When Tim Catley joined Sydney Water Corporation as its new chief information officer back in 2005, he had $17 million to 'keep the lights on' — the group's board was reeling from a failed billing system implementation in 2001. Today, armed with a $60 million budget, Catley is taking on transformation again, only this time with strong governance.
Catley joined the state-owned corporation during a tough period for its IT department. "The credibility of the business was at an all-time low," Catley recently told delegates at Gartner's 2008 Symposium in Sydney, where he detailed Sydney Water's three-year IT makeover.
"There was no confidence that we could deliver. And there was no trust between the business and IT. So [the relationship] was not quite toxic, but not great either," he says.
That lack of trust was what was behind Sydney Water's paltry IT budget of $8.4 million in 2003. By 2005 the budget had doubled to $17.2 million, reflecting some growth in confidence. But this year, Catley has $60 million to work with; mostly to remediate what he says was a decade of underinvestment, which left the organisation littered with small contracts and a raft of ageing applications.
We built a simple 100-day plan that everyone could subscribe to and we started to execute on it. We focused on building confidence that we could deliver, so that we could extend beyond keeping the lights on.
Sydney Water CIO Tim Catley
"We should have been spending around $25 million to $30 million a year," Catley explains to ZDNet.com.au. "We had been really under-spending for around 10 years and so we have had a significant amount of remediation to do."
A culture of poor governance and planning for IT projects had culminated in a highly publicised failed billing system implementation in 2001, which not only spooked Sydney Water's view of IT, but sent ripples across the entire state government.
Under a deal signed-off by then director of Sydney Water, Michael Costa, PriceWaterhouseCoopers had been contracted to build its Customer Information and Billing System (CIBS). The project was estimated to cost $38 million, but blew out to $138 million and ended up with Sydney Water deflecting blame to PWC as it wrote off $61 million.
"We walked away from a multi-million dollar investment," Catley says of the billing system project. "That rocked confidence from the board down."
"We really didn't have much of a strategy. Planning, at best, was year to year. Because we had no discipline, priorities changed all the time. It was really hard to get good delivery. And we were pretty inefficient," he says.
Having entered such an environment, Catley understandably wanted to change the board's perception that IT could not deliver.
"We built a simple 100-day plan that everyone could subscribe to and we started to execute on it," he says. "We focused on building confidence that we could deliver, so that we could extend beyond keeping the lights on."
To reinforce the idea that IT could do more than keep the lights on, Catley turned the department's approach to intellectual property on its head. "Pre-2005 we used to outsource our really IP-intensive processes," he says. "What we've done over the last couple of years is in-source those high valued-add tasks. We moved very much to an organisation model that tried to create intellectual property within IT."
This has meant shaping the department's capabilities around Sydney Water's business process groups: asset control, such as maintenance scheduling; customer management and billing systems; and corporate processes, such as human resources and finance. "That allowed us to build IP and knowledge about those processes and business units," he says. "That means our solutions architects really understand the application road map in their areas — how the applications connect with each other and how they interact with infrastructure."
Catley admits, however, that change hasn't been all smooth sailing. Some staff dissatisfied at the changes had left, while the tight labour market in 2006 foiled Catley's plan to fill senior roles first, which, if it had worked, would have allowed them to shape the team around them.
The department has largely moved past this phase now, and consists of around 180 staff, many of which come from Sydney Water's IT service providers, Fujitsu and Oakton. The joint workforce has three core units: projects, IT services, and the help desk.
Recent user and customer surveys still show there is room for improvement, but by and large feedback has indicated a growing confidence in the IT department's ability to deliver projects and services, according to Catley.
An indication that confidence has returned is that today the majority of expenditure is discretionary, says Catley. A case in point is the this year's rollout of IBM's Maximo scheduling system for maintenance staff, which came with around 600 new rugged notebooks for remote access.
"The majority of investment now is actually discretionary investment — around improving the business, and making us more efficient. That's been a really important to the transformation. It's a validation that IT can deliver," he says.
Governance now the focus
The shift toward discretionary investment has forced Catley to show his hand on the issue of project governance. It had been a key point of failure in the CIBS project, which auditors had noted lacked adequate documentation of processes and actions taken throughout the project.
"Now governance is the big focus. We're better at delivery, we've created an investment road map and a new set of governance processes over the top of it. The challenge, now that we have grown, is that we are still doing the right things," he says.
Now governance is the big focus. We're better at delivery, we've created an investment road map and a new set of governance processes over the top of it.
Sydney Water CIO Tim Catley
Catley's approach to governance over the next 12 months will be critical as the board sweats over the possibility of another CIBS. One of the biggest tasks for the year is ahead in the coming week as he and the board select an integrator to implement Sydney Water's Siebel-based CRM system.
"Probably the biggest decision I need to make is to pick someone to help us get our CRM system up and running," he says.
The Siebel system will replace a raft of ageing applications which have been used to manage customer services. The new system is planned to improve customers' self-service options, as well as feed data back into its business intelligence platform that Catley's team have worked on since 2006.
The CRM system is also part of Sydney Water's attempt to reduce the number of "atomised" vendor relationships it has maintained over the years, which had caused it problems in the past, particularly around defining responsibilities when something went wrong.
"We've tended to have lots of small relationships, which was really hard to manage," says Catley. "And there is still the challenge of rolling those contracts into larger contracts, which will move us from 15 atomised contracts to around three contracts." While he will attempt to simplify those contracts Catley said he would never rely on a single outsourcing partner.
What's in store?
As a state-owned regulated entity, Sydney Water's funding is guaranteed, which means it can escape much of the turmoil related to the global economy that is currently affecting businesses.
It has been argued that an economic downturn could make open source software more appealing, however that is unlikely in the case of Sydney Water, according to Catley, who said that Microsoft was far too entrenched to even consider open source alternatives.
"Look, we haven't done much in open source at the moment. It's not something we have perceived there is a lot of value in at the moment," he said. "And while we have more than enough Windows servers to keep us happy, it's because we have to have Windows, because we have products that want to run there. We're definitely not going down the path of loading OpenOffice at the desktop level. Microsoft will remain there for a while," said Catley.
Also off the cards for Sydney Water is Windows Vista. "I think we might ... wait for 7 to come along," he said. "I don't think the threat of hardware vendors pulling support for XP is going to eventuate because now that they've announced 7 the heat will go out of it. And for us, you get some benefits out of Vista, like network roaming and better power management, but it's not really enough for us to make the move."
However the weak Australian dollar has already impacted the bottom line, said Catley, and could spell a change in how the business treats expenditure on hardware. "What we are experiencing is that people who are based in the US are putting their costs up. So we might get less for our dollar. Because of the way the dollar has gone Cisco have just done a 12 per cent price rise across the board, while Sun has done 9 per cent," he said, adding that it could see Sydney Water capitalising its hardware expenditure in the future.
But while hardware prices give a clear indication of future costs, the labour market, which hampered his top-down recruitment strategy, has been harder to judge.
"I can't figure out the labour market at the moment," said Catley. "I know some organisations are letting people go, but I'm not getting any consistent feedback. I'll talk to some agents who say that it hasn't come off at all and I'll talk to others who say something different. My general view, regardless if the market is really tight or has a lot of stock on it, it's still really hard to get really good people."
Catley's story is not unusual in government circles; IT projects gone wrong have spooked plenty into taking a cautious approach to IT. But it does emphasise the importance of strong governance in ensuring IT departments are run well in future.