Local IT executives expect to achieve 2004 goals

MANILA (01/19/2004) - Even as the country enters what could well be a turbulent election year, local IT executives remain confident of reaching their IT goals. Among their plans this year, outsourcing, wireless networking and cellular phone technology figure prominently. These are just some of the topics discussed during the 10th Annual CIO Roundtable of Computerworld Philippines that was held last month.

Computerworld Philippines this time played host to three CIOs -- Alexander Arevalo, deputy commissioner of the Bureau of Customs, Dr. Robert Asuncion of Lufthansa Technik Philippines, and Police Inspector Efren Fernandez II, assistant chief for Personnel Accounting and Information System of the Philippine National Police. Although they made up the smallest number of CIO Roundtable participants since this annual event was organized, the discussions were as lively and informative as the previous editions.

The full transcript follows:

CWP: How would you describe the Philippine IT environment in 2003?

AREVALO: At the Bureau of Customs (BOC), we have to depend a lot on the resources available to us before we could move towards IT. As far as we are concerned, the IT system was sort of like treading water. It was in the maintenance and survival mode. We had to make sure the old systems continued to run and the old software continued to run with the old equipment and the old people continued to work efficiently given the increased challenges of having to improve our collections.

"Maintaining IT" means I have to go down to the smallest details such as tracking the gasoline in the generators at the Ninoy Aquino International Airport (NAIA). It means maintaining enough duct tapes in a port, checking if the line printer is okay. I have to go down to really micromanaging the system because, in my experience, the most expensive systems fail on (a small electrical) fuse and a lot of people have already taken for granted that fuse, and that's why I've gone to that level. Whenever reports come to me, such as cases of brownout, I go through the details because there is no back-up system I can depend on. Our U.S.uninterrupted power supply) units now run on extension cords when they used to run on batteries. Improvement is still greatly needed to run our AVR system.

The challenge for the BOC is that, given the limited budget, we are able to support requirements and deliver our mission. At the same time, we are able to motivate our people to work double-time despite the fact that they don't even have overtime pay. To improve collection given the limited time of operations means lengthening an employee's hours. People have to go overtime. Level one back-up operations sometimes run until early morning.

The challenge of IT is that although we are not seen, we continue to be the backstage hands that must make sure the show goes on and the mission is fully delivered. To make sure that people watching the BOC will not feel the pain or the challenges as well as the difficulties our agency is facing. As far as we are concerned, the IT environment in the BOC is even on resuscitation mode. Fortunately, we have been told that our additional 65 million peso (US$1.2 million) capital budget for next year is available to make new developments.

It took me two years to bring the BOC to the radar screen of the international community. I had to get the attention of the President and even make a case for it. A lot of times they ask me, what will convince somebody like the President to support you?

I always say it's in your voice. People listening to you will see whether you're sincere, committed, and whether you know what you're doing. They know if your thinking is focused on short-, middle- or long-term goals. How can you decide if the person trying to convince you doesn't sound like he has convinced himself?

We are fortunate to have no less than the President as the IT champion, that the government allocated 4 billion pesos for the e-Government Fund.

The challenge, still, is that we are a highly labor-intensive country and sometimes might want to decide to delay implementing IT solutions in favor of employing people. There are things like that in the BOC, but we also give great importance to developing IT. There is no shipment that goes into the BOC that has not touched IT. Documents cannot be released unless it is released through the computer. It's real-time. If they delay the shipment now, they are going to pay thousands of pesos because it's on a daily basis.

FERNANDEZ: We have the same situation as the BOC but our primary concern is on the protection of the system and protection for ourselves. Primarily, we had a plan that targeted to connect all members of the Philippine National Police (PNP), not just in the whole region but the whole Philippines. But at the back of our minds, we were hesitant due to the many setbacks we know we will encounter in developing this plan. We wanted a system that will accurately track the location and party of a police officer.

But we realized that not only will we be challenged in creating such a system, but in trusting people to operate the system as well. We are risking our security and position details which can do us a lot of harm if it falls in the wrong hands. It is hard to change a system where everything's very confidential and traditional. Lately though, we have come up with solutions that have established that all units must submit regular reports along with the orders issued. We scan them so that when a police officer comes with a fake document, we will know.

With regard to IT, we have already built our database since 1998, starting out with a text-based type of system which contains no pictures of police officers. Now, almost everyone has posted pictures to make identification easier and more secure.

The bulk of the problem in digitalizing the system comes mainly from the older beneficiaries from the Armed Forces of the Philippines (AFP) because they want to use the old format and are still somewhat resistant to change. They always have the perception that they would retire sooner or later so there is no need to update their files.

Currently, the PNP has three separate databases: personal account information system, alchemy, and the ID database. We look forward to integrating all three systems so everything will fall under just one program.

Lately, we have charges that have been filed against officers who have falsified documents. It is easier to detect them because each order is contained in just one page making it difficult to add or delete information. It wasn't easy to implement this, much more supply funding for it. We've requested this a long time ago and have received a lot of rejection letters from higher officials. Finally, the system and investment are paying off.

ASUNCION:Our main concern is the high availability of our systems. We work on a given framework so whenever there are things that have to be done and have to be acquired, we acquire them because we have to ensure high availability and provide a good turn-around time. If we don't, then we lose clients. We are more concerned with productivity issues. A lot of productivity issues are dealt with in two ways: the process and the technology. Both of them work hand in hand since we work on a 24 x 7 operations. We have a lot of redundancies such as service clusters and storage area networks.

All of our users are connected wirelessly at 100 Mbps (bits per second). This is because our mechanics refer to manuals before doing a procedure, including something as simple as fixing a sink. They have to open these manuals from their desktops whenever they work on aircrafts. They use laptops that are Wi-Fi enabled. But we block them to prevent free Internet access. We are a young company and we want to make a statement in the global market that we are a Filipino company that can do maintenance and repair of aircraft with the same quality offered by Europeans and Americans at lower costs. Filipinos are very resourceful. We do not save in training because we believe that a well-trained employee is an asset. It reduces the resistance to change.

CWP: What were your organization's most significant IT initiatives in 2003?

ASUNCION: We were able to make really good use of our MRO (maintenance, repair and overhaul) software, a highly specialized software built for maintenance support and overhaul. We got it from a U.S.-based company and is very different from what Lufthansa in Germany has. They are using SAP. I have nothing against SAP but I think ours is a better fit for the type of operations we are doing right now. In Germany, they handle around 300-400 planes, we handle only about 20-30 planes. If the business expands, I'm confident that the software will still be able to handle it.

Our capability is with Airbuses. Some things we cannot overhaul but we can maintain since there's a capability for maintenance. Just because we're MRO doesn't mean we can repair everything. Everything has to be certified including tools such as jacks and wrenches. We perform unattended back-up because there is huge production. We do back-up four to five times a day. The issue right now is securing the data infrastructure. We are working in a Windows environment and that poses high vulnerability. Our e-mails are already serviced on Linux though. We have set up DMGs (distributed mail guards) and firewalls to protect our infrastructure. We have around 20 virtual networks.

AREVALO: We should be able to bring the BOC's system up to speed with our 500 million peso budget. The last time the project fund came in was in 1999. Technically, our technology is about five years old for both hardware and software. We should be able to integrate the system to the Internet and provide more real-time construction and more databases and warehousing. We had an arrangement earlier with the Bankers Association of the Philippines. We do the back-end for the world while the payment system is done by the bank. The front-end is being done by application service providers we have partnered with. We are accrediting about five or six of them to do the front-end construction.

We are in constant discussion with telcos and other providers for us to speed up the wireless solutions. We plan to integrate transactions and payments through cell phones and leverage on how Filipinos make use of such technology. In a speech I delivered in a UN assembly in 2001, I proposed the access of BOC transactions through the use of cell phones. Even Singapore is watching us because it doesn't even do it yet due to its wide use of the Internet. In the BOC, we want to leapfrog from the Internet to wireless. Not many Filipinos have Internet access but most have cell phones. The biggest challenge in going wireless is having a very robust, real-time, and very quick data processing which is why we need a lot of funds. We have to invest in infrastructure.

We are partnering with private, leading-edge companies as they start to pull us and see to it that we are in symmetry as far as technology is concerned. We cannot be a step behind or else we will be the choke point of the system. That's our challenge. The private sector also expects a lot from us. We have to see to it that our stakeholders, IT partners, importers, and other government agencies are able to attain interest in transacting with the BOC. We see to it that it is a win-win situation, that everyone goes home smiling to avoid donor fatigue.

It's the same situation when the national government gave us the 500 million peso budget. We never expected it and we are happy with it. There are a number of other agencies that also need the money and we are fortunate to have acquired it. Even if I feel we need more, I am not asking for it. Let other agencies have it. We return the investment given to us by sharing it, doing inter-agency connections as well as going ASEAN.

We have estimated that we can generate an income stream of anywhere between 100 million pesos and 400 million pesos a year. This is the kind of attitude we have. It is very easy to be selfish but we choose to share. We have developed an attitude wherein we foresee ourselves as part of a culture, a family. We work for the long term. We want to see these things continue even beyond our terms. We see to it that the foundation of all we're doing is well in place, robust and not personality-oriented.

CWP: Considering that 2004 is an election year, do you have fears about the presidential elections' impact on your future IT plans and programs?

AREVALO: In my experience, it's a matter of making a case. I think that the issue is whether leaders of agencies like us are going to change. This reminds me of what was said in Malaysia. As IT heads of the customs department of our respective countries, we can dictate the speed by which IT is going to be deployed in our respective countries.

What I'm saying is we may change the commissioner or the president but if he or she is not an IT champion, there is a limit to what changes can happen in the leadership. The ultimate test of a robust IT policy in government or in an agency is for us to be able to disassociate it from the personality. My objective is to see to it that I put in place the seeds and roots so that the system doesn't become dependent on me. The system should be beyond me.

If you have that kind of attitude, first you get to think that you're dispensable. Second, you get to think that you have to put the system in place immediately. That was why when they were asking me if they could give me the money in installments, I said, "Give me 500 million pesos or nothing." In essence, in terms of negotiation, positioning and marketing, sometimes I even have to re-brand. I'm talking of the same organization but I'm changing its name.

If we put in the foundation, IT shouldn't be personality-driven. A change in administration or in a MIS head should not change the system. If it does, it shows that the project is not well constructed.

FERNANDEZ: We're introducing a number of innovations. In our computer services department, we have a pool of programmers •both officers and non-officers who are utilized by the PNP. From my class alone, there are 22 of us, each with a different specialization. There was also a task force recently formed which I think was composed initially of eight people.

CWP: Since expansion and upgrades are being planned by Lufthansa Technik for 2004, will there be an increase in your IT hiring?

ASUNCION: We're not actually hiring, but we're getting replacements for specific positions that were vacated.

CWP: You said you have about 200 personnel, mostly engineers. How many people are manning your IT systems?

ASUNCION: We have only 38. We may add one or two people for very specific skills requirements.

AREVALO: The challenge of IT in the government is that it is very difficult to hire highly-qualified people because the salary is not very high. On the average, government salaries are about one-fourth of industry standards.

For this year, we're actually going to go toward outsourcing so we can utilize expertise in the private sector on a per-need basis. This way, the bureau need not operate with any risk of obsolescence of technology or skills. Instead of establishing say, a telephone system, we're just going to subscribe to the service. We need not acquire a frame relay.

Following the concept of outsourcing, there are items within our resource base that will have to be procured and maintained internally. But I guess that those that are subject to quick changes in technology and dependent on design obsolescence will have to be outsourced.

In terms of personnel, in MIS I have about 70 dispersed in 21 locations nationwide, so there are sites where only one person is manning the IT facility. What this boils down to is a shift in the kind of skills. At the moment, I am looking for project management experts rather than technology experts. Instead of hiring an IT professional and paying a premium to constantly upgrade and maintain his skill level, we might as well pay for that same skill on a per-need basis. We don't want to get stuck with an expert on Windows 2000 when we're perfectly aware that Windows 2005 is coming out soon.

In terms of cost, it's really very costly and difficult to upgrade skills. You can easily hire somebody for $200 to $300 per month, but the training to upgrade the skills of this new recruit costs about $1,000 per month. There are even trainings that cost $1,000 for two hours. So we'd rather take advantage of the pool of skilled workers outside whenever we need them.

The issue is sometimes you really have to move away from opening the hood of the computer and hiring the right people who will go under that hood and isolate the problem. There's got to be a culture shift. It's about time we get out of the techie shell.

CWP: How about at the PNP, are you planning to hire new IT professionals?

FERNANDEZ: Our priority has always been operations. New police, not IT professionals, will be hired next year. Total manpower in IT is less than 100. Among the ranks, the younger officers are more inclined to IT. The sad thing is younger officers are also the junior officers whose superiors are not very inclined to IT.

AREVALO: How do you assess the IT savviness of police officials?

FERNANDEZ: It still is principle-bound. On our part, we chose to be more oriented outside the service. But we're more needed in the service, that's why we're still here.

As the younger generation who are exposed to IT, we'll bring our inclination to IT, computers and automation even when we become senior officers in the future. I doubt if we'd revert to the old manual system when we rise through the ranks.

We're also looking forward to schooling which we will pay out of our own pockets. The government will definitely pay for our schooling as mandated by law, but we encounter difficulty enlisting for courses.

CWP: Do you ever have to justify the training you'd want to avail yourselves of?

FERNANDEZ: In the PNP, government eligibility weighs heavier than certification. For instance, even when we're commissioned as an IT officer, our responsibility is not only that of an IT officer but also a police officer.

CWP: As IT professionals, what products do you think will be hot and not so hot this coming year?

ASUNCION: I think what will be hot is wireless LAN and securing the wireless network. From that, probably more Web service models such as portals will be coming out. We're gearing for some form of portal where there's a user interface containing all the applications required.

CWP: Are you currently installing or looking at installing applications for Web services?

ASUNCION: Not in 2004, probably in 2005.

CWP: Do you encounter technology resistance among your staff?

ASUNCION:Not really because most of our employees are young. They know IT.

CWP: What do you think will make tech deployment easy?

ASUNCION: What will make it easier really is the kind of training we provide. It's not too easy to work with the tools that we have. You need to actually be part of a specific work force. So it's really the training that will matter.

We are going slow on some of the Windows propaganda that are coming out. We really see to it that we're not being tied up with Windows. We're still moving with our Windows plans, but not that fast unlike in our other infrastructure plans. Right now, our e-mail server is running Linux. We're also collating all our databases on the Unix platform.

AREVALO:I remember the time when we had the Asia-Pacific Economic Cooperation summit here. That was the time we experimented on digital photo and digital printing. What I did was to buy a 14,000-peso Nikon camera and a 450,000-peso dye-sub printer of Kodak. We loaded it on a 400,000-peso Macintosh. We integrated all these technologies. We even went to the point of calling up the engineer who designed the system because it wouldn't print.

As far as technology is concerned, we are aiming for a wireless LAN in 2004. The enabling technology would be the device, as we expect to see advances in terms of the use of the cell phone as a multimedia device -- digital still camera, digital video camera, PDA capability and Internet capability.

Maybe by further pushing the PC capabilities of the cell phone, which are user-friendly and user-dependent, we can transfer the capabilities of the PC to the cell phone. I guess the success of the use of the cell phone as a PC alternative will depend on the middleware, on application service providers working on a menu-driven WAP or Internet-based or text-based system.

For 2004, I am predicting, at least for the BOC, the use of wireless technology in BOC transactions, specifically in the area of payment and tracking of shipments.

CWP: What can you say about the government's move to standardize on Linux?

AREVALO:The basic challenge of an IT manager is being able to recover from a crisis. If my personnel component has limited skills capability compared to the private sector, if my hardware capability is not at par with what's available in the private sector, do I want to be accountable for the maintenance of my OS?

Being an expert in Linux is fine, but it requires current updating. From a psychological standpoint, if I have an OS which is being maintained and updated by a multi-billion company, it would be much easier to accept when it fails compared to a software that failed because I don't have money to maintain it.

In the BOC, we are in the revenue collection business. We cannot tell our people that we deserve what we get. You pay much, you get happy. You get a freeware, you get a free crash. As far the OS is concerned, it will be dictated by our mandate, by our capability, and the price we have to pay for downtime. A downtime in the Manila international port, if it hits the two-hour critical time, can cost us as much as 100 million pesos to 150 million pesos worth of collections in a day.

I think the issue of the choice of the OS will depend on my capability to take over from a crisis. Can I recover from a crisis faster on Linux compared to Windows? From a political standpoint, where can I survive, from a Linux crash or from a MS crash? In any IT system, always look at the after-sales service. I will be violating that principle if I don't look at that aspect. Will I buy my Toshiba locally or from Hong Kong? Where will I get the after-sales support?

It is also the same for the OS. When you buy an OS, the after-sales service goes with it. When you get Linux, hopefully you've got money on standby to buy the expert on a per-call basis. Unfortunately, we don't have that money.

As far as our private sector partners are concerned, they're also not on open source. Again, the decision will be based on how we're going to map the overall design of the system. With the way things are going, it looks like we're going to be conservative and may have to choose the more expensive option.

FERNANDEZ: I recommended Linux because I have had so many bad experiences with the Microsoft OS. We had as much as 25 crashes in a year but with Linux, we never encountered such a problem so I recommended the OS. However, I am not pushing for an entire Linux system for the PNP. I would still go for a mixed topology. My users will be using the regular Windows OS but for stability reasons, my back-end will be running on Linux.

ASUNCION: I think the answer to that would be being able to match the use and the needs to the OS. If you're doing desktop publishing or manual critical operations, it's easy to shift OS. But if you're into bread-and-butter operations it will be different. For instance if they have a crash on their database, all that needs to be done is reroute. Unlike with us, if our system goes down, we're really down.

CWP: What technologies will be hot and not so hot at the PNP?

FERNANDEZ: Unfortunately, until this time, not all police stations have their own PCs. So for 2004, the agency's focus will still be PC acquisition. Although we wanted to implement innovations, especially on the technical aspect, we always get tied up with the budget. I want to tie up a number of applications in our Web site, for instance. More than just being a soft copy of the PNP brochure, we want our site to become a crime and emergency-reporting mechanism as well.

AREVALO: From a political standpoint, I think the issue of effective governance means being able to reach out to each member of the citizenry. The most logical mode of reaching out to each citizen is through the cell phone. As of now, cell phone penetration is already at the 20-30 percent level as opposed to the 1 percent penetration rate of the Internet. There are about 25 times more cell phones than computers in the Philippines, not to mention the number of hours spent using the cell phone every day. That's why in the BOC, we're thinking of conducting citizen transactions using the cell phone.

CWP: How has your role as a CIO evolved through the years and what is the next step in your career?

FERNANDEZ: I started as an IT officer. When I became system chief of our section my knowledge expanded from just knowing how to run the system to learning the logic behind the system. Now I'm doing more analysis of the data, more project management. I want to develop that more rather than focus on just the technology.

AREVALO: The reason I went to the Bureau of Customs is that I was just too high up at the Palace where I had wanted to influence IT on a nationwide scale. These were also the same things that I aimed for when I was in Harvard. I attended a subject wherein all my classmates were MIT guys. There were just two of us from Harvard. I saw that the Internet and computers would be part and parcel of our lives. Eventually, e-governance will become normal to government.

My vision is to be able to put in place the foundations of e-governance in the Philippines as a model for other countries to emulate. At the Bureau of Customs, we'd like to influence other people in other agencies so we can further consolidate e-governance, remove the boundaries between agencies, and have a single portal or window to transact with government. I hope to be able plant the seed so that at the Bureau of Customs this can come about. I think this is already being done in ASEAN, and this is going to happen sooner than later. I hope it's also going to happen in government.

I was the proponent of the TOPWeb in (the presidential palace) Malacañang. As early as 1994-1995, my vision was to put the whole Philippine government in a hard disk. If you can do that, then you can calibrate policy using the information from that hard disk. The concept is that governance is basically a matter of administering paper on which policies are printed. What is the output of Malacañang?

They're all paper, they're all ideas. Malacañang doesn't come out with money, it doesn't pay money. Malacañang doesn't come out with firearms. It comes out with papers. But how can policies at the macro level be properly integrated, consolidated and calibrated if you don't have a handle on the information that you need?

So there's going to be a lot of "guess-timates." I hope to put in place the rudiments, the groundwork for running government. You said that as long as the system is there, you can put any president and the system is going to run. I also believe in that concept. I was thinking if you had an intelligent information system and you have the parameters, you can easily issue memos for exceptional management. Just like what you're doing on your database, if the RPM is down, you e-mail it here. If the collection is down, you e-mail it there. Thus, instead of taking care of the routine, instead of taking care of the predictable and the mundane, our people can go up to the macro level.

The challenge of any government official, particularly in governance, is being able to put the brilliance, the shine on policy. It is unacceptable if you only have rough ideas, estimates and numbers. Before policies can be made, there has to be empirical basis, trends, linear relations and variance analysis. It shouldn't be accepted because "Ah, it's the way it's been done before." That could only be done if we have all these in electronic form, in a single middleware where everything can interchange and interact and really be a tool for business. If the President were, for example, to be asked, "Madam President, what is this and that?

She'd get her cell phone, type something and answer, "Oh, our GNP as of five minutes ago was like this. Our imports were like this." If we can do that, our policy would be point target. This means that instead of developing the whole of Makati, you just focus on Herrera because it's the one with the problem. You'll be more precise and make better use of resources because you'll have less room for errors. It's going to happen in three to five years. The money that I will receive in the next two to three years is going to go toward that. We're going to influence not just the Bureau of Customs, but the way the whole government is going to be run.

CWP: Will a Department of Information and Communication Technology, if it is approved, be of any help?

AREVALO: It still goes back to what I said earlier. My theory is that the implementation of ICT might be best achieved from the bottom going up, than from the top going down. The DICT can come out with the policies, with the papers. The concept that we're pursuing right now might not be by accident. It might be deliberate that the President at the ITECC level is dispersing the money for you to do your own and then integrate it later. From the DICT point of view, you have a very broad landscape to look at. Now the President can actually do resource allocation on a piecemeal basis, then when there is already critical mass of IT, you'll do a DICT.

It's so hard to put up a Department of Telecoms if there are actually no telephones. It's hard to do a DICT if no one is doing IT. Any organizational change toward consolidation of IT is very good but my attitude is let's stop talking about policy. Let's talk about implementation, specific projects that each citizen can feel. What's the mandate of the government?

What's the mandate of the Bureau of Customs?

One time, we had a discussion at our executive committee and they said, "No, our mandate is to collect revenue." I said, "Excuse me Mr. Director, you have a very narrow and shallow perspective of what our role is." Our role is to improve the living standard of the Filipino people.

If you're only going to collect revenue, then you're just a cashier. I said, "No, you're a government functionary and you're supposed to influence the life of the Filipino people." I would like to be able to utilize the whole of the Bureau of Customs with the present structure to positively influence others.

ASUNCION: I've been a CIO for two companies before Lufthansa -- Rustan's and Global Brands. My job has evolved from being a big project manager and fighting fires, to trying to give the strategic vision and direction for the company. Now it's trying to make IT a business case for the company. If you cannot make a business case out of your projects, you don't get the money and the business fails. It becomes something that only makes you look good and nothing else.

Everything right now is trying to align the IT strategy with the business imperatives and the business models that the company operates on. The competition is tight, money is scarce and the environment is very unpredictable. So, anything on IT has to have a very tight business case and that's the role of the CIO, as far as we are concerned, and that's what every division manager under me is trying to do. For every project, whether it's concerned with infrastructure, outsourcing or development, there has to be a business case to it that ties up with one or two business models that the company operates on.

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