Agents of Change

As the region steps up to the challenges and opportunities of the information economy the IT manager and his IT department are expected to undergo a fundamental change. It’s now up to you to deliver real business value — are you up to it?

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By  Greg Wilson Published  May 29, 2001

Agents of Change|~||~||~|The IT manager’s job description is undergoing a fundamental change as organisations revise the role of information technology within the organisation. Next generation IT managers are going to be expected to quote last year’s revenues, rattle off the mission statements and illustrate how IT can drive the business. IT department heads unable to do these simple tasks will merely illustrate the insular nature of their
IT department from the rest of the business organisation.

The evolving role of the IT manager is of course going hand-in-hand with the move to place IT at the core of the business. Increasingly the IT department is expected to align at least part of its organisation with the company’s overall business goals, while continuing to provide support and strategy for the infrastructure that runs the business. In the future the IT manager will play lynchpin role — juggling the rapidly changing business needs and technology environments in an effort to deliver a competitive edge across the board.

For the IT department to make the successful leap to the core of any business it’s going to require a fundamental change in how the IT department looks, functions and interacts with the rest of the business organisation. The IT department can no longer afford to spend time managing the chaos brought by incremental, ad-hoc investments in information technology. “Many IT departments have been battling to regain control of the IT environment since the invention of the PC,” says Evan Powell, group general manager for IT with Dubai-based Al Tayer Group. IT departments need to regain control and start “focusing on adding strategic value to the business,” Powell adds.

Building strategic value for the business requires a fundamental shift in responsibilities away from the break/fix services of the past to greater strategic emphasis. IT managers won’t just manage the physical IT infrastructure of a company; they will have to help manage the knowledge assets of a company.
This requires the evolution from IT manager to chief information officer (CIO). CIOs are willing and able to make strategic business decisions in conjunction with the other areas of the business to lower operation costs and increase productivity.
The CIO role is one of “constant change,” says Mohammed Shah, vice president, Royah Company, the former IT division of SAVOLA Group. “The CIO role is impacted by the constant change from both a technical and a business perspective,” he explains.

For IT managers to assume the mantle of ‘agent of change’ within the organisation, they have to go further than simply aligning IT and business strategies — it means the IT department adopting an entrepreneurial approach to the business. “There is a difference between the IT manager and the CIO — the CIO is willing to take risks between the business and technology. It’s no longer about playing safe… we must be agents of change, we must be at the front to drive change,” explains Powell. “We should put ourselves at a much higher level. We have to look at the strategic level, not at the tactical level.”

The leap from IT manager to CIO means fundamentally redefining the relationship between IT and business. Although the position of CIO has been well established within the US and Europe, many local organisations haven’t yet started to move in this direction. Looking around the region, there is little evidence that IT managers have managed the transition to the CIO role. Most IT departments appear to be reacting to change, rather than helping to direct the future business strategy. “Many companies are still taking a segmented approach to projects and trying to resolve immediate problems,” says Iftikhar Nadeem, senior e-business analyst, centre for economic & management systems, with Saudi’s King Fahd University of Petroleum & Minerals (KFUPM).

“Many business here don’t see a compelling reason to alter the structure of their organisation… it’s very hard for them to justify the dollars they are spending on IT,” Nadeem explains.

Also says Nadeem, many of the region’s ERP projects have been approached from this tactical point of view. For example, a financials module has been put in place to introduce greater efficiency into the accounting side of the business, but similar efficiencies haven’t been deployed in other more challenging areas of the business.
“There appears to be little awareness of how to introduce greater value on the back of ERP projects,” says Nadeem. “There doesn’t seem to be much focus on delivering the additional business benefit, such as enhanced customer services, lowering the cost per transaction or streamlining the supply chain,” he adds.

||**||Page 2|~||~||~|But the combined impact of reduced government support, pending World Trade Organisation (WTO) membership, adherence to the GATT accords and the influence of e-business, is changing the competitive environment for businesses in the region, putting such issues at the top of the business agenda. Consequently, businesses will have little choice but make room at the top for the CIO position to help manage and exploit the opportunities presented by IT — regardless of how challenging they are to the organisation.
Some organisations are already moving to fundamentally rewrite the relationship between the IT organisation and the business. Recently, Saudi’s SAVOLA Group, took the decision to spin-off its IT division into a separate and independent entity, called Royah Company. The SAVOLA Group management had early recognition of the critical role of IT and invested in developing the strategy and infrastructure. The formation of Royah was the natural extension of the existing supplier/customer relationship, which had previously determined the delivery of IT services. “Typically the IT area is very insular and they tend to have a distance between the business and with that distance they tend to have a lot of problems in delivering their solutions,” explains Mohammed Shah.

“[Our] IT division was a separate [entity] within the group [with] a very strong focus on having a supplier/customer relationship with the rest of the group. That actually helped us mature as a division, and be much more business and IT focused.”

The supplier/customer relationship has characterised much of the IT infrastructure the group has constructed. Royah Company acts as a shared service provider to the various companies within the SAVOLA Group. Each company within the group separately negotiates a service level agreement between itself and Royah, to govern the delivery of IT services. “We have individual service level agreements with each of our businesses, and they pay a different amount of money depending on the quality of service,” says Shah.

“It’s like an airline, if you stay in economy then you pay a certain price, but if [they] want first class attention and luxury care, then [they] pay a different price. There are different service levels built in to our processes and we need to manage how we provide services against the contracted levels.”

The outsourced relationships are monitored using CA’s Unicenter TNG Advanced Helpdesk module. Shah describes the Unicenter as the “IT department’s application,” enabling the department to automate its own procedures.

Other modules of Unicenter enable the IT department to deliver software over the Web to users in distress and to remotely manage components of the group’s IT infrastructure, which consists of over 3000 IT devices. “Once you have the infrastructure the critical thing is maintaining and monitoring the infrastructure and making sure that your cost of ownership is as efficient as possible,” comments Shah.
“That is the importance of enterprise infrastructure management. We’re using Unicenter to help us manage and sustain our IT infrastructure — our approach here has been to have a strong central management suite.”

A core element to SAVOLA Group’s manageable infrastructure is its ‘shared’ Jeddah-based data centre. The centre hosts the group’s Oracle 11 applications in a high availability environment, powered by HP 9000 V Class servers. The earlier rollout of version 11 of Oracle’s applications has allowed the organisation to ‘break free,” of the client, says Shah. This will be further enhanced when the current ongoing upgrade to 11i is complete, he adds.

“Just like any country needs roads, communications, bridges — businesses also need to have the right infrastructure in place to facilitate the growth and prosperity of its applications, users, environment, and to keep the [total cost of ownership] as low as possible,” explains Shah.

SAVOLA’s standardised infrastructure has also enabled the organisation to streamline its daily business procedures. For example, prior to the group’s migration to Oracle, closing the financial books at the end of every period took about five weeks — now the whole process takes days. Why? The group-wide deployment of Oracle means the company doesn’t have to contend with multiple systems when attempting to gather data and it doesn’t have to address data integrity issues. “We have a single set of standards, a shared data centre, a single highly experienced and trained pool of resources that everybody calls on… the infrastructure is key to success,” says Shah.

||**||Page 3|~||~||~|A simplified, but scalable infrastructure provides the foundation for further changes within the IT organisation. Not only does it provide a vital tool to standardise the delivery of information, but it also implements shared business practices.

Al Tayer Group is also in the process of putting together a simplified infrastructure, to enable greater information flow throughout the organisation. Beginning 18 months ago, Powell has been working on creating a manageable infrastructure, primarily based around Windows 2000 technologies. The most recent step has been to tackle a JD Edwards ERP rollout.

However, the implementation is not just about delivering greater functionality, it’s about changing the very way the 18-company group operates. “We’re not implementing JD Edwards to replace our current applications, if we were going to do that we might as well keep the applications we had. What is important is moving the applications across the areas [of the business],” says Powell.

“[As part of the] to move to JD Edwards we are getting the logistics, the finance and the marketing people together and we’re defining common needs. [We’re] showing them the value of common objectives. [The common objectives] are in place and [the business users] are committed to implementing. The IT department is not there to just implement technology, we’re there to actually change the way the business operates.”

The effectiveness of any CIO is going to rely on the change management skills. Any project that proposes to alter the way a company operates needs to be done in close conjunction with the business community, in order to encourage ownership of a particular system. “Change management is very important and it has two parts: communication, communication, communication, communication — you could say it a 1000 times and it wouldn’t be enough — and training,” says Shah.

According to Amr Taher, IT manager for Saudi Binladin Group’s Operation & Maintenance division, the selection of the implementation team is critical. “Team members should come from both the IT side and the business side… and the team members must be interactive, sharing knowledge and implementation methodology.”

With the majority of the infrastructure work done within SAVOLA, the group has taken the evolution of its IT division further with the spinning off, and formation of Royah Company. The separate company is now planning to deliver its localised Oracle ERP implementation expertise to other companies in the region.

By doing so Royah will be in a stronger position to leverage on ‘economies of scale’ to deliver IT services at a more competitive rate to the SAVOLA companies and its external customers. Also by generating another revenue stream for the group, Royah will be in a stronger position to support the group’s ambitious growth plans. “As we develop another revenue stream we actually start to sustain ourselves better. We’re [also] able to provide our internal organisation with much more competitive rate because of the economics of scale,” says Shah.

For example, “I have a database administrator, but if I can use him across the board — externally as well as internally — then I’m getting better return on that cost, which helps me to actually reduce the overall unit cost.”

Emirates National Oil Company (ENOC) also spun its IT division off at the tail end of last year. Since forming Global Technology Services (GTS) and marketing its Oracle ERP expertise, the business has come rolling in, says ENCO’s group IT manager, V. Shankar Iyer.

GTS, which is also responsible for IT services to the ENOC group of companies has won customers across the region and is in the progress of setting up offices outside Dubai. “All the group activities are outsourced to GTS, but this forms only 30% of GTS business. 70% of GTS revenue comes from outside resources,” comments Iyer. Of that 70%, approximately 50% of it is outside the UAE.“The group gets the best of all worlds, because we are doing projects for different companies we are accumulating a lot of knowledge. With IT there is a very high rate of people leaving. But with this bigger pool, this risk is reduced and that helps us,” he adds.

But just how soon other companies embrace the CIO role continues to be a matter of debate. Some market pundits point to continuing transitory nature of many IT staff in the region as a possible reason for the absence of CIOs in many companies. Even creating the CIO role is going to mark a break from the norm for many companies.

After lacking this step organisations don’t want to see that leap of faith repaid by the CIO leaving in the space of two years. But with competition either from foreign players or local companies becoming a reality for most organisations many more are going to be forced into developing a CIO position. But increasingly if the IT department doesn’t “demonstrate that we are agents of change and if we don’t add value, or show them the money, why should we expect them to say you are important? Now technology has upped the profile of IT dramatically, we need to go beyond that and think what we can do to raise the profile and value [to the business,],” says Powell.

||**||Binladin’s O&M division streamlines IT infrastructure|~||~||~|The Operation & Maintenance (O&M) arm of the Saudi Binladin Group is embracing a web-centric computing model with a comprehensive rollout of thin clients and Oracle 11i. When completed the IT infrastructure project will enable employees to logon to customised workplace portals and begin work wherever they are.

Core to the project is a comprehensive upgrade of O&M’s backend applications; including the deployment of Oracle 11i modules and subsequent integration with its business critical maintenance management system, Maximo. “Both applications are web-enabled, so it was logical to use [a browser] to run our applications,” says Amr Taher, IT manager, with the Operations & Maintenance division.

“The simplest idea was to develop a thin client environment and put everything on the application servers and use the power of the servers. Then users could access the application servers and all of the [network] resources through thin clients. This way, wherever they are, they can just log into our site, and they will always have their desktop available to them,” Taher explains.

The Operations & Maintenance division has deployed Windows 2000 Terminal Server, with a Citrix MetaFrame to manage the thin client devices. When the implementation is completed all the applications — not just the Oracle business applications — will be accessed via the Internet and hosted in the Jeddah-based data centre.

Currently, the project team is tackling the implementation of Oracle’s 11i Human Resources and Financials modules. The project team also intends to tackle the deployment of the Inventory module in the near future. “We’re upgrading to [11i]… to take advantage of the workflow and integrate it with the Maximo maintenance management application,” says Taher.

Although both Oracle and Maximo are web-enabled, integrating the two applications is not going to be easy. O&M is currently working on the integration of the two packages. “We have Oracle applications for all of the business office-related issues. We’re integrating Maximo tightly with Oracle Applications so [our] inventory works between the two. Our [ordering purchase application] is also integrated through Maximo and Oracle,” says Taher.

The coding work needed to integrate Oracle and Maximo will not to disrupt the existing workflow contained within the applications. “The applications establish a business flow… which is normally much better than the existing one,” says Taher. “Customisation disrupts the workflow and creates problems.”

As part infrastructure project, the Operations & Maintenance division has already upgraded its hardware, and is in the processes of revamping its network infrastructure. Currently end users are either connecting to the Internet via virtual private networks, leased lines, or if they are single users, dial-up. “We’re upgrading the network using Nortel switching… and Cisco routers,” says Taher.

Since the beginning of the year, the Jeddah-based data centre has been running Unix-based HP N class servers to power the core business applications. The data centre also has a number of Dell PowerEdge server clusters running Windows 2000 Terminal Server, and hosting Microsoft Office applications and AutoCAD.

The migration to the web-centric environment has required significant training both within the IT department and the end user community within the organisation. According to Taher, it’s important to build a team atmosphere within the implementation team, which should comprise both business and IT personnel.

||**||Gartner Group predicts the emergence of ‘new roles’|~||~||~|The Web demands the close integration of technical expertise and business savvy. But as businesses increasingly move more functions towards the Internet, it’s going to impact traditional organisational structures.

According a Gartner Group report, several previously unheard of positions would be created within companies to specifically to enhance the management and exploit the opportunities generated by IT and the Internet. (See ACN/01/01).

“Enterprises should recognise that the Internet has radically changed the traditional business models and that the critical role for enterprise success in a web-centric business environment is speed, speed, speed,” said Gartner analyst, Ken McGee.

For example, Gartner reported that the role of identifying, searching and capturing data would become the job of a ‘new’ senior level manager in an IT driven enterprise. The role of ‘chief monitoring officer,’ would likely become one of the most important roles within an organisation, stated the Gartner report.

“Such a monitoring executive would have real-time access to every item of data, business process and metric that enters and exits within the enterprise, and will serve as an early warning detection system for the enterprise to react to evolving external and internal environments,” said analyst, Ken McGee.

Other job descriptions are also expected to appear between 2003 and 2010:
E-marketplace manager: Will guide the enterprise through the networked economy.
E-marketing executives: Will focus enterprise sales and advertising strategies from broad to specific markets.
E-dealer makers: Will broker the myriad of supplier/buyer relationships that an enterprise needs.
Customer relationship management executives: Will develop mechanisms to predict changing consumer needs.
Transaction cops: Ensure the integrity of networked deals, especially those done via e-marketplaces.
Human resource executives: Will be responsible for retraining and attracting skilled workers.
E-business integrators: Will transform legacy processes to network economy processes.
Economists: Will perform economic climate tests on the business environment.
Corporate anthologists: Will decipher, diagnose and cultivate the most appropriate corporate culture.

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