It was an eventful year in all economic sectors and 2008 certainly fulfilled that ancient Chinese curse ‘May you live in interesting times.’ For the ICT people as well as their colleagues in Irish business, the already changing landscape brought gloomier colours, shadows and squalls. But when we set about interviewing a select group of CIOs it became evident that the general outlook is not at all one of gloom and doom. In fact, the overall attitude that came though was more of a belief that the challenges posed by recession will give smart technology a major opportunity to prove to business that it has a key contribution to make to cost control, maintaining profitability and recovery.
Another consensus line, echoed anecdotally by ICT industry sources, is that major projects already under way have not been cancelled or pulled back. They have certainly been subject to line-by-line scrutiny for possible economies, but where commitments have been made and budgets in place, investments in infrastructure, upgrading and major software projects like ERP have been sustained. On the other hand, proposals for such significant investments that arose during the course of 2008 had to face rigorous interrogation and produce a compelling business case. Even then, in many organisations the funding would have been postponed or not sanctioned at all. There would have been exceptions, of course, largely those projects that promised to save costs in the near term or that were simply so overdue that their priority was beyond argument.
Project life
Our CIOs all agreed that longer term, capital intensive ICT projects have in any event been out of corporate favour in Ireland as elsewhere for the last couple of years. The trend has been towards smaller scale, incremental systems investment with readily defined business benefits and shorter term payback. This was both assisted by and to some extent the result of developments in technology such as the ubiquitous browser front end and user access anywhere, anytime plus better design of pared-down business processes that can be re-used as software components, SOA, virtualisation and so on.
“From a technology perspective I think we are beginning to see the economic influences as in reality a huge opportunity to develop and invest in ICT that offers direct, tangible business benefits in cost reduction, resource savings, flexibility in processes and people’s work and the introduction of new and profitable services,” says Karen Forte, CIO of Allianz. She cites the examples of the communications technologies IP telephony (IPT) and Unified Communications (UC) in which Allianz has invested strongly coincident with its recent move to new headquarters.
“These give our staff a richness and flexibility of communications that is proving highly valuable as a platform for teleworking, ‘hot desking’ and general anywhere, any time working that is now the norm. With presence technology there is transparent and immediate visibility of a person’s availability and the best channel to use, messages are relayed in each person’s chosen format and there are many other useful features.”
Her salient point is that these newer communications technologies are an excellent example of ICT giving business a new flexibility that would be impossible without them. Some of the immediately useful benefits are technically quite simple, with the right systems, others are more complex or take some time for the users to get to know and appreciate. But the business improvements and efficiencies are readily apparent. “That is what ICT has to deliver to the business today, in this group and I’m quite sure everywhere else. Management needs ICT development that is predicated on contributing to the business, offers early benefits and a maximum payback or RoI period of maybe 12 to 18 months.” It is a question, she believes, of delivering tangible improvements in efficiency, flexibility business process or whatever and doing so in chunks that are easy to perceive and understand. “From an IT department perspective you build satisfied service users and allies in the business while from a senior management point of view the investments are business-driven and of a manageable scale.”
SaaS
On the strategic front, the Allianz team is looking hard at Software as a Service (SaaS) as a leaner and more cost-efficient solution than traditional licensing and in-house software support. “In principle it is the same as other forms of outsourcing. Let the specialists and their expertise look after it and don’t devote in-house resources to systems that others can probably run better. The other side is that the pay-per-use model is inherently more attractive from a cost control point of view. I understand that Microsoft, for example, is going to offer products as web services and that is something we will be looking at.”
In the meantime, Allianz has ‘dipped its toe in the water with SAP’, as Karen Forte puts it, by contracting some key elements of its systems to SAP running in a German data centre and delivered as a service by a specialist Allianz Group IT services company. This is a hybrid model that may become more common, where the application delivery architecture is SaaS, but the service is essentially private and under the control of the enterprise, in this case the giant Allianz organisation.
“We see it as potentially the best of both worlds. We pay by usage and by department for our applications, the service provider operates to very tight SLAs and our investment in in-house resources can be reduced or redirected. Is our group relationship with the supplier a factor? If anything, I suspect it might promote an even tighter discipline than a simple buyer-seller relationship.”
Forte explains that Allianz is not currently involved in any big strategic ICT development: “We are perhaps a bit fortunate in that we had achieved most of our planned infrastructure and systems investment to coincide with the head office move. So we are now quite well placed with platforms that enable us to pursue any smaller scale development that brings a good business case to the table.” That definitely includes, she says, new product introductions. “Cost constraints are not the only driver. We are looking for top line growth as well. With proven software processes we have re-usable components that we can spin, skin and colour to offer new products or established products through new channels. We also look across the Allianz Group for proven products in other geographies that the business believes could be attractive in the Irish market.”
Infrastructure renewal
Our CIO from the construction sector, clearly one of the hardest hit economically this year, is Eamonn Buckley of SIAC. As it happens, his group, like Allianz, had completed a major infrastructure renewal programme in 2007 that left it better positioned than most to adjust its ICT to the new realities. “We replaced all of our enterprise servers and also virtualised the entire set. So we certainly have the advantage that we can step up capacity next year without adding more servers. There are also licensing advantages that have contributed to cost restraint.”
As a construction group, SIAC by definition always has the greater part of its activity dispersed through a range of construction sites around the country. “Serving the ICT needs of those sites is a major part of our responsibility and a priority,” Eamonn Buckley explains, “So for example in 2009 we intend to invest further in WAN acceleration devices. We have piloted their use on several sites and found them effective.”
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