The significant players

MIS 100 Overview

For the past nine years, the organisation with the most number of screens has always made it to the top rank in MIS100, the annual report on the top IT using organisations in New Zealand. However, this year, the organisation with the biggest number of screens, the New Zealand Defence Force, ranked third. The University of Auckland, for the third year in a row, ranked nzfirst. There is no mix-up. It is all due to the new methodology we are using, where number of screens, which used to be the sole determinant, is joined by turnover and staff numbers as the criteria for the ranking.

Still, using the new methodology, the education, government and health sectors dominate the But it has also led to the inching up of enterprises in industries like manufacturing, and the emergence of new names like Vector and Lion Nathan. This, in our opinion, makes the MIS100 more relevant and interesting as a gauge of the level of activity in IT organisations across New Zealand.

Going through the key IS projects of the MIS100 organisations, we find recurring themes for the next 12 months. Business intelligence, knowledge management, service orientated architecture and virtualisation are the most cited projects for enterprises in both government and private sectors.

Their CIOs, on the other hand, cite an overriding concern, that of staff recruitment and retention. The latter is an ongoing business challenge, they say, echoing the concerns expressed by heads of IT organisations included in the 2005 report.The screens testThis year, the Defence Force, reports the highest number of screens at 14,800, a jump from its 2005 figures of 8150.

The University of Auckland reported the highest number of screens in 2004 and 2005, but this year, ranks only fourth when it comes to number of screens.The Ministry of Social Development has the second highest number of screens, and this is fuelled by the fact that it has incorporated the Department of Child, Youth and Family (number 35 in 2005) which in the past was counted as a separate organisation in the MIS100.

This year too, we have asked organisations to include smart phones and PDAs, as these web-enabled devices become critical business tools. And, as many of you have pointed out, they require support in a similar way to traditional desktops and portables.The average number of screens continues to grow each year. This year, the average number of screens for those in the top 25 was 8013. Contrast this to 7327 in 2005, or even 5855 in 2003. But this growth is not exhibited in the organisations in the 76 to 100 ranks.

This quartile has an average of 1218 screens, lower than the 2005 figures of 1304. As in the past two years, CIOs in the MIS100 are dealing with the impact of enterprise mergers in their respective organisations. As one IT director puts it, these mergers underscore the need for IT to be flexible and allow for speedy integration with the acquired organisations.

In the past 12 months, among those involved in mergers were PGG Wrightson, Gullivers, Ministry of Social Development, Vector and Fisher & Paykel Appliances. The Christchurch College of Education is currently in a merger process with the University of Canterbury. Both organisations are in this year's list, and next year we will see the impact of this merger in the ranking of the University of Canterbury.

PGG Wrightson, for instance, was number 75 in the 2005 ranking where it was listed as Wrightson Group. The October 2005 merger with Pyne Gould Guinness required significant business and IS division restructuring, and this year, the group ranked 57. By industry and regionMore than half of the biggest IT users in New Zealand are from the public sector (see graph B above).

Notably, education has been dominating the list for the past seven years. This year, there are 22 organisations in the sector, there are eight universities, and five of them are in the top 20. Twenty one organisations are from the government and defence. Of these, five are local governments.

Health and community services comprise 11 per cent of the total. Manufacturing showed a slight increase this year at 9 per cent with three of them (Fonterra, Carter Holt Harvey and Fletcher Building) in the top 10.

Last year, manufacturing represented 7 per cent, the same figure as retail, which this year is down to 5 per cent.In the regional distribution, Wellington leads the list, as it has been doing so for the past three years. This is also a reflection of the dominance of central government in MIS100.

This year, 36 Wellington-based organisations are in the list (compared to 40 in 2005) with 34 from Auckland(compared to 36 the previous year).

Christchurch has eight this year, an increase of three from 2005. Dunedin decreased by one and Palmerston North was steady at three.

IT staff and the end users

The MIS100 uses the number of employees as an indication of the number of users and IT head has to support.

That is why we used EFTS numbers instead of employees for the education sector. This year's MIS100 organisations employ a total of 15,684 IT staff, with an average of 117 per site.

This is a considerable increase from the 2005 count of 11,950 with an average of 88 IT staff per site. Had we included the number of outsourced staff, this number would no doubt be significantly higher of course. Expectedly the figure is higher for the top 25 organisations, where the average number is 295, and this figure drops to 86 for those in the 26 to 50 ranking.

Overall, each IT staff member supports on average of 29 screens. For those in the top 25, this figure is lower, at 27, but becomes higher for the organisations in the lower ranks. Those in the 51 to 100 ranks, however, support the same number, at 35 screens per IT person.

OS and database users

This year, Microsoft takes the top space for operating systems at 82 per cent, up from 74 per cent in 2005. Sun and Linux have remained steady for the past two years at 37 and 35 per cent respectively (see graph D on page 12). The top five rankings for database use has not changed, which are Microsoft, Oracle, Sybase, IBM and Informix.

Microsoft, however, is the clear winner. Its use has increased, with 90 per cent compared to 81 per cent the previous year. Oracle is down to 66 per cent, compared to 72 per cent in 2005. Same with Sybase which moved to 17 per cent, from 20 per cent in 2005, and IBM which is 17 per cent, down two points from 2005.

Open source MySQL is 8 per cent this year, two percentage points higher (see graph E on page 12).Reporting lines and transitionsThis is the third year that we have asked CIOs about their reporting line. This year 34 of the IS leaders say they report directly to the CEO or managing director, up from 33 the previous year.

However, more IS leaders say they report to the CFO or the director and general manager of finance, 21 as against 16 in 2005. One IT director reports to the board of directors, and the rest report to a range of titles including the commercial director, general manager finance and human resources, director for organisational performance and group director business strategy.As in past year, MIS100 tracks the changes in leadership in a number of companies.

Most notable are the shifts in IS leadership at Fonterra, New Zealand Defence Force, Westpac, ANZ National Bank, New Zealand Post and Vector. Some of the shifts occurred after a major reorganisation of the structure of the IS department as in the case of Westpac, New Zealand Post and HealthIntelligence.

A continuing business challenge

The MIS100 provides an interesting insight into the range of projects that IT organisations are currently involved with. Across all sectors and organisation sizes, server virtualisation is one of the most cited initiatives. Different projects touching on knowledge management and business intelligence are also on the agenda for a lot of organisations.

But as the IT leaders open up about the range of new projects they will pursue in the next year, they also express concern about having access to skilled staff that could affect the implementation of these projects.

The issue of staff recruitment and retention ranked high in the trends for 2005. The IT directors interviewed this year say the issue remains a challenge, with a range of implications.

The chief information officer of an international consultancy group says availability of these skills and resources is critical to the company's competitive advance. Another CIO supports this view, saying the shortage will affect the innovation and quality of service they provide to users and customers.

Some organisations express concern over where to get extra staff during certain times of the year, or for special projects.The predicted economic downturn is expected to make staff recruitment much harder, particularly those that cannot pay top dollar for the much sought specialist skills.

As a result, IT organisations are 'rethinking' their recruitment and retention strategies, including a focus on staff development and more flexible work arrangements. Others are looking to overseas recruitment to ease the shortage.

Some are working more closely with their counterparts in other countries. But they are also cognisant of the fact they are competing with global and offshore companies in the war for talent. One positive development is a trend for New Zealand residents returning from their OE with additional skills and experience, and also a rise in number of UK residents looking for IT work. Despite this, there are significant skills shortages in areas like systems architecture and network design.

IT directors also note the growing need for staff that possess IT skills and a business focus, and are able to deal with internal and external customers. It is very hard, as one CIO says, to find this 'combination of soft and hard skills'.

A colleague concurs when he states the recruitment market is active, but the selection pool is not large. There is no clear-cut solution to this problem and with admissions to tertiary ICT courses of IT staff continuing to decline, particularly the numbers of NZ-resident enrolments, the situation doesn¿t look like easing longer-term.

Perhaps it is time for industry and tertiary education to begin to work closer together? Making an impact This year, for the first time (and in conjunction with BMC Software), we asked IT directors their views on the alignment of IT with the rest of the business in their respective organisations.The IT directors say they fully understand the company¿s business strategy (an average of 9.08 on a scale of one to 10), and feel their technology supports this strategy (8.65 on the average).

But the figure dropped significantly (7.88 average) when asked whether the business owners of the company or their fellow C-level suite colleagues, fully understand how IT contributes to the success of the business.

So now that the ICT department has aligned itself with the business, a new question presents itself, namely how to market ICT to the rest of the executive. There were enterprises that ranked highly in all three questions, and expectedly a number of them are in ICT like Telecom, EDS and Datacom. But the IT directors who point out they and their teams understand and fully support the business strategy but can not say the same for how the rest of the business view the IS department, come from a cross section of industries, central government, finance, education.

This clearly indicates the need for IT executives to effectively market IT to their business constituents. Analyst firm Forrester, which tackled the subject in a recent paper, says there is a possibility the IT department could be accused of self-promotion. But this is no reason to pull the plug on such a campaign.

As Forrester analyst Laurie M. Orlov points out, "No products or services produced in the marketplace thrive without marketing to prospective constituents." It will be interesting to note how many New Zealand IS leaders will add this mission to their key projects in the coming year.

Fairfax Business Research provided the analysis of the MIS100 data and the graphs.

Comment at mailto:divinap@fairfaxbm.com.