the risk of loss of internal knowledge which may potentially result in mistakes being made in the alignment of ICT and business strategy, but unless businesses can realise real efficiencies from running their own IT and processes, the benefits to outsourcing usually outweigh the risks. Further, more major ICT directions are being decided by the CFO with the CIO in reporting role, says Lowcay. This helps contain costs and break down IT silos to ensure IT remains an enabler of the business irrespective of who is carrying out the day-to-day development and management of ICT projects and processes.
Wellington-based ICT recruitment company Helium is one smaller business that decided its business goals could be better realised through ICT outsourcing. Director Mike Baker says he was wary of introducing more variable costs and potential points of failure by retaining IT in-house as his business grew. He eventually settled on single infrastructure provisioning model known as Virtual Data Centre from Revera which provides scaleable, ready-built, plug-in IT infrastructure spanning desktop support, applications and underlying server and storage as well as software and connectivity.
“We got rid of our IT – the whole lot,” says Baker.
Well almost. Helium still needs to align its business and ICT initiatives strategically – it just doesn’t need to internally execut
