IT's Show Time

IT's Show Time

'The show must go on' has more than the usual implications for Hoyts CIO Patrick TehAs chief information officer (CIO) of Hoyts Cinemas' Australian operation, the foremost thing on Patrick Teh's mind is ensuring that Hoyts' use of show-stopping technology doesn't actually stop the show. Furthermore, in an age where an organisation's use of IT can mean the difference between success and failure, he says he must be sure that the IT-centric activities it engages in are actually beneficial to the cinema chain's customers and not just a display of unwarranted technical appreciation. In essence, his role is to ensure that, like the movie itself, the technology used behind the scenes is not a big budget flop. Hoyts is continually on the lookout for ways of achieving its corporate goals. For a cinema chain, this means getting eyes glued to screens and bums firmly planted on seats. To facilitate this, the company has leveraged several technologically-dependent and consumer-friendly schemes with an eye to improving the ever-important bottom line. Hoyts Cinemas employs 1700 full-time employees in Australia; among them are the four "IT associates" who manage the daily technology needs of the company, both here and in New Zealand. In August 1996 the company floated and after its first year as a public entity posted a $85.4 million earning before interest, taxes, depreciation and amortisation (EBITDA) for the fifty-three weeks to 3 July 1997 on revenues worth $381.5 million.

In total, Hoyts' operation now encompasses around 1250 screens throughout its worldwide markets which include sites in New Zealand, the US, Europe, South America and Australia, to name just a few. The company aims to have 3000 screens in operation around the globe by 2002, and according to Teh, the organisation is well on track to achieve this goal. Citing Hoyts' 1996 initial public offering as a great source of immediate corporate activity, Teh says the imperatives brought forth by the float helped the company determine its IT future. "The major implication for IT during [the time of the float] was the intensive due diligence being performed on the organisation. The auditors scrutinised our IT plans, which included gap analysis on our IT position, our projected capital expenditures over the next few years and our disaster recovery plans," he explains. "It was a case of demonstrating a blueprint of IT activities to ensure potential investors that we either already have or are in the process of implementing the infrastructure and applications portfolio that can support a growing, internationally-focused organisation."The most hotly debated -- and mission-critical -- topic currently in the professional radars of CIOs around the world is that of year 2000 compliance.

Teh says Hoyts has enlisted the help of one of its software vendors in a bid to help it prepare for and defuse the computing time bomb. "We've engaged Platinum Technology to assist us with the [Y2K] project. Because of our philosophy of purchasing packaged systems, and the fact that most of our systems -- both hardware and software -- are relatively new, [our systems] are compliant," he says. "Consequently, we're not overly exposed where IT facilities are concerned. On non-IT facilities, we're concentrating on items that are potentially show stoppers, like our projectors and automation that drives the cinemas such as curtains and lights." According to Teh, Hoyts plans to be fully Y2K compliant by the end of June 1999. But while it's all well and good to be confident in your own systems' millennium readiness, Teh says Hoyts has also worked hard to ensure its key suppliers are steeled for the business requirements that will arise at the turn of the century. Thankfully, he says, many of Hoyts' non-technical suppliers have already completed their own Y2K strategies. Non-compliant systems are therefore unlikely to burn the cinema giant when the clock ticks over to 1 January, 2000.

"Our key non-IT suppliers are the film distributors, food and beverage suppliers and property managers. The upside is that most of our suppliers are major players who already have a Y2K policy in place or are in the process of obtaining compliance." Teh manages Hoyts' information systems with a team that is definitely not "bigger than Ben Hur". When it comes to the company's IT workforce, he says Hoyts maintains a policy that aims to encourage its technological team to remain lean and nimble, while ensuring its IT capabilities do not suffer as a result. "Finding and retaining the right people who understand that 'small is superior' [is the biggest challenge of managing Hoyts' IT needs]," Teh says. "What I mean is that often people associate the size of IT headcount with the size of the organisation. We prefer to engage IT associates who believe in doing more with less, and who excel in relationship management. A few persons well-versed in 360-degree people management skills with an open outlook can deliver more than a large closed team developing skills internally."Teh says Hoyts has developed a working rule of thumb when it comes to its IT management. Rather than just group all of its IT products and services together under a single operational banner, he says Hoyts maintains separate IT classifications. This, he explains, provides the company with a greater understanding of its technical position and lets it act on technological advances if and when it needs to.

"Our approach to IT is simple, yet we believe, effective. We categorise IT into three classes: technology required to stay in business; key pipeline technology investments that provide us with easily quantifiable returns on investments; and disruptive technology, or what we call 'opportunity creating technology', that we do not know where it will lead to, but we know we want to be ready in case the technology does take off," Teh says. "In order to succeed in our business, we maintain investment equilibrium amongst the three classes of IT.

In order to remain nimble and flexible, we retain a small team. In order to be competitive, we build relationships with suppliers, associates and users.

That's our IT mantra." Straying from the traditional corporate model that places the IT function a distant second to a company's overall business activities, the cinema chain puts much faith in technology's ability to provide novel ways of doing business. In the parlance of Hollywood, when the IT director at Hoyts yells "roll 'em", it's a safe bet that along with the lights and cameras, lots of technology action is taking place. And, while they may not share top billing, the IT extras at the cinema chain play just as pivotal a business role as the lead playersNo Ticket for E-commerce Hoyts is not overly anxious to jump aboard the electronic commerce bandwagon.

Labelling the practice "disruptive technology", Hoyts' CIO Patrick Teh says the company will continue to keep an eye on developments within the e-commerce arena, but has no immediate plans to launch itself head first -- and unprepared -- into expensive online trading activities. "Contrary to what others may think, we still classify e-commerce as disruptive technology. Our policy on disruptive technologies is that we maintain tabs on them and invest small amounts of dollars in these technologies to ensure we're not left out when the technology does take off or when the consumer environment is ready," he explains. "We have an e-commerce plan in place, albeit not a full-blown one." While Hoyts has no immediate plans to enter the e-commerce arena, Teh says the company will maintain a general online trading strategy to ensure it is not left out in the cold once the practice achieves mainstream public and corporate acceptance.

"Our current e-commerce plan includes complementing our existing telephony ticketing system with Web-based ticketing channels, and implementing a corporate intranet to facilitate a standardised information delivery medium worldwide. As to the former, we do not have a definitive timeframe for delivery," Teh says. "Being part of disruptive technology investments, it is early days for us to be able to estimate the percentage of returns from online business. Suffice it to say, we can get there fairly quickly when we have to."ET Phone Hoyts In December 1995 Hoyts launched the Hoyts Hotline -- the first foray by a cinema exhibitor in Australia to increase its ticket distribution channels through telephony. By dialling 13 2700, movie-goers in the Sydney metropolitan area are able to listen to movie session times and purchase movie tickets, regardless of the session time or cinema location, by forwarding credit card details over the telephone. Purchased tickets can then be redeemed from Hoyts Ticket Point kiosks that are located in cinema foyers. Alternatively, patrons may also purchase tickets from these kiosks using their credit cards. According to Patrick Teh, Hoyts' CIO, Hoyts Hotline was not only developed as the front line in its attack for market share in an increasingly competitive environment, but also gives its customers an alternative to the dreaded ticket-buying queue.

"The service was introduced to provide patrons with a convenient way to pre-book their tickets and then collect them without having to queue at the box office, or bypassing the box office by purchasing their tickets from these kiosks," he explains.

Rainy days, school holidays and the screening of big-name movies are significant contributors to the take-up of its movie hotline. Teh says the phone service typically accounts for between 2 and 30 per cent of total ticket sales during these times. "The service is very popular with screenings of blockbuster movies," Teh says. "For example, during the Independence Day blockbuster screening, we were averaging teleticketing sales of up to 25 per cent of total tickets sold. This technology is not new and is gaining more acceptance by the day."

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