By the Computerworld Philippines Staff
Published in the March 2009 print edition of Computerworld Philippines

The company IT department, already commonly seen as a cost center, is now the focus of even more intense scrutiny by top management as news reports about the ongoing global economic slowdown fan anxiety in all industries. According to analyst firm, Gartner Inc., the IT mantra “doing more with less” is quickly being replaced by “doing less with less” as most IT departments across the globe begin feeling the pinch of the crisis.

In line with this, Computerworld Philippines, in its 1st CIO Roundtable discussion for the year, gathered CIOs and IT executives from different industries in the country to find out exactly how the global slowdown is affecting local firms, particularly their IT departments.

Sponsored by Sophos Plc, the roundtable discussion—a lively and insightful exchange among the Computerworld Philippines team and the six invited IT executives—revealed that, contrary to what most people expect, the present scenario is not “all doom and gloom” for local IT departments. IT in fact, tends to take center stage nowadays; as top management increasingly looks to it to help the business cut costs and improve efficiency through technology.

Dennis Bancod, executive vice president for IT at Rizal Commercial Banking Corporation (RCBC), acknowledged that, being in financial services, their company is being impacted by the crisis. He said, however, that they are not changing any strategies, particularly in the IT department, as it has always been their philosophy to remain prudent and spend only on what they need.

Lorraine Belo, CIO of construction supply firm, Wilcon Builders Inc., agreed. “We more or less still operate the same way regardless of the economic situation, in the sense that we do not really overspend on things, even before the crisis,” she said. “We just spend on whatever is needed.”

Although situations may vary with each company, one industry that is not quite feeling the pinch yet is the real estate sector, according to Jay Estaris, CIO of the Century Properties Group. “I think people are still investing in the Philippines and, for a company like ours that is used to operating in adverse situations, you just try to operate the best way you can and assume the worst while hoping for the best,” he noted.

For his part, Marcelo Trinidad, IT manager of home and construction materials suppliers, Ceramic Plaza Inc., said that during tough times, the pressure is even greater for IT to help the business weather the storm. “It’s really up to us in IT to try to make all these processes more efficient, so this year we are really expected to do more,” he pointed out. “This year would be a very busy and challenging year for us because we have to reinvent ourselves and raise the bar to be able to do more for the business.”

“I think most IT departments have been trained to work on a minimum budget and to do multi-tasking. However, the owners of CDO have always been very supportive of the IT department and they recognize that if you do not spend on IT you end up spending more,” said Leonides Tolentino, senior manager, management information systems, Foodsphere, Inc., better known for the brand it carries—CDO.

“The crisis gives us more opportunity to align with management because, being a food manufacturing business, we were traditionally not IT-centric but now, management realizes that a lot of opportunity to weather the storm is actually coming from different technologies,” added Rogelio Tayamora, IT director, Pepsi-Cola Products Phils. Inc.

Excerpts of the discussion follow:

CWP: Is your IT department already feeling the effects of the global economic crisis?

Bancod: I guess our industry, among those represented here, is the most affected because the current economic crisis is really a crisis on the financial services industry and when the financial sector is hit, as a consequence all the other industries would eventually be affected as well. Now, as whether the IT department is feeling it, I would say “Yes.” But this crisis did not blossom overnight, the signals have been felt from as early as the middle of 2007 and the recovery is probably going to take another 12 to 18 months. So, at least from our perspective, as early as the middle of 2007, we knew that we had to do something to be able to weather the storm.

Estaris: I can’t really speak for everybody in the real estate industry but we have noticed that the sector is quite impervious to the effects of the crisis. I think people are still investing in the Philippines and, for a company like ours that is used to operating in adverse situations, you will try to operate the best way you can and assume the worst while hoping for the best. With our IT department in particular, we have not really experienced any difficulty that may be attributed to the ongoing global crisis.

Trinidad: Our industry is closely related to the real estate sector and, so far, I have been talking with architects and contractors and most of them are even looking forward to a good year because they say it is during these times that the price of construction materials goes down.

Tayamora: Our company sells food and beverage products so we are very much affected by trends and changes in consumer spending. On the IT side, since Pepsi here in the Philippines is part of the larger, global Pepsi-Cola family, we are also affected by the changes and directions that our parent company in the US puts in place. The direction for us now is to hold on to the “Cash is king” motto. We want to protect our cash so, in the process, we have become stricter with credit. The idea is not to spend ahead of the curve. Anything that we want to spend on, either in marketing or development, should really present a solid return. In the process, the IT department is also affected but we are actually quite used to this as we have always been quite conservative with our initiatives. The good thing is we have a long-term plan in place so we can better gauge which projects we can work on now and which ones could be shelved for a while.

Tolentino: People may stop buying construction materials or real estate properties, they can stop investing in banks, but people will always have to eat three times a day, so our company being in food manufacturing is doing just fine. We did well in 2008 and we are optimistic that this year, although we may see shifts in consumer spending or preferences, we can still do well. From the IT perspective, it being a cost center, I think most IT departments have been trained to work on a minimum budget and to do multi-tasking. However, the owners of CDO have always been very supportive of the IT department and they recognize that if you do not spend on IT, you end up spending more because of productivity loss or even loss of sales opportunities, say when the system goes down for example. So they realize the importance of IT. I even increased our budget for this year because we have to ensure our system is highly available and we will be working on a lot of additional projects for the finance department along with some initiatives on business intelligence.

CWP: What areas have been affected—or do you think will be affected—by the global crisis?

Trinidad: Among the companies present here, ours is probably the smallest, and this I think is a good thing given this economic crisis, especially because we are not highly-dependent on external providers and almost all of our systems are developed in-house. Reading about all these software companies that are being impacted by the crisis along with other big companies that have big investments in large banks that are in trouble, I can imagine how much of a nightmare it would be for IT professionals to wake up one morning and find out that they can no longer get support for their mission-critical systems. In that sense, I believe we are not that affected, also because we really have a good and devoted team capable of working on and fixing things internally.

Estaris: At Century Properties, all IT projects that we have dreamed up for the past two years are still going on. We are still delivering these projects, hopefully on schedule and on budget. Given that, while I believe in tested products, right now we are servicing the needs of the organization more with home-grown applications and most of these are Internet-driven applications. On the other hand, I would imagine that if I was still on the other side of the fence as a vendor, this crisis would be creating certain difficulties because the focus of the clients right now has shifted from those issues addressable by IT to concerns about prices. So I would imagine there maybe a slowdown in vendor driven-applications but, internally it’s not affecting us at all.

Bancod: First, you have to be prudent enough to make sure that you weather the storm and, at the same time, you want to also look at it as an opportunity and see which areas you can exploit in a crisis situation. For us, the way IT would react to that is not really with just IT per se but it is really about making sure that the we keep our close ties with the business and see how they are going to react in such a situation and be able to exploit and support the opportunities that they would identify to weather the storm.

Tayamora: For us at Pepsi, the key word is also “prudence.” IT follows whatever direction the business takes, especially in view of this slowdown. This crisis even gives us an opportunity to take a closer look at our current setup, review what we could do better and what we may be doing wrong. It also gives us more opportunity to align with management because, being a food manufacturing firm, we were traditionally not IT-centric, but now management realizes that a lot of opportunity to weather the storm is actually coming from different technologies. Thus, the crisis somehow has had a good impact on the IT department because it brought us closer to management.

Tolentino: All IT projects are a go for our company but a few of the areas that may be affected this year are in the acquisition of new technologies. That may slow down this year. We could also possibly delay the purchase of licenses and maybe wait for the best time within the year so we can buy in bulk and take advantage of discounts. On the training side, I know of some companies that have held back on training their IT people but I believe now is the best time to equip your people as IT gains more importance in times like these.

CWP: What technologies do you think will help your company respond to the expected tightening of economic conditions?

Tolentino: I am looking at two areas which I believe will be vital to the business: one is a security and productivity tool and the other is business intelligence. The reason I mentioned security is because our business is built around the formulation of all our products so we have really strengthened our security system and put in place the necessary layers of protection. Business intelligence, meanwhile, will also play an important role in the business because it will help us in the analysis, not only of day-to-day sales and production reports, but also in predicting possible changes in market behavior so we can better address and more quickly adapt to what the consumers want and would want in the future.

Tayamora: We are also looking at a business intelligence system that would allow us to mine all our transactional data. Pepsi offices are geographically spread out so data is also widely spread out and the key is to be able to narrow the gap between information turnaround and decision-making. Security, of course, is an ongoing initiative within Pepsi.

Estaris: I think I’m fortunate to be in a company that has a visionary for a leader. He has made it clear to us what the battle plan is and, simply put, it just means that all the departments have to work harder. Given that, we in IT are focusing our applications development work and even our network operations projects on three key areas: conventional efficiency and empowerment tools for the various departments so that they can operate their lean teams efficiently and cost effectively, and a non-conventional portion where we are focusing on executive decision agility. We need to provide information as quickly and as accurately as possible given that the decision-makers and owners have to react very quickly to whatever is happening in the market.

CWP: In Wilcon, are you looking at any particular technologies that you think will help you respond better to the tightening economic conditions?

Belo: In terms of strategy, I think we more or less still operate the same way regardless of the economic situation in the sense that we do not really overspend on things, even before the crisis. We use open source, for example, because it does not cost much so we channel the money in necessary spending, like, say, in hardware. Another technology that we are looking into is wireless. We are planning to have our sales staff use a wireless PDA (personal digital assistants) probably later this year because, right now, our sales staff takes the order then goes back to the computer. A lot of time is wasted on the side of the customer which also means less sales for our staff. Overall, our strategy in IT is really simple: we just spend on whatever is needed.

Trinidad: We are also looking at open source because it is really cost-efficient. One other technology is Voice over IP (VoIP) to reduce the communication costs between our branches.

Bancod: RCBC, as you know, has been in the market for so long and IT in the bank is really in a mature state already, so we have very few gaps. Our strategy with technology remains the same because we believe that it is not really technology but the business that dictates any changes. So it would really depend on how they would respond to the crisis. Say they see potential in the property sector, then it would be our task to come up with new products and services that could be launched to cater to that particular industry. Other than that, I do not see any major changes in our IT strategies.

CWP: How will this crisis affect, if at all, the IT manpower?

Bancod: My philosophy is the same with both IT manpower or resources—just get the resources that you need and maintain that. I don’t think this crisis has serious implications on IT resources. My view is we have to see the opportunity in this. Getting IT talent has always been a battle. In 2007, we lost all of our talent to a big business process outsourcing firm; I think it’s time that we try to get them back. So these layoffs we have been hearing of may be not be all bad. But, of course, you still have to be prudent so as not to upset your bottom line. Balance your needs based on your plans and match that with the human capital you require.

Estaris: With or without this crisis, the IT department is under constant reevaluation; we need to, at least internally, justify our existence and make our company understand that whatever manpower we have right now is the ideal minimum headcount. So, with this crisis, it is going to be “business as usual.” We will keep producing the applications that the business needs.

Belo: We are opening stores and we, in fact, just hired one more IT person so it is very unlikely that we will reduce our staff because we actually need more.

Trinidad: I think at times like these, the people in other departments should be more afraid about losing their jobs than the IT people because this is when the company really takes a close look at internal improvements and the IT department is usually the enabler of all these improvements because IT is needed now more than ever.

Tayamora: Our philosophy at Pepsi is we just get the resources that we need so our 11-man team does a lot of multitasking. We also outsource most of our processes because it’s working for us, so I don’t believe that we really need a very big team.

Tolentino: As I mentioned earlier, I am even spending more on training now because I believe this is vital to the development of my core team. IT people are a rare breed, you have to challenge them, you have to give them technologies to play with. So one way for me to retain my core team is to train and equip them.

CWP: Are there current IT strategies (either in terms of technology or management) in your company that you think needs rethinking to address any forthcoming downturns?

Estaris: Any good company or any good IT department should constantly reevaluate its strategies; it should change constantly depending on what the market requires. So all our projects are constantly being reevaluated. They always have to be aligned with corporate needs and corporate directions and we have our regular meetings with top management to make sure that what we are doing is right.

Bancod: When you talk about IT strategies and how these are being affected by the current economic situation, I believe there will be no significant changes. It would all still be about your bottom line, generating new revenues, reducing cost, and so on. What I think is unique in this situation and how IT units, particularly in financial services, may be affected, is you would want to anticipate how the regulatory bodies would react to the situation. During the 1997 Asian crisis, a number of reforms, like Basel II, were instituted by the Bangko Sentral ng Pilipinas (BSP) and all the banks had to comply. This crisis would institute a new set of reforms that would be triggered globally and the Bangko Sentral would probably adopt and, as a consequence, they would most likely ask all the banks to comply with those. So if there’s an area in IT strategy that may change that would probably depend on how we are going to respond to the reforms that they will institute.

Tayamora: In terms of strategy, we really just align our initiatives with those of management and support which direction they want to go. We’ve been doing a lot of planning and we have been executing projects based on a long-term plan, so every year we just build on what we had accomplished. If the business wants to rethink some strategies because of a new opportunity, then we do what is needed from our end to support that. We are still primarily a manufacturing firm so the IT department is just really there to ensure that business processes go well based on our long-term plans.

Tolentino: We also plan ahead so should there be any rethinking of strategies, this would depend on the company’s priorities, so we would probably be prioritizing less-effort-but-more-impact projects as we constantly strive to achieve cost benefits.

CWP: As the IT head of your respective companies what do you think will 2009 be like?

Tayamora: I don’t know if it’s unique in our industry, but competition is really tight nowadays and, because of that, we have to be really good at what we do. I’m quite fortunate because we have a parent company that directs what strategies to undertake; you can be a maverick at times but there isn’t much room for that nowadays.

Bancod: I guess if you are driving a car and you’ve been driving it for like two years at 60 miles per hour, in 2009 you would probably want to drive at 20 miles per hour. If you are used to checking your map every once in a while, now you may have to check your map more frequently than before. That’s how we look at 2009. We know we need to be more careful and we know we need to be more prudent but, at the same time, we know it is still a very dynamic market and we need to respond to the needs of our market. For IT, I expect 2009 to be a very busy year and, for us, it’s really again an opportunity for the CIO to try to lobby for his internal projects.

Belo: It’s going to be busy, basically because we have been expanding so much. One of my goals is to still have the same amount of people but to have more efficient systems in place. For example in HR, we do not want to increase our HR staff anymore, so we want to automate more processes. We are also putting in place a new ERP (enterprise resource planning) system, so we are going to be very busy making everything more efficient.

Estaris: In the IT department, we really just purchase what we need and always prioritize projects based on need. We do have to manage the expectations of other departments because they tend to keep on demanding stuff, say faster connections or faster generation of reports, etc. But this year, since we need to prioritize things, we probably would not be able to deliver all their wishes all at the same time.

Trinidad: During these tough times, it’s really up to us in IT to try to make all these processes more efficient so, this year, we are really expected to do more. This year would be a very busy and challenging year for us because we have to reinvent ourselves and raise the bar to be able to do more for the business.

CWP: Finally, how can IT vendors help your departments as well as your company as a whole hurdle the challenges that lie ahead?

Tayamora: Probably to be a bit more understanding because companies would definitely stretch their budgets now, and service quality should always be there. We don’t hook up with a lot of vendors; our philosophy is basically to establish long-term partnerships. So basically what we would want from vendors is for them to be more understanding, maintain service quality and also to have better control over their resellers.

Tolentino: On my part, it’s really my philosophy to not talk to sales people. I always ask to talk to the sales engineer who really knows the product because a sales person will sell you anything even when you do not need it and will tell you that something’s possible even when it’s not. My advice to principals, as well, is to not have too many resellers but focus on having a few reputable and reliable ones.

Bancod: I think because of the current environment what makes you re-think the way you deal with vendors is the support that you are getting from them, in other words, support capability. I think one new thing in this area, in response to the crisis, is somehow you now tend to be more comfortable with local partners because they are not that affected and you have to review the support capability of some multinational vendors. That, I believe, is one consequence of this crisis but, other than that, the way we deal with them will remain the same.

Belo: I always like to work directly with the principals because I have had bad experiences with sales people selling me products just for the sake of selling, even when you do not need the product. So what I do is, for example I want to buy a product from Microsoft, I talk directly to Microsoft and tell them what I want. I give them the specs and I ask them to recommend resellers, then I tell them “Okay, you can tell your reseller that I am interested.” I like how that is done because, if I go straight to the reseller, they will just call and call and, eventually, I will discover that I do not really need what they are selling, so that’s how we do things now.

Estaris: I think the struggle for us, rather than pricing or anything else, is that it’s very rare to find a vendor who really takes the time to understand your issues. Most of the time, they are trying to form-fit your issues according to their product and I don’t appreciate that. So my tip for vendors is try to understand the problem: what issues are keeping us awake and tell us how you are going to address those.

Trinidad: I guess, in general, vendors should really take a look from the point of view of the buyer. What we want is value for our money so, of course, price is an issue and good service should always be there. Also, they should provide real solutions and not just sell products. To do that, they should really assess what the client needs.

Possibly Related Posts:

• The Cloud: Waiting to Descend or Forever Up in The Air?
• Moving Through the Supply Chain
• Data Recovery– Riding Through The Chaos
• Mitigating the Risks
• Greening the Workplace

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