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IT Takes a Village

IT Takes a Village

As new CIO for Village Roadshow, Joe Locandro says he is looking forward to being able to influence the company's future direction by being involved in its top-level decision-making. After joining Village Roadshow in 1997 as general manager -- IT for Village Cinemas International (internally known as the Exhibition Division), Locandro was promoted to CIO in August this year.

Not only is it a new role for Locandro, it is also a newly created one within the company. Village Roadshow has various divisions, the main ones being Exhibition, Roadshow Distribution, Austereo Radio Network, Theme Parks and Film Production. Each has its own IT unit, which traditionally has aligned itself to whatever the business drivers of the division are and operated autonomously.

Reporting directly to Village Roadshow's vice chairman and into the executive committee, Locandro's job now is to leverage technology across the group and identify synergies. At present the divisional IT managers continue to report into the business with a dotted line relationship to Locandro.

"My primary role as general manager -- IT in the Exhibition Division was to develop strategies and solutions for the business as it grows both domestically and internationally. The organisation is very dynamic and entrepreneurial, and there is a very strong commitment to IT. The executive committee recognised that some of the things we are doing now in the Exhibition Division are leading edge, and consequently appointed me as CIO across all divisions to oversee the group's IT strategy and use IT to powerhouse the growth and future of the organisation," Locandro says.

"The divisions will still handle tactical issues and the day-to-day running of their IT infrastructure. However, if the divisions all have to upgrade to a new accounting package, for example, it makes sense to now look at an enterprise solution. That's where I'll play more of a role, as well as in influencing policies and strategies for the group," he explains.

It was early days for Locandro in his new role when he spoke to CIO magazine, and he was still doing both his old and new jobs until he could find a replacement for the former. He admits he has yet to get the lay of the land, and one of his priorities is to develop a three-year plan.

Locandro believes that IT is now viewed positively in Village Roadshow and that since joining the company he has been instrumental in changing the culture from IT as a cost to IT as an investment. The creation of the CIO role, he thinks, is testament to IT being now seen as a key enabler for the company to move forward into the next century. He anticipates that much of his time will be spent identifying and educating senior management on where technology will help with new business opportunities.

"Rather than be reactive, I'm expected to look ahead. A lot of my role will involve future visioning for the company, high-level research, communicating and presenting and setting up structures, policies and guidelines for large projects and big ticket items," he says.

According to Locandro, Village Roadshow has very sophisticated IT infrastructure and communications. This includes the Austereo network, the largest conglomeration of radio stations in Australia, and a virtual private network Village Cinemas is implementing globally. The company's Web site is among the top six in Australia in terms of number of hits. Locandro claims Village Roadshow is well placed to leverage its infrastructure, particularly for electronic commerce.

Telecommuting is also popular among travelling executives and with offices around the world, Village Roadshow is a big user of videoconferencing both for internal and external meetings. In fact, Locandro describes videoconferencing as his lifesaver, given the number of hours he works and the amount he travels.

In addition, the company has few legacy systems, most being greenfield developments embarked upon over the last two years. Consequently, Locandro claims that Y2K has not been as big an issue for Village Roadshow as for some organisations and is well in hand. "When everyone else wakes up and pulls out their stalled projects next year, hopefully most of mine will be done," he reflects.

Locandro's philosophy is that transactional systems which offer no competitive advantage -- such as Village Roadshow's payroll, accounting and ticketing systems -- should always be packages, as they tend to be best-of-breed for the particular application. Then the company can concentrate its business intelligence and effort on applications where it can differentiate itself and gain competitive advantage, such as its Management Information (MI) Warehouse.

However, Locandro is also a strong believer in outsourcing, including the development of such purpose-built applications, as he thinks it would be a significant overhead to keep all the necessary staff, tools and technologies in-house, especially given the pace of change. It is Village Roadshow's strategy to deal only with global outsourcing partners, such as NCR, whose core business it is to carry such overheads and which have the economies of scale to manage his peaks and troughs. This then enables Locandro to pick and choose what technology and resources he needs at a particular time.

Village Roadshow's strategy, wherever practical, is also to run all its applications on Windows NT. According to Locandro, all systems are managed on a 24x7 basis and he also outsources the management of critical hardware under service agreements.

While many organisations bemoan the lack of IT skills, Locandro claims his approach to applications development makes it easier for the company to attract and retain good IT staff. He is currently building a small core team to assist him in his new role. However, human resources is no longer a big part of his job, as most of the responsibility for IT staffing rests with the individual line managers. He prides himself that since he joined the company, only three of his staff have left, one to take maternity leave, one to go backpacking around Europe, and the third to gain more experience in data warehousing.

"I think Village Roadshow is seen as a very progressive company," he says. "We are not a legacy/maintenance environment; we use the latest technology and are very headstrong in development. The film and entertainment industry is also growing. People see us as a great opportunity and we have no trouble attracting the right ones when we want to."

Before joining Village Roadshow, Locandro worked for BP Oil Group for 16 years, 10 of which were as senior IT manager. This included overseas secondments, which he thinks later helped him develop global strategies for Village Cinemas' international expansion. The experience of trying to get 14 European countries to work as one taught him to be more tolerant of different views and that standardisation does bring its benefits.

Locandro describes his own management style as somewhat laissez-faire in that he tends to let people get on with the job once he has confidence in their ability. It's consultative where necessary, he says, but can be autocratic when it comes to policy and decision-making. Apart from a thick hide, he believes successful CIOs need to be good communicators both upwards and downwards.

"They also need to be very visionary and not constrained by traditional thought, because they're going to be the change agents of the future. They may not necessarily come from traditional IT backgrounds. They need to be able to keep abreast of technologies; but the trick is picking the right ones. The traditional problems of standardisation versus best-of-breed never go away; but the biggest challenge is the rate and pace of change and not losing sight of what you're trying to achieve at the end of the day, which is enabling the business," he says.

Counting Candy Bars

According to Locandro, at the heart of Village Roadshow's strategy to take advantage of new business opportunities through IT is the company's MI Warehouse, the first phase of which went live earlier this year.

The MI Warehouse is a central repository of information based on NCR's Teradata solution. It has a capacity of 20 terabytes (although Locandro says it is nowhere near this level yet) and currently resides on a Unix platform until Windows NT scales up sufficiently for such a robust application. The warehouse is fed by Village Cinemas' transactional systems, in particular general ledger, ticket box and candy bar sales, and uses the BusinessObjects decision-support system for its front end.

Management across the company use the MI Warehouse for applications such as cinema forecasting, staffing, candy bar ordering and evaluating promotions. The warehouse allows Village Cinemas to track trading patterns for any cinema or film on any day and develop strategies to boost trade during slow periods or target individual sites. It can also measure the effects of various price points, such as half-price admission on Tuesdays, as well as the effect these prices have on other areas of the business -- for example, candy bar spend.

Every time a candy bar sale is run through a register, it is recorded and the data is fed into the warehouse nightly. By analysing this data, Village Cinemas can keep track of sales down to individual Mars Bars and can look at factors such as how much customers spend on different nights of the week or at different times of the day. This knowledge allows the company to improve inventory levels and plan special promotions to the greatest effect, as well as judge the success of campaigns across different states.

By looking at daily admissions Village can predict the lifecycle of a film. As admissions begin to tail off, the company may decide to move the film to a smaller cinema or show it less frequently. This also better positions the company to manage its staffing requirements, an important consideration given its large casual workforce. By looking at patterns of previous films other predictions can be made. For example, if the last Tom Cruise movie attracted X number of cinema goers then Village can anticipate what admissions will be for his next film and plan to screen it in a cinema with a given number of seats.

According to Village, the information the MI Warehouse provides management also benefits customers. By improving forecasting techniques, Village Cinemas has been able to optimise box-office queues and significantly reduce the "sold-out" signs that once plagued popular films. Similarly, it says, it would be rare for a Village cinema to run out of popcorn or Coke, as the candy bar ordering process is more accurate and efficient.

"The driving force behind the warehouse was to get a holistic view of our business and our customers," Locandro says. "You can't separate the two, because there are a lot of internal business processes that determine what you offer your customers. By better understanding our business and modifying our internal processes, we have been able to make better operational decisions and this in turn has had a positive impact on our customers.

"The information is also used to drive new business opportunities and helps us plan for future growth. Cinemas cost millions of dollars to build, so we need to ensure that seat use per screen remains at acceptable levels. Accurate forecasting helps us with the feasibility of what size cinemas to build."

Indeed, since 1998 Village has opened more than 250 new screens, including the launch of the biggest "megaplex" in the southern hemisphere. The company is currently considering plans to build a further 1450 screens at various locations around the world.

That Vision Thing

The MI Warehouse had its origins in an IT strategy Locandro wrote in 1997. Data warehouses are often hard to cost justify and Locandro admits the MI Warehouse was a significant upfront investment. However, by placing it in the context of an overall IT strategy rather than as an individual project, and looking at the total cost of ownership, he says it was easier to get management approval.

"I was able to show the management team that in five years we would not be able to take advantage of the business opportunities that this and other infrastructure investments would give us. While we might take a big capital hit now, our upgrade path and our cost of ownership in the future would be lower. I don't think people look at many projects like that in the long term. However, as we're finding, we have to expand the warehouse incrementally, and it's now far cheaper for us to do so. We will be able to cost justify the next phases and produce ROIs for them, because the big capital cost in the initial infrastructure is over," Locandro says.

The then managing director of Village Cinemas International, John Anderson, whom Locandro describes as a firm believer in technology, sponsored the project and, according to Locandro, decreed that "all you guys have to make it work". In developing the warehouse Locandro says that Village provided the knowledge base in the form of a team of business analysts, and NCR provided the architecture, database design and project management.

"We wanted someone who could handle the entire process, and that's one of NCR's core capabilities," he says. "We used a vendor selection criteria that had a weighting of 60 per cent financial, including price, and 40 per cent on other factors, such as scalability, reliability and leading technology base. One of the critical differentiators was NCR's Rapid Deployment Methodology and the scale of Teradata, a critical factor given our growth plans. Our business is entertainment and we also need to store information in multiple formats, such as video clips, and not just numbers and letters."

The project was not without its challenges, though. Data integrity was an issue, as was the complexity of the data. The phase-one post-project audit found that Village's number of tables, joins and table relationships was 10 times more than that of some of NCR's larger customers, who themselves had 10 times the volume of Village's data. This caused delays, as it involved implementing new rules and processes, and, Locandro says, it is important for people to understand that big is not necessarily complex when it comes to customer relationships.

The next phase of the project will extend the warehouse to include international operations and other business divisions not currently covered, as well as incorporating data from other systems, such as payroll. It will also be Web-enabled so that travelling executives can access it from anywhere in the world via the company's secure intranet.

"We've learned a few lessons, but now we're ready to move forward to the next stage," Locandro says. "We're getting a whole new feel about how our customers behave and how we interact with them. And our service offerings are going to be more fine-tuned to that."

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