Welcome to the CIO Vision Series and congratulations to Cesare Tizi, who was awarded the ZDNet Australia CIO of the Year award for 2007. Tizi was recognised for the work he did while successfully leading Australia's largest energy supplier, AGL Energy, through a period of intense change.
Cesare, describe the IT challenges you faced at AGL.
Tizi: AGL was -- how's a nice way of putting it? Quite a challenge! AGL's an organisation that ... was growing at an amazing rate. When I joined AGL, we had pretty much every technology you could shake a stick at: we had mainframes; mid-range, Wintel-type platforms; we had eight significant billing systems, all running and all quite tightly integrated with all the various components of AGL.
However, when we modelled the cost of that, it was horrific. What we were paying for in all the diversity of licenses, the amount of people ... to maintain the knowledge across all different technologies, it was just too great. And one of the ways to get costs under control ... was to simplify -- that seems to be the Holy Grail these days.
I remember when I sat down with Greg Martin, the CEO at the time. And Greg didn't pull any punches: he said, "We've got this; it's big", and IT's a big part of it, and it seems unwieldy. Because it was so complex and unwieldy, he said, "I can't put out new products ... every time I want to change, it seems to be so horrifically complicated. Every time we make a change things go wrong because it's so complicated."
There was no answer: we had to simplify it. I remember the diagram we had for the technologies: it was a very big diagram. In fact, they had to get a plotter to print it out: it wouldn't even go on most of their printers. The obvious thing, without doubt, was the billing systems and the main business systems around that area. There were too many of them. They were big and they were complex. Some of them were running out of support; some of them were on very old base technology.
So the strategy basically said they had to replace all of those in one big hit. Scary challenge, but that was the challenge.
Which technologies really excite you?
Tizi: If I go back to the Transurban days: the e-TAG, which you see in Sydney quite a bit now but kicked off in Melbourne, is basically a giant RFID -- a very sophisticated and advanced one.
With the emergence of RFIDs, the small, low-cost devices that are being installed on consumer goods, is exciting technology. Now, I don't know whether you're aware, just recently, there's a new standard of RFIDs that's come out. It's a standard that's been accepted by a whole lot of organisations around the world, including Wal-Mart, which is insisting on that standard for its future platforms.
Now, what RFIDs can give you, at very, very low cost, is the ability to track real-world objects. Whether it's bags going through an airport -- Milan airport is planning to install RFIDs on its luggage -- or whether it's WalMart tracking goods coming in to the store, the ability to track real-world objects opens up unbelievable business opportunities.
The example that someone gave me was the idea of a supermarket where every item is RFID-tagged. As you walk through an RFID reader -- with your trolley full -- it reads all the items and gives you a tallied list and price.
Just picture that! Initially, the reaction is "I feel sorry for the checkout ladies." I appreciate that; I understand that. However, the efficiency, the effectiveness, the accuracy, of that to track real-world items is unbelievable.
I can see RFID becoming a key component of security. I know there's a lot of talk about biometrics. But there's a real problem with biometrics, and it's just not quite getting there on that. But RFID possibilities are quite enormous. So that technology really excites me.
How did you secure the IT infrastructure of Australia's largest energy firm?
Tizi: It's a big challenge! One of the dilemmas with four million customers is that you carry a lot of credit cards in your system. They're stored in databases and although they are encrypted, the risks of someone harvesting those credit cards -- through all sorts of means, both internally and externally -- is very, very high.
In all the IT teams I've had, I've never outsourced security. I've outsourced the role of auditing security, but never the planning and thinking and strategising of security on there.
Training and education is a big part of it -- before you start electronic security. You have to make sure that people are aware of the significance of the information that's available. It starts with the IT team. When I join an organisation, I tell my IT team -- especially the people who are administrators -- that they are privileged people who have access to a lot of things and they need to take that privilege very, very seriously. Encryption is an obvious must-have on the key information. Understanding the privacy codes is a big part of it
Making the business aware of what the implications were if you have a breach and having a plan if that happens -- in the sense of how to manage the media, how to manage the situation. I think [access] security is pretty well managed with the technology that's provided by a lot of the directory-services companies. But, when it gets beyond that, to the privacy data, that's the part we have to put a lot of focus on.
Australia is debating the possible need for data-disclosure laws, so that, if there is a breach, then the company has to come out and say "We've lost this many credit cards" -- what do you think of that?
Tizi: I think it's a fantastic idea. I think you have to. I think companies -- because of the financial effects they'd have if they declared something like that -- tend to delay the announcement. I'm not picking on anyone in particular. But there's a temptation to do that and to manage the media.
[A breach] destroys confidence ... and you don't want things that destroy the customers' confidence in their institutions. However, if something does happen, it has to be declared. I think it's the right thing to do.
I am going to throw a few buzzwords at you, let me know how these technologies have affected your business: Virtualisation.
Tizi: I love it. First thing is it just gets rid of the clutter in the data centres. Secondly, it gets rid of all the wasted capacity, be it CPU, memory, or disk storage. In AGL, as well as in Transurban, we moved pretty quickly towards a virtualised platform for CPU and for storage.
The other thing, too: it aids my ability to deploy quickly. A virtualised environment is much easier to deploy a new app, or a new environment for an app, than a non-virtualised environment. My data centres typically have always been externally hosted. So, with virtualisation, management's a lot easier. You don't have to be there on the ground to plug and unplug. I don't actually miss the days of stacks and stacks of servers sitting on shelves.
I know that virtualisation reduces the amount of energy being used by data centres. Coming from the energy industry, I'm very conscious of greenhouse gases and sustainable models for energy consumption. And data centres are tremendous users of energy. Now, the number of servers sitting idle still generates a lot of heat and uses a lot of electricity. The amount of air-conditioning that goes into those things.
The virtualisation, combined with some of the low-energy CPUs that are coming out of the big CPU manufacturers, I think, will do a lot towards reducing energy consumption at data centres. Less heat, also, means less air-conditioning. So I see positive from virtualisation. It's still an expensive technology in some ways. Some organisations probably can't quite get there. But, if the application is hosted, does it matter?
Tizi: One of the problems we've run into with our own data centres at AGL -- and our data centres in Transurban -- is we ran out of capacity in the building for electricity. The capacity was being drawn up by the immense density of servers, which generate a lot of heat and require a lot of air-conditioning. The energy consumption of buildings is actually going up. On desks we're putting in bigger monitors -- although they're going to LCDs, which are better than the old CRTs -- but we're just putting in more and more.
Green issues are becoming quite significant. IT has become one of the biggest consumers of electricity, without a doubt. Doing things like having servers in environmentally controlled, refrigerated, cold computer rooms, while the power supply is outside, makes a lot of sense. You want to cool is the CPU, you don't want to cool the power supply; that can run hot. So, when I see organisations coming up with lower-energy chips, lower-energy power supplies ... I think that's fantastic. I really believe in that.
I'm an environmentalist type, I'll declare right now. I have two daughters who believe in me doing the right thing for the environment. I'm very keen to do my bit.
...Voice over IP.
Tizi: I love VoIP technology for a number of reasons, but not necessarily for the quality. The first thing I've experienced is that, unless it's a particularly high-quality system that is well installed and well configured, with more than enough bandwidth across all the connections, quality suffers. And you have to watch that, because, in the end, you're in a business where you're communicating with the customer. If they can't understand what you're saying, you have a problem.
The first really great thing about VoIP was plugging the phone directly into the wall, into the network socket -- and then plugging the PC into the phone. That was a real win because I thought "That was just great -- one less socket, save money, less complexity!" There was a risk there that, if one part failed, then the other one failed as well; but that wasn't too bad.
The second thing -- and I didn't manage to achieve this -- was that we all carried around an AGL ID card that had a a six-digit employee number. I would have loved the ID of the employee number to be the same number as their phone extension. So voice over IP gives you the ability of effectively indirect addressing phones, and that was great. I had an office in Melbourne and Sydney, so therefore I had two offices and two phones. But I could change -- whatever office I was in, one button and I could make that phone my phone. That was nice.
Another feature, which we didn't implement but I would have loved to have, was to have my voicemail sent as a wave file as an e-mail. That could arrive on my BlackBerry, which I could play. I kind of liked that possibility. The incredible flexibility of those phones is what really makes voice over IP a real terrific tool of technology.
But don't underestimate the cost and the time it takes to implement it. It's big, especially if you're going to do it in a call centre environment. To get the reliability and the functionality in a call centre can be quite challenging.
Tizi: Look, I don't have much to say about it. I've used it. I like the interface. It's big. It requires a lot of CPU. It's a real challenge.
Let's take this full circle, back to the business. It's a challenge moving the business from, say, Windows 2000 to Windows XP and getting enough value to justify that, let alone moving it to another environment -- especially when half your organisation don't need much more than e-mail and the basic application.
I think eventually people will all move to Vista, as they all moved to XP from the Windows 2000 environment and the ME environment. It might take longer than Microsoft thought it might take. The big decision a lot of corporations will be making now that -- certainly we were at AGL where we had a lot of Windows 2000 -- was whether we'd miss XP and go straight to Vista. But it is hard to get the cost models right.
How important is mobile computing?
Tizi: Let me have a look at it from the point of view of the pure consumer. This is a person that uses his mobile device for everything: weekends, night, daytime; at the office as well. From that point of view, it is extremely important. The ability to check your e-mail, SMS or message efficiently on your handheld device, is incredibly important because we're very mobile.
My management style is "walk around". I'm not at my desk a lot; I travel a lot as well and ability to communicate without using your voice -- without interrupting a conversation or meeting -- I think is very important. The ability to aggregate messaging with calendaring and address book is very important. It is essential, because it actually combines my e-mail, my phone, my address book, and that's pretty much all the components.
I'm still amazed at the cost of mobile Internet: it's far too high; there are plans, but it's still too high. In fact, it's at a level where you're reluctant to use it. It doesn't encourage use, it actually discourages use. Because it's high, it becomes a bit of a problem when you're trying to introduce it as a component of a corporate package.
So it has many, many challenges but a lot of it is about the device -- the screen has to be good: the right size; the right level of brightness and contrast. The unit has to have the right battery life, although that seems to be pretty good these days.
In the end, it has to be snappy. I had a very old, early version of a non-BlackBerry device -- basically a Pocket PC. It was a very early version; I'll admit that. And it frustrated me enormously. I used to dial a number on it to make a phone call, and it was catching up with the dialling. So I didn't know where I was.
What are your key measures for success?
Tizi: Ah. It's a simple one actually. One of the things I learnt is that the old model of taking a business strategy and tossing it over IT, and then IT building a strategy that delivers that business strategy, doesn't work. One of the things I've learned over the last many years is that the way to get a better IT environment and be successful in IT is not to create a standalone IT strategy only. I do create a standalone IT strategy; but it's very, very much around platforms and technologies.
To be honest: the business is not interested in IT. However, what I do is insert and work with the business -- actually go to the business and try to embed IT components into its business strategy. Within the business strategy, there are IT elements, which make sure the business strategy gets delivered -- perhaps more efficiently, more timely, and with less risk.
Could you give us an example?
Tizi: Customer-relationship management (CRM) is a good example. Is CRM about managing customers from the point of view of recording their interactions? Well, yes, it is, partly. But, then, when you go into the business and say "Why do we have CRM?" You quickly realise that the reason is that they want a single-customer view. The IT strategy wouldn't pick that up.
What does single-customer view mean? Well, it means that, no matter which billing system, account, branch, whatever -- if the customer gives us his name or his mobile-phone number or something, we'll find that customer and know everything about him.
Now, to deliver that, you need to have a uniform CRM arrangement, where that CRM system front-ends, technology-wise, all your channels, be they the Web and call centres. You put that not in the IT strategy but in the business strategy, so you have a unified channel strategy, which is a technological thing, in your business strategy.
Now, you can deliver value, because you have delivered not just a CRM system, which records interactions, but also a system that uses technology to create that seamless interaction with the customer, which reduces call centre time, reduces average handling time of the customer.
I'll go back to the original question: how do you know you're successful?
Quite often, quite regularly, there are technical-strategy meetings and there are strategy meetings. When they have their strategy meeting and you get a phone call from the head of the business who says, "Chez, can you or one of your boys come and join us for our off-site strategy meeting?" -- now you know you're successful because what they've done is acknowledge that IT is important and they believe it's actually added some value.
So, when I get that phone call, I know I've been successful as CIO.