News Analysis

CIO Interview: Kevin O'Connor, Paddy Power

Angelica Mari

Technology plans are moving full steam ahead at Paddy Power, with a new chief information officer recruited to oversee the IT underpinning the Irish bookmaker's exponential growth.

Paddy Power has had a strong financial performance: in August, the firm posted a 54% profit rise for the six-month period to the end of June and full-year results are expected to be up to 30% higher than 2009. Online profits also skyrocketed and UK retail is gaining ground.

The recognition that the company's technology would have to evolve to support continued growth prompted the appointment of Kevin O'Connor, an IT veteran from the financial services sector, as chief information officer in the summer.

"I realised the [job] was pretty similar to what I had done before - it is all about high availability, a high degree of innovation, as well as huge focus on security and user experience," said O'Connor.

"We also have several hundred shops, a significant web presence and a growing international footprint as well as B2B partnerships, so clearly we have to make things run efficiently," O'Connor told Computer Weekly.

"The firm also realises that technology is going to be a competitive advantage, so it is important that we offer more products through more channels and also ensure that users have the richest experience we can provide."

O'Connor is on the company's management executive group and reports to its chief operating officer. According to the IT chief, his new employer's appreciation of what technology can enable is a breath of fresh air.

"The people running the business are extremely smart. I come from an investment banking background and users there are very tech-savvy, but I can safely say that is even more the case at Paddy Power," he said.

While most businesses are looking to reduce spending, Paddy Power's IT budget has gone up "significantly" and so has the headcount. The CIO confirmed the trend is set to continue for the coming year and the firm is hiring IT staff.

Catering for changing customer habits

Paddy Power is looking to enrich the user experience across all its distribution channels, while boosting the amount of sports and more events in which to bet on. This means extra demands on calculation requirements behind the scenes, as well as improved security, resilience and reliability.

The gambling firm also recognises the business implications brought by the rise of consumer IT and Generation Y, so another key area of focus is creating opportunities and also mitigating any possible challenges.

"With the Generation Y coming up, there are many features of user expectation which have been driven by technology at home as well as social media, so we have to appeal to these audiences by bringing them the products they want, the way they want, but clearly that has got to be in secure and reliable manner," said O'Connor.

"As you add products, you don't want to swamp people. You want the breadth, but the right selection for a given customer base and a lot of this is around technology. We need to be sensitive of people, as too much information destroys value," he said.

Similarly to many of its competitors in the UK, Paddy Power is placing significant efforts on improving online user experience. The company has also been quick to jump on the mobile bandwagon: it launched an Android-based betting application last month, following on from a web app for iPhone and iPod Touch in June and an iPhone app in August.

Efficiencies in the back-end

As Paddy Power's offering broadens, improving the company's core betting engine has become crucial. Since the company allows bets to be placed during events, odds change extremely quickly and systems must calculate prices robustly and reliably.

As sophistication increases, more computing power will be required to deal with peaks of demand in events such as the Grand National and avoid delays. Most development around the improvements is based on Java, while other technologies are in use to ensure parallelisation, where many calculations are carried out simultaneously, based on the principle that large tasks can be divided into smaller ones, which are then solved concurrently

Ensuring the reliability and scalability without paying for huge hardware costs for the rest of the year is a big challenge. Capacity planning is another trying aspect of IT at Paddy Power - and most of its peers - due to complexities around testing of the IT set-up as the business grows.

Paddy Power's competitors such as Betfair have invested heavily in grid computing and virtualisation to deal with the increase in computing power and O'Connor is currently looking at options. However, regulatory constraints related to the location of the service means the company has to own and manage its infrastructure, meaning approaches such as infrastructure-as-a-service (IaaS) would not be viable.

"There is no scope for sorry; IT just has to work. While IaaS in not a new idea in my view, it is still fairly immature," said O'Connor.

"I am not aware of anyone using IaaS in investment banking, for example - they are willing to pay a premium to absolutely ensure the systems won't go down and the same goes for us," he said.

"Cost is secondary - the user experience, reliability and the variety of products are the main drivers and we'll pay what it costs [to ensure the appropriate IT to support them]."

Paddy Power already uses virtualisation extensively across its two datacentres in the Isle of Man and Dublin. The company employs the technology for development, testing and corporate systems where the utilisation of dedicated hardware is low, but avoids using the technology for production environments.

"When it comes to our client-facing systems, reliability and performance is paramount. We would rather spend more money on boxes which are underutilised than introducing an additional level of complexity and the possibility that things can go wrong," said O'Connor.

Additional work in the back end includes a replacement of technology supporting the company's call centre "from the handset down" and improvement of corporate systems. This has become necessary due to complexities related to the firm's increasing international expansion, multiple currencies and legal implications.

Taking stock

At a time of austerity and cost-cutting across many IT departments in all industry sectors, O'Connor admits he is fortunate to be in a position to spend on technology to support future growth.

"There is no request that I have made that has been turned down and I am not aware of that happening with my predecessor either. We have been driven by the business, we don't want technology for technology's sake, but we are not constrained about cost either," he said.

However, the fact that Paddy Power is upping its spend on IT doesn't mean there no scope to do things more efficiently. The company's main suppliers for hardware are Dell and IBM, with a "new but rapidly increasing" relationship with HP. Key software vendors include Microsoft and Oracle and O'Connor anticipates a change in engagement rules.

"There are times you need to take stock. We are a bigger player than we were two or three years ago, and some of these [supplier] relationships have been going on for a long time and some vendors will be dealt with in a different way as we are a different size of client," he said.

"Certainly with the current recession, a number of the previously big clients are no longer spending as much, so suppliers are interested in keeping a relationship with us as there aren't many companies growing."

Boosting the IT organisation

Earlier this year, Paddy Power said it is looking to create 750 jobs in Ireland in the next three years, and more than 40 vacancies in the UK and Ireland have been created in technology alone.

The company is looking to recruit positions including infrastructure and database engineers, web developers and business analysts. The bookmaker is also looking to fill graduate positions in IT. Executive searches are underway to fill three senior roles: head of infrastructure, head of retail IT in Ireland and UK and a head of corporate IT.

"It is very nice to talk to vendors and headhunters, they are talking to people about cost cutting and while we always want value for money, the conversation we have with them is about how they can help us grow," said O'Connor.

According to the CIO, Paddy Power's IT organisation is small compared to most of its UK competitors - Betfair, for example, employs a team of more than 600 people - but that hasn't hindered performance.

Similar to Betfair though, Paddy Power is keen to attract the best specialists and is happy to source talent globally.

"We are looking to provide the best service to our customers, provide the best value to our shareholders, so we will do what it takes to get the best people," said O'Connor.


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