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New service contract agreements have been prominent the past month, particularly with the Department of Defence. The Department of Defence has traditionally engaged in high volume, high value, complex projects and does invest a lot in IT to support its critical functions.
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Conclusion: In most vendor-client relationships power shifts from the client to the vendor as soon as the deal is signed. As the SMACC (Social, Mobile, Analytics, Cloud and Consumerisation) ecosystem evolves, strategies are emerging that enable power to remain with the client for the duration of the vendor-client relationship. However, this shift in power will only happen if the client actively works to eliminate vendor lock-in strategies.
This month there has been a significant increase in senior appointments, restructures, collaboration and purchases in the ICT industry. In particular, service providers are acquiring or partnering with technology vendors to integrate specialised and high quality products with their services. This highlights the demand in the market for access to new and developing technologies and associated services to take advantage of them. In order to stay competitive, service providers have been forced to move beyond basic service provision and include technologies as part of their service offerings.
Discussions regarding unknowns that arise from multi-layered, hybrid and increasingly complex ICT environments have been prevalent this month. There is a recognition that, because of these variables, traditional tools and delivery models are often insufficient to ensure ICT environments function efficiently. Reviews indicate that difficulties can arise because of failures in the implementation of management and operational protocols as well as the critical tools needed to bind the many facets of an ICT environment together, to ensure operational effectiveness which all users can access and understand. For instance, user authentication systems that now require careful consideration and planning are often not feasible as they can require very specific expertise for just one small aspect of a large environment. IBRS Analyst James Turner will be discussing this particular issue in relation to authentication solutions, as well as potential response measures in a webinar to be held on July 31st.
Conclusion: When it comes to balancing the demands of stakeholders, CIOs are often left with Hobson’s choice1 – give in to demands from their enterprise customers. The alternative (saying no) risks the CIO being labelled a ‘Blocker’.
Elite CIOs deal with individual stakeholder demands within an ecosystem of five distinct stakeholder forces, and in doing so drive extraordinary enterprise benefits. Less effective CIOs remain bogged down in a tactical debate focusing on one demand at a time – never really satisfying anyone.
Success as a CIO will be defined by how well an agreed balance by these five stake-holder forces will be achieved.
This month’s outsourcing deals were especially interesting, showing that the range of services available to outsource and the ways customers are using them has broadened and borders for providers are being eliminated. Vendors are becoming more specialised, as the trend to target outsourced services at particular business functions or objectives, to satisfy customer needs, has emerged. This has resulted in vendors adopting more flexible products, services and delivery models to accommodate a wider range of customers and their varied requirements. This is becoming clearer with potential customers, such as the Department of Health specifically stating it wishes to explore different service models, technologies, IT practices and market capabilities when searching for a new service provider.
For several months business analysts and government ministers have been telling the public that Australia has to lift its productivity. The urgent call to action has come about because the golden years of mining are stuttering. To fill the gap left by mining, at the same time as the creeping shadow of ageing ‘boomers’ lengthens, productivity has to rise.
Companies and individuals are aware of this. Recommendations to improve productivity come in various forms. With technology, it’s in almost every piece of kit offered, from gadgets that squeeze that extra bit of output per hour to a full migration or new stack. In the human resources area it may come as advice to give more time to the work-life balance. Even adding green plants to the workplace has been another means to lift productivity.
Particularly prominent this month was the high level of new senior appointments and employee rationalisation in the IT industry. This highlights the critical nature of taking into account practical, business issues as well as technological developments to maintain efficiency, competitiveness and targeted service provision for a company’s internal ICT customers, as well as for service providers catering to external clients.
April has been an incredibly strong month for outsourcing engagements. Most interesting is the variety of deals in size and nature as well as the vendor and customer size. It is clear that the momentum in outsourcing is steady accelerating as new technologies are accepted and the skills required to support them evolve and become more readily available. A proliferation of smaller and specialist service providers, new service models, efficiencies and affordable technologies have also resulted in increasing the availability of outsourcing to small-to-medium enterprises wishing to take advantage of new developments.
Security continued to be a major concern during March, with particular focus on new privacy regulations (Privacy Amendment Act) that came into effect on March 12th. A lot of interest was generated because of the extensive measures and associated fines for breaching the new Australian Privacy Principles (APPs). The APPs focuses on protection of sensitive information and integrates information security policies which are already in place. Of most interest were the significant changes, the fact that many companies were not sufficiently prepared and the high fines for breaching the APPs. It displays an increased concern and focus on establishing security solutions and a requirement to engage external providers to assist with response measures as well as illustrating the need for strong government regulations to prevent misuse, loss or inappropriate access to sensitive data, facilitate breach detection and to establish responses for security breaches.
Conclusion: Debate over Microsoft’s mixed record of successes and slow innovation during the last decade has incited conjecture as to its long term durability. As many highly successful vendors have disappeared very quickly, the same inference for Microsoft is a reasonable one.
While Microsoft has been ‘disrupted’ in the sense that it has not adjusted smoothly to new conditions, its demise is not imminent. The corporation has to fix several parts of its business, which will not be easy, but it’s financially sound and growing. Microsoft customers need not fret over its longevity. However, they ought to examine how much they depend on Microsoft or other flexible options over the next five years.
February saw a continued emphasis on security threats and response measures, as well as practical issues that may impact on IT investment. Particularly interesting was a write-down of Tower’s new core IT systems after the sale of some of its business units. This highlights the need for careful planning and extensive consideration of real world issues in an environment where fluid and complex IT and business structures exist. The desire to exploit the benefits of new technologies requires changes to both IT and business foundations which can pose challenges when technologies and business processes need to be integrated. A combination of evolving solutions and limited support can be problematic when business-oriented decisions are made which could have flow-on or unpredictable effects on IT infrastructure and strategies.
This month has seen a lot of discussion regarding security failures, sparking debate in relation to the adequacy of the solutions and response capabilities for such incidents. Concerns raised because of these failures, emerging technologies and uncertainties regarding security arrangements have forced both vendors and specialist security providers to investigate ways of alleviating customer concerns through integrating solutions and assurances when establishing outsourcing arrangements. While security has always been an issue for customers recent failures are driving more collaborative, open and prospectively sturdier security arrangements for the future.
Especially noticeable in December was the large number of purchases and collaborative agreements in the IT service provider sector. Vendors aiming to expand their customer base and service offerings, reach and scale as well as exploiting new technologies they have no access to are adopting alternative approaches to business growth and sustainability. This underscores the need for the industry to remain flexible and be aware of industry changes, demands and evolving areas that can benefit their customers
Conclusion: When faced with the need to upgrade the desktop, rather than viewing this as a refresh or modernisation project (which is an IT centric approach to technology issues) undertake a business centric Application Delivery roadmap that focuses on the end-user’s application experience and the business benefits.
An Application Delivery approach will reduce project risks by highlighting the linkages between the project and the business benefits, prioritising the delivery stages of the project to get value early in the project, and ensuring application delivery methods are aligned to the user’s needs, ensuring a high quality user experience.
There has been much discussion this month with regard to IT in the Banking and Financial Services sector. Projects and plans to expand internal IT structures have largely been in response to increased and changing customer needs and demands. The high level of activity and discussion regarding IT in this sector illustrates how evolving technologies and customer awareness and desire to access these new technologies can transform internal infrastructures and how IT service providers must respond positively to these demands. IT service providers catering to these new needs need to address issues such as internal support systems, protocols and IT decision-making and make significant increases in IT investment. This is particularly evident as service providers restructure, extend capacities and begin to offer new services in respect of cloud and security.
Conclusion: When faced with the need to upgrade the desktop, rather than viewing this as a refresh or modernisation project, which is an IT centric approach to technology issues, undertake a business centric Application Delivery roadmap that focuses on the end-user’s application experience and the business benefits.
This month there has been a lot of discussion regarding the importance of innovation, in the approach to both technology and business strategies. While this has been flagged previously it is even clearer when examining the IT industry activity this month, in particular company buy-outs, new product and service offerings, investments in development and company growth. Collaboration between companies in the provision of specialised service offerings and in discussions about new standards and protocols for evolving technologies and solutions were also noticeable. These activities are both driven by, and drive, the need to innovate in the current climate, the need to address user concerns in the uptake of new solutions and a desire to maximise the benefits of using new solutions.
September has seen a noticeable rise in the number and value of outsourcing deals, particularly in the provision of communications and network infrastructure. Other IT news was centred mainly around the change in government. Pre-election, there was much discussion on the Coalition’s proposed strategies and plans, and after the election, predictions regarding the impact of the change on the ICT industry. Commentary and opinion was largely positive and focused on increased confidence and business-centric policies which are expected to drive evolution and growth in the ICT industry.
The majority of IT outsourcing contracts this month include the provision of cloud-based services, and issues relating to cloud adoption. A large number of service providers and consultancies have announced the acquisition of specialist divisions, partnerships and collaborative agreements for the sharing of information and expertise for companies outsourcing IT. A number of training initiatives, workshops, and information sharing arrangements between vendors, industry service providers, and governments have taken place.This benefits both vendors and customers when outsourcing in an environment where a large degree of flexibility and constant development is required to accommodate new technologies and solutions. By expanding existing capacities or strengthening service offerings companies are providing a greater range and higher quality specialist services for a changing market.
July has seen a noticeable rise in the number and range of outsourcing deals. An interesting development is the move to smaller service providers who are being engaged to provide targeted and specialised services. This flags a trend in the outsourcing industry which has been evolving for some time, as the desire to realise the benefits of new technologies across diverse commercial environments is necessitating specialist support skills and increased company flexibility from prospective vendors.
While discussions around company and service offering expansions have been common in the past few months the real consideration of the implications of these developments was prominent this month, In particular the demand for new and highly specialised service offerings in response to increased business complexities, new technologies and solutions and problems emerging because of these issues. For instance, the demand for consultants to copy company data, manage data retention and review and reduce stored data has risen dramatically as the accumulation of large amounts of data is becoming problematic for organisations. Enhanced technologies and solutions or different problems necessitate services to support them which in turn results in new tools and outsourcing services providing stability to growth markets, and the development of new ones.
Conclusion: Most organisations that use enterprise resource planning (ERP) software have a need to integrate the ERP system with other enterprise software. It is common for ERP systems to be integrated with customer relationship management software (CRM) and with all the bespoke applications that operate at the core of the business. Some organisations strive to simplify the system integration challenge with a single silver-bullet system integration technology, but this approach only works in the simplest scenarios, when the number of system interfaces is small. Instead, aiming for maintainable integration code leads to better results.
This month, there has been a lot of discussion regarding security and ICT systems. These discussions have ranged between risks, new product offerings, need for greater awareness, specialist security company expansions and security responses. This has been interesting in relation to outsourcing as the discussions have adopted a more holistic approach, with security not being seen as an individual component of IT operations, but rather one which should be integrated with other areas. For instance, aging technologies or system protocols which can potentially cause major security problems, are not seen as distinct with both the problem and response measures intertwined. The types of specialist skills necessary to address security issues caused by existing technologies and practices as well as evolving markets and technologies will inevitably result in a growth in products and service provision in this area.
Conclusion: Many organisations in Australia rely on SAP software for enterprise resource planning (ERP) software. To get the best results out of their data, a significant number of organisations have implemented a data warehouse alongside operational systems, and are combining SAP software with best-of-breed technologies for customer relationship management and system integration. Whilst SAP software continues to provide important functionality, it pays to understand to what extent standardisation of ERP functionality makes economic sense, and from what point onwards standardisation reduces the organisation’s ability to deliver unique and valuable services. Standardisation is desirable only if it leads to a system landscape that is simpler and sufficiently resilient.
This month, there has been a lot of discussion regarding cloud computing services, in particular new offerings launched by a number of companies globally. More interesting for outsourcing however is talk around technical, legal and administrative vulnerabilities when contracting out IT services. The continuation of the Queensland Health Payroll review, which has flagged problems that can arise when procurement processes are not properly scrutinised, is just one example of these problems.It is clear that many of these vulnerabilities are still not properly considered by companies when outsourcing or off-shoring and are often caused by a failure to properly monitor vendors.
Conclusion: Selecting a corporate mobile device standard can be risky. Mobile devices are far more personal than PCs, and users’ preferences are heavily influenced by their existing consumer experience and personal choices.
Imposing an IT driven device standard increases the risk of the CIO being forced into defending the decision against disgruntled end-users, some of whom may have considerable influence. To avoid this follow the four golden rules of mobility and ensure mobile device selection has business buy-in.
Especially interesting this month was the start of the Queensland Health Payroll System Commission of Inquiry, which is investigating outsourcing arrangements with IBM and the system’s failure that caused significant havoc and extreme cost overruns. Initial findings indicate there were some serious problems with several areas of the procurement process, including insufficient time to review IBM’s proposal, no verification of the technologies that IBM founded the payroll system on, and a failure to effectively monitor the procurement process. This highlights the dangers, and extreme roll-on effects a lack of planning and management in the procurement process can have on an outsourcing arrangement, and re-emphasises that exercising tight management control, including thorough reviews, is just as critical at the beginning of the contract process as after the agreement has commenced.
Conclusion: For most organisations, especially SME, it’s time to let go of your IT infrastructure. Owning and operating your own hardware was once a necessary part of using IT for a competitive advantage, however it is now an unnecessary burden that reduces agility, creates significant risks and impacts long term sustainability.
CIOs should not be asking “if”, but rather “when, how and to whom” we let go of the IT infrastructure.
Conclusion: IT Managers and CIOs who are responsible for external-facing websites are faced by the difficult proposition of determining the optimal set of browsers and browser versions to support. Supporting too many browser platforms wastes money; supporting too few risks alienating users.
Prominent in the news this month were announcements of plans to cut contractor and employee numbers in a range of ICT services companies, such as ASG and Sensis. Along with cutbacks, companies also plan to restructure business processes, change strategic focuses and find ways to increase efficiency. While this is not new, increased reports of budget cuts and changes brought on by new technologies and improved business structures really does give rise to a sharper focus which should result in more targeted, careful and more successful programs, as opposed to simple staff cuts to save on IT spend. This is definitely a positive for the industry because as businesses evolve they will implement better ICT service provision frameworks
January saw a noticeable increase in tender offers and project announcements, and forecasts for the coming year. There has been a particular focus on growth in big data solutions, cloud computing and mobile devices. More interesting though were the high number of reports on criminal prosecutions, regulatory actions and internal and external protests in the IT industry, as well as commentary on potential problems. This indicates that people and companies are paying closer attention to their contracts and technologies, which is definitely a good thing where there are outsourcing agreements and a need to keep up to date on external forces that could possibly impact on arrangements.
This month’s IT news has been especially interesting with a lot of discussion around vendor transformation, in particular, vendor restructures, business unit purchases and sales and market expansion. Vendors have also been discussing changes to their strategic focuses, business priorities and service offerings. These developments clearly reflect recent trends and growth forecasts in business demands for IT outsourcing with vendors rebalancing their offerings in an effort to cater to these demands. While this is nothing new the number of vendors making significant internal changes across so many areas has never been so visible indicating shifts in IT priorities and strategic focuses for businesses in general. These are issues that will be fascinating to observe as they unfold.
This month, there has been a lot of discussion around mobile technologies and BYOD practices. What’s especially interesting is a shift in focus from actual technology adoption and reasons for growth in this area, to the need for systems and solutions that can support the adoption of these devices, including device management systems and applications, company protocols as well as user identification and control tools. This indicates a broader perspective of a growth area that goes down several levels to management solutions and company practices which does not typically happen in the industry. It also indicates this could be an emerging area for vendors supplying outsourced support systems, and device management services.
October has seen a significant rise in IT outsourcing deals many of which are more interesting than usual and with a more noticeable engagement of smaller, very specialised IT service providers. This move confirms last year’s forecasts regarding the need for more focused services in light of a rise in the types of divergent technologies being deployed by companies, as well as system consolidation and the need for customisation. This month has also seen a lot of significant industry forecasts and the publication of interesting research results as the end of the year becomes closer.
While there were no new projects or tenders announced this month, outsourcing deals are finally becoming a little more significant, with the Royal Adelaide Hospital network deal being especially interesting. The forecasts for outsourcing are currently excellent and there are grounds for optimism in the future.
There were only a few deals this month with one very interesting contract between Perpetual and Fujitsu which came through towards the end of the month. This contract is a complete, infrastructure agreement, which used to be quite common but now really stands out in the current environment where customers prefer to outsource to multiple, smaller vendors. This agreement may indicate that the consolidated, single supplier arrangement could be coming back into popularity.
While outsourcing deals were a little thin in July there was a lot of discussion around the risks for companies with “BYOD” policies, and the opportunities for service providers to manage solutions. The failure of Peru’s One Laptop per Child initiative (“OLPC”), which has been hampered with problems such as insufficient skills and school resources to make use of the computers, highlights problems that arise when there is a serious mismatch between ideas, strategies and reality. This is a common problem with outsourcing arrangements in general Illustrating that great initiatives and solid implementation plans are not sufficient if external influences, such as the human element, are not taken into consideration.
Conclusion: For organisations that use digital content distributors, telecoms suppliers, and social media, the Convergence Review is an important stage in how policy and regulation will evolve. The review sought to update the regulations in the sector which has changed rapidly. Although the review did not focus on digital players, there were elements in the digital arena that indicate where change may lead.
It is probably inevitable that more regulation will enter the digital content and distribution sector. The need to impose controls will be to facilitate market competition and foster new ventures. It will also be used to protect individuals. That means that running an unregulated market is not possible if the goals of increasing local content, commerce and technology innovation are to be achieved. Organisations may have a special interest perspective depending on their role within the content, communications, technology development and social media sectors.
This month’s deals were fairly thin but tenders and project announcements were up. More interesting this month was the chatter centred around BYOD, and other new technologies that are resulting in diversified environments and management and security vulnerabilities arising because of a lack of planning and experience with these technologies.These types of environments are expected to result in new outsourcing service offerings for vendors to take control of areas like mobile device management
The topic of Bring Your Own Device (BYOD) has resurfaced this year. While this is an important trend that needs to be examined by IT organisations, be careful to separate the facts from the hype. Here are the four most common myths that I keep hearing.
Conclusion: When conceiving and designing new services, the primary focus of product managers and technologists is often on functionality, and adequate quality of service is largely assumed as a given. Similarly, from the perspective of a potential user of a new service – the user is mainly concerned about the functional fit of the service, and is prone to making implicit assumptions about quality of service based on brief experimental use of a service. The best service level agreements not only quantify quality of service, they also provide strong incentives for services provider and service users to cooperate and collaborate on continuous improvement.
Conclusion: The speed and disruptive effects of consumerisation in the mobile market surprised many organisations that were looking back, not forward. Even mobile providers have not anticipated rates of change and must invest millions to remain competitive.
Over the next three to four years the mobile market will face stark realities in a fully developed and oversupplied market. Providers will have to manage costs, improve service delivery and raise user revenue. That is not an easy set of objectives to achieve. The effect of raising revenues and cost management on users could be disruptive as users seek to maintain price and service levels they have enjoyed for some time. Organisations may have to manage another round of change when it comes.
The major interest this month has related to revenue growth for IT service providers. Global and Australian figures are high, and the flow-on effects were clear in the news. Service providers have been announcing new service offerings, strengths in different areas, company expansion both locally and globally, and revenue increases and investment in expanding and improving business operations. Overall it seems there will be some interesting times ahead as business growth impacts on outsourcing industry practices and trends.
Deals have increased this month, but more importantly, the deals are more interesting! Increased outsourcing in areas that support consumer-orientated functions (as opposed to just infrastructure or business support deals) is especially clear this month.
Conclusion: The attention in which organisations are engaging with social media inevitably leads to a sharper focus on the reputational and legal ramifications of using social media. Organisations have to consider how their staff use social media, the materials published, the statements made on an organisation’s behalf, and possible consequences of the material.
Reviewing and resetting guidelines for employee use of all social media, in particular career sites, is fundamental to how an organisation, its brand name and products are distributed and perceived through social media. New guidelines will set a fairer use policy between employee and organisation, reduce the uncertainties and reduce unforeseen risks.
Deals were light but other news was especially interesting this month. The standout issue seems to be the IT skills shortage (again!), but the discussions about the shortage seem to be expanding into areas such as hiring practices, potential resolutions etc, indicating people are considering the issue carefully, with commentary going down a few levels. There also seemed to be a high level of CIO and CTO appointments this month. The most interesting topic was the Huawei exclusion from NBN bids – lots of debate (and allegations) on that one, everyone seemed to have an opinion!
Conclusion: With cumulative revenue in excess of $1 billion, and penetration into the majority of ASX50 organisations,Indian based IT service providers are clearly a well-established and credentialed participant in the Australian IT environment. The adoption of these vendors by Australian organisations has continued to accelerate in recent years. An increased challenge for current and prospective customers is to understand the implications of evolving Indian provider capability and investment.
This month we have seen a lot of commentary on the e-Health records initiative, with industry bodies (medical, privacy and software) becoming quite vocal about expected launch date delays and inability to reach technical objectives, while government bodies responsible for the system refute the claims! More significant this month is the rise in outsourcing contracts and proposed tenders and even better, more interesting contracts – finally!
Social media is nearly ubiquitous in every market. So far social media ventures have done extremely well commercially, if not in real money, well then, at least in some discounted financial value accounting methodology.
This year the whole game, so to speak, goes up a degree with Facebook more than likely to go public with its IPO in late May according to latest reports. Forecasting what it will mean to the social media industry, to usage and apps development in a market that is already mature and fully saturated, is complex.
Conclusion: The Australian Institute of Management recognises that leadership and management will need to continue to evolve to keep up with technological innovation and globalisation. Whilst organisations are usually aware of the need to keep up with technological changes, they often struggle with the practical implications for management and impact on organisational structure. On the one hand operational management can increasingly be automated, and on the other hand the ability to build and lead high performance teams is gaining in importance. Having appropriate people in executive team leadership positions is critical.
There have been no IT deals of great interest this month which is to be expected so early in the calendar year. As with any major government IT program, now that the launch of the federal government’s e-health record system is being ramped up, reports and debates on the system including any setbacks and flaws have increased this month and will probably keep doing so until July. Forecasts are levelling off, but there are interesting comments on predictions for the outsourcing landscape by the IAOP and Outsourcing Centre and it will be of further interest to follow developments over the next twelve months.
Conclusion: The challenge of servicing customers well through various channels and over many devices has added considerable complexity to operations. The blindness of monitoring how well the IT operation is working has been removed and now data flows in huge amounts. The principal goal is to provide high quality customer experience and not simply rely on dashboards to churn out machine data reports.
The skills of analysis and insight should be more keenly applied to the data in order to reveal and clarify the value of the data. How the reams of data can be used for an organisation to deliver a high customer experience remains the main task. Organisations that believe that solely monitoring data to support transactions will likely miss the significance of what the data can yield and strengthen their customer contacts.
Deals during the month have been comparatively unexciting, with a real focus on analysis of major issues in 2011 and forecasts for 2012. What is a little disturbing and confusing about this month’s news items were the Federal Government announcements about areas for planned IT spending cuts, and increases. It is shaving costs on some essential IT (such as equipment upgrade and maintenance) and cutting vendor panels and new projects while it continues to invest huge amounts into spending on IT for students. While this appears to be a good idea in theory the value of diverting this spending may be questionable. The perceived need to get technology into student’s hands, within what is a tight timeframe, could be mostly for government PR. However this rush could lead to an inability to negotiate the best deals in terms of price and reduced leverage to procure quality items.
Conclusion: Bob Dylan’s enigmatic song ‘Changing of the Guards’ included these lyrics: “But Eden is burning, either brace yourself for elimination. Or else your hearts must have the courage for the changing of the guards.” This song could well refer to changes in IT that have been gathering force for over a decade. A new order is emerging: progressive CIOs are unseating their regressive counterparts bringing new meaning to IT enablement.
While the number of outsourcing transactions has reduced in Q3 this year, the deals this month are more interesting than usual. News largely focused on project rollouts of previous sourcing deals and there seems to be a lot more tender and project announcements.
News has been very thin this month. Apple product releases, vendor offerings, the dispute with Samsung and the death of Steve Jobs have really dominated the news. IT company CEO and CIO employment was also featured quite heavily. There were a few deals and developments, but of most interest is the establishment of a new Australian outsourcing industry body. Hopefully we will get some significant insight from them in the future.
Conclusion: The discipline of Enterprise Architecture has evolved from the need to articulate and maintain a big picture overview of how an organisation works, covering organisational structure, processes, and systems. Whilst Enterprise Architecture can assist in implementing industry best practices, several-fold improvements in productivity and quality are only possible if the organisation makes a conscious effort to attract and retain top-level subject matter experts, and if it commits to a so-called Domain Engineering / Software Product Line approach to the strategic analysis of market needs and the design of products and services.
Contracts continue to be issued in relation to the NBN build. Both Transfield Services and the Syntheo JV have been awarded significant two year contracts.
On the other hand it is interesting to note that the value of IT services contracts globally has fallen again in Q2 2011. A fall of 40% in the past year now brings contract value to its lowest level in over eight years.
Conclusion: The IPv6 day in June attracted significant media attention and raised the profile of IPv6 again. As is typical, the media latched on to the “bad news” and ran headlines stating that the Internet is running out of addresses! While this is correct, most ANZ organisations will not experience any significant impact and the burden of supporting IPv6 will largely fall to the telecommunications vendors, or other organisations that run large public networks.
IT executives need to check that their organisation has a strategy for dealing with IPv6, largely at their gateways systems, and ensure that this strategy does not get blown out of proportion.
While there is not as much activity as last month there are still a lot of interesting sourcing deals, both in government and private enterprise. Although small in number there are some interesting projects around, particularly for government bodies.
Conclusion: VMware’s vSphere Storage Appliance (VSA) is the beginning of the end of the modular storage market. While built for the low end of the market, the VSA will scale-up over time and disrupt the modular storage market. The key benefits of the VSA in a VMware cluster are: lower infrastructure complexity, lower capital costs, greater workload agility and reduced IT skills.
SMBs should consider the VSA at their next major infrastructure refresh. Enterprises should experiment with a standalone environment, such as dev/test or a new departmental application, and become familiar with this technology. Enterprise should then create an adoption strategy to replace modular storage in their VMware server cluster as the VSA matures and scales up.
A very busy month with a significant amount of material. A lot of deals have been done and there are a large number of projects under consideration. Additionally there are some interesting initiatives to be found in the other news section.
A very exciting month! Not just lots of deals, but big ones too (mostly due to the NBN Co). No real tenders this month, but lots of project announcements in the Queensland Government budget in the wake of flood recovery
This month’s outsourcing highlights are especially interesting – there has been lots of activity in buying and selling outsourcing businesses and specialised business units. There have also been a lot of announcements about new service offerings, or expanded service offerings by vendors. You’ll see examples of this in the general news section, as well as an article that talks about BPO firms less likely to experience growth if they have a singular focus, and not several service streams, like IT services. All these things show the need for diversification in outsourcing service offerings, as well as streamlining, expanding and very targeted offerings in specialist industries (like health care, mining or cloud specific etc).
Conclusion: Between the initial enthusiasm of planning a new system, the focused effort of selecting a vendor and negotiating a contract, and the frenetic activity of implementation, nobody wants to think about how to deal with the possibility of a major project failure. While rare, organisations need to put in place contingency plans before they start, preferably during planning and negotiations.
Organisations should establish a framework for dealing with failing systems that gives them the necessary tools to quickly get it back on track or terminate it and seek reparation if appropriate. Without this, organisations risk a long and bitter struggle, which is both costly and embarrassing to themselves and the vendor.
Conclusion: More than almost any other factor in a CIO’s armoury, having good people within IT is a mainstay of continued success. Building good teams starts with staff selection. While some use search firms for senior roles, most CIOs use traditional recruitment methods: profile the role, advertise it, shortlist candidates, interview them, check references, then appoint. In difficult employment markets it is tempting to make staff selection compromises purely for the sake of filling a vacant role and relieving a stress-point.
Activity pretty ordinary this month with deals being pretty thin and sub-standard. We heard a couple of significant deals were going to be announced on the 29th but only one between IBM and NBN eventuated.
Conclusion: In 2011 Chinese based IT services providers will start to appear in the Australian IT marketplace. Clearly, their impact will be modest at first, although for certain organisations, there is the potential to benefit from engagement.
While they use Indian based firms as benchmarks, Chinese firms are significantly different from the Indian based services providers. Despite sharing the same offshoring based model, Chinese firms are more engineering focused and significantly less mature. You must be aware that engagement of Chinese providers will have specific engagement benefits and challenges.
Conclusion: A new leadership team in a major IT provider such as IBM will mean the potential for change and disruption for customers, partners and staff of IBM. This change may vary from a potential for a shift in strategic direction to more incremental changes as new management seeks to place its stamp on company performance. Just as in your organisation, new leadership at IBM will mean new ideas and processes for both IBM and its clients.
Conclusion: The generic term “the business” as used by IT people to refer to their stakeholders, is a gross and somewhat dangerous generalisation. Blithely referring to “the business” while making little effort to understand the real needs and priorities of system constituents can leave IT practitioners disconnected from the people they are trying to serve. Organisations have many different facets and characteristics that all seek different qualities from IT solutions. Understanding these differences is an essential requirement to delivering superior IT services and solutions.
2010 has seen many high profile IT failures in well-run Australian companies
Westpac’s online banking system was down for about nine hours in August, due to a “software patch”.
Virgin Blue had a complete outage of its online reservation system in September, which lasted for about 21 hours. This was caused by data corruption on a solid state disk that appears to have then corrupted the recovery environment. Virgin said this created severe interruption to its business for 11 days and estimated the cost as between $15 million and $20 million.
NAB’s core banking system was impacted by the “upload of a corrupted file” in November. This prevented many of customers from receiving payments or withdrawing funds. The impact of this failure was still being felt some weeks after the initial incident.
CBA had processing problems that impacted about five per cent of customers so that from an ATM their accounts had a zero balance.
Vodafone customers experienced poor reception and slow download speeds for over a month ago after a “software upgrade caused instability” in its system.
In five months Australian has experienced five high profile failures from five brand name companies. So how is this possible? Each of these organisations has large, well-funded IT organisations.
Conclusion: Many an incoming CIO stumbles between acceptance of an employment offer and the first few months in the job. Often for the CIO it seems that there is so much to do it’s difficult to know where to turn and what to focus on. Coupled with this, the incoming CIO usually has an overwhelming sense of desire to do a good job and achieve recognition.
Conclusion: With core Fibre Channel over Ethernet (FCoE) and Converged Enhanced Ethernet standards now ratified, and with major networking vendors having rolled out FCoE products, IT executives should prepare themselves for an onslaught of converged FC and IP networking product marketing.
While FCoE will be the dominant storage protocol in the long-run, IT organisations must brush aside vendor’s future/function technobabble and understand the benefits of a converged network in the context of their environment. Only then can the organisation define an adoption strategy that guides how and when storage networking is migrated to FCoE.
Conclusion: In the best-selling 1982 publication "In Search of Excellence"1Tom Peters introduced the concept of MBWA or Managing By Wandering Around. His hypothesis, which remains valid today, is that to gain perspective senior executives should periodically distance themselves from usual management activities to see their organisations differently.
Conclusion: As a CIO enmeshed in day to day activities, it is easy to think myopically of a world bounded only by what is closest to hand: IT clients, staff and suppliers. But to do so can be delusional. Effective CIOs are first and foremost good strategic thinkers constantly focused on delivering better business outcomes. As such, they take the time to survey the world beyond their immediate boundaries, reflecting on and gaining inspiration from the manifold influences that can shape their future plans and indeed over which the CIO may exert affect. Such a world, quite distant from daily routine but subtly connected to it, may be thought of as the CIO’s role as seen from space.
Conclusion:All contracts eventually terminate, however the reasons for the termination and the way the termination is handled can lead to different outcomes. To minimise the risks associated with contract termination it is essential that the buying organisation gives due consideration to this event while in the early stages of the procurement cycle. Unless the procurement contract is drafted to cover the issues that can arise as a result of termination, the buying organisation can be faced with significant business disruption, financial penalties and potentially even legal action.
John Maynard Keynes is back in business. A version of his theories helped save the world’s economy last year. The English economist’s robust statement is the headline above, and it’s getting a lot of wear right now. It serves as a reminder of how being flexible is the basis of making the right decision.
As everyone breathes a sigh of Keynesian relief, there is also a spotlight on Japan as the former Asian economic powerhouse may illustrate the future for most of the developed world, technologically and economically.
Conclusion: One of the key activities in Contract Management is the governance and performance management process that is used to ensure that suppliers meet their contracted deliverables.1 Despite the importance of this process to the achievement of the goals surrounding the contract, in many situations contract managers report that the performance targets and related governance processes have not worked, and in some cases, actually hindered contract performance.
Conclusion: In Australasia in 2009, admittedly in the thrall of the GFC, an unprecedentedly high number of CIOs lost their jobs. A broad spectrum of CIOs were involved: some were high profile industry figures, a few had been promoted from within whilst others with seemingly well-credentialed backgrounds had been in their roles for a matter of months.
Conclusion: HP’s acquisition of 3COM, Oracle’s acquisition of Sun Microsystems and Cisco’s move into blade servers are all clear signs that IT infrastructure is at the beginning of another major structural change. These events herald a transition from today’s Layered Components model, where best-of-breed components are purchased from a number of specialist vendors and then integrated by the IT organisation, to an Integrated Systems model where complete systems are purchased from a single vendor, avoiding the need for the IT organisation to act as a Systems Integrator.
IT organisations should look at adopting the Integrated Systems model when the costs and risks of acting as a System Integrator outweigh the benefits of competition at the component level (commoditisation and innovation).
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