The rise of innovation platforms

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The rise of innovation platforms
Pedro Harris, NSW Finance and Maria Milosavljevic, Australian Crime Commission discuss their projects.

Top CIOs prove their value beyond the walls of their business.

The digital revolution, backed by public cloud services and delivered to powerful mobile devices, has rendered the most complex transactions easier than ever to consume.

As executives look to build digital services using ‘as-a-service’ models, the cost versus value of internal IT functions has come under considerable scrutiny.

Some IT departments have been hollowed out and pushed further away from the business, usually consigned a risk management function limited to security, availability and architecture governance. Backed into a corner, the IT function can too easily become a choke point on change, giving the business more cause to question its value.

Others - at times facing desperate staffing and budget constraints - have taken dramatic action to prove out their value.

Several of the submissions in this year’s iTnews Benchmark Awards - a large number of finalists among them - chose a ‘make or break’ bet on innovations that would deliver value from internal users right through to customers, and sometimes further still.

Australia’s best CIOs want to produce innovation ‘platforms’ - technology investments upon which value can multiply over time. The basic premise is that once the value of platform innovation has been proved amongst internal users, it can readily be adapted to offer similar value to customers, or better still be white-labelled or licensed for use by other organisations facing the same challenges.

The hallmark of success for such a strategy is when an IT function that has typically battled the label of being ‘a cost centre’ is delivering the business unambiguous, direct revenues on its own steam.

The model

Asked on stage at the Benchmark Awards which model of innovation they most sought to emulate, Apple was a predictable answer. Steve Jobs’ Apple, more than most companies, understands the value of platform, after Cupertino mastered the art of tying its expensive hardware to an ecosystem of easy-to-consume services.

But several others said they looked up to a company that doesn’t deliver products anywhere near as exciting: Amazon Web Services and its retail parent, Amazon.com.

Amazon.com was always a retailer, first and foremost, but the part of its story that appeals most to CIOs is that its IT department built such a strong platform for internal use that a case was later made to spin it out for broader consumption.

The technology behind Amazon Web Services was simple - the e-tailer’s IT shop was among the first to build a scalable compute cloud from out of the foundations of open source server virtualisation software (the Xen hypervisor), and also among the first to tie that capability to the web hosting control panel.

Originally planned as a means of subsidising the cost of excess capacity for Amazon’s own hosting, Amazon Web Services is now a giant in its own right - and a great example of what can be gained by turning internal innovation around 180 degrees and exposing it directly to customers.

Amazon’s platform story was made all the stronger when one of its largest customers - Netflix - created tools for it that far exceeded what the retailer had built for customers, and chose to release them more broadly to the user community under open source licensing. Platforms were built on platforms and attracted greater technology talent to both.

Award winners

As is often the case, many of the award winners at this year’s Benchmarks found themselves in a position where taking a bet on an internal innovation was their only choice.

“For us, it was about survival”, noted government CIO of the Year finalist Maria Milosavljevic of the Australian Crime Commission. Faced with a constrained fiscal environment and a government that has struggled to pass budget measures, the build of its ‘Fusion’ unstructured data store was the only alternative to scaling back the Commission’s stated ambitions and in turn its IT team.

Carsales CIO and 2015 Retail CIO of the Year Ajay Bhatia was also out of options. He’d long identified a need for the online retailer to find an alternative to licensing expensive search engines from third parties which were failing to live up to customer expectations.

“We looked at several open and closed source search engines,” he said. “Through all the research we hadn’t found a solution."

Bhatia took a gamble on an 18-month long quest to build a search engine that would enable car buyers to search across multiple fields of criteria simultaneously - three chosen models of car, for example, but within a single geography, price-range, colour or vintage.

The build, which took longer than expected, required a great deal of patience from the company. But the ‘Ryvuss’ search engine that resulted has delivered substantial rewards - Carsales page speeds were boosted by one second, there was a 16 percent drop in calls to contact centres, a 30 percent drop in emails to customer contact centre and a reduction in call waiting times. 

Read on to find out more about the Benchmark winners...

The icing on the cake was the licensing of the search engine to two similar sites serving larger markets overseas, driving direct revenue back into the business.

“What we delivered wasn’t just a new system, its a platform for innovation,” Bhatia told his peers at the CIO Strategy Summit.

Peter O’Halloran, CIO of Australia’s National Blood Authority, won Healthcare CIO of the Year on a similar narrative.

Delivering specialised services to Australians that suffer from rare blood conditions costs taxpayers in the order of $200 million a year. Any wastage in the system is not looked upon favourably.

O’Halloran’s team delivered a mobile app that integrates seamlessly into the Authority’s clinical registry system, giving patients somewhat of a ‘self-management’ option for treating these conditions.

The app quite literally helps in “life or death situations”, O’Halloran told the audience, which makes him reticent to express its value in dollar terms. He nonetheless impressed the Benchmark Awards judges on the back of both high levels of user adoption and licensing deals to healthcare providers across the globe that have more than paid for the development costs of the app.

Several other Benchmarks finalists built innovations that have since been used or licensed elsewhere.

ING’s ‘Zero Touch’ designs, which enabled the bank’s Australian subsidiary to deliver the sum of its systems from a highly-standardised private cloud, have now been adopted by the bank’s global IT operations. This success helped propel COO Simon Andrews to win Finance CIO of the Year and the 2015 CIO of the Year.

Rio Tinto’s long-running investment in RTVis - the 3D visual front-end for its comprehensive mining information system - has so far resulted in a two percent increase in high-grade iron ore recovery - which equates to millions extra in the bank - and has been rolled out to four iron ore operations since it first went into production.

The mining giant is now adapting the technology for use in its coal and copper operations. This project also won the judges favour, chosen over the first stage of an ambitious system overhaul at SITA and a mobility solution at rival Fortescue Metals to see head of automation Ben Rogers named Industrial CIO of the Year.

Similarly, Pedro Harris’ vision for consolidating the NSW Government’s data centres into two purpose-built facilities and inviting suppliers into the same trusted zone to provide IT services on an as-a-service basis won’t be enjoyed by NSW Government agencies alone.

Harris told his CIO peers that other jurisdictions have been welcomed into the same network, which is “open to any buyer.”

While there are some hurdles in the way of that becoming a reality - namely data sovereignty and restrictions on buying outside of existing procurement panels - Harris has been in discussions with both the Queensland and West Australian governments about whether they could make use of the model.

NSW Board of Studies CIO Mitra Bhar is also earning the state government dividends for an internal innovation - the development of the Board’s MarkManager app for the distributed, online marking of high school examination papers has since been commercialised.

Bhar, a worthy finalist in the Education CIO of the Year category, has since won two competitive tenders, one on home soil and another in Europe, for the licensing of this simple workflow tool to other educational institutions.

“We now do marking for WA high school examinations and we’ll soon be doing a deal with a major European testing authority,” she said.

This year’s awards crowned a larger than ever contingent of CIOs that have delivered far beyond the needs of internal users - whether it was via agile projects at Domain, Mi9 and Vodafone Australia or the agility offered to these front-end teams via ‘agile infrastructure’ overhauls at the likes of Dick Smith, ING and Mercy Health.

Perhaps the ‘innovation platform’ should always have been the focus of the IT function, remarked Tennis Australia CIO and fellow finalist Samir Mahir.

“I hear a lot of people say that ‘business wants this’ or ‘the business wants that’,” he told the audience.

“I tell my staff often - you are the business too. Does your badge have a different colour to the others? You have to think about the business - think about how to save costs and generate revenue - in everything you do.”

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