Australia turns self-sufficiency into IT ingenuity
(IDG) -- Every year, tourists from around the world flock to Australia's Northern Territory to visit Ayers Rock, an imposing granite monolith that rises dramatically against the sky. The iron in the rock gives it its reddish hue, but it changes color throughout the day as sunlight hits it, turning from a rich tan to a pale orange. The rock has spiritual significance for the Aborigines, but its ability to alter itself is also indicative of a young country in transformation.
In 2001 it will celebrate the centennial of its founding as an independent nation, and in fall 1999 citizens will vote on whether to abolish its status as a member of the British Commonwealth. Australia is in the throes of deciding how quickly it will break from its insular and fiercely independent past and enter the 21st-century global economy.
This exotic nation isn't just a tourist destination anymore. The country imported US$13.7 billion of U.S. goods in 1998, and 1,500 U.S. companies already have operations Down Under. Further, Australia is positioning itself as the next global financial services center, making the leap from a commodity-based economy of wool and mining exports to a producer of technology-based products and services. The explosion of high-tech startups since the deregulation of the telecommunications industry in 1997 is just one example of this trend. If you're not already partnering with the Aussies, just wait. You will be.
Australia's remoteness may have hindered growth in the past, but today information technology and the Internet are bridging the gap between the Aussies and the rest of the world. The country's upcoming generation of CIOs is at the forefront of this revolution. These IT leaders have learned how to make do with less—a trait entrenched in the country's history as a prison colony for English and Irish convicts, and one from which all technology leaders can learn.
Like their American counterparts, Australian CIOs are concerned with aligning IT with the business and managing risk, customer service and electronic commerce—yet their approaches are often more pragmatic, more resourceful and more relationship-driven.
First and foremost, a dearth in local expertise and products forces a conservative approach to IT. High tariffs make hardware extra expensive, so innovation is especially difficult. Nevertheless, Australia cannot afford to fall behind the technology curve if it wants to compete in the global market.
It's a precarious balancing act. The Aussies know they must go global to grow, but they are often hindered by the lack of funding and confidence to do so. How Australians have overcome the barrier of distance and isolation yields valuable lessons for any CIO today. Learning how to be resourceful is a competitive advantage not only domestically but also when business expands to far-flung places.
Australian CIOs are finding creative ways to handle universal challenges like extending IT infrastructure, dealing with poor vendor support and approaching globalization.
To understand how Australians do business today, it helps to know a little history. The pervasive notion of egalitarianism in Australian society, often referred to as giving others a "fair-go," is a 200-year-old legacy. Australia's founders—petty criminals, political nonconformists and murderers—were rejects of British society sent to Australia to start a prison colony and establish a base for the British Empire in Asia. In the territory called New South Wales, they bonded together in solidarity against the oppressive military government and created towns from the dusty earth.
This sense of fairness and respect for others carries over into the business world today. Observers often say Australians are straightforward and strive to achieve win-win results in business dealings. American Loran Fite, CIO of WestPac Banking Corp., one of Australia's four largest banks, has picked up on the subtleties of the local business culture in the five years he's worked in Sydney. Fite thinks the Australian way is more sincere, less arrogant and, from the customer's perspective, far superior to that of Americans. "Americans tend to think of the customer as a revenue stream. Aussies think more in terms of partnership." Fite has even gone so far as to change the title on his business card to "Team Member" (at the urging of his 7-year-old daughter). His staff has a high degree of trust with each other and a cooperative spirit that allows people to make big decisions over pizza and beer. Fite spends less time managing people issues and more time on strategy.
Marianne Broadbent, research director of GartnerGroup Pacific's IT Executive Program in Melbourne, travels frequently to the United States. She observes that since Australian businesspeople are generally less competitive on a personal level than Americans, they tend to create better relationships between business and IT. And since project failures can often be tied to the disconnect between these headstrong groups, American CIOs could use some insight into how to bridge that gap.
A more laid-back attitude and a lack of an American-style "wait your turn" culture may also contribute to the fact that Australians can climb up the corporate ladder quickly. It's not unusual at large organizations to find CIOs under age 40. Take David Simpson, the lively thirtysomething executive vice president and head of IT at Banker's Trust Australia Ltd. (BT). Simpson, who works in a corner cube with a stunning view of Sydney Harbor and the Royal Botanic Gardens, is responsible for IT infrastructure strategy at the A$943 million (US$592 million) wholly owned subsidiary of New York City-based Banker's Trust Corp. (soon to merge with Deutsche Bank AG). "Culturally, people value your input no matter what your age," he says, adding, "You can get thrown into the deep end very quickly."
Simpson dove into the challenges at BT with vigor. Under his leadership, the organization introduced a standard, Microsoft-based desktop PC that has cut support needs in half and lowered the total cost of ownership from $11,000 to $9,000 per head.
Like many thriving, young Australian execs, Simpson has to be wary of being construed a "tall poppy," a cultural label placed on people who flaunt their success, based on the idea that a poppy taller than the others gets chopped down. "I try not to be too political or too smug," Simpson says.
While team-building and interpersonal relationships are second nature to Australians, so is ingenuity. In colonial days, when supplies from Britain were few and far between, Australians resorted to hunting kangaroos in times of desperation. Observes Maurice Newman, chairman of the Australian Stock Exchange, "Innovation and creativity are the upside of the tyranny of distance. When you are left to your own devices, you become very resourceful."
A common challenge for Australians is getting good (or any) support from their hardware and software vendors, mostly U.S. and European companies. Marco Tapia, general manager of IT at P&O Ports Ltd., a stevedoring division of P&O Australia, says American companies often give Australian customers second-class service. "The U.S. offices really don't give a toss about us," he gripes. Even his local IBM representative in Sydney couldn't help him find equipment for his overseas offices, so Tapia had to hunt down the contacts himself.
Lighthearted and frank, Tapia, a Chilean who came to Australia 13 years ago, is getting good at workarounds. As P&O Ports has expanded rapidly in the last five years, with 19 container terminals in and outside Australia, Tapia's information technology staff has the process down to a science. "Now we're in good shape to go to any country and get set up quickly through local contacts," Tapia says cheerfully.
Gail Burke, executive director and head of information services at Macquarie Bank Ltd., a A$664 million (US$417 million) investment bank in Sydney, develops application expertise among her staff and does all customization in-house to adjust for poor vendor support rather than rely on consultants or contractors. She says the support issue usually comes up with makers of niche products, however, rather than major suppliers.
Another hindrance for Aussie CIOs is the expense of deploying technology across a large geographical expanse with a small population. Burke adds that high tariffs can boost hardware costs by 10 percent to 30 percent, and foreign software companies (she wouldn't divulge names) beef up margins. This leaves many CIOs with a wait-and-see attitude toward emerging technologies that stands in stark contrast to the American habit of opening the wallet before really learning about the technology.
Burke led a global desktop standardization strategy at Macquarie, and she says it's difficult to manage expectations among employees in far-flung cities like New York and Singapore who clamor for the latest and greatest gadgets. Nevertheless, she decided to wait for the release of Windows 2000 rather than upgrade the company to Windows 98 last year.
P&O Ports supports its global offices entirely through the Internet rather than expensive leased lines. Despite the company's breakneck growth—five years ago it was purely domestic, but today global business accounts for A$450 million (US$297 million) in revenues—Tapia doesn't foresee a day when he'll need a different solution. "E-mail for monthly reporting works fine," he says.
Even at National Australia Bank Ltd. in Melbourne, which earned A$9.8 billion (US$6.1 billion) in revenues last year providing retail and business banking and investment services worldwide, fancy new technology isn't always the answer to an IT challenge. Faced with the daunting task of integrating the bank's wholesale and retail branches spread across 15 countries in Europe, the United States and Asia, CIO Michael Coomer decided against replacing several legacy systems with a common platform and is installing an Oracle-based data warehouse to distribute the data instead. "To replace all those systems, it would have been five to six years before we saw any benefit," he says.
Peter Weill, an information technology professor and director of the Centre for Management of Information Technology at Melbourne Business School, believes this skepticism toward hyped-up technology is due in part to the difficulty Australian CIOs have in obtaining funding for infrastructure investment. For instance, he says, Australians have been building ERP projects on top of existing hardware for years rather than spending enormous sums on new boxes, as many U.S. organizations have done. Many Australian CIOs don't admit readily that frugality is a cultural commonality, yet there's no mistaking that the mind-set helps companies grow and go global a lot faster.
It's no secret that aussies love to travel, and many work overseas for a few years at some point in their careers. A country full of wanderlust means that Aussies have ample opportunity to check out firsthand what the rest of the world is doing. This is valuable because Australian companies can quickly deploy best practices from overseas and in some cases leapfrog the competition.
For example, Dwight King, the executive director of customer process and information (in effect, the CIO) of the partially privatized telecommunications giant Telstra Corp., says the company looked at the U.S. model of telecommunications deregulation two years ago and recognized some vital mistakes.
"It was too confusing for the customer," says King, an American expatriate and 25-year veteran of Electronic Data Systems Corp. "The customer has to integrate all the services [himself]." Telstra's strategy is to provide everything under the sun—mobile phones, long distance service, Internet access, pay-TV—and package it in one integrated customer bill. Since deregulation opened up the market in 1997, Telstra now has several nimble Australian competitors.
Capitalizing on the work of others by doing things better the second time around is something Australians do well. "We're fast followers," explains National Australia Bank's Coomer. For instance, Australia looked at the confusing mix of digital and analog technologies for mobile phones in the United States and decided to go instead with the European GSM (global system for mobile communication) technology because it is much more ubiquitous. Now Australia is one of the leading countries in per-capita penetration of mobile phones, and its phones can be used not only nationwide but in 55 other countries. Nevertheless, being a follower has its downside. For one, it discourages entrepreneurs from developing and commercializing new technologies because of a defeatist attitude that someone somewhere else will launch it first.
But if history is a guide, the Aussies will overcome this hurdle too. Over the last 15 years, the country has tackled reform with a vengeance, deregulating banking, telecommunications, the post office and utilities; relaxing labor laws and trimming the fat from government. Making the transition from a backwater economy to a diversified, international player is one balancing act after another. Innovate or follow? Break all ties from the Queen or maintain British heritage? As Australia shapes its destiny by debating its constitution and passing tax reforms to promote innovation, the country's distance from the world's financial centers will always be a psychological, if not physical, hindrance to globalization.
Yet progressive thinkers like Newman of the Australian Stock Exchange believe Australia plays an important role in the global economy. He sees the Asian economic flu as a window of opportunity for Australia to help its neighbors and to act as a stabilizing force in the region. As testament to this emerging role, Prime Minister John Howard has committed A$50 million (US$31.4 million) in financial aid over the next three years to improve the Asia-Pacific economy.
Whichever direction Australia heads, you can bet it won't be down a conventional path. "It's the usual 'fortress Australia' thing," shrugs BT's Simpson. "We always want to be different and do it our own way." Perhaps the time is ripe for the tables to turn, for the world's IT leaders to look Down Under for the latest best practices—even though Aussies may tell you, in their characteristically modest way, that they have few to share.
Senior Writer Polly Schneider can be reached at email@example.com. David Simpson photo by Nancy Cohen, Marco Tapia photo by Nancy Cohen.
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