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Case Studies: Innovative Solutions

Driving transformation and savings in challenging times: Zespri case study

Driving transformation and savings in challenging times: Zespri case study

The year 2013 was tough for Zespri. The PSA virus was decimating its growers’ high value, gold kiwifruit crops across New Zealand. As well, a major initiative was underway to help growers replace existing cultivars with a more disease- tolerant variety, Sun Gold. The hope was that this cultivar’s vigorous fruiting qualities would also lead to strong production, that it would be outstandingly successful with consumers, and help sustain the growth of the industry. The Zespri board and executive had witnessed the devastation of the Christchurch earthquakes and the Japanese tsunami, and recognised a risk to their offices in Mt Maunganui and backup IT services in Tauranga. Zespri operates a global supply chain, and losing its IT services could leave crops unpicked, left in storage or stuck on wharves anywhere in the world. To compound the challenge, Zespri’s IT infrastructure was approaching end-of-life, and required a substantial capital investment to upgrade and enhance existing services. In short, the kiwifruit marketing, grower-owned company faced the following risks: Financial risk A substantial capital investment is a challenge to any business. The competition for funds is fierce. In this case of an IT upgrade there would be a multi-year burden on the balance sheet as the items depreciated, whilst uncertainty swirled around the business’ long term viability. Scale risk If the crop yield grew as hoped, then there was a need to quickly scale up to markets new and existing. If the crop yield fell then the IT investment would be oversized compared to the need going forward, with the burden sitting on the balance sheet. Either way, replicating the current IT environment was not the answer. Natural disaster risk Christchurch’s earthquakes and Japan’s tsunami had changed the risk equation for Zespri’s business forever. Natural disasters were now a very real threat to continued IT service in a 24/7/365 global enterprise. Were data centres, even if distributed across the North Island, really a robust answer? Global reach risk Offices across the globe required access to IT services, many of which were operated out of Mt Maunganui. These services were delivered via complex, secure VPNs (Virtual Private Networks). Technically this approach worked, but it placed all the business’ eggs in one basket. With a real business need for application access via mobile phones, tablets and roaming devices, VPNs seemed a very complex way to access services. The question came from above: I get easy access to Facebook and LinkedIn when I am travelling. Why not my business information? Support risk How does a New Zealand company deliver acceptable levels of support to cities across the world? What if the network connection goes down in Tokyo during the peak season? Who do you send? What service guarantees are there? Who gets priority in a major crisis? The solution options Keep things as they are: unacceptable. After the earthquakes and the tsunami, having two data centres within the same region was now seen as just too plain risky. Moving to new, geographically separate hosting facilities: marginal. Moving equipment and services into a hosted environment didn’t solve the problem of scaling up and down, or offer a financially sensible option. Commercially, Zespri would have to upgrade the IT equipment to have it hosted, or sign up for a fixed term to have a supplier own and operate it on their behalf. Shove it all up into the cloud: scary. But that is exactly what they did. Growth enabled Now three years later Zespri is in growth mode. The gold crop is producing record numbers and is in demand across the planet. The IT systems scale up and down as seasonal and market demands require, consuming services as needed and switching them off when not required. Costs are no longer tied to capital investment. The IT financial model is consumption-based with close monitoring and management of expenses using a combination of financial analysis, real time online analytics provided by Total Utilities and constant reappraisal of the business’ requirements based on the insights delivered. Access is via a stable and secure data network, delivered by a world class provider. The supply chain resides in multiple Microsoft Azure data centres globally, ensuring business continuity. This managed, outsourced Azure environment delivers critical supply chain services globally. Coupled with Office 365, Skype for Business and SharePoint, Zespri is competing for market share on the world stage. It is able to scale with speed, delivering a robust and repeatable IT environment as new offices open and new services emerge and evolve, and all this at a lower cost per tray of kiwifruit than was previously thought possible. No innovation comes without a new set of risks and challenges though. As with international roaming mobile data services, bill shock can be an issue. In my next post, I will address managing and monitoring consumption-based IT services locally and in the public cloud. David Spratt is director of ICT at Total Utilities. Email david@tumg.co.nz

Utilities experts net good result for fisheries company

When you have a global supply chain delivering premium live seafood and chilled fresh fish to domestic and overseas markets, there is little room for communications, business process or system errors. Aotearoa Fisheries Limited is the largest Maori-owned fisheries company and it’s been harvesting, processing and delivering live, chilled and frozen seafood since its establishment in 2004. It harvests, processes and delivers chilled, canned and frozen seafood and ready to eat products to over 20 countries. For the past five years Aotearoa Fisheries has been working with utilities procurement specialists, Total Utilities, to ensure that their telecommunications/ICT, natural gas, electricity suppliers are providing high levels of service at the best price. Independent ICT Strategic Review When David Spratt, Director of ICT at Total Utilities, carried out a strategic review of Aotearoa Fisheries IT architecture, hardware and management in 2015, he brought 30 years of experience in senior ICT roles to the table. Aotearoa Fisheries had recently moved to a new IT provider supplying Infrastructure as a Service (IaaS), with one division retaining and maintaining its own servers. The business was interested in comparing the two approaches as well as benchmarking costs against other providers in the market. “The outcome was a comprehensive report which compared our costs with market prices and included a number of helpful comments and recommendations,” said Angus McFarlane, Group Information Systems Manager. “As part of the process David went to great lengths, interviewing both the IT support company and IaaS provider as part of the process. “It was good for our CFO to gain an independent view from the experts. The review was in-depth and thorough. It was definitely not a political or surface report and added a lot of value to our organisation.” Negotiating the right telecommunications contract had the potential to be equally complex. At Aotearoa Fisheries service delivery is just as important as price. When there’s half a tonne of live crayfish to land, being able to communicate quota availability and landing location to the skipper is paramount – not to mention ensuring that a refrigerated truck is ready and waiting to meet the boat. Any logistical delays can be costly. When Aotearoa Fisheries called Total Utilities in to manage their latest telecommunications RFP the result was quite dramatic. “We decided to move away from the incumbent provider to a new-generation network aggregator that is very customer service-centric,” continued Angus. “The broad experience that Total Utilities brought to bear made a significant impact on the process. We value the fact that they possess a network of contacts across the whole utilities sector but have no allegiance to any one supplier, and therefore can provide that independent market assessment.” Aotearoa Fisheries worked with Total Utilities to create a decision matrix which weighted a wide range of factors like account management, adoption of new technology, reporting and invoicing. Angus commented. “We wanted a partner to see us right for the next five years so we couldn’t leave anything to chance. We have to be agile in order to meet the demands of our markets and products – if we’ve got boats fishing from a new location we need a robust network service to get the catch to the right place, live and in perfect condition.” With over 25 years of experience in ICT and particular expertise in telephony, unified communications, data networking and managed services, Mike Ette at Total Utilities was in a strong position to help. “We are really happy with the outcome,” confirmed Angus. “The next key phase will see us moving everything over to our new supplier.” “Total Utilities don’t bring multiple layers to the engagement. We deal with senior people who know what they’re doing. They are the ones actually doing the work - we don’t get passed off to a junior,” he stressed. “Total Utilities people are very easy to do business with and they know how to get to the crux of the matter. They make a real effort to understand our business and market.” “We can trust Total Utilities, they are good value and very responsive. They are able to view the big picture from a strategic point of view and apply their expertise. They don’t just deal in theory but are used to applying real world solutions. If you just need an organisation to get into the nuts and bolts of your IT or telecoms infrastructure, Total Utilities is definitely the right company.”

Achieving Client Success

Emmy Seccombe
Te Uru
Paul Laing
Red Stag Timber
Haydn Randall
St Bede's College
How the Internet of Things is transforming Business

Over Christmas 2015 I spent a lot of my beach time getting sun burnt and considering the threat of global warming to my kids and to their kids. I eventually decided that, to save the planet, I could start by measuring the energy consumption of every electrical device in the world. This would help people understand how to use these devices more efficiently, they would use less energy and “voila” world saved! The only problem is – how the heck do I talk to every electrical device in the world? More importantly – how do I get them to talk back to me? Welcome to the emerging world of the Internet of Things The Internet of Things? What the heck is that? All many of us know about this topic is via TV or the newspaper with an over hyped American guru telling us how our new fridges will know whether we are about to run out of milk and will place an order for delivery that day. Now, to be honest, I don’t want Countdown to know that every week I drink four dozen beers, scoff sixteen packets of crisps and kill my inner sadness with endless king size bars of dairy milk chocolate. So why am I writing an article trying to explain and justify something that sounds a little bit too much like big brother is watching? Because it matters. Because the Internet of Things is about how our businesses can sustainably compete in the future. So, let’s start by trying to explain the Internet of Things The Basic Building block of the Internet of Things – the unique address Just as we have a unique address at home, the internet uses unique addresses to connect devices and allow them to speak to each other. This address looks a bit like this Up until recently the number of possible addresses using this approach was around 4.3 billion. “4.3 billion addresses? That’s plenty.” you might say. Not quite. There are now over 2.1 billion smart phones in the world. There are an additional 2 billion PC’s as well. That’s a total of 4.5 billion devices each with a unique internet address. Add every web site to that list and the reality is we ran out of addresses years ago. (Tech geeks – yes I know it’s not that simple, but no one else actually cares.) So, the geniuses in internet land came up with a new addressing scheme called IP V6 (Internet Protocol Version 6). This provided for enough internet addresses to uniquely identify every molecule on the surface of the earth and then do the same for five similar sized planets.  Using a technical term, we now have a “shed load of addresses” and won’t run out for another million years or so. So how will unlimited internet addresses help my business compete? Let’s take an example from our daily lives. Those of you old enough to remember probably still own an AA road map. It’s hard to imagine that world – stopping at the side of the road to check we are on the right track, yelling at our partner because they said “turn that way” and you said “which way?” and then it was too late and you missed the turnoff.  Deliveries were late, drivers got lost, shipping deadlines were missed and business lost all because we couldn’t find our way from A to B. Now we simply say “OK Google give me directions to home” and a soothing voice accompanies you all the way, always polite, never getting angry, and even able to connect to your home phone to tell the family exactly what time you will get there. Not only that this information could, and is, made available to thousands of others. How do you think Google maps knows that there is a traffic jam five kilometres down the road? You are already a part of the Internet of Things, only now the virtually infinite numbers of addresses means that Google Maps (geolocation) is barely a drop in the ocean in terms of possibilities for efficiency and competitive advantage. Imagine that this same ability to communicate could be applied to things that you make, things that you ship, things that you maintain and things that you use, to deliver the products and services you rely on. The way you do business today could end up a bit like that dog-eared AA map, a relic of a bygone era. Over a series of the next three articles I aim to describe how kiwi companies currently use the Internet of Things to be more efficient, cut wastage and to compete locally and globally. These articles will cover: The I of T – Energy Management The I of T – Production Management The I of T – Supply Chain Management As a regular contributor to the EMA's Business Plus Magazine I strongly believe that sharing information and gaining access to fresh ideas is why we are members in the first place. If you enjoy my articles and if this one has struck a chord I would like to ask a favour. The Internet of Things is an emerging and important field. Being a consultant, writer, father, grandad (sob) and husband means I don’t get out as much as I used to and so predicting trends and commenting on ICT issues does feel a bit like preaching from a bubble some days. If you are working on something interesting, or have an idea or opinion that might inform this series better, then please connect with me via Link’d In or email in the link below. Just because it seems ordinary to you doesn’t mean others won’t gain immensely from your insight. I know for a fact that I will.

Winners, losers and unrequited computer love…a satirical review of 2016

After a busy year trying to make sense of the changing ICT landscape I’m winding down for Christmas by attending as many customer and supplier events as possible. The prospect of free wine and food, stimulating conversations and standard speeches by sales managers delivers a mix of pleasure and pain. I’ve also delighted in compiling my 2016 awards list of companies and individuals that have taken on the IT challenge and made a difference, one way or another. The IT challenge awards go to: The 1980’s Post Office in Disguise Award: Chorus. Given the task of delivering fibre to the country’s wealthiest city Chorus, you sure have made an art form of missing targets, breaking promises and then complaining to the government about not getting paid enough. Fellas – I live two minutes off the Southern Motorway, on the Great South Rd, well within the greater Auckland Council area. Two years ago, you promised me UFB in 2016 – now you have “no plans” to deliver on that promise. In the meantime, I have download speeds slower than my aging prostate in the middle of the night. But then - when you made all the cable guys redundant and turned them into “self-employed” Vision Stream contractors, what the heck did you expect to happen to quality, delivery and on-time performance?   The Best Solution Nobody Wants Award: Amazon Web Services. We all knew you were the best at the technical stuff nobody understands. We all knew you were cheaper than chips. At the end of the day guys, we didn’t want your fancy pants “cloud availability zones”. What we really wanted, was something simple and easy to use. Not the mysterious dross the high priests of IT have been serving us up for the past 20 years. In the end, we spurned you and chose Microsoft, despite your rugged good looks and romantic promises of freedom and joy!   The “We keep trusting you but it feels so very dirty when we do” Award: Microsoft Four years ago, you told us the world would end if we used cloud servers at the risk of our sovereignty, privacy, security and data ownership. Now that you have a half-decent product, you tell us that these aren’t problems at all and that Microsoft Azure and Skype for Business will make us all so very happy. Even though Bill and Melinda Gates are saving the world from disease and war using our money I still only half believe you. I do love you though, I do. Just keep telling me that you love me too and you won’t betray me and that it will all be okay in the end.   The “Three years to retirement and then I am SO out of here” Award: All you technocrats in IT departments all over New Zealand You know who you are. I worked with most of you during the 1990s and early 2000s. Back then we were so proud of our local innovation and No 8 wire ways that saved us from dealing with those multinational IT companies who thought New Zealand was part of Asia Pacific. Now you are clinging to your “boxes that go ping” and telling us that “the cloud” will work for some companies but have limited use in ours. In fact, you don’t even agree that “the cloud” is a real thing and keep demanding we define it. Then you strive to dazzle us with the same technical gobbledegook that lost you your place at the executive table and left you reporting to Finance. In your heart of hearts, you know it’s all a lie and that you just can’t deliver on the promises you make any more. Better to go to your grave clinging onto that shiny box you love so much than to admit you have become the same dinosaur as the one you replaced back in the days of mainframes, whirring tapes and green screens.   The “You don’t even need to know much to be world class” Award: The cloud. Whether it’s Office 365, Amazon Web Services, Salesforce, Facebook or just plain old internet banking the reality is that you are all world class and we love you for it. We can have you at home, at work, in fact anywhere for cents in the dollar and with a click of a credit card. Mr/Ms Cloud you are just so secure, so easy to like, so powerful and so very, very cheap I can’t help but want to marry you. If only Siri would answer my calls….   Merry Christmas readers - see you in the New Year.   This article is also published in the December 2016 issue of the EMA Business Plus magazine where David is a regular contributor.

Businesses need to get the best possible pricing and contract terms for utilities such as water, power and rubbish collection. But once costs are minimised, improved utilisation becomes critical to extracting greater value. A formal, independent audit process is the best way of identifying quick wins. Why perform an audit now? In the past two years the waste services marketplace has experienced aggressive price-cutting by major suppliers. Now they are differentiating themselves with srvice offerings, and their customers need to understand how. In recent months two vertically integrated suppliers have signalled their intention to emphasise value-added recycling and waste minimisation processes over price-cutting, going forward. Other suppliers of waste services that don’t possess their own landfills are using waste audit services as a point of difference, to avoid getting dragged into a price-cutting battle they will struggle to win. The most efficient money-savers Business customers will save more money by sending less waste to the rubbish dump (landfill) than they will from a reduction in the price of waste services. From a supplier’s standpoint, waste audits are costly, requiring staff time and data analysis, with capital outlays often the consequence of the resulting recommendations. Waste audits are also self-defeating for those in the business of collecting and burying rubbish. As we have been working with businesses to reduce their waste quantities and bin movements, as well as negotiate new commercial contracts on their behalf, we have observed the following potential pitfalls: Staff training: New waste-handling process may require either specialised staff training or socialising of new ideas. This entails additional cost, and the purported benefits may be predicated on unrealistic assumptions. Staff buy-in: Change needs to be adopted from the top down, however, if staff aren’t on board with a new process, you could be charged for specialist one-off disposal of spoiled recyclables should waste not be accurately sorted. It is thus important to ascertain the time pressures on your staff before a new initiative is accepted. Hospitality customers are a happy hunting ground for waste diversion suggestions given that their raw materials often come in recyclable packaging, and food waste streams result. However, this industry is fundamentally deadline-focussed, and staff are less likely to worry about what goes in a particular bin when there are orders backing up. A suggestion to save money on waste may thus end up costing you more in staff time. Spread the message and keep it current: Ensure you spread the waste diversion message beyond a small number of staff. This has cropped up in the education sector where a particular year/age group might push hard for an improved process, but the next year is more apathetic. A few years later a similar set of failed initiatives will be suggested by an enthusiastic set of newcomers, unaware of what was previously attempted. Audit waste expenditure Challenge current processes and the underpinning assumptions with an audit review process. The terms and conditions of certain supply agreements prohibit your engaging competing waste service suppliers for such reviews. This serves the interests of your incumbent supplier, whilst limiting the breadth of ideas and potential technologies available. The Commerce Commission moved in 2015 to limit unfair contract terms, which cause an imbalance in parties’ rights in consumer contracts. Although the intention is to focus on the non-commercial sector, energy retailers have begun rolling out more end-user friendly terms to business customers. It is our hope that the relevant waste industry participants will adopt a similar position to allow for a greater spread of waste minimisation ideas. Waste diversion reduces cost Other than the obvious desire to limit landfill refuse, to extend the life of these expensive assets and minimise resource wastage, there are currently obvious financial pay offs in diverting waste. These are likely to grow in future, either with a change of Government, or with a change in Government focus. A waste levy of $10 per tonne is already in place to help reduce the amount of waste New Zealanders generate, but the levy is set at a level 10 times below that of some of New Zealand’s regular trading partners. In addition, the Emissions Trading Scheme covers methane emitted from landfills, but only for every second tonne at present. Energy-savings initiatives by business are hampered by relatively low energy-pricing, and the same sort of thinking will undoubtedly apply with regard to waste services. However, given the current level of these charges vis-à-vis our international trading partners, we recommend business remediates as much as possible now rather than face higher costs in the future. With the components of your waste services charges unlikely to fall any lower, diverting waste from landfill such as with increased recycling, is the best way to unlock additional savings and insulate your business from potential cost blowouts in future. Jonathan Gardiner is a Director of Total Utilities.

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