IT goes DIY - the sidelining of the IT dept

By Anthony Doesburg

As businesses use mobile devices and cloud services in a drive to put customers first, some IT departments are being sidelined, reports Anthony Doesburg

Paul Brislen, head of the Telecommunications Users Association, cut $30,000 from his IT budget. Photo / Chris Gorman
Paul Brislen, head of the Telecommunications Users Association, cut $30,000 from his IT budget. Photo / Chris Gorman

To borrow an expression applied to software companies that use their own programs, Paul Brislen is eating his own dog food.

The head of Tuanz, the telecommunications user group, has nearly eliminated the organisation's $30,000 information technology budget by canny use of the technology for which he is chief cheerleader.

Armed with a tablet and the latest and greatest in mobile data services, Brislen is a one-man IT department. "It's remarkable - I run all of Tuanz off an iPad these days," he says.

"The website, member database, newsletters - the whole lot is stored in the cloud and 4G lets me connect more easily than I can using a copper-based DSL service."

New 4G mobile services mean small businesses, in particular, can leapfrog office broadband speeds.

"I don't bother looking for Wi-Fi hotspots if I'm sitting down somewhere because 4G is so much faster.

"But when 4G coverage isn't available and it defaults to 3G, suddenly you're plunged back into the dark ages. It's not just that it's a bit faster, it's so much faster it's phenomenal."

Mobility is driving businesses, Brislen says.

"Customers want to be on the move, businesses need to be out and about pressing the flesh and mobile devices and services enable it."

Aside from the cost saving and convenience it affords Tuanz, faster mobile services open up new commercial opportunities, Brislen says.

"There's an app from realestate.co.nz that will tell you houses for sale in whatever location you're in. You can not only see pictures, but run video and get a detailed property report on your mobile device while you're wandering the streets.

"It changes the dynamic for real estate in a way nothing else has been able to do because it's immediate," he says.

For existing business processes, mobile apps together with cloud services are the agents of change, giving access to office systems without the security concerns and other complications of connecting a laptop to the company server.

"To run Tuanz I have an app that connects to cloud-based customer relationship tool Zoho. And the same with our website - I access the Squarespace content management system, which is in the cloud, from the app provided."

As dog food goes, it couldn't be tastier, Brislen says.

"It's great - we used to spend $30,000 a year on ICT and now we spend about $500."

Paul Stoddart, director of Auckland company Business Lighting Solutions, is similarly hooked on mobile and cloud services.

The maker of an LED alternative to the fluorescent tube has been operating for about five years, relying on contractors to provide expertise without the overhead of hiring staff.

Fleetness of foot and inventiveness - the company's LEDs are up to 15 times more efficient than equivalent incandescent bulbs - keep the lights on at the company.

Although it now has an office, Stoddart is sometimes on the road for weeks at a time, in effect running the business on a mobile device.

"I've just spent 20 days with a hired driver calling at a customer's sites around the country. I was constantly working using mobile broadband - handling email, writing reports and responding to customer requests for proposals."

Stoddart says access to web-based services such as the shared file storage tool Dropbox is a huge benefit for the business.

"One of the people we outsource to is a lighting engineer in Australia. The files he sends back are very large, so using Dropbox is key."

Invoicing is taken care of by cloud-based accounting system Xero and a "virtual CFO" tool gives real-world accountants Staples Rodway access to the company's payables, receivables and bank balances.

And the company accesses its logistics provider's systems via the web. "That enables us to monitor and manage inventory and dispatch products."

Another important web tool is video upload service Vimeo, which is used to give customers an animated preview of products under design before they are committed to manufacture.

But critical as data services are to the business, neither Stoddart's mobile connection nor the office's broadband internet link are state of the art.

The office has a copper-based high-speed VDSL connection, which he would upgrade to fibre-optic ultra-fast broadband if it were available. A mobile service upgrade is in the offing, however, when he gets around to activating a new 4G-capable handset, although without widespread 4G coverage, he's sceptical of the service's value.

"For it to be really useful it has to be ubiquitous." Stoddart is not interested in implementing technology for the sake of it, but he credits mobile and cloud-based tools with helping build a $7.5 million business with 11 staff during a difficult economic period.

"I have a lot of grey hair and wrinkles and I'd be telling you porkies if I didn't say it's been bloody hard. We've had to be innovative, nimble and persistent but we've got there and we're now exporting, working with the major supermarket chains, district health boards, Air New Zealand and others." And without an IT department in sight.

Putting the customer before the computer system

Downplaying the technology aspect of IT is as much a trend among large organisations as small ones, as they put more emphasis on information and farm out data processing and storage.

"What a business actually values is being customer-centric and information-led," says Adam Dodds, New Zealand IT services research manager at analyst IDC.

Reshuffling priorities is the latest phase in what IDC calls the adoption of "third platform" technologies, which include cloud services, mobile devices, social networks and big data analytics. It is a global trend, says Dodds, that puts customers ahead of computer systems. And it means the people who manage the systems are in danger of being sidelined.

New sensitivity to customer expectations is also highlighted in an IBM survey of 4000 top business executives, some in New Zealand. The study found that "customers and citizens expect to be treated as individuals, which means knowing what makes each of us 'tick"'.

Chief executives in the study said customers had a more important influence on strategy than boards of directors.

Technology, however, remains critical to doing business.

Dodds says functions such as email and financial systems are increasingly being taken for granted.

And instead of waiting for IT departments to deliver sales data and other customer intelligence, business managers are paying cloud providers to do the number-crunching.

Dodds says that should trigger navel-gazing among New Zealand chief information officers, many of whom still preside over "second platform" - or largely in-house - ICT systems.

"They have an infrastructure - hardware and software - approach to the management of the business. They see themselves as the gatekeepers for risk and control."

Those preoccupations are out of step with the rapid pace that line managers are growing accustomed to, thanks to mobility and cloud services, says Dodds.

"We're seeing CIOs losing control and budgets shifting to business managers, enabling them to adopt cloud-based applications. The driver is that CIOs are seen as not responsive enough."

When applications are a commodity, the value of owning infrastructure becomes questionable.

"Why not buy it from a service provider with significantly better economies of scale and put some of the risk that falls to the CIO on to them?"

That frees CIOs to take the lead in developing information and risk strategies with senior executives. Their IT staff, in the meantime, need to become more outgoing.

"They need to go out and be part of the organisation and help guide its adoption of new technologies."

IT industry already in top gear

With the economy bouncing back, IT spending might be expected to surge, but that's not quite what industry analyst IDC expects.

Adam Dodds, IDC New Zealand IT services research manager, predicts increased use of "commodity" mobile and cloud services rather than a flood of investment in new gear.

"In a commoditised landscape, pricing is coming down," he says.

"That means the overall value of the market isn't necessarily increasing significantly."

Paul Matthews, head of the Institute of IT Professionals, says the surge has already happened.

"It probably goes back about 18 months - our sector has been hugely busy," he says.

"We have two things happening.

"One is we're getting really big success overseas. It's not just Xero, but some of the second-tier companies are starting to break through into international markets.

"The second part is that those that are servicing customers in New Zealand are having a busy time as well."

Many organisations put the brakes on spending for three or four years and are now realising they need to invest to get technology's benefits.

But money can't buy everything.

"The skills shortage is something that has been around for a long time," says Matthews.

"We had a bit of a reprieve through the financial crisis but demand is beginning to spike again."

Skills that are particularly scarce are professional-level business analysts and systems architects and software developers.

"For many years people have predicted we wouldn't need software developers in the future - computers would write their own code - but it hasn't happened and it's not going to any time soon.

"Similarly, people said cloud services would wipe out the whole sector but it's had the opposite effect.

"The cloud has given New Zealand providers the opportunity to build software and deliver it to the world with a couple of clicks.

"We have companies that are starting to succeed on the world stage and they have a big hunger and need for developers."

Some companies are being held back by their inability to find skilled developers, Matthews says.

"Orion Health, for instance, is growing at a phenomenal pace and has opportunities worldwide.

"But it could be doing much more if it could get enough people with the right skills."

The IBM study suggests CIOs, who were 40 per cent of the research sample, are aware of the changed role they are going to have to play.

In three to five years, the study found, the majority expect IT's main function will be "critical enablement of enterprise strategy", instead of providing "process improvements to enhance efficiency", which is today's main concern.

- NZ Herald

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