Dairy express
FONTERRA is the largest commercial organisation in the country. It handles 95% of New Zealand’s dairy exports to 140 countries. Sarah Putt spoke to CIO Chris Barendregt and Manager of Infrastructure and Services Management Lisa Payne about what it takes to keep the voice and data links open to the farm - and to the world.
How big is the team that supports the ICT structure for Fonterra?
Barendregt [B]: The total Fonterra Information Management team is around 140 globally. Here, Australiaand Asia – that’s business applications, infrastructure, end-to-end IS.
Payne [P]: We buy managed services or outsource depending on the relationship. We’re not actually physically monitoring or looking after anything ourselves here. We do that through the service providers.
[B]: So you can probably add another 500-700 to that number.
Who are your main outsourcing partners?
[P]: Gen-i, HP, HCL and AT&T.
[B]: We make extensive use of contractors as well.
To get a sense of the scale of the ICT solutions you are responsible for, how many mobile phones would you provision company-wide?
[P]: I look after the agreement for the New Zealand-based mobile phones, so it’s about 2500.
[B]: We tend to provision mobile phones locally; we don’t have a global agreement for mobile phones. We have people based in 46 countries and some of those operations are quite small, so they just buy off the local provider.
International roaming is a big issue for business users. When you have 2500 mobile users, is that a big spend?
[P]: It seems disproportionate in terms of the spend; it’s high-cost, especially on the data side of it. I’d say the voice side of it has probably come down over the years. We’re educating our users to use wireless. There’s so much infrastructure available around the world, you don’t need to rely on a data card all the time.
[B]: Some heavy users travelling overseas will use IP phones over their laptops; that’s what I do when I’m travelling. We can plug into our offices all over the world and/or over an Internet connection in a hotel. But I don’t make a whole lot of phone calls on the other side of theworld – too busy in meeting people.
There’s been a big push to Gen-i services this year, with the EDS contract moving to Gen-i in January.
[B] It’s not really a big push, because Gen-i was always there anyway; it is now a direct relationship as opposed to a relationship via EDS. So it was more a change in how we buy services. The only thing that did change was that Gen-i picked up supporting the LAN in Australia and New Zealand, which had previously been with EDS. And AT&T picked up the rest of the world LAN.
But you always split the mobile contract between the two telcos, Vodafone and Telecom, and now you’ve moved everything across to Telecom’s XT Network.
You’ve said it’s for the cost savings, but is that the only reason?
[B]: That’s why we pushed for the change. But previously there wasn’t the same option for a single provider. The reason is, a lot of our sites only get Telecom coverage and others Vodafone coverage. In all honesty, Telecom never used to have a great BlackBerry or roaming solution. Now all those issues have been addressed and there are certain cost advantages to putting more into one provider, for example on-net termination rates.
Do they offer deals where they give staff family discounts?
[P]: Yes.
Can you put a figure on how much you’ve saved by going with one provider?
[P]: I wouldn’t like to. That’s confidential information.
[B]: But it was significant.
In terms of coverage, how do you think WCDMA network compares to the old CDMA network?
[P]: We’re just going through all that now. Certainly we haven’t come across any places where it’s worse yet, but we have to test every site where our users travel to. The biggest challenge will be the shareholder relationship managers – they are the people on the road for their living, so they’ll going to be the biggest test for us. I guess we just need to watch this space.
We’ve got a set of performance criteria that the network has to meet before we’ll encourage users to move across. So if they’re on an old Telecom network now and the new one just doesn’t cut it, we’re not going to say you must go across; you just do whatever’s got the best service for you.
I imagine there’s a handset change, but then would that have been part of the deal as well?
[P]: Yes.
[B]: We don’t have a target to get 100% of people on XT. Our target is 95%, and that’s 95% of users that get a viable service. I’d expect that we’ll still have CDMA users; we’ll still have Vodafone users.
Is there a concern that you’ve put all your business with one supplier?
[B]: The advantage is that you don’t get those demarcation points; they can holistically look at your mobility requirements and your service requirements. In terms of straight vendor performance they’re incentivised toperform. They’ve got clauses in contracts, so if they don’t perform we’ve got remedies.[P]: The more they understand what we need, the more they can fight the good fight for Fonterra back in the organisation. I think there are definitely some positives to having a key relationship with one provider.[B]: That’s pretty much how we operate; most of our infrastructure is outsourced. We get it from multiple providers but we tend to give them (Gen-i, HP, HCL and AT&T) a big enough slice of the action to make it worth their while.
How do find the vendors? Are they interested in creating bespoke solutions, or is it one size fits all?
[B]: We’re not that interested in bespoke solutions because we’re not really that different to anybody else. Our requirements aren’t that complex. What we’ve done with our network is move away from a bespokesolution because bespoke translates to complexity and cost that often isn’t actually required. You would have some unique requirements in that you’ve got factories in out-of-the-way places.
[B]: That doesn’t mean the solutions are any different; it just means that we have a requirement for them to push the network further than it may be at this point. If we want fibre into the site, that’s just standardfibre that Telecom would put anywhere else for anyone else and it’s not a dedicated circuit. Anyone could use it.Gen-i is the party that we deal with, but they can actually buy their service off anybody else. So the more standard it is, the easier it is to integrate. They don’t have to get the service off Chorus. That’s thedifference with Operational Separation: they’re not just pushing Chorus circuits at us. As Lisa says – we’re just after costeffective services.So you’ve found that since Telecom operationally separated there’s been a better service being delivered by Gen-i?[B]: I think it’s easier to get an end-to-end solution to a remote area now.
How would you rate rural connectivity? Just yesterday Chorus announced they’re spending $1.8 million on a fibre link to Akaroa, so presumably investment in rural links is increasing. What‘s your experience?[P]: I think it’s varied. Where there’s a business case for them to go there, there isn’t a problem. We’ve been lucky to have some of our newer sites like Culverden (a small town in North Canterbury) connected to fibre. We were putting a new site there and in discussions with Telecom they happened to have plans, so they brought those forward.
As long as you’re not duplicating an investment I think you can make it work. If there’s another service provider that we see out there digging, we’d probably say (to Gen-i) if you guys can’t give us fibre we might be able to leverage this one, so can you go and talk to them for us please.
[B]: That’s the advantage of having scale with one provider; we can influence priorities.
What about international connectivity – is that a big expense?
[P]: The likes of AT&T manage all that for us, so they have agreements in place. This is a cost, but there’s also an advantage not having 15 different languages that need to be spoken to get a data server in.
Are you regularly videoconferencing to places like China and other parts of Asia?
[P]: We’ve got videoconferencing into Singapore, Germany, and Chicago in the US. It’s expensive into places like Singapore at the moment, but I expect that as the infrastructure is upgraded it will get better and more reasonably priced. For example,in Japan they have very good infrastructure in place and we’re exploring how we can leverage off the great Internet-based fibre solutions over there.[B]: We’ve got around 20 sites that are connected with dedicated videoconferencing facilities and we’re seeing quite an increase in usage, especially at the top level, just because of the sheer costs and disruption the comes with travel.[P]: Gen-i provides the service and at present we’re using mainly Polycom as the hardware.
What about the dairy farmers themselves. Is enabling shareholder connectivity part of your brief?
[B]: There’s a line where they do things themselves versus us connecting out to them.
How much do they expect you to enable better connectivity solutions?
[B]: It’s an area we’re not heavily involved in admittedly, but it’s an area that a number of service providers are interested in helping and there are technically savvy farmers out there.But it’s not your responsibility to look after shareholder connectivity. Do you think they are well served out there in the farms
[B]: I think they could always be better served. If you look at our shareholder portal Fencepost, that’s intentionally designed to be able to access at all speeds – different options in terms of what connectivity you have.Do you think Fonterra should champion fibre to the farm, such as TUANZ is advocating? Do you think the company should take a stand on behalf of its shareholders or is it not your role to do that?
[B]: That’s why we’re a member of TUANZ. There are bodies that do that on behalf of the industry.If you could wave a magic wand and get what you wanted to make your job easier, what would it be?
[B]: Fibre everywhere.
[P]: It’s not just the connectivity, it’s what we put on the end of it. It’s access to our key applications from anywhere.
[B]: The desire would be that a discussion around network capability and bandwidth was never part of the conversation. If we wanted to implement desktop videoconferencing technology, connectivity wouldn’t even be part of the conversation because there was affordable, unlimited capacity available on demand.Do you think we’re going to achieve that as a country given the government investment in ultra-fast broadband?
[B]: I don’t think it’s a New Zealand issues; it’s a worldwide challenge.
There’s no point in us having fantastic connectivity just within NZ; the Internet doesn’t reside here. We connect to all other parts of the world, so it’s a huge challenge globally and it’s going to take time and a lot money to address.
