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Learning From Disaster | Part One - Under Scrutiny

Learning From Disaster | Part One - Under Scrutiny

CIOs can expect to find themselves increasingly in the spotlight in the future as cries for more corporate accountability and transparency become a clamour.

The quality of information systems at Ansett is also under question. A little over a year ago Ansett administrator Mark Mentha told ABC TV's The 7.30 Report that on coming in to sort out the Ansett mess he found "a business that's in great distress. And one that was very unorganised and one that had very little in the way of financial information".

Gary Toomey, CEO of parent company Air New Zealand, agreed, telling 7.30 Report business reporter Alan Kohler: "That's something we've been saying since we've been in there. We've been trying to fix that, but obviously there's a lot of work to be done in respect of the information systems."

Air New Zealand group vice president strategy and planning Andrew David says in part the comments reflect the challenges facing any voluntary administrator during difficult times, particularly when numbers of people hired by the company to provide management information have already walked out the door.

So were the Ansett systems capable of providing the quality of information the company would have needed to better forewarn it against collapse? David prefers to avoid a direct answer but confirms both Air New Zealand's and Ansett's systems needed replacing. Indeed, he says, when Ansett collapsed the two airlines were just days away from having an integrated data centre in Melbourne.

"There was a program of work that was under way to integrate both companies' IT infrastructure, which had actually all but happened. We'd already saved a sizeable sum," he says. "We had quite an extensive integration program under way, and we had a program planned over a three-year period to move to single systems, single business processes right across the two airlines, and we had made significant progress. We'd got single suppliers and were all but ready to turn the switch on one data centre in Melbourne. We were going to turn off our Auckland data centre and we've since had to spend six months breathing life back into the Auckland data centre."

Air New Zealand is now in the process of replacing its own finance, HR and procurement systems with PeopleSoft. David says Ansett would have been following a similar path had it survived.

"What companies want clearly is more information and less data, and that's still a problem here. I'm involved in a project right now to get better focus on key performance indicators and get that information to the right people with integrity. And it's got to be timely information as well. You do need the facts, and you need the facts now, not yesterday. You need to be smart and nimble," David says. (Look for Andrew David's story in a future issue of CIO magazine.)Peter Adams, a lecturer in IT at the School of Information Studies, Charles Sturt University, has other theories about the lessons for CIOs from the Ansett experience. Adams points to research highlighting that the difficulties in managing IT (and the business) increase exponentially as the organisation grows. The bigger the business, he says, the greater the complexity and cost.

"For [Ansett] specifically, each project and section within IT became its own entity with all the political and fiefdom implications," says Adams. "My understanding is they could not produce route-by-route profitabilities from their MIS [department]. This is in contrast to Kendell [Airlines] where we exported data from the financial management systems into fancy Excel spreadsheets our management accountants had designed and had a P&L out within four days of the period end.

"I clearly recall a consultant from the likes of KPMG or Ernst & Young asking me why we didn't implement a system like SAP [which Ansett used] to improve our management reporting . . . I guess the lesson here is big business listens to big name consultants, who often forget it is the quality and timeliness of the information that is important, not the Â'brand' of the package reporting it."

Next - Learning From Disaster | Part Two: Making Information Accountable

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