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Reinventing for change: The challenges of predictable ICT in Australia and New Zealand
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  • 22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved
  • When we think about change we often think of sudden and unpredictable events. Something we are subject to, something out of our control. The reality is that while making exact predictions can be difficult with enough information we can glean some sense of order from the chaos around us.For example, if we consider the quarterly GDP rates for Australia over the last 40 years a pattern emerges. A business cycle that when recognized can be used by business leaders to plan ahead to be prepared. As my wife is fond of saying – luck is just good preparation that allows us to capitalise on an opportunities.
  • Just like the business cycles of the macro-economic environment, there are also patterns and cycles that exist within the ICT industry.For example, there is the ICT Asset Renewal Cycle driven by what Longhaus calls the “Big Reset” that occurred around 2000. The Big Reset actually made ICT spending more predictable. Unlike the preceding 30 years where ICT asset cycles were characterized by timing of technology adoption by industry verticals, Y2K artificially brought almost all organizations onto a single asset renewal cycle.As you can see once we take account the typical useful life of ICT assets (typically 3-5 years), plus the renewal planning that occurs to address this you can see we’ve already experienced much of the asset replacement activity already. What is next is the bedding down of these assets into an effective and stable environment of keeping the lights on as many organisations begin the process of looking forward into the renewal of their core business applications that in Y2K were often not replaced, but merely patched.
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved
  • Self ActualisationCreativitySpontaneityEsteem NeedsConfidenceAchievementSocial NeedsFriendship and familySafety NeedsPersonal securityPhysiological NeedsFood and waterAs the harder times set in, Maslow’s theory says we focus on the more basic needs. Only when those are not threatened or in abundance are we able to focus on higher order needs and pursuits. 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved
  • Recent research by Robert Urwiler and Mark Frolick has shown that organisations exhibit similar “needs” concepts that translate to perceived value and behaviour. Niether Urwiler or Frolick link these needs to economic cycles, but it is Longhaus’ experience that the focus of organisation on ICT changes with the times.A classic example if the shift of CIOs within the organisation structure. At the start of the economic cycle when times are booming and capital investment by the board is high they report to the CEO. By the of the cycle when ICT is treated as a pure commodity and business as usual the CIO may find themselves as simply the 2IC to the CFO.What is interesting is that given the current stage of the cycle Longhaus is seeing a return to the Stability & Security level.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved
  • COBIT includes the Val IT Framework.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved

Reinventing for change: The challenges of predictable ICT in Australia and New Zealand Reinventing for change: The challenges of predictable ICT in Australia and New Zealand Presentation Transcript

  • Reinventing for change The challenges of predictable ICT in Australia and New Zealand Sam Higgins Research Director August 2008 Copyright © 2008 Longhaus Pty Ltd
  • Who is Longhaus? • Longhaus is a research publisher and • Strong international and technology advisory company with a specialty in research experience technology • Leading industry voice in press and • We publish business reports and media broadsheets advise executives and management across Australia's government, business, and consumer sectors on the application • Queensland founded and headquartered and direction of technology – Website: 5,000+ site visits per month • Our directional research reports are – Website: 12,000+ page visits per month utilised by both SME and major – Website: 7-10 minutes per visit organisations across the world – Blog: 3,500+ hits – Newsletter: 2,500+ distribution per month • Through our AAA (Access All Areas) – Downloads: 1,000+ per month advisory service we answer big business – 8,400+ SlideShare visits questions that most often pertain to customer, product or services markets – strong focus on government 2 Commercial-in-confidence
  • Research Focus 3 Commercial-in-confidence
  • Outline • What patterns exist to help CEOs and CIOs predict changes? • How does change impact the value of ICT service delivery? • What are the business and technical challenges currently facing CIOs? • How should ICT organisations respond to these challenges? • Which strategies are being used in the local market? 4 Commercial-in-confidence
  • Predictability in business is hard, but patterns help CEOs plan ahead 9 8 7 6 5 Forecast 4 3 2 1 0 -1 Average long -2 business cycle is 34 quarters -3 (8 1/2 years) 36 qtrs. 34 qtrs. 34 qtrs. 33 qtrs. 38 qtrs. 33 qtrs. -4 -5 Annual real GDP growth (%) progressed in quarters to September 2007 (and forecast to June 2011) -6 1962 1966 1970 1974 1978 1982 1984 1986 1988 1992 1994 1996 2000 2004 2006 2008 2010 2012 2014 2016 2018 2020 1960 1964 1968 1972 1976 1980 1990 1998 2002 Source: Paul Ruthven of IBISWorld 07/12/07
  • And savvy CIOs recognise that patterns also exist for the “ business of ICT” Post Y2K Synchronised ICT Asset Renewal Cycle Asset Replacement Renewal Business Planning As Usual 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Longhaus 6 Commercial-in-confidence
  • Longhaus’ Annual ICT Spending & Priorities Study aims to help organisations understanding these cycles • Sampling 100+ ICT decision makers from over 6000 medium to large firms • Giving us a 95% confidence level with a MOE of +/-10% • Australian and New Zealand firms: – Allocate 5% of revenue on ICT – Spend 12% more on ICT in 2008 – Increase new investment by 16% Lights On: 80%  84% • A real average increase of only 3.2% New Investments: 20%  16% 7 Commercial-in-confidence
  • But as business and ICT cycles change so does the perceived “value of ICT” • Just as personal needs change with economic cycles, so the IT needs focus of an enterprise change The Hierarchy of Personal • Self Actualisation Needs • Esteem Needs • Social Needs • Safety Needs • Physiological Needs Source: Abraham Maslow, 1943 8 Commercial-in-confidence
  • But as business and ICT cycles change so does the perceived “value of ICT” • Just as personal needs change with economic cycles, so the IT needs focus of an enterprise change The IT Value • Paradigm Shifting Hierarchy • Competitive Differentiation • Integrated Information • Stability & Security • Infrastructure & Connectivity Source: Robert Urwiler & Mark Frolick, 2008 9 Commercial-in-confidence
  • The result is that CIOs face a raft of challenges both business and technical 10 Commercial-in-confidence
  • Addressing these challenges requires a balanced approach to planning and provision of ICT services The Business operation of ICT Use of ICT in the Business Provision of ICT for the Business 11 Commercial-in-confidence
  • Service management remains a key strategy locally for improving the business of ICT 12 Commercial-in-confidence
  • But many organisations focus on project management ahead of service management 13 Commercial-in-confidence
  • Provisioning of ICT for the business remains hardware focused, but this is changing 14 Commercial-in-confidence
  • Open source, SaaS and Virtualisation are emerging as mainstream ICT strategies 15 Commercial-in-confidence
  • However, Longhaus cautions organisations to look beyond the hype • Open source offers alternatives, but… – Strong open source solutions remain commodity focused • Virtualisation offers savings through utilisation, but… – Virtual server sprawl now rivals physical sprawl • Service-oriented architecture offers flexibility, but… – SOA creep means many connections are unmanaged • Software-as-a-Service offers ease of consumption, but… – Data integration and data leakage prevention become difficult 16 Commercial-in-confidence
  • Wrapping Up • Cycles do exist that provide predictability in the face of seemingly constant change • Over time the current and desired level of ICT value changes in response to these cycles • Successfully meeting the challenge of change requires planning and activities across the three dimensions of ICT delivery • Strategies focused on application renewal will take centre stage in Australia and New Zealand in 2009 17 Commercial-in-confidence
  • Selected Source Material • Successful Portfolio Management Unifies ICT Management Practices, Longview, September 2006 • The Three dimensions of ICT Planning for Queensland Government CIOs, Brief, November 2007 • Post-Y2K bubble looms as an asset replacement train wreck, Longview, December 2006 • Managing not implementing SOA becomes the real challenge, Longview, December 2006 • Business culture is the next barrier to second generation SOA projects, Longview, December 2007 • IT Spending and Priorities Study 2008, February 2008 18 Commercial-in-confidence
  • Thank you Longhaus Head Office Level 30, AMP Place 10 Eagle Street Brisbane QLD 4000 Longhaus Research Centre 7/269 Abbotsford Road Bowen Hills QLD 4006 p: +61 7 3868 4796 f: +61 7 3303 8445 inquiry@longhaus.com 19 Commercial-in-confidence