Canadian CIOs are girding their organizations for another tight year as pressure to lower costs and squeeze value from information technology continues unabated.
For Matthew Dunn, CIO at Vancouver-based Intrawest Corp., an operator of four-season resorts, priorities are more business focused
than technology focused, with internal branding of the IT functions and organizations at the top of his list. “”To make IT an effective business partner, we have to think and act like a business within the business,”” he says.
Offering a clear definition of services, clients and measures demonstrating business value and contribution round out his top three.
“”Those are the priorities in IT,”” says Dunn. “”They aren’t technology priorities. Welcome to the 21st century.””
Dunn says what Intrawest spends on IT is dictated by what the business wants to accomplish, not some random percentage. He acknowledges belt-tightening has been the norm of late, but says it hasn’t shaped Intrawest’s strategies. “”What’s shaped our strategies is recognition that our ability to partner effectively and deliver what our business needs are what matters most.”” And say goodbye to bigger projects, he adds. “”We’re after better business projects, not bigger IT budgets.””
For other CIOs, slashed IT spending has been a reality for several years.
David Booth, director of information management with the Workers Compensation Board (WCB) of Alberta in Edmonton, has seen his budget cut for the past four years. “”We are very tightly tied to the workers and the employers,”” he says.
The WCB has seen an increase in the number of injuries in the workplace in the province, and as a result, premiums have gone up. “”It’s difficult to raise your premiums and then at the same time raise your administrative budgets. It’s just politically unpalatable.””
Operationally, Booth says the key thing is to be as homogeneous as possible — get complexity out of the environment. “”We’re down to one network protocol and we have one operating system. That reduces maintenance costs dramatically.””
Regardless of technology, Booth says the focus now is demonstrating the business value to those who hold the purse strings. “”We say, ‘If we don’t do it, these systems will have poor response times. Here’s the business case for those systems.'””
Ted Barnicoat, CIO with Calgary-based Trimac Transportation, says tough times particular to the trucking industry have meant he’s had to do more with less. He expects that reality to persist this year.
Barnicoat has seen his budget slide steadily since 2000. Cutting the payroll is an obvious response to diminishing funds, he says. “”We have certainly deferred investment in things like upgrades of software. What we have not been willing to sacrifice is service levels to our customers,”” says Barnicoat, “”so we have maintained the same service levels that we’ve had in the past but we’ve done it with less people and more automation.””
Trimac’s preference will be shorter rather than longer-term projects in 2003, but there will some exceptions. For example, Barnicoat anticipates a PeopleSoft upgrade (both financials and HR) to the current version in order to maintain vendor support. The potential loss of that support was a selling point to the business, he says, because maintaining it is cheaper than doing it in-house. “”In selling this to our CEO and the board it has been around not just risk management, it has been around the actual physical benefits we are going to get out of this in terms of improved processes because of the Internet base of this product.””
Trimac will also be dealing with process improvement in order to recover the costs of the deployment. “”That is a change in expectation from say 2000,”” Barnicoat says.
Much like transportation, Canada’s aerospace industry has seen its share of tribulation. Robert Proulx, CIO for Bombardier Aerospace, will be dealing with sector-specific challenges as well as a new captain at the Bombardier helm as CN’s Paul Tellier came aboard Jan. 13.
“”We had to reduce our budget through the year,”” says Proulx of 2002. The challenge, he says, was to make good on key deliverables committed to business despite the budget crunching. For now, Proulx expects similar funding for 2003; however, “”if we are to crunch again at the same kind of percentage we did in 2002, we are facing serious issues.””
Aside from staff reduction, Proulx’s strategy to rein in costs is to break down his portfolio into three chunks — operating costs, tactical project investment and strategic investment. The past two years have seen success in reducing operational expenses, he says, by almost 20 per cent per year, and fewer, more focused tactical projects in partnership with the business unit to deliver better bottom line results.
Proulx says the main priority for Bombardier Aerospace is software and hardware consolidation throughout its global operation, followed closely by optimization of business processes. “”We are to get better results with less people. This has been the essence of our strategy for the last two years and we are pursuing the same in 2003.””
Proulx would speculate little on what effect Tellier’s arrival will have on the company’s aerospace unit. “”I think it’s fair to expect that when you bring in new management leadership you expect people to look to make sure we are investing in what is generating results and that’s what we’re all concentrating on — working on the right things.””
Not every IT department is facing frugal funding for 2003. Mike Cuddy, CIO with Concord, Ont.-based Toromont Industries Ltd., a heavy equipment and refrigeration company, has a slightly higher budget than last year. The company will focus on expanding its e-commerce system and initiatives, as well as its customer relationship management system and related initiatives.
Toromont’s IT department is tightly aligned with business, says Cuddy. “”While IT is a separate department on the organization chart, we believe it is not a department, but is integrated throughout our business. We have VP’s of operating units that understand IT, and we have systems analysts and programmers that understand the business.””
That’s an approach Groupe Desjardins General Insurance of Montréal has taken for nearly a decade, according to Pierre Deschenes, senior vice-president of technology. The past two years have been quite busy for his internal IT staff of 175 people as they worked to integrate systems from two acquisitions. That work is 90 per cent complete, he says, so the focus for the coming year will be to revisit the company’s IT strategy.
“”We don’t expect a big increase in our IT budget.”” More likely there will be a slight decrease, says Deschenes, and smaller projects.
Alignment of IT goals with business demands at Groupe Desjardins has been a conscious effort since 1994. “”Since that time, each and every project is decided at the executive committee, and all of these projects are to be in line with the strategic plan.””
This model will set the tone for the year, rather than a technological silver bullet or large-scale projects, says Bertrand Garnier, executive consultant at Compass Management Consulting based in Montréal.
The primary priorities for most CIOs will be on operational excellence, and smaller and higher impact projects, he says, and those projects will be driven from the CEO’s desk and, ideally, cascade down.
For Intrawest’s Dunn, it’s about finding what works for his organization. “”Enterprise IT operates as a service business within the company. The business unit’s IT resources are the critical ‘local partners’ in this delivery chain,”” he says, “”and they are leading the way at business/IT alignment.””