- 11 August, 1999 10:17
In the course of their research on IT in Australia, CIO (US) journalists Howard Baldwin and Polly Schneider conducted more than 60 interviews with CIOs and business executives from major companies in the financial services, retail, health care, entertainment, telecommunications, shipping and mining industries; senators and government officials; consultants, IT firms and professors. Here's what some of our local CIOs had to say about business challenges and the state of IT in AustraliaWhat's at the top of your agenda?Jon Wood, CIO, Coles Myer, Melbourne: The biggest issue for Australians is taking technology and converting it into a business solution that works. We're a little unusual at Coles Myer. Our view is that ERP makes sense where it relates to a function like finance that is not a competitive advantage -- where your industry doesn't require you to be different. Further up the chain, you can be competitive on store-based systems. At that end of it, ERP makes no sense -- it's really a commodity product. So we use best of breed in those ends of the business where we need to differentiate.
James Brown, manager of information and knowledge, Brisbane City Council: The real issue for us is coming out of traumatic times of the '80s when organisations were focusing on the bottom line and IT spending became a visible line item on the balance sheet. Australia is on the elusive quest for IT and business alignment. CEOs are demanding greater accountability. So now we have to really look at adding value. Also, for the last 15 years most organisations have spent millions on back-office systems, but now we're seeing more of a focus on front office investments -- customer support and customer intimacy.
Michael Coomer, CIO, National Australia Bank, Melbourne: I still think IT is a bloody contact sport. We need high-class and intelligent human beings to develop and drive our technology. Over 20 per cent of my time is spent on human capital issues. I'm really trying to drive competitive advantage through our 3000 IT professionals in seven locations around world. How do we go about managing them and driving common goals and collaboration?Valda Berzins, CIO, Australia Post, Melbourne: Retaining staff is a problem.
It's not that people are leaving the country, but we're losing them to other companies on salary or whatever.
Do Australian CIOs share much common ground with their US counterparts?Marianne Broadbent, head and research director, IT executive program, GartnerGroup Pacific, Melbourne: There are more similarities between the United States and Australia than between Australia and Europe. Using existing IT investments and the idea of "value extraction" is huge in Australia.
Australians are also more sceptical of anything that appears to be a fad.
They're good at chasing out the hype.
Coomer: We're very good at taking the value proposition and applying technology to it. We can be a leader in the application of technology as opposed to the R&D. We're not like Silicon Valley here -- we use proven applications and standards.
Loran Fite, CIO, WestPac Banking Corp, Sydney: One thing Aussies can learn from the United States is how to focus. Sometime they struggle a bit more with setting priorities. Aussies would tend to have a list of several priorities rather than one or two. This is why a year ago I had to really focus the company on our priorities.
What's the Aussie style of doing business?Carney Soderberg, managing partner, business process, management and ventures, government APAC, Andersen Consulting: Australians are fairly strident in trying new things, more adventurous and less bureaucratic. Once Australians get onto something, their adoption is really fast. They're great adapters. Because of the tyranny of distance they've had to invent a lot of things themselves.
David Simpson, executive vice president and head of bankwide technology, Bankers Trust Australia, Sydney: What you see is what you get. Being brash and blunt is very much a cultural thing -- we don't talk around the issues. The English, among others, find it very offensive.
Fite: People in Australia are very open and more gentle. They're not as aggressive as Americans -- their style is more laid back. Also, Australians listen more and are less arrogant.
Marco Tapia, general manager of Information Technology, P&O Ports, Sydney: The Aussie way of doing things is very friendly. People here value relationships.
When you meet a supplier you build a long-term relationship -- and it may take months to reach a decision. In the United States it's much faster-paced.
Because of this, it's been very difficult for Australian companies to break into the US market.
What's tough about being an IT executive in Australia?Broadbent: If you have a firm here with $1 billion in revenues, it is more complex than a US firm because the company will have more lines of business and is operating in more countries -- because we have such a small domestic base.
To grow you have to go overseas.
Peter Weill, director of the Centre for Management of Information Technology at the University of Melbourne Business School: The country has traditionally existed on commodities, but now we need to add more value to our exports because those industries have such low prices [worldwide] now. We have to become a high-tech exporter -- and we have to learn not to export intellectual property anymore but retain it.
Labor Senator Kate Lundy, shadow minister for sport, youth affairs and assisting on IT, Canberra: I don't believe there's a high level of adaptability in the decision-making circles. The last few years -- with efforts of government trying to actively promote an interest in the information economy -- has been like getting blood out of a stone. People who shine in this area tend to be of the younger generation and are not part of this entrenched and narrowly focused leadership group of the traditional businesses here. Rather than having a progressive transition of business attitudes I think we're a victim of this chasm: Those who get [IT], and those who don't. For those who get it, it's a very frustrating place to be.
Berzins: Australia's problem is getting the infrastructure across a huge country but for a much smaller population -- so it's a lot more costly to roll out technology. We can't put in satellite technology everywhere because it's too expensive. In the United States, we could do newfangled stuff because we'd have the population to support it. We're two to three years behind [in Australia] because we have to wait for the price-point to go down.
Coomer: Where we've lagged is with consumer Internet transactions compared with the United States. Aussies in general are big users of the Internet, but more for e-mail and information. There is a genuine fear in the consumer market for buying things on the Net. And that's about the same for business-to-business transactions.
There's a lot of hoopla about the IT-outsourcing trend in the Australian government. Is it working?Weill: Government is more aggressive with outsourcing than the private sector.
In three years everything in the government IT sector will be outsourced. The entire IT function in [the state of] Adelaide is going through EDS and the response there has been mixed. It's very hard to make changes in a small department when you have such a big project. We've done some research on payoff and found that firms that outsourced more had lower costs but less agility and slower time to market.
Soderberg: Cost-cutting is a big part of these projects, but the bigger push is ideology. Some of the departments are looking to outsource the financial and HR areas including the technology to support that. It's different from the private sector in that they're really looking at reforming government.
Lundy: The local industry has been marginalised. The contracts are only going to CSC, IBM or EDS. No one else has the magnitude or the capacity to even come at it. The government ended up inserting a clause mandating local industry development -- and that was kicking and screaming. The multinationals have been brutal, quite frankly. They weren't happy with that, and local industry wasn't happy because it relegated them to subcontractor status and entrenched their exclusion from competing on the primary tenders. No one's winning at the moment.
Aussies are known for being innovative, so why don't they have a robust, local IT industry?Tom Worthington, director of technical issues, Year 2000 Program Management Office, Australian Department of Defence, Canberra: Conventional wisdom is that Aussies are good at innovation but poor at the business end. Partly it's a cultural thing -- but people in graduate school should be trained in how to commercialise products. The tendency is to give the product away for others to develop and sell.
Tapia: Americans are so far ahead of us -- you have the critical mass and an educational system that supports IT. Here we have a lot of people who leave school at grade 10 or 12. We are followers -- we never create new ways of doing things and we don't take risks because of the [lack of] capital and the tax situation. The government's been talking about tax reform for years.
Lundy: We do have a really exciting array of IT entrepreneurs who, rather than being exalted in the eyes of the community, tend to be tested quite brutally.
It works against the whole spirit of a community of investment -- getting behind someone who's doing really well. This in itself is driving people offshore.
So is there any hope?
Lundy: It's a positive prognosis for us because there is some generational shift in the culture here. The capital gains tax shift will create some momentum and there is a growing recognition of what constitutes critical elements in creating a global market from the various niche environments Australia can offer. We'll never have critical mass in any sense, but what we contribute is unique, and our strength is in what we innovate. The challenge is how to create revenue models around the distribution of intellectual property.