The department of transformers

The game has changed and IT has a pivotal role to play in enabling business transformation.

Dr Marcus Blosch, Gartner
Dr Marcus Blosch, Gartner
]The walled garden of IT has exploded, says Marcus Blosch, VP of research on Gartner’s Enterprise Architecture team.

The IT department can no longer dictate the terms to the users. Instead, IT is expected to enable transformation and empower employees to do their work in anyway that suit them.

“The game has changed. The role of the CIO has changed. You have to change the way you run your IT organisation,” says Blosch at the CIO100 event in Auckland, which presents the results of the 2013 research on the biggest IT using organisations in New Zealand.

Without new approaches, IT’s role remains static and less strategically relevant, says Blosch. But he is seeing some positive changes.

According to Gartner’s 2013 CIO survey, 41 percent of CIOs said their participation in business strategy formulation is increasing. There is also growing participation in business innovation and business strategy execution.

“It’s really about having something to contribute.”

How can IT help transform the way we interact with our customers or the way we make money?

“You’ve got to have those stories to tell,” says Blosch. “Then you can change the role of the CIO to be much more involved with the business.”

The survey also found that organisations are not using IT’s full potential. More than half of respondents said that less than 50 percent of their organisation’s technology potential has been realised.

“We’ve made all this investment in technology, people are bringing their own devices into the organisation and still, what we could and should be doing with these technologies is just not happening.”

“We’ve got a magic sword but we are using it to open cans of beans.”

Whose responsibility is it to realise all that value?

“Well, it’s probably you — the CIOs,” says Blosch. “You have a better understanding of the technology and its potential.”

Digital hunting and harvesting

Blosch presented Gartner’s research identifying three areas within IT — tending, hunting and harvesting. While tending is BAU, the idea about hunting is a more innovative area, he says. It is about understanding your business and business model, and then searching for new opportunities. It is also having the ability to run multiple pilots and take the successful ones into the business. Following on from hunting is harvesting. Once you’ve got a new technology in place, how can you extend the opportunities and get additional value from the technology investment?

“Moving away from just the tending and BAU to the hunting and harvesting – that is one of the key value-adds the IT organisation can bring.”

The single biggest change within organisations this year is that the IT organisation is no longer treated as a cost centre.

“There is change afoot. CIOs are starting to see change within their organisations. But you have to be the master of your own destiny and drive that change.”

Technology-driven bank merger

One thing that Craig Sims, COO of ANZ, has learned over the past two years is that the role of IT is transformational for banks. Sims oversaw the merger of the ANZ and National Bank, a project that spanned from October 2010 until December 2012.

Craig Sims, chief operating officer, ANZ Bank: "It’s not worth losing reputation or customers over faster delivery."
Craig Sims, chief operating officer, ANZ Bank: "It’s not worth losing reputation or customers over faster delivery."
As part of the merger, ANZ went through a simplification process. ANZ acquired the National Bank from Lloyds TSB in 2003. For the next 10 years, the two organisations had duplicate systems — two IT systems, two sets of products, two customer bases and two management teams. The theory was that the two brands would grow, reach more customers and give the organisation a greater market share, says Sims. But the dual brand strategy didn’t work as planned – fast forward seven years and the two banks’ market share had dropped from around 38 percent to 31 percent. The brands were almost competing against each other, he says.

“We had to do something radical to change it.”

The simplification programme meant that the organisation now has one brand, one infrastructure and one way of dealing with customers.

The organisation decided to use the National Bank system because it offered a better proposition in the overall package, Sims says. There was also a big decision to be made around which brand to use. Lloyds gave ANZ the rights to use the National Bank brand until the end of 2014. While this was a strong brand it wasn’t going to be a long-term solution, so the organisation opted to go for the ANZ brand.

“If you were a National Bank person, you were going through a brand change. If you were an ANZ person, the brand didn’t change, but the product set did.” It also meant that internally, half the organisation was fully trained and could help and coach the other half, which bound the organisation together, he says.

The system conversion was done over one single weekend in October last year. All in one go, the team moved 2.6 million customer records, 500,000 security records, 80 million transactions and $46 billion of funds across to the National Bank system, Sims says.

Pre-merger, ANZ won one in four mortgages. “Now we are winning over a third.” Sims recommends having strong project governance. The project was expected to take 20 months, but at one stage the organisation set the aspirational target of getting it done in 12 months. “As we got into the programme it was very clear that we didn’t have the skill sets and capabilities to deliver it [at that pace] and we had to reset the dial.”

“You have to be brave enough to call it and do the right thing.” It’s not worth losing reputation or customers over faster delivery, he says.

Related: CIO Agenda 2013: Transform, innovate, engage

Meet the ‘Internet of Everything’

The job of the CIO has never been more difficult, says Dave Wilson, regional manager at Cisco New Zealand.

“The way we are communicating and collaborating is changing and users are forcing that upon us.”

Dave Wilson, Cisco: Rethink your IT fundamentals — what are you going to maintain and keep as your core business?
Dave Wilson, Cisco: Rethink your IT fundamentals — what are you going to maintain and keep as your core business?
What Cisco has coined ‘the Internet of Everything’ is here, Wilson says. It means we are connecting unconnected devices and making everyday objects intelligent. Largely driven by the internet becoming available globally; advances and affordability of technology and networks, the Internet of Everything is about connecting people, things, data and processes — and how to capture the value of it in our everyday lives and in business, he says.

“This transition is real. It’s here now. Don’t miss it,” he says.

Determine where your business is today with regard to Internet of Everything, take advantage of it and become more profitable, he says. Rethink your IT fundamentals — what are you going to maintain and keep as your core business? Also reconsider your trusted partners, he says. Who will best help you on the next stage of your journey?

Related: Cisco prepares platform for Internet of Things

healthAlliance top IT user

For the third year running, shared services provider healthAlliance has been named the largest IT user in New Zealand in the CIO100. The organisation supports 20,619 screens — about 2000 more than last year. And the organisation is continuing to grow.

“The theme that I heard is change,” says Vendrig, referring to the presentations of the earlier speakers. “Change is everlasting and we should plan things all the time,” he states, “healthAlliance is a good example of that.”

Related:CIO100 2013 Overview: Chief transformation officer

The shared services organisation started in 2000 working across two district health boards or DHBs (Waitemata and Counties Manukau). In 2011, healthAlliance doubled its size and now provides finance, procurement, supply chain, payroll and information services to the four Northern Region District Health Boards including Auckland and Northland DHBs.

Related:Johan Vedrig: On a merger mission

Vendrig says in the next two years, the organisation will work with Health Benefits Limited to expand the scope of the finance, procurement and supply chain services to 20 district health boards across New Zealand.

“We are investing heavily in resilience training to keep up with the challenges we are facing.”

Sidebar: Selected by CIOs in 2013:

Top-three business strategies: • Increasing enterprise growth • Delivering operational results • Reducing enterprise costs Top three IT strategies • Delivering business solutions • Improving IT management and governance • Improving IT organisation and workforce Top three technologies that CIOs prioritise in 2013 • Analytics and business intelligence • Mobile technologies • Cloud computing — SaaS, IaaS and PaaS

Source: Gartner

Cisco and Samsung sponsored the CIO100 2013 Event in Auckland.

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