Stories by Peter Hind

The retail industry has a strong record in demonstrating that information technology can deliver competitive advantage and transform an industry, particularly relating to supply chain management.
In Australia and the United Kingdom you will find examples showing just how the astute application of technology can transform the dynamics of a marketplace. In both countries, in a comparatively short period of time, one organisation has harnessed IT to become a virtually unassailable market leader while, on the other hand, the ineffective application of technology has left an erstwhile strong competitor, desperately playing the 'no win game' of 'catch up'.

There will be a lot about 2059 that will continue to surprise many of us in the communications equipment industry. However, rather than look forward to what these unexpected developments might entail, I thought there might be value in looking back to remember how far we have come since 2009. When you work in such a fast-paced industry as ours, it can be easy to take radical change for granted. Yet the last 50 years have been punctuated by many significant developments that have transformed our working and recreational lives.
Perhaps the biggest cultural change is that we no longer refer to the information technology or IT industry. This name reflected the fact that the earliest computers sought to help organisations make more informed decisions. However, the evolution of communication technology since the advent of the Internet in the 1990’s has made distance irrelevant and has accelerated mobility. However, this functionality is only part of the reason we now work in the CE (communications equipment) industry. This name also recognises that this functionality has also dramatically enhanced corporate dialogue and communications everywhere.

I have recently done a series of presentations examining what CIOs need to do to help their organisations respond to the global down turn in the economy. These events have made me look at virtualisation with a new set of eyes. I now believe that it does indeed have a lot of merit.
At the outset I saw that virtualisation is an obvious way that a business can get more use from its existing IT assets. Clearly, if you partition a current server to a number of virtual servers that all run on this one physical device, then this will increase the utilisation of the server. Research shows that many existing servers are seldom running near full capacity. Therefore, it would appear that there is lots of opportunity for virtualisation. Moreover, such consolidation would allow an organisation to retire a number of servers which would help reduce expenditure on hardware maintenance and would, probably, simplify the system's administration task.

I have just returned from organising and chairing the annual New
Zealand CIO conference. It is an activity I really enjoy. I am friends

It takes a brave person to tackle a hard challenge because these are likely to be thankless tasks. The chance of failure is high so you might spend a lot of effort getting nowhere. Why risk your career or reputation on something so difficult?
Yet, for some people, a challenge makes a task more compelling.

Recently, I came across a white paper that arguing that at its heart, the IT department was all about change. It contended that most costs in IT essentially relate to implementing change and the subsequent management of it. Moreover, the article stated that, since many of the ITIL processes relate to IT change in its many manifestations, by helping an organisation better manage such shifts, it is possible to use change metrics to determine the ROI in the implementation of ITIL.
The article was the result of a brain storming session among a group of American CIOs who were looking at how they could argue an effective business case for the adoption of ITIL. The discussion highlighted that where IT staff members spend their most time usually revolves around change. The CIOs recognised that when something goes wrong, the resolution typically begins by focusing on what is different. The CIOs then agreed that it is possible to quantify change in IT operations through three key variables: the number of requests for change (RFC); the number of changes actually made and the number of releases that are implemented (a release was defined as a batch of changes grouped together that entailed build, test and implement processes).

Research is vital to keep industries and executives informed about trends and directions, but are senior IT executives aware of this importance, or do they see information gathering calls as a nuisance to be avoided?
It is amazing how difficult it is to get local business executives to respond to a research project. Right now I am midway through a project that requires me to undertake a simple survey of business executives. I want to understand how organisations place a book value on their core software assets. Do they treat them as a liability or do they treat the expenditure as an asset and capitalise the expense? My study requires respondents to answer around 20 questions, the vast majority of which require them to rank an option. It is something that takes them five to ten minutes and for this time they will get a free copy of the final survey report.

During a recent visit to the US, Peter Hind spent time with Professor Geoffrey Xie, a recognized authority on computer networks, who works in the Department of Computer Science at the Naval Postgraduate School in Monterey. He reports on discussions he had with André Mendes, a past winner of America's IT Executive of the Year award. André is CIO at the Special Olympics, headquartered in Washington.

A recent major Kuala Lumpur IT security conference provided very useful insights into the increasing security difficulties that confront CIOs today. Consistently, the speakers were knowledgeable, passionate and articulate but, will these messages ever bear their desired fruit. Were we just preaching to the converted?

This recognition of the real security challenge was spectacularly highlighted recently by the incompetence of the UK government which managed to lose the contact and bank account details of 25 million recipients of child benefits. These were copied and unencrypted on to two CDs and sent through the internal mail from whence they disappeared.

So voluminous is the data surrounding CIOs that it could almost be likened to a tsunami that will engulf business. In fact an IDC study entitled 'The Expanding Digital Universe' estimated that the current size of that universe was 161 billion gigabytes. Moreover, it anticipated that the volume would grow six fold by the end of this decade to 988 billion gigabytes. In effect, that represents a CAGR in global data of 57 percent in over four years.

One of the questions that I have frequently been asked in my time as an industry analyst is: What do I believe are the hallmarks of a good IT department? In running IT Executive Forums, I’ve probably interviewed more than 500 CIOs, IT Managers and their reports over the years. In this time, I have come to recognise the common characteristics which reflect an IT department that seems to be on top of most things.
Let’s start with some of the qualities I do not believe they possess. First, these IT departments do not bunker themselves down against the outside world. Invariably, good IT departments are open in their outlook, and actively seek to engage with their counterparts elsewhere. They appreciate that such interaction sharpens their thinking, introduces new ideas and challenge prejudices and preconceptions. The CIOs in charge have come to recognise that an IT department can only hope to improve its performance through such external dialogue.

How much do you think a business system is worth? The usual answer to this question would be the purchase price minus any depreciation. Yet in my experience that is rarely a true reflection of the value of these applications to the business. These systems are embedded in the organisation. Processes flow from them. They are instinctively utilised by employees. They are frequently adapted to specific business requirements. If they stopped working tomorrow it would create havoc in many companies. The reality is they are worth considerably more than many executives appreciate.
Yet even the name given to established business systems highlights a certain lack of appreciation towards them. The term ‘legacy applications’ implies something old fashioned, inherited or long-in-the-tooth. Unfortunately in IT there can always be a temptation to confuse the new with the better. There is a lot to be said for a robust, dependable legacy application. You know it works and you know changing from it will bring significant disruption to the business. Replacing an application can require extensive staff training and modifications to work practices while, at the back of the mind, is the uncertainty as to whether you will be any better off in the long run.

Each year I get a chance to take a look at what has happened in the New Zealand IT industry over the past 12 months. I gather these insights when I analyse the results from IDC's annual Forecast for Management (FFM) survey. It is always an interesting process as it allows me to check whether the anecdotal feedback I am hearing from CIOs here is in line with the survey evidence. However, I reviewed this year's data with particular interest. For some time I have been conscious that many in the ICT industry are anxious for some good news. They seem to feel that if everything in business is about cycles the ICT upturn must be due. Is it, then, now time to open the champagne?
At the outset though, since the perennial challenge in ICT is to align it with the business, we should position IT investment against how New Zealand business has been operating as a whole. In this regard local CIOs should feel encouraged. In January the NZSX 50 stood at 15% over the previous record high as at January 2004. There was also good solid growth in GDP performance and inflation was well under control. There have been many times in the countries history when such solid statistics would generate euphoria. They should indicate boom times. For those in IT such circumstances should equate to a myriad of new exciting IT projects underway. Yet the reality is that the CIOs I talk to have never felt more stressed.

These are clearly turbulent times in business. Research in the US and Canada by Mergerstat.com shows that throughout the 1990’s the number of mergers and takeovers announced in North America quadrupled between 1991 and 2003. Probably low stock prices and the need to consolidate to fight off competition have fuelled these forces. Nonetheless, CIOs have been left with the task of tying together a myriad of disparate systems to establish the brand new united company. Perhaps this explosion in merger and acquisition activity is why IDC research highlights that the fastest growing challenge reported by New Zealand CIOs is integrating multiple systems.
Certainly, their CFO counterparts believe that a lack of integrated data is the biggest deficiency in corporate data. In 2003 IBM undertook a global survey of CFOs. Interestingly, the primary concern of CFOs was that decision-making in their organisations was being hampered by the lack of integration of data across the business. Less than 10% of respondents believed their management had access to integrated information. In effect, CFOs seemed worried that decision-making was being done in silos.