Ciaran Kelly is consulting partner with PricewaterhouseCoopers in Ireland.
One of the things we keep hearing is the role of IT in shaping business strategy, but surely you can’t really square that circle with reduced or flat budgets?
People have been told: “Keep your budgets flat, and if you have to invest and innovate in certain areas, well then cut back in others”. For example, people are sweating their resources on storage, laptops and servers. They are now taking risks by operating out of maintenance and non-availability on systems, but they’re diverting some of what they would have spent on capital expenditure into more innovative types of projects.
To be completely honest, there was always a bit of room in that, anyhow. I was speaking to clients that might have replenishment every three to four years on some of their storage devices and they’re getting an extra year out of it and are able to spend those extra funds, whether that’s on social networking or, what one or two clients are doing, iPhone-based apps.
Where is the dividing line for IT budgets between maintenance and innovation?
I think a relatively small component of the IT spend is on innovation. I would honestly say that it hasn’t changed dramatically in the last couple of years … I’d say it has gone down, generally speaking. Google has been fairly critical of SMEs in Ireland – and corporates – around their level of internet penetration and using it to gain additional revenue. I think that’s quite true; I’m based in Ireland but I and the team do 30-40pc of our work outside of Ireland, and there is a notable difference … It’s not about trying to create something huge out of this and trying to be a dot-com millionaire, it’s really only about having another channel to reach your customers. They’re missing a huge opportunity here. I don’t think we use the internet in Ireland as aggressively as we could.
E-commerce is obviously a good example of tying in IT to your main business, but what other areas have you seen investment?
The next biggest area – and it’s driven by a number of factors – is management information; better, more timely and accurate information. We have seen across all of our clients where directors, and particularly non-executive directors – are demanding clearer information on the company they’re supposed to be overseeing. We’ve seen significant investment in the area of IT around understanding what type of information that senior executives and divisional managers need to run their areas and making sure they get it in a timely manner.
A lot of the investment is being done in house, just trying to normalise disparate systems and trying to consolidate it into one database. It hasn’t meant that people have necessarily gone out and bought huge software licences. A lot of these companies have the tools and the capabilities to do it, whether it’s Hyperion or Cognos. Some limited investments have taken place – they haven’t been huge – but they have transformed the way that senior managers view their organisations.
What about cloud computing: is the hype translating into real projects or are organisations taking a wait and see approach?
The best way to do it is present it in a measured way and say this is a 10-year bet – for Ireland, and for companies that decide to invest in it. To give an example, here in PwC we’ve just invested a seven-figure sum in new server equipment. We probably will move to the cloud the next time that investment comes around in two or three years’ time. We’ll probably start planning for it in 18 months’ time.
I think the concept, and indeed the practice of it, makes perfect sense. It’s more resilient in terms of availability and I think it’s a utility, anyhow, in the same way as they have said. The big concern is security (but) there are solutions out there for it.
Do you think tablet PCs have a role in business?
Absolutely they have … Even if corporates don’t push the agenda on this terribly hard for whatever reason, people and consumers are buying into them.
There’s good technology that will allow corporates to put a bubble around their own employee’s device, whether it’s an iPhone or a tablet, that will allow for a portion of their personal device to hold work data in a very controlled and secure environment. That is going to resolve a huge amount of issues for corporates and I think they’re absolutely fantastic tools.
People are used to maybe having their home PC and maybe their work laptop; this is professional life and personal life very much harmonising into one device. Socially speaking, I’m waiting for the pushback. It hasn’t come yet. It creates a myriad of complexities around who owns the device. If someone downloads illegal software or music, is it a work device or personal device? And if it’s a work-supplied device, do you stop them from accessing iTunes or something like that? But I can see in a short number of years people won’t be buying desktops or laptops, they’ll be buying tablets.
Are you seeing IT moving away from long project times and uncertain returns to being about faster turnaround, quick delivery and measurable returns on investment?
I look at it from a different perspective. There are a lot of major projects taking place in a lot of organisations across Ireland at the moment – and we’re lucky enough to be involved in a few of them – but they’re not necessarily seen as IT projects. They’re seen as business transformation projects where IT is a major component – probably at least half of the overall change. People have the appetite to take on the major change projects, but they don’t have the appetite to wait two years to see any light at the end of the tunnel. They do want to see those benefits coming in a reasonably quick period.
The rule of thumb is that in six months you have to be able to have shown some demonstrable value that the project has delivered. Now, that requires people change, process change, technology change and organisational restructure.
Do you think that’s the way CIOs have to go – they have a view across all the business, and can they see where they can drive change?
Absolutely it is, and it needs to come from the CIO, in particular, as a business member of the senior management team, we’re seeing a bit more of that, in fairness. The quality of heads of IT, which might be called CIOs more often, is much better than it was even three years ago, I think, and they are coming with agendas like that.
Maybe it’s a factor of the amount of money that’s been spent on IT but the prominence of CIOs has increased in the last two to three years. It was a way of getting someone inside the tent to better control the amount of money. IT was out in the corner and (now) it allows senior management to get better visibility in terms of where the money is being invested. And it’s around the information side. We’ve helped about half a dozen organisations around the country where they’ve asked me to sit on the interview panel for their CIOs. It’s interesting because nearly all the bigger organisations around Ireland are looking for CIOs to look at the business processes, and process rationalisation and automation, and they’re looking at better management information.
And yet, CIOs have upped their game in terms of their own skill sets. What’s going on?
I think the competencies of CIOs have increased a lot and they’ve been given more prominence at C level but behind them, the availability of strong IT people – good technical people, good business analysts – there’s a lot of people there that just aren’t as technical. Even today when we’re doing our recruitment, we struggle sometimes to find top-calibre IT people. Very often when we do, we’re not looking at Irish people, we’re looking internationally. And that’s unfortunate.
What’s the reason for this skills shortage?
As computer games and iPhones and the internet and Facebook become popular in Ireland and elsewhere, so IT has lost its appeal as a profession. Something’s going wrong there in the middle and I don’t really have an answer for it. There are some great things being done, whether it’s the young scientist exhibition or some of the programmes in the universities, as well, but I do think it’s a big issue.
As a result, do you think in future, CIOs will have less of a grounding in technology and maybe more of a business background?
The CIO has to be proficient enough in technology that their best technical person can’t pull the wool over his or her eyes. That’s where they need to be, but they need to really understand the business extremely well.
Are those people born or made?
I think they’re developed and they’re exposed to both sides of the equation. I would say it probably takes up to 20 years to be a very good CIO. You need a lot of IT experience – you need to cover all the bases, from databases to networking, to operating systems to development, to performance, scalability and security. You think about all those components and then you think about the business that you’re working in, understanding what makes it tick and how you implement change within a business successfully. That takes a long time, as well.