Why the thrills and challenges of a new-economy company enticed a "bricks and mortar" man into becoming a dotcom CIOPatrick Eltridge is undaunted by the myths that have sprung up describing how dotcom companies test the limits of technology to pursue business plans that change before they can be confirmed. He recently rose to the challenge and accepted the CIO's job at online-only employment site www.seek.com.au. It is not a job that would appeal to everyone. A sense of adventure would appear to be essential because dotcoms, by definition, do things that haven't been done before. To compound matters, there are few examples to follow; yet the CIO is not allowed to forget that information technology is vital to the company's very existence.
Eltridge is keenly aware of the challenges in store for him as CIO. "One of the things that defines a successful dotcom is that it is a model-breaker, an industry-destroyer that is changing the basic business model of how an industry sector works. That is what Amazon.com did, for example," Eltridge explains.
Seek is no exception. Almost three years old, it is relatively mature for a dotcom and it has turned the recruitment advertising business on its head. Best of all, it is successful. "The three essentials for a dotcom - and Seek can tick all of them - are having a business model that changes the fundamental revenue models of an industry; having a fantastic brand; and getting in early. Those things are not of themselves technology issues, but you're not going to change things unless you build on technology. That's where the change is," Eltridge says.
Although his career has been spent almost entirely within the banking sector and would seem to be far removed from the operations of Seek, Eltridge had been involved on several occasions with electronic commerce and was well aware of its potential. That exposure was one of the factors that influenced his decision to join. "The story that Seek has was particularly attractive," Eltridge says. "The fact that they are an Internet company in the first place, given my background in e-commerce, is very interesting to me.
"Second, the fact that they are very successful at what they do makes it compelling. Where Seek is positioned at the moment, as undisputed leader of its sector in Australia, and the growth opportunities we have going forward are extraordinarily exciting, even if it wasn't a dream job for a technologist."
At Seek, Eltridge's responsibilities extend across the full range of IT services for the company. With a staff of 36, he covers end-to-end IT services, including the production Web site, development - which is all undertaken in-house - and operations to support that infrastructure. While the IT group is small - but growing - Eltridge says he does not find the size daunting, nor is he overwhelmed by the pace at which the company is moving. This can partly be explained by the type of IT role in which he has been employed in the past. "One of the characteristics of my work at the National Australia Bank, for example, was that I nearly always found myself working in small teams, usually with growth-oriented initiatives and building new things."
The lingering message was that small is good. "Ultimately, if you take it to extremes, the most productive size for a work team is one. The management overhead is as close to zero as you can get, and everything beyond that is a compromise." But he is also well aware that the whole raison d'être of a dotcom is that it cannot stay small. And it is up to Eltridge to provide and manage the technological vehicle that will enable Seek to grow. He has strong views about how he can make that happen. "I believe there is a sort of evolutionary line from small company IT to big company IT, and typically what happens is that along the way you improve your risk management and quality, and you improve processes and structures. But you often lose nimbleness and flexibility and responsiveness to business needs.
"I remain convinced that you don't have to kill the creative heart of IT when you grow a small IT team into a big IT team," Eltridge stresses. That has become one of his initial aims: to organise a mid-to-large sized IT group and run it in such as way as to stay very close to the business customer. "I want to embed IT as a function within the business so seamlessly that you might look into a project team and at first glance not be able to tell who's from marketing and who's from IT," he says.
Ironically, Eltridge believes that to achieve his goal he must do two contradictory things. "Basically, you break down the organisational and attitudinal barrier between IT and the business so that people naturally operate as part of cross-functional teams. However, at the same time you respect the fact that IT is a complex, highly technical discipline and you only get resilience, quality and price-efficiency out of managing it as a core expertise and managing it centrally - that is, maintaining a central direction for strategy and cohesiveness.
"I don't agree with the ultimate step of simply carving IT up into any number of little teams and burying them forever in the business. There are too many advantages to be gained from centrally managing your infrastructure and your disciplines and your architectures and your processes and policy. The advantages are measured in quality and price."
Eltridge's management plan is built on a middle ground approach that he admits he hasn't seen well executed by any of the companies he has yet been involved with. "It has IT execution very closely connected to the discrete business units that they are working with, and yet there is a sort of elastic band tied around the waists of the IT people as they go into the business. It gives the IT people an architectural and process-based foundation that they can sit on and so behave to the business as if they are a member of the business team, yet not lose the advantages of being part of a centrally-managed IT team.
"That sounds like a grand theory, but I would hope that it is the aspiration of every IT manager and I remain convinced it can be done a lot better than we've seen done today," Eltridge says.
A strategy of this nature obviously requires the support of the rest of the organisation. Eltridge is convinced that support will be forthcoming at Seek, where he finds the business leaders particularly pragmatic. "They know they have enjoyed the advantages and speed to market that a very small and nimble IT team has given them," he notes. "After all, that is why Seek is number one in the market: because of the great work that's gone on over the last two years.
"But they also know that that's not a sustainable model and that you need to complement that with process and structure as you grow into a far more resilient and longer-lasting company. So they've known that they need to change and evolve and layer some new skills alongside the ones they had. That's why I'm here. They don't pretend to know the How, so we're discussing together what the appropriate IT models and IT management models are and how that best integrates with the business."
Eltridge points out that it's not all one-way traffic. "We push back a little bit occasionally and say: Well, in this case it's the business model that should change. The business process can be better adapted to the activity we're trying to deliver here.' For me, what defines the CIO role is that you have a foot in both camps. You're not just a technologist, and you're not just a business strategist who understands how PCs work. You've really got to be the connecting glue between the two worlds, and essential in that is the relationships you have with the other executives, and particularly with the CEO. You have to work really hard at making that relationship complementary."
But this is still early days for Eltridge. He admits that he is not spending as much time as he would like on the business side of the company's operations because his first priority is to set his own IT management plans in train. "I'm going to be spending a lot of time on recruitment over the next three to six months, I suspect," Eltridge admits. "We have all the core skill bases that I'm concerned about having in-house - like business analysis and project management and senior development capabilities, testing capabilities, and operations. For strategic reasons, I'm keen to have that granularity of skill in-house.
"I've got all those core skill groups covered, and now it's just a matter of building depth. As we increase depth, we can increase the pace of development even further and lengthen our lead."
The challenges do not stop with staff-related growth. "In parallel, the next challenge is operational excellence," Eltridge says. "That means keeping the site available, it means performance, it means all the boring old IT stuff that we've been doing for decades and that I learned at the knees of all those mainframe people. It involves capacity management, systems performance management, security management and all that stuff."
Eltridge stresses that it is vital that Seek maintain operational standards for IT. "We're getting a high profile out there and the demands on the operational side of the business are higher than they've ever been, so if we were to stumble there would be a lot of eyes on us. We have a big business here now and I take very seriously the need to protect that."
Underlying those challenges is a third stream, which Eltridge describes as a more strategic imperative: making sure the skills and capabilities are in place to take the business in whatever direction it chooses to go in the future. "That's the flexibility and that's the heart, I think, of IT strategy - keeping your options open and being able to move in any direction at relatively short notice without unravelling everything you've spent the last two years doing."
This is the area that is of most vital importance for this dotcom company. "I think we're going to be pushing the envelope on Microsoft-based infrastructure over the next couple of years," Eltridge claims. "We remain confident in that infrastructure, but know that it's going to be only a few steps ahead of us as we grow. So we need Microsoft to maintain momentum as it moves towards more enterprise-level platforms. If [Microsoft] slackens off even slightly we'll overtake it and find ourselves exposed. And that's not a position I want to be in.
"I need people - really good project management skills, world's best-class software engineers and developers, people who want to push the technology as far as it will go - to carry us forward as we grow along those lines."
Never a Stranger in a Strange Land
The transition from technologist to business strategist has been a steady progression for Patrick Eltridge. Fresh out of Wollongong University with a Bachelor of Mathematics degree in Computing Science, he found that operating systems, compilers, microprocessor architectures, Unix and C meant more to him than RPG and the IBM System/38 environment he found himself in at Hongkong and Shanghai Banking Corporation. Yet he did not feel out of place. "I found my peers - my fellow programmers - all had straight business backgrounds, so we formed a complementary team," he acknowledges. "I knew how the computer worked, and they'd had more developmental work in systems analysis. Together we formed a very strong combination."
His work at HSBC, and later with National Australia Bank, always involved distributed systems rather than the mainframe environments that the banks relied on for their mainstream processing, but the culture was largely similar. "I've had all the advantages of working in a large-scale IT environment, but with the more interesting and more technically evolving distributed computing side of things," he explains.
His work at the banks inevitably involved him in business applications, like treasury trading systems and retail distribution systems. Eventually, in the mid 90s, as Eltridge began to move away from hands-on IT architectures and consultancy into the banking operations, his transition into business strategy picked up a notch.
"All the time, the National's CIO Michael Coomer was looking to put IT on a more commercial footing, to re-engineer the relationship between IT and the business, and to make IT more accountable for performance," Eltridge explains. "Basically, the aim was to help the business understand the true cost of the business processes it was doing."
Then Eltridge was appointed head of business and IT alignment with effective control over NAB's global products and services IT strategy. "This was a role embedded within the business," he explains. "It effectively completed my transition." - P ScottIsn't IT Ironic?
It is ironic that the greatest challenge facing Patrick Eltridge at online recruitment site www.seek.com.au is not so much how to manage IT for a dotcom as the old IT bugbear of where to find and recruit suitably skilled staff. It is the most pressing problem to arise from the dotcom's need to grow.
"We're are growing here very quickly; not just in scale: we're growing the business in an operational sense and the amount of traffic and revenue are growing," Eltridge explains. "But just as importantly, we're growing skills and capabilities and processes, and that involves a lot of change in the way people work and what's expected of them as individuals." It affects all of Seek's operations, Eltridge acknowledges, and not just IT, which has grown from a staff of four to 36 in the past year.
"Right now my biggest bottleneck is being able to recruit good quality people quickly enough. It's a very healthy market out there and the good candidates I come across have multiple offers and get to choose those opportunities that best meet their personal development agendas. They're not necessarily making judgements about the companies they're joining, they're really being given the opportunity - as people always should - to choose their own paths."
With suitably skilled people being in short supply, and those that are available being extremely selective, staffing can seem an almost insurmountable problem. "I'm going to be spending a lot of time on recruitment over the next three to six months, I suspect," Eltridge admits.
The E-nemy Is Us
Now that Patrick Eltridge has joined a dotcom and is totally immersed in the Internet business environment, he looks back with some exasperation on his previous exposure to e-commerce.
As far back as 1996, he was working at the National Australia Bank on the formative stages of the bank's e-commerce strategies. "And I continued to be involved in National's e-commerce strategy," he says. "It was close to my heart for many years, although I found the finance industry's pace of development frustrating. It was not opportunistic enough. They couldn't really grasp the nettle even though to this day the level of strategic understanding and expertise in the industry and especially the National remains high."
With such expertise created and maintained, Eltridge wonders why some of Australia's large organisations haven't been more dominant in the marketplace. He puts part of it down to a "pathological fear" of eroding their own traditional businesses.
"Objectively they understand - and they do understand - that if these Internet business models work then they will be hurt. But they don't seem to be able to come to the logical conclusion that if somebody's going to cannibalise our business base it might as well be us. And that's requiring a leap of imagination that very few incumbents have displayed so far.
"And it's not just in banking and finance; it's true in the retail space as well, and in other industries," Eltridge observes. - P Scott
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