Frank O’Dea, Partner with EY, who leads the firm’s Performance Improvement practice in Ireland discusses with Owen McQuade how large scale transformation projects can transform Ireland’s public sector and private businesses.
The business landscape in Ireland has changed considerably over the last two years, and our economy is now enjoying stronger levels of growth. EY’s Frank O’Dea sees a bright future ahead as organisations look to capitalise on a more favourable economic climate. “Intensifying investment is helping to drive the domestic economy, and ongoing reform programmes in both the public and private sectors are presenting us with opportunities to achieve greater efficiencies and better results,” says O’Dea.
In addition to the changing economic environment, the disruptive impact of new technologies is driving many large change programmes across all industries. When asked if these change programmes are addressing different issues now that the economic environment has changed, O’Dea says that in the early stages of the downturn a lot of the emphasis was on cost cutting “but the focus has now shifted to improving organisational performance to capitalise on growth opportunities in the private sector, to tackle the public service reform and investment is needed to overhaul key public services and infrastructure”.
“Ireland has a two engine private sector economy; the indigenous sector which suffered quite heavily in the economic downturn, and which is spread more regionally, and the international sector which is more sheltered from that scale of recession, but is concentrated around major cities. The pharmaceutical, life science and the technology sectors have continued to grow in recent years,” observes O’Dea.
“The downturn has fostered an appetite to take on some of the bigger changes that need to happen. Organisations have opted for a bigger and faster change now than they typically would have done prior to the downturn,” he adds.
One development O’Dea notes is that many of his clients are now thinking about scaling up their businesses, particularly in indigenous companies where “a lot of opportunity exists, particularly internationally as investors are prepared to back those kind of companies. The companies that are associated with our Entrepreneur of the Year™ programme are prime examples: innovative, growing entrepreneurial businesses with a strong global reach who are continuously looking at ways to re-invent and expand their presence. In order to successfully attract investors, grow a business, or improve and sustain performance, core business functions often need to be fundamentally transformed to mitigate shifting external factors,” says O’Dea.
Irrespective of the economic climate, the focus for top management has been consistently focused on “their people and their customers”. This has been a key driver of change in recent years.
Technology also continues to play an instrumental role in shaping all sectors of the economy. “Disruptive technology is presenting both opportunities and threats to a lot of markets. The emergence of new technology is also resulting in elevated stakeholder expectations to drive the business in a cost-effective way,” he emphasises.
The term ‘digital’ has many definitions. Handheld devices are offering an increasing level of sophistication in the transactions they can conduct, resulting in new business opportunities to take advantage of the shift into digital channels. “The banking and digital payments sector in particular has been experiencing real disruption. Although in overall terms commerce is increasing, it is comprised of a higher volume of smaller transactions. This change is bringing about new demands in the way their businesses have to operate,” says O’Dea.
Companies now must also put a comprehensive social media strategy in place in order to successfully market themselves and to interact with their customers. “In many respects this has put a huge burden on small businesses. The initial pull of relatively inexpensive, insightful access to your target audience is often offset by the practical challenges. Your strategy must be innovative, creative and timely while still meeting branding, operational and financial requirements. Social media can be a mixed bag. Some still struggle with it while others have fantastic entrepreneurial breakthroughs,” explains O’Dea.
“The generation that has grown up with the web require a different interaction than somebody who has migrated to the web throughout their life, and this presents businesses with the challenge of understanding both types of customer. Even as employees, businesses have to enable an environment where that will work,” observes O’Dea.
While mobile technology presents us with a range of new business opportunities, threats are present in equal measure. O’Dea explains: “Security and risk mitigation in the digital world have become the key focus areas for organisations. We are now embedding smart technology into critical infrastructure and that can become exposed to cyber threats. Clients are increasingly relying on our expertise to help them identify and mitigate these threats, which can affect business reputation, security and continuity.”
One important change that O’Dea highlights is the way in which organisations now procure IT systems. The traditional method of procurement was to build a relationship with a single large supplier – a ‘one stop shop’ approach. This has now shifted to a multi-vendor environment. “Procurement officers are now seeking a number of specialised partners who will work with them in specific areas. This can be difficult to manage, but if implemented successfully it can have significant advantages. When you consider the spectrum of a large organisation whereby cloud applications co-exist with legacy applications,” observes O’Dea.
The digitisation of organisations with the deployment of digital technologies requires a degree of organisational agility. Cloud technologies are offering much greater flexibility and responsiveness. However, for most organisations the migration to cloud will transition through a hybrid phase where cloud and traditional solutions will need to co-exist for a period. O’Dea has found that an effective approach is to build “agile pockets” within the organisation. Vendors, and the technology used by them in these pockets can be very different than the technology used in the rest of the organisation. Managing both new and legacy systems in parallel is the challenge.
With O’Dea’s years of experience in leading large scale transformation he believes that people are central to its success or failure. “Any change being implemented has to be executed through the people within the organisation. If an organisation wants to undertake ‘the digital journey’, it needs to bring everyone in the workforce along. Otherwise, you risk losing some of the skills and experience that you have in the process.”
After the period of austerity, O’Dea sees it is now an opportune time for the public sector to invest in its people, and its training and education to renew the skills of the public service. “We have seen some tremendous leadership across the public service during the recession and the rapid nature of the recovery is a testament to the calibre of the people that exist within it. But we need to continue to invest in this area and create career pathways for people to specialise and indeed adapt to some of the new technologies that emerge,” adds O’Dea.
There is still a lot of reform needed in many areas of the economy, notably the health sector and other services where ageing assets and sustained underinvestment are now posing capacity constraints to current operations as well as growth in demand for services.
In financial services, there is a lot of investment needed to counterbalance the under-investment during the downturn. In particular, investment in new digital channels and technologies are higher up the agenda.
“Traditional core banking services will still endure within the big pillar banks and there is also a lot of innovation in this area. We are going into an environment where banks will have to expose some of their account information and, provided they have customer approval, allow their competitors access to data. This will be good news for customers who will have more choices and easier switching options,” observes O’Dea.
Another trend O’Dea highlights is the impact regulation is having across all sectors. For example, in the utilities sector regulatory change is driving a lot of activity including the implementation of new smart meters and the new electricity market, I-SEM. “While change will ultimately benefit the consumer, it brings a lot of upheaval with it. Some of those infrastructural changes, such as smart metering, create vulnerability for the incumbents. If people are going to swap a meter it gives potential competitors the opportunity to offer alternative services and solutions to the consumer,” he says.
Customer focus has emerged as a common trend within all of the organisations that O’Dea works with – and this is largely due to the emergence of disruptive technologies and more choice. “Businesses have always needed insight into what the customer wants. While some new technologies can help with that, they also allow the customer to become a lot more empowered. The relationship between businesses and their customers is fundamentally changing, placing the customer at the heart of the transformational process,” he adds.
O’Dea observes that multiple changes are happening at the same time in large organisations which leads to an increasingly complex environment. “Every organisation’s view of transformation is different but for large scale change you need to ensure everything is cohesive. There is no point in technology rushing ahead of the people, and there is similarly no point in getting the people in place and not delivering the technology. Getting that balance right is important,” he stresses.
In trying to navigate this increasingly complex environment organisations are coming to EY because it is independent, and can help establish the right multi-vendor environment: “We are not aligned with technology companies and we don’t build IT systems. We’re in a position to advise people objectively on the right architecture and how to blend new cloud, digital and analytics technologies into their legacy architecture in a secure way. That is the kind of problem that we are helping solve,” emphasises O’Dea.
EY is helping organisations across a wide range of sectors to understand their customers better, develop their customer and digital strategies and to satisfy strategic objectives. O’Dea says that this requires a joined up approach focusing on a number of aspects: “To implement real change, organisations need take a holistic view in terms of people, IT infrastructure, supply chain, operations, finance and marketing to improve overall efficiencies and improve their performance.”
Profile: Frank O’Dea
Dublin-born Frank O’Dea joined EY in 2012 and leads the firm’s Performance Improvement practice in Ireland. He specialises in shaping and leading major business transformation programmes, and has extensive experience implementing large scale international business change, outsourcing and information technology projects. He has over 30 years’ experience across the telecommunications, technology, software and IT sectors internationally and in Ireland. Prior to joining EY Frank was Managing Director of Mosaic, a network sharing venture between two major telecoms companies in Ireland. Prior to that he held a number of senior international roles with another major consulting organisation. He has a Master’s degree in Management Science from Trinity College Dublin, a Bachelor’s degree in Agricultural Science from University College Dublin and a Certified Diploma in Accounting and Finance from ACCA. Interests include spending time with the family, “anything to do with the countryside” and Frank has a keen interest in rugby.