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Profile: Leading edge Australian companies

Sometimes you just must have the latest technology, and swallow the associated risks of being the first to use it. We talk to the companies that couldn't wait.



Sometimes you just must have the latest technology, and swallow the associated risks of being the first to use it. We talk to the companies that couldn't wait.


Contents
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

Rule number one when buying technology, is to only use what has been tried and tested. Being the first company to implement the latest technology can seriously backfire, as you effectively become a "tester" rather than a "user".

However, as with all rules, there is an exception -- if the technology in question will be a business differentiator, then sometimes you can not afford to wait and it is worth taking the associated risks. In the first article of what will be an ongoing series in Technology & Business, we profile companies that couldn't wait for the tried and tested -- companies on the bleeding edge of technology.

Virtual Finance Australia
Virtual Finance Australia (VFA) has been in business since 1998, arranging many different types of financing for its clients, from home loans and debt consolidation to commercial loans and equipment or construction finance. More than AU$200 million of finance is currently under its management.

Clients are referred to the company by a network including major real estate agencies, accountants, financial planners, and insurance companies -- VFA needed a way of providing these people with secure access to its custom-built CRM system.

Managing director Tony Bulic tried Citrix Metaframe and Microsoft Windows Terminal Services, but said they were too cumbersome and presented too many problems. The company now uses a ThinPoint server appliance from NetLeverage. This device makes Windows XP and 2000 applications available to thin clients without requiring Terminal Server or Citrix.

It's common for appliances to be based on Intel processors, but NetLeverage uses the inexpensive Philips TriMedia processor, which is normally found in products such as CD or DVD players. The "secret sauce" is a compiler developed by NetLeverage's founder, CTO, and CEO Steven Hasani, that harnesses the processor's four stages in parallel, resulting in performance comparable to a 2.4GHz Pentium Xeon, according to the company.

VFA's system has a backend application server running the CRM application plus a single client running on an inexpensive PC. The ThinPoint shares that client among up to 40 concurrent users. Hasani points out that the client PC -- not the ThinPoint -- is the source of the 40-user limitation, and that an additional PC is needed for every 40 concurrent users. The constraint on the ThinPoint is bandwidth rather than throughput. Hassan estimates that with this application a single ThinPoint could service around 1000 concurrent users (the theoretical maximum is 10,240 users). That said, he suggests most organisations would install a second ThinPoint in a high-availability configuration long before that limit was reached. "It's a very scalable environment," he says.

"ThinPoint is very easy to use and very adaptable to my business," says Bulic. Adding users to the Citrix system was "like pulling teeth" but very simple with ThinPoint. NetLeverage sells VFA the exact number of licences it needs, rather than blocks of licences that typically remain under-utilised, he says. (In fact, ThinPoint CALs are sold in blocks of three, but that's sufficiently fine-grained for most purposes.) This is especially important for VFA, as it expects to grow from the current 1500 users to 10,000 in around six months. That sounds rapid, but signing up a single estate agency chain can bring in thousands of users in one go. "The beauty of this is that I only pay for what I use," says Bulic. Citrix is more appropriate for businesses that are large enough to employ their own technical staff, he suggests.

The ThinPoint delivered 100 percent uptime in the two months between installation and our interview. "It didn't miss a beat -- it's working brilliantly," says Bulic. "It's a thousand times better than Citrix or Terminal Services... It's the most robust system I've used for remote access."

He's clearly a very satisfied customer, but what made him decide to take a chance on a relatively unknown product and supplier? Bulic says all his questions were professionally answered by Hasani ("the man deserves every praise" he says), and the equipment was provided on a 14-day free trial. That latter point was an important one, as Bulic was tired of buying hardware and software "A startup is the hardest thing to do," says Chris Howells, consultant at NetLeverage. It's necessary to provide superior features, a better price, or both, and to "over service" clients from the outset, for example through "try-before-you-buy" arrangements.

The same technology is used in NetLeverage's NetPoint and wwWebGuard products. NetPoint combines firewall, antivirus, anti-spam, file server, Web server, and mail server in a single appliance. wwWebGuard provides Web content filtering and access control according to user or computer. Taking into account the price, reliability, and ease of operation: "You can't go past ThinPoint," says Bulic. "It's brilliant -- I speak from the heart." Servcorp


Contents
Introduction
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

Servcorp operates serviced and virtual offices around Australia and globally, including cities in New Zealand, Japan, China, Malaysia, Singapore, Thailand, France, Belgium, and the United Arab Emrites. Marcus Moufarrige, general manager and CIO of Servcorp Asia, says the company started investigating voice over IP (VoIP) in 2000 because "we were looking for innovative ways to manage our communications".

In particular, the company was looking for ways to provide its clients with a competitive advantage from the best communications services, and to gain full control over the management of its communications, which wasn't possible with the traditional PABXs. In fact, the incumbent suppliers' reluctance to provide all the information Servcorp required -- the company handles its own installation and development work -- was the reason it started looking further afield.

"We worked on it for two years to get it right."
The first purchases were made in 2001, but deployment didn't begin until 2002. "We worked on it for two years to get it right," says Moufarrige. "No one designs systems for our business," he adds.

Because of this, Servcorp likes to get in early and do its own development work. Standard enterprise systems are not appropriate for Servcorp's multi-tenanted premises where each line must be answered in the appropriate client's name, for example. Moufarrige says Cisco provided excellent support, and Servcorp ended up with "a really futuristic multi-tenant environment telephony product."

On average, clients have 14-month leases with Servcorp. They are typically branch offices of multinational companies, but other 1-10 person business are also represented. Flexibility is consequently important, and that's what IP telephony provides. Receptionists are presented with the information needed to answer incoming calls correctly, and then they can stack and distribute them to extensions or voicemail, or to mobile or home office numbers. Work is underway on the development of a system that will allow clients to control the follow-me and call diversion features for themselves, along with other aspects such as the way the receptionist answers the phone. This should be operational by March 2005.

Moves and changes are far easier than with a conventional phone system, and the company manages all the IP phone systems from Sydney, including integration with an in-house client management and billing application.

"The management of this is so much easier than anything we've seen before," he says.

"On every point, we've had success -- some things faster than others. I'm sure we made the right decision."
"The handsets are full of features," says Moufarrige, including missed calls and directory functions that people have become familiar with from using mobiles. "They're really sexy phones -- they sell offices for us." When neighbouring Servcorp premises are compared, those equipped with the IP phones have done better. It is apparent that it's not just a question of first impressions counting, as client retention has improved.

"On every point, we've had success -- some things faster than others," he says. "I'm sure we made the right decision."

While much of the attention given to VoIP focuses on cost savings compared with traditional carriers, Servcorp's focus was on management. Most outbound calls are still made over the PSTN, although the company now offers tenants in multiple Servcorp locations the option of fixed-price inter-office calls. Moufarrige says fixed line call costs have fallen substantially, and it costs just as much to set up for notionally "free" calls. The total cost of ownership for phone and broadband hasn't changed much, he says, it's just that the costs have shifted between categories. "The major telcos have a lot more control than people think," he says.

Ausmelt


Contents
Introduction
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

Ausmelt is a technology company that sells a smelting technology that was developed in Australia. As a result, Robert Matusewicz, technical development manager at Ausmelt, says he's only too aware that most companies want to be "fast followers" rather than leaders when it comes to technical innovation.

Although his job includes responsibility for IT, Matusewicz is a metallurgist by training and his main role involves research and development and setting up pilot plants using Ausmelt's technology. Consequently, he's happy to investigate the options when making an IT purchase. Matusewicz reports to the managing director and he has the authority to make the decisions, saving internal controversy. "At the end of the day, it's up to me," he says. "I just get asked the question 'is it going to work?'"

The increased use of digital images meant that by late 2002 it was apparent that the company's NT-based server was running out of storage space. Although the number of employees had remained fairly stable over a decade, the volume of data was exploding.

"Warning bells should ring when suppliers fail to stand behind their products."
The server was an old system and fitting additional disks was an expensive proposition, so Matusewicz looked around and found that Apple's Xserve -- a relative newcomer to the server market -- was a lot cheaper than an equivalent Intel-based server. He had considered Linux, but found Mac OS X Server more usable.

The main question was how well it would fit in to what is otherwise an all-Windows shop, but Apple reseller Designwyse offered the Xserve with a money-back guarantee that it would work successfully. "That was an enormous factor," says Matusewicz, who says that warning bells should ring when suppliers fail to stand behind their products in this way.

Discussions between the two companies continued over several months to establish the suitability of the product and any changes in practices that would be needed.

The Xserve was installed in mid-2003 and all went well. It is used for file storage rather than as an application server, and Windows users simply log on in the conventional manner and are given appropriate access.

More recently, the NT server has been replaced completely by another Intel-based server, this time using Microsoft's Small Business Server 2003 to accommodate a specific financial application, with the Xserve remaining as a file server. Matusewicz says Small Business Server is a very suitable product for companies such as Ausmelt, "but your software is costing you as much as the hardware" due to per-seat licensing. The Xserve includes an unlimited user licence. "I don't like the way Microsoft handles its licensing," he says, though Small Business Server does show that the company is now addressing the small business market.

Although Mac OS X Server can now connect to Active Directory as used by Windows Server, Matusewicz has not bothered to do so because there is no current need for this capability.

"The outcome [the selection of Xserve] may have been different if we had been looking at the financials and the storage requirement all at once," he says, but a Windows server would have cost one-and-a-half to two times as much as the Xserve, "and that was something you just couldn't ignore." Suncorp


Contents
Introduction
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

Suncorp -- Australia's sixth largest bank and second largest general insurer -- was one of the early adopters of natural language speech recognition (NLSR). General manager of personal customer sales and service Andrew Mulvogue says: "We didn't believe we were going out early." Organisations such as Credit Union Australia and the TAB had implemented speech recognition for transactional purposes, whereas Suncorp's plan was to get callers through to the most appropriate staff member as quickly as possible. This meant there was no need to integrate NLSR with back-end systems, so "it was a very low-risk introduction into the technology".

The implementation might have been regarded as low risk, but there was a risk to the organisation in terms of the large number of customers that would be touched by the new system. Suncorp's large range of products and services meant that traditional touchtone IVR ("for balance enquiries, press 1...") was frustrating for customers. Consequently, much attention was paid to usability and customer trials.

The first step was to collect the different utterances used by real customers by running the VeCommerce voice engine but having human operators in the background to route the calls. That information was applied to an initial implementation that was subjected to usability testing where it received a higher rating than the old IVR system. Performance Technologies Group carried out the testing and benchmarking for the project, which was managed by SMS Consulting.

Next came a 300-user pilot that took calls from a particular region, and after further adjustments a 5000-user pilot covering various locations including Melbourne and Sydney. By this stage, customer ratings had reached 3.9 out of five compared with 3.4 for the IVR system, but recognition accuracy hadn't reached the target. A seven-day all-customer trial provided sufficient calls to take the accuracy over 94 percent, and the system went live on 11 December 2002.

Instead of having to plough through a series of IVR menus, customers can now simply state what they're calling about, for example, "claim for a broken window, thanks."

The system incorporates more than 60,000 phrases derived from caller conversations, and uses skills-based routing to direct the calls to an appropriate agent.

One of Mulvogue's concerns was that the persona of the system would be consistent with Suncorp's values. "You can get it running so well that the customer thinks they are talking to a human being," he says, but adds that it is not desirable because it could lead to embarrassment for the customer. To avoid discouraging customers from using NLSR, if the system twice fails to understand a request, the caller is transferred to a live operator and prioritised to reach the right queue.

The project was successful and met its goals: the average time to reach an agent was reduced from 70 to 30 seconds, and misdirected calls fell from six percent to 2.5 percent. Among other benefits, this led to a saving of over 2.6 million telco minutes a year.

Mulvogue believes an important factor was that the project was owned, led, and driven by the business as part of an overall vision to improve customer service.

Over the last year, most of the focus has been on developing agents' skills, knowledge, processes, and authority to deliver first-call resolution, rather than on the technology. For the cases where that isn't possible, Suncorp is planning to add the ability for callers to ask for the same agent when they call back regarding the same matter and they will be given the choice of waiting for that person or speaking to someone else based on the expected wait time. How to be an innovator


Contents
Introduction
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

The case studies presented here are from the customers' points of view. We wondered if some more general issues could be gleaned from someone who routinely helps organisations adopt new technologies, so we spoke to Brad Kassell, who runs IBM's jStart program in Australia.

His challenge is to find customers looking to use new technology as a differentiator. Compared with the days of the dot-com bubble, "the business case needs to be a lot stronger now", but partnering with a company like IBM helps mitigate the risks of such projects, he says.

Such innovation is often found in SMEs, he says, partly because the CIO in a smaller enterprise is more likely to have the authority to proceed with a project if he or she sees the justification. Larger organisations -- notably banks and telcos -- always have an eye on new technology but their huge IT base makes it hard to implement change quickly.

"Australia is quite progressive, technologically," he says, and local CIOs and IT architects are more likely to look for ways to apply new technology than their colleagues elsewhere in the region.

There can be a trade-off between the characteristics of the individual and the organisation. A CIO may be very aggressive when it comes to finding ways to apply new technology to business problems, but when the company is working with an outsourcer the deal is probably organised around optimisation and efficiency rather than innovation.

Even where players in an industry are keen to apply technology to gain an advantage -- financial services is one example, says Kassell -- any downturn in that sector works against innovation, and that's a "flight to security" rather than a "flight to quality".

When an organisation wants to explore a new technology, it is almost axiomatic that it will lack skills that are hard to find in the employment market, and there will also be a shortage of training courses. Teaming with an organisation the size of IBM can provide a way of obtaining and transferring those skills.

jStart projects normally involve proofs of concept, pilots, or first-time implementations. "We like to build things because that's a good way to determine that the customer's doing the right thing," says Kassell.

"Customers are always going to be nervous... the company needs to be financially viable, or have some sort of funding."
It's important to choose the project carefully, focussing on a specific area that will provide a basis for further implementation. For example, an organisation trying to replace its existing middleware with a Web Services architecture in one go is asking for trouble. This is not just a technical issue: keeping the project narrowly focussed also helps manage expectations elsewhere in the organisation.

Success is generally measured against three criteria: Does the technology work? Has a business problem been solved? Is the customer self-sufficient in the technology?

Kassell suggests that early adopters can work with smaller companies, particularly where the vendor has something unique to offer. But "customers are always going to be nervous... the company needs to be financially viable, or have some sort of funding," he says. Executive Summary


Contents
Introduction
Servcorp
Ausmelt
Suncorp
How to be an innovator
Executive Summary

  • Lesser-known companies may have just the product to solve your business problem.
  • Due diligence applies even if you're trying something new.
  • Ask for a money-back guarantee -- if the vendor can't rely on its products then why should you?
  • Being seen as an innovator may help your business.
  • The professional background of the decision maker, the industry in which the organisation operates, and market conditions may all colour attitudes towards innovation.
  • Innovation may be easier for smaller companies, as fewer people are involved in the decision.
  • The most popular products in a particular sector may have been overtaken by a newcomer's price-performance ratio.
  • Before introducing something new, thoroughly test its performance and usability. If it's customer facing, involve customers in the products tests.
  • Remember that the objective is to solve a business problem, so you might be looking for different benefits from a new product or technology than other organisations.
  • Start with a specific project and then expand the application of the technology or product rather than going for a "big bang" introduction.

This article was first published in Technology & Business magazine.
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