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Best of breed
next horizons
Viewpoint
Battle-Test Your Innovation Strategy Pg 35
Future of Software Pricing Excellence Pg 40
Apps and Desktops and Clouds Pg 48
12 T r a c k t e c h n o lo g y
B u i ld b usi n ess
Shape self
Designing products for value | Essentials of a Chief Compliance Officer Volume 01 | Issue 12
Suresh Shanmugam CIO, Mahindra Finance
Rajeev Batra CIO, Sistema Shyam TeleServices
A 9.9 Media Publication
Vishwajeet Singh CIO, Epitome Travel Solutions
Volume 01 Issue 12 December 2012 150
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editorial yashvendra singh | yashvendra.singh@9dot9.in
2012: A Watershed Year
The year gone by could be the harbinger of enterprise mobility and the death of the PC in 2013
A
s I pen down the last editorial of the calendar year, I can’t help but wonder how momentous announcements somehow fail to deliver on the promises they make. I can clearly recall the remarkable hype when scientists announced they had completed the Human Genome Project. Acres and acres of newsprint were devoted to how the findings would banish chronic diseases and reverse ageing. That was the year 2000. Despite more than a decade passing by, we are yet to witness the wonders accruing from the project. The
fault, I feel, lies not with the scientists but with the scribes. Tech journalists more often than not jump the gun by proclaiming the arrival of future too soon. It takes time for technology to leave a mark. But when it does, the impact is enormous. There are certain years that stand out as defining moments in technology. When it comes to mobility, 2012 could be one such year. Cautious not to jump the gun, we feel this area of technology is yet to fulfill the promise it holds. However, the new year could just see the promise getting fulfilled.
editors pick 14
The Growth CIO
3 companies. 3 stages of business lifecycle. 3 technology leaders. 1 mission—aligning IT with business needs.
2
December 2012
With an astounding uptake of mobile devices (2012 saw the number of smart phones touching one billion), 2013 could well witness the end of the humble PC (including the one on which you are reading this article). Not only this, this proliferation of mobile devices in enterprises will have an all-round impact. A technology decision maker will have to focus on enhancing security, developing robust applications, putting in place highspeed networks, and increasing computing power (for every 600 iPhones or 122 iPads, one additional server is required). We are certain that you will carry the never-say-die attitude and the spirit of innovation displayed during 2012 through to 2013. As a salutation to your exemplary work in the last 12 months, we are capping this year’s editorial calendar with a befitting cover feature. The story showcases three cases of novel technology implementa-
tions in companies at various stages of business growth. During 2012, we focused on the opportunities, risks, and innovations that impelled technology leaders like you to progress to the next level of business-driven solutions. As we move into 2013, we will continue to be your trusted partner in balancing the new emerging realities of technology. So, stay positive and confident in the new year. And by the way, the gains from the genome project are finally visible. This year, the first anti-cancer drug of its kind saw its debut and the first anti-body conjugate for use in humans was made available. Technology may take time but it sure works!
december 2012 14
Cover Story
RegulArs
14 | The Growth CIO
December 2012
next horizons
viewpoint
Future of Software Pricing Excellence Pg 40
Apps and Desktops and Clouds Pg 48
Volume 01 Issue 12 December 2012 150
12 T r a c k T e c h n o lo g y
Volume 01 | Issue 12
4
Copyright, All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd. is prohibited. Printed and published by Anuradha Das Mathur for Nine Dot Nine Interactive Pvt Ltd, Bungalow No. 725, Sector - 1, Shirvane, Nerul, Navi Mumbai - 400706. Printed at Tara Art Printers Pvt ltd. A-46-47, Sector-5, NOIDA (U.P.) 201301
Best of BreeD
Battle-Test Your Innovation Strategy Pg 35
B u i ld B uSi n eSS
Shape Self
Designing proDucts for value | essentials of a chief compliance officer
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S p i n e
cio & leader.com
3 Companies. 3 Stages of Business Lifecycle. 3 Technology Leaders. 1 Mission—Aligning IT with Business Needs.
02 | Editorial 08 | Enterprise Roundup 48 | viewpoint
Suresh Shanmugam CIO, Mahindra Finance
Rajeev Batra CIO, Sistema Shyam TeleServices
Vishwajeet Singh CIO, Epitome Travel Solutions
A 9.9 Media Publication
Cover design by: shokeen saifi imaging by: Peterson PJ & Anil T photos by: Subhojit Paul & Jiten Gandhi
Special leadership section Page 24A to 34
25 | Top Down delivering innovative services Ashok Sethi, CIO, Sapient, believes that five years down the line, CIOs will become more growth oriented
32 | opinion Lessons from Qinghai’s Mystery Mountains
xx
There are many leadership lessons to be learnt from scaling peaks
26 | Leading edge Designing Products for Value How leading
me & my mentee
30 | “Mentor by delegating work properly” Ashok
Cherian, CIO, JK Cement, and Amitab Saxena, General Manager-IT, JK Cement, talk about their relationship as team members
firms combine insights about customers, competitors, and costs to develop innovative products
34 | SHELF LIFE The Twelve Absolutes Of Leadership The core value of leadership, the book says, is formed by confidence, grace and touch
December 2012
5
www.cioandleader.com Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Anuradha Das Mathur Editorial Executive Editor: Yashvendra Singh Consulting Editor: Atanu Kumar Das Assistant Editor: Varun Aggarwal & Akhilesh Shukla DEsign Sr. Creative Director: Jayan K Narayanan Sr. Art Director: Anil VK Associate Art Directors: Atul Deshmukh & Anil T Sr. Visualisers: Manav Sachdev & Shokeen Saifi Visualiser: NV Baiju Sr. Designers: Raj Kishore Verma, Shigil Narayanan Suneesh K & Haridas Balan Designers: Charu Dwivedi, Peterson PJ & Midhun Mohan MARCOM Associate Art Director: Prasanth Ramakrishnan Designer: Rahul Babu STUDIO Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi
44 no holds barred
44 | Achieve energy efficiency gains Jaybalan Velayudhan, Director,
Schneider Electric, discusses the different aspects of energy efficiency Corrigendum On Page 34 of the November issue of CIO&Leader magazine, we have wrongly stated that Rajeev Bhadauria is the head of HR at Reliance Infra. He is presently, Director (HR) at Jindal Steel Pvt Ltd. We regret the error.
40 | Next Horizons: Future of Software Pricing Excellence US government will coordinate sharing and protection of information
6
46 | tech for governance: Essentials of a Chief Compliance Officer There are 5 features which are consistent to all CCO positions
December 2012
advertisers’ index Iomega IFC Symantec 1 Riverbed 3 Schneider 12, 13 IBM IBC Microsoft BC This index is provided as an additional service.The publisher does not assume any liabilities for errors or omissions.
advisory Panel Anil Garg, CIO, Dabur David Briskman, CIO, Ranbaxy Mani Mulki, VP-IT, ICICI Bank Manish Gupta, Director, Enterprise Solutions AMEA, PepsiCo India Foods & Beverages, PepsiCo Raghu Raman, CEO, National Intelligence Grid, Govt. of India S R Mallela, Former CTO, AFL Santrupt Misra, Director, Aditya Birla Group Sushil Prakash, Sr Consultant, NMEICT (National Mission on Education through Information and Communication Technology) Vijay Sethi, CIO, Hero MotoCorp Vishal Salvi, CISO, HDFC Bank Deepak B Phatak, Subharao M Nilekani Chair Professor and Head, KReSIT, IIT - Bombay NEXT100 ADVISORY PANEL Manish Pal, Deputy Vice President, Information Security Group (ISG), HDFC Bank Shiju George, Sr Manager (IT Infrastructure), Shoppers Stop Farhan Khan, Associate Vice President – IT, Radico Khaitan Berjes Eric Shroff, Senior Manager – IT, Tata Services Sharat M Airani, Chief – IT (Systems & Security), Forbes Marshall Ashish Khanna, Corporate Manager, IT Infrastructure, The Oberoi Group Sales & Marketing National Manager – Events and Special Projects: Mahantesh Godi (+91 98804 36623) National Sales Manager: Vinodh K (+91 97407 14817) Assistant General Manager Sales (South): Ashish Kumar Singh (+91 97407 61921) Senior Sales Manager (North): Aveek Bhose (+91 98998 86986) Product Manager - CSO Forum and Strategic Sales: Seema Menon (+91 97403 94000) Brand Manager: Jigyasa Kishore (+91 98107 70298) Production & Logistics Sr. GM. Operations: Shivshankar M Hiremath Manager Operations: Rakesh Upadhyay Asst. Manager - Logistics: Vijay Menon Executive Logistics: Nilesh Shiravadekar Production Executive: Vilas Mhatre Logistics: MP Singh & Mohd. Ansari OFFICE ADDRESS Published, Printed and Owned by Nine Dot Nine Interactive Pvt Ltd. Published and printed on their behalf by Anuradha Das Mathur. Published at Bungalow No. 725, Sector - 1, Shirvane, Nerul, Navi Mumbai - 400706. Printed at Tara Art Printers Pvt Ltd. A-46-47, Sector-5, NOIDA (U.P.) 201301 For any customer queries and assistance please contact help@9dot9.in This issue of CIO&Leader includes 12 pages of CSO Forum free with the magazine
FOGGED OUT BY THE CLOUD? PETER COCHRANE WILL GIVE YOU A CLEARER VIEW Inflexion Convex 2013: Cloud… the easy next step The Inflexion Conference/Expo will help you:
• Determine the next steps needed to leverage the capabilities of cloud computing • Choose and implement the most effective cloud solutions • Mitigate the risks associated with the implementation of ‘Cloud’ Inflexion will include buyers' meets, workshops and an innovative immersive cloud café
Peter Cochrane One of the world's most respected and sought-after experts on technology, change and the future effects of change on corporations and individuals
Partners
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Who will be there: Over 700 of India’s enterprise CIO/IT community, CXOs, LoB Heads, Government officials, over two days. Date: REGISTER February 18 - 19, 2013 www.inflexionconvex.in Venue: India Habitat Centre, Lodhi Rd, New Delhi
Knowledge Partner
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Enterprise
40% GenY Users Have Different Identities Pg 08
image photos.com
Round-up
story Inside
VVIDIA, Nokia Enter into Worldwide Strategic Alliance Nokia will distribute VVIDIA’s mobile content in 150 countries
Digital media company, VVDIA, has entered into a strategic alliance with world’s leading mobile handset maker Nokia. Now, Nokia will distribute VVIDIA’s innovative South Asian content in the 150 countries where it has presence. South Asian Diaspora can now access localised content, created by VVIDIA, by just logging into Nokia Store, on their handsets. VVIDIA’s has added a new genre in content creation by adding infotainment, fashion and lifestyle, glamour, Bollywood, utilities, short films, Humor, grooming, recipes, devotional, fitness and many more in the existing category of infotainment. Artists,
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experts and models speaking regional languages are used in videos/contents. MD & CEO Arunn K Asthaana says, “The partnership will help us offer content to the South Asian community living in 150 countries of the globe, where Nokia has a presence. Nokia users will now have innovative and simple content in their regional language on their handsets.” “VVIDIA’s USP lies in its core ability to ideate, produce and distribute customised local vernacular ethnic content (mainly video) and use of its own multi patent pending technology platform VIMEOX, to offer you a never before consumption experience” he added.
Data Briefing
22%
of world’s data to be generated by China alone by 2020
Enterprise Round-up
They RAJEEV Said it CHANDRASEKHAR
image by photos.com
In a parliament debate over Section 66A of the IT Act, Member of Parliament, Rajya Sabha, Rajeev Chandrasekhar lashed at the government for defending the controversial section of the IT Act
New Digital Universe Study Reveals Big Data Gap Less than 1% of world’s data is analysed EMC announced results of the EMC-sponsored IDC Digital Universe study, “Big Data, Bigger Digital Shadows, and Biggest Growth in the Far East”— which found that despite the unprecedented expansion of the digital universe due to the massive amounts of data being generated daily by people and machines, IDC estimates that only 0.5% of the world’s data is being analyzed. The proliferation of devices such as PCs and smartphones worldwide, increased Internet access within emerging markets and the boost in data from machines such as surveillance cameras or smart meters has contributed to the doubling of the digital universe within the past two years alone — to a mammoth 2.8 ZB. IDC projects that the digital universe will reach 40 ZB by 2020, an amount that exceeds previous forecasts by 14 percent. In its sixth year, the study – measuring and forecasting the amount of digital information created and copied annually – includes findings around the “Big Data Gap,” which is the gap between the amount of data with hidden value and the amount of value that is actually being extracted; the level of data protection required versus what is being delivered; and the geographic implications of the world’s data.
QUICK BYTE iN CLOUD
“Sibal would be in a minority if he considers Section 66A to be in line with the constitution of India. Phrases like ‘Grossly harmful’ etc are being misused – it’s not just the case the police is misusing it, but it is the act itself which is an issue.” —Rajeev Chandrasekhar, Member of Parliament, Rajya Sabha
By 2020, IDC predicts that 46.7% of data stored in the cloud will be related to entertainment — not enterprise data. Surveillance data, embedded and medical data, and information created by computers, phones and consumer electronics will make up the remainder December 2012
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image by photos.com
Enterprise Round-up
40% GenY Users Have Different Online vs Offline Identities Need to
stay connected drives this trend Ninety percent of Gen Y surveyed worldwide said they check their smartphones for updates in email, texts, and social media sites, often before they get out of bed, according to the 2012 Cisco Connected World Technology Report (CCWTR.) There are 206 bones in the human body, and the smartphone could plausibly be considered the 207th for Gen Y. Two out of five said they “would feel anxious, like part of me is
missing,” if they couldn’t use their smartphones to stay connected. Based on a survey conducted by InsightExpress of 1800 college students and young professionals aged 18 to 30 across 18 countries, the report examines how Generation Y uses the Internet and mobile devices to connect with the world around them. The report reveals their behavior and attitudes about the creation, access and privacy
Global Tracker
Disk Storage
vendor revenue totalled $5.3 bn in Q3, 2012, a 3.6% surge from revenue of $5.1 bn in Q3, 2011
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Source: gartner
Global external controllerbased (ECB) disk storage
of the enormous amounts of data being generated daily by smartphones, sensors, video cameras, monitors, and other connected devices. Mobile devices are just the beginning. As more and more people, processes, data and things join and interact on the “Internet of Everything,” the volume and potential value of all the data generated by those connections grow exponentially. Gen Y does not want to miss anything. Checking their mobile devices for text, email, and social media updates is how they start their day– often even before getting out of bed. For this generation, information is real-time, all the time. Nine of 10 respondents globally will get dressed, brush their teeth, and want to check their smartphones as part of the morning ritual for getting ready for school or work. In India, 96 percent of those who have smartphones will check for updates as part of the morning routine. For employers, this is meaningful because it demonstrates that the workforce of the future is more agile, more informed, and more responsive than any previous generation. They live to connect and communicate. Globally, 60 percent of Gen Yers subconsciously or compulsively checking their smartphones for emails, texts or social media updates. In India, 70 percent of respondents compulsively check their smartphones for updates. Of those, 42 percent said they would feel anxious if they couldn't’t check their smartphones and 71 percent wish they didn’t feel so compelled, but they like to stay connected. They’re everywhere! Smartphones are used everywhere, even in the most private of places. The craving to stay connected means that the lines between work and social life/family life are blurring. People check for work updates and communicate at all hours from every place imaginable. Time is elastic: for Generation Y there are no clear markers between “the work day” and personal time– both blend and overlap throughout the day and night. Nearly 84 percent of the Gen Y respondents in India said mobile applications are important to their daily lives compared to the global average of 70 percent.
image by photos.com
FICCI Chooses MS Office 365 for Collaboration Adopts MS Office 365 over Google Apps for security and reliability
FICCI, India’s largest and oldest apex business organisation adopts Microsoft Office 365 over Google Apps to improve its communication and collaboration in the cloud. FICCI’s migration to Office 365 will enable the organisation to add more licenses on Microsoft Exchange and enhance collaboration amongst users in a virtual environment using Microsoft Lync. FICCI wanted to upgrade its email system from the limitations of Rediffmail server to a more
stable platform where data space, service support and security could be achieved. The organisation evaluated hosted solutions from Google, IBM and Microsoft, through an in-depth market survey and feasibility study and found the best fit in Microsoft Office 365. The key reasons for choosing Microsoft platform over its competitors were compatibility with existing infrastructure, active directory synchronisation, meeting 99.99 percent uptime service level agreement (SLA), easy to configure setup for both desktop as well as mobile users including Windows, Blackberry, iPhone or Android users. FICCI completed migration to the cloud across its domestic as well as International offices in two months choosing PC Solution as preferred partner for setup, existing data migration and end user installation. Rajiv Mishra, Additional Director & Head — IT, FICCI stated, “We looked for ways to deliver cloud on our terms along with enterprise-class security, thereby reducing capex. Microsoft Office 365 emerged as a better fit with our overall IT strategy, as it is much more integrated and advanced than Google Apps and offers more of the functionality our employees need. Combined with the extended functionality in Lync Online, Office 365 offers much more enterprise value than Google.” Ramkumar Pichai, General Manager — Microsoft Office Division, Microsoft India, “FICCI’s decision to deploy Office 365 across its offices worldwide is further evidence of the enterpriseclass quality and scalability of the world’s most popular productivity platform. Office 365 clearly makes Google Apps look outdated when it comes to enterprise-class security and delivering cloud on your terms.”
Fact ticker
More Connected Global Market in 2013 Consumers will demand control of their identities
Symphony Teleca Corporation (STC) has announced its software industry predictions for the year 2013. “The year 2013 will see a fundamental reshaping in the way commercial software and software related products are built and deployed in a rapidly merging environment of the cloud, mobility and analytics. Software
manufacturers will move towards verticalisation, building software for niche segments and specialized application areas. The Indian economy is irrevocably shifting from services to product engineering, with NFC and mobilisation leading the trend.” In 2013, Symphony Teleca predicts there will be a shift to
task-centric computing as user interfaces become truly multimodal and content, services and applications grow to be pervasive, moving with the user across device types. There will be an increased emphasis on voice recognition enablement technologies such as ECNR as the next phase of UI is not keys or touch, but voice. Consumers will demand federated control of their identities across platforms and devices as they seek to manage their personas not just on their own devices but across all.
Hughes
H
ughes Communications India has been contracted to connect 27,000 offsite ATMs with a secure broadband satellite network over the next two years and provide managed network services for various public sector banks. The contracts have a total value of Rs 200 crore over an eight year period, and were awarded by eight Managed Service Providers (MSPs). The Hughes win is part of one of the largest outsourcing deals in the financial sector, under which the Ministry of Finance and a consortium of all the public sector banks of India have contracted with nine different MSPs to install and manage a total of 63,000 off-site and on-site ATMs across urban and rural India. The MSPs were chosen through a series of reverse auctions for sixteen different circles, conducted by six lead banks, namely, SBI, Bank of India, PNB, Bank Of Baroda, UBI, and Canara Bank. India currently has approximately 100,000 ATMs and this initiative is expected to increase the ATM density by over 60 percent, thus helping meet the goals of Financial Inclusion and delivery of e-Government services to citizens directly. Hughes will install and operate its advanced HN9200 and HN9400 satellite broadband terminals at ATM sites.
December 2012
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DATA CENTER CORNER dc planning
The Top 9 Mistakes in Data Center Planning
By avoiding these mistakes, you will be well on your way to achieving success. Through proper planning, you can create a data center facility that meets your organisation’s performance goals and needs Summary
Gartner states that any site more than seven years old is obsolete. Overcrowded or obsolete data centers create a roadblock for growing organisations, and expansion is the only solution.
T
oday, many businesses are operating outside of safe capacity thresholds with little or no room to expand. According to IDC, the average data center is nine years old. However, Gartner states that any site more than seven years old is obsolete. Overcrowded or obsolete data centers create a roadblock for growing organisations, and expansion is the only solution. Last year, getting the capital to carry out a data center expansion was nearly impossible, and it only exacerbated the need for more space. Below are the top nine mistakes in data center planning.
Big Mistake 1 Failure to take total cost of ownership (TCO) into account: Focusing solely on capital cost is an easy trap; the dollars required to build or expand can be staggering. Capital cost modeling is critical, but if you have not included the costs to operate and maintain (OpEx) your businesscritical facilities infrastructure, you have severely short-
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changed the overall process of effective business planning. Focussing on capital expense is very critical.
Big Mistake 2 Poor cost-to-build estimating: Another common mistake is the estimate itself. Financial requests made to boards of directors for capital to expand or build a data center are often too low and result in failure. The flow of decision-making looks something like this: • The capital request is made and tentatively approved. • Financial resources are allocated to investigate, capture and create a true budget. • Time is spent driving the above budget process. • The findings reveal that the initial budget request is too low.
Big Mistake 3 Improperly setting design criteria & performance characteristics: There are two missteps that can put your organisation in the overspend death spiral. First, every-
data center corner
CUSTOM PUBLISHING
Designs that are modular and flexible are the key to long term success. Even the best kilowatt per square foot/rack planning can be obsolete due to consolidation one wants a Tier 3 design, but not everyone needs one. Second, most visions of kilowatt per square foot or rack are not supported by actual business requirements. Too many times, the “must have 300 watts per square foot” approach may not be justified. Don’t overbuild; it is a waste of capital. Make sure you get the design right.
Big Mistake 4 Selecting a site before design criteria are in place: Organisations often start searching for the perfect space to build before having their design criteria and performance characteristics in place. Without this vital information, it doesn’t make sense to spend time visiting or reviewing multiple sites. This typical “cart before the horse” scenario happens most frequently with users in the 1-3 megawatt range. The problem with selecting a site prematurely or based on narrow geography is that the site often cannot meet the design requirements.
Big Mistake 5 Space planning before design criteria is in place: The amount of space to house the data center facility infrastructure components can be significant. In the most robust of systems, the ratio of raised floor to support gear could be as high as 1 to 1. Many organisations base their space requirements on IT equipment alone. However, mechanical and electrical equipment require a significant amount of space. Therefore, it is critical to determine your design criteria before you develop your space plan.
Big Mistake 6 Designing into a dead-end: The data center industry has done a good job of promoting the importance of modular designs. However, using the modular approach doesn’t guarantee success. Organisations still “dead-end” themselves by using the wrong crystal ball when guessing about future needs. Everything can and will change. Designs that are modular and flexible are the key to long term success. Even the best kilowatt per square foot/rack planning can be obsolete due to consolidation, exponential business growth via acquisition, or a sharp turn to an unplanned high density footprint. Design your input and output distribution
$1.3 billion the size of data center colocation and hosting market in India in 2016 Source: Gartner
systems to accommodate any future change in your base build criteria.
Big Mistake 7 Misunderstanding PUE: Power Usage Effectiveness (PUE) is an effective tool to drive and measure efficiency. However, broad energy efficiency claims may lead to significant misunderstanding. In nearly all situations for new builds and expansions, there is a capital cost related to gaining lower PUE. Many times, organisations set a PUE goal with all the proper intentions but the calculation does not take into account all factors that should be considered. You need to fully understand what the ROI is on capital expenses to reach your goals. Use PUE to your advantage to meet your overall business goals.
Big Mistake 8 Misunderstanding LEED certification: To date, the US Green Building Council (USGBC) has not set specific criteria for data center LEED criteria. There are three basic missteps that take place: • Failure to develop a base understanding of the qualifying criteria. • Pursuing LEED certification as an afterthought. • There will be costs related to receiving certification. Failure to take these related expenses into account will impact your TCO and business decision planning process.
Big Mistake 9 Overcomplicated designs: As stated earlier, simple is better. Regardless of the target tier rating you have chosen, there are dozens of ways to design an effective system. Too often, redundancy goals drive too much complexity. Add in the multiple approaches to building a modular system and things get complicated fast. When engaging internally or with your chosen consultant, the number one goal should be to keep it simple.
BROUGHT to YOU BY
December 2012
13
C O V E R S T O R Y | t h e g ro w t h c i o
3 companies. 3 stages of business lifecycle. 3 technology leaders. 1 mission — aligning IT with business needs
The Growth CIO
14
December 2012
t h e g r o w t h c i o | CO V ER S TOR y
There are hurdles to business growth at every level of the maturity curve of an enterprise. Technology not only has the potential to alleviate these hurdles but can help open up new avenues for business growth. However, given the tough economic situation, this is easier said than done. To achieve this, enterprise technology decision makers will have to display phenomenal leadership abilities. In our cover story, we feature three such CIOs from companies at different levels of maturity. From ensuring a healthy bottom line to building a robust top line, these three technology leaders have gone beyond the call of duty and delivered results. After all, you’re considered a leader, only if you deliver results! By team cio&Leader Design shokeen saifi Imaging haridas balan Photos subhojit paul & Jiten Gandhi
December 2012
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C O V E R S T O R Y | t h e g ro w t h c i o
“IT should complement the core business of any organisation. In our case, it has seamlessly complemented business growth� —Vishwajeet Singh CIO, Epitome Travel Solutions
Vishwajeet Singh CIO, Epitome Travel Solutions, says that the clear mandate for the IT department was to keep the costs low
Leveraging Open source for Saving Costs
Epitome Travel Solutions develops a mission-critical travel portal using open source technology and saves precious capital expenditure.
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December 2012
Epitome Travel Solutions (ETS) is a travel organisation that offers diverse travel-related solutions and services to the corporates as well as individuals. Founded by a group of experts who have decades of diverse experience, Epitome Travel Solutions aims to be a game changer in the burgeoning travel industry. Envisioned to provide holistic solutions to the awe inspiring, and ever-expanding travel industry, the organisation is focused on delivering excellent service to travelers.
The Situation Being a new entrant into the market, ETS was faced with all the challenges typically confronting a start up. There were pressures of differentiating from competition, keeping costs low and above all, creating a comprehensive and robust IT infrastructure for the travel portal.
t h e g r o w t h c i o | CO V ER S TOR y
As Vishwajeeet Singh, CIO, ETS, says, “The travel business, in both its conventional and online forms, has reached a certain maturity level, so it is important that we find ways to set our services apart.” “The clear mandate for the IT department was to keep costs low and leverage technology that offered the least recurring cost. We had to compete with the well-established giants in the industry, and at the same time meet customers’ ever-increasing and demanding expectations. The biggest challenge confronting us was to carry out the sizing of the resources, platform, architecture and product,” he avers. To prepare the company for fast and sustained growth, Singh needed to deploy a cost-efficient, scalable and fully supported platform as the foundation for the design and creation of its travel portal that provided its customers with holistic travel solutions and excellent service. The performance of the platform had to be excellent, especially since it was designed to feature various complex searching patterns and algorithms to respond to customers’ queries. In addition, as the portal would be heavily accessed from multiple customers across the globe, security was also a critical parameter.
The Solution
Epitome Travel Solutions industry: Travel and Hospitality Etablished: 2011 headquarters: Okhla, New Delhi Products and Services: Online travel solutions for large corporations and SME, expense management, analytics and consultation on cost savings, 24X7/365 real time support
The company made a calculated decision to avoid off-theshelf products to build its portal. There were two major reasons behind this move. “One was the exorbitant costs of these products, and the other was lack of flexibility in building the entire framework to specific needs. We opted to build the complete framework of the travel portal, including the core engine and the interface, in house. This would not just be cost effective, but we would also be able to use our experience to become a differentiator in the travel industry,” recalls Singh. The firm evaluated multiple proprietary and open source operating systems. The IT team did the proof of concept (PoC) for two months to evaluate. “We rigorously evaluated the operating systems on reliability, flexibility, performance, security, ease of support, and cost,” said Singh. After a rigorous evaluation, ETS selected Red Hat and implemented Red Hat Enterprise Linux as its core enterprise platform. Singh leveraged the LAMP (Linux, Apache, MySQL, PHP/Perl) technology, which seemed to be an ideal fit that not only met the firm’s criteria, but also allowed ETS to take advantage of rapid innovation from the open source community and avoid proprietary lock-in. In addition, Red Hat’s subscription model provided ETS with a predictable total cost of ownership (TCO), while ensuring that ETS derives continuous value even after ini-
tial roll outs. To further do away with the need for a large number of servers, Singh made full use of virtualisation technologies from VMware and Citrix. It deployed IBM Blade centers to host its applications. The company developed a complete end-to-end solution with all three layers -- front end, middleware and backend. It also developed a customised Business Intelligence. For its switching requirements, it deployed Juniper’s L2 and L3 switching devices. “It was more like a module driven development and we achieved all within 8 months. It is a web-based application and caters to any segment of customer i.e. B2C, B2B and B2E. We are currently covering only Indian customers,” recalls Singh.
The Benefits The travel portal of ETS has been live for over a one year. Today, more than 500 agents and various corporations use the firm’s services. “Currently, we have restricted ourselves only to the B2B and B2E market segments. But with the kind of performance we on this platform, we are confident to launch and serve the B2C segment by early 2013,” says Singh. The biggest gain for ETS post the deployment has been on the front of cost. “IT should complement the core business of any organisation. In our case, it has seamlessly complemented business growth. Given that our mandate was to save cost, the solution enabled us to save as much as 30 percent in terms of capital expenditure on software licensing. Besides, the solution is fully customisable and secured and it was easy to train our employees on it since it has a rich GUI. The solution is open for any change and load,” says Singh. By opting to use open source, ETS freed itself from vendor lock-in, and enabled itself to choose hardware platforms that delivered flexibility and high performance. Open source-based solutions also provided ETS with lower IT costs, simplified management, reduced systems maintenance, and increased scalability and performance for the travel portal. The maintenance of the entire IT infrastructure has also been highly simplified. “The application has had a virtually zero down time, making it an immensely successful deployment. Our customer satisfaction has increased incrementally. With the state of the art infrastructure, we can reach customers easily and the cost-effective nature of the platform has allowed us to pass those benefits onto our customers,” avers Singh. “The solution has made our business more agile, allowing us to rapidly respond to ever-changing business needs and helping us use IT in a strategic way to build the right platform for tomorrow,” he adds.
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C O V E R S T O R Y | t h e g ro w t h c i o
Scaling new heights in innovation MTS has developed two innovative mobile platforms to retain existing customers and acquire new ones
Sistema Shyam TeleServices Ltd (SSTL) nationally operates services under the MTS brand and has over 16 million wireless subscribers in the data and the voice category. SSTL is a venture involving equity participation by Sistema of Russia, the Government of Russian Federation and the Shyam Group of India. The company started its operations in India three years ago and employs over 3,500 employees, operates over 3,00,000 retailers and has made investments of over $3.2 billion.
The Situation Last year, the company was in a situation where it needed to develop a product, which would help them in retention of customers. With the telecom market in India getting more and more competitive, one of the most important things for telcos today is to come up with innovative products that not only enable them to retain the customers but also help them in new customers acquisition. Being a growing telecommunications company, the foremost target ahead of SSTL was to launch products that would be unique and offer value for the customers.
The Solution MTS Founded: 2008 headquarters: New Delhi, India Products: Mobile telephony, wireless broadband customer base: 17 million
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In 2011, the in-house IT team, along with the marketing team at MTS, came up with a product named MBonus, which has the capability of offering on-the-fly voice and data proposition to the customers, basis their usage pattern. The unique part of the product is that it is completely automated and it works with a massively parallel and columnar analytical databases coupled with a data mining engine behind it. According to Rajeev Batra, CIO, SSTL, “The beauty of the product is that it is the first in the industry. While many players have tried accomplish this in the past, they
December 2012
failed to take care of the complex business analytics that works elegantly at the back-end. The solution that we have developed is very robust and scalable. Presently, it has the capacity to handle 20 million customers and can be scaled up as and when required.” Another innovative product that the company has launched just a couple of months back is mAd. The product is a next generation mobile advertising platform empowering advertisers to engage with the customers. The mAd service allows MTS smartphone customers to make free calls by just watching video advertisements on their device. “It is a win-win situation for both the customers and the advertisers. If a customer watches an ad, he gets 60 seconds of free call time. In a day, a customer can get a maximum of 240 seconds of talk time free, which is valid for lifetime. So in a month, a customer can get up to 120 minutes of free talk time,” says Batra. The catch is that the customer has to watch the complete ad to get the free talk time. To ensure this, MTS had to do lot of back-end analytics. The advertiser pays for the free talk time that is given to the customers. According to Batra, the response to the initiative is tremendous with 25,000 to 30,000 advertisements being watched per day. The product is absolutely free for MTS customers and it requires no activation charges, no application download charges as well as no data transfer charges while viewing the video ads. The user gets a seamless experience with no buffering and video streaming hassles. A slew of leading brands including Coca Cola, Pepsi, Mentos, Centre Fresh, Fiat, Kellog's, Titan, Lenovo have already associated for MTS mAD service to engage with their customers. MTS mAD service is available on all Android devices on
“We have always tried to come up with fresh mobile platforms and both MBonus and mAd have shown that our thought process behind conceptualising these products is accepted by the customers” —Rajeev Batra, CIO, Sistema Shyam TeleServices
Rajeev Batra CIO, Sistema Shyam, has developed a mobile platform where customers can expereince instant gratification
the MTS network including MTS MTag 3.1, 351, 352, 353, 401, MTS Pulse, Samsung Galaxy Y and Samsung Galaxy Ace Duos CDMA. The company is expanding the scope of this service by launching it on Blackberry and Brew enabled entry level MTS handsets.
The Benefits After the implementation of MBonus, the company in the last one year has seen amazing results. “With MBonus, the idea was to provide instant gratification to our customers. It was primarily targeted at our pre-paid customers and the idea was to enhance usage and retain customers. We have been able to achieve both. The programme is still running and we are making it more intelligent,” says Batra. In case of mAd, the company has received a great response from the youth segment.
“mAd is primarily targeted at our pre-paid customers and we have already started witnessing its success in the market. The young brigade is cashing on the free talk time. I hope that this will also be a big hit in the rural areas where people would like to have free talk time. We feel this product will go a long way in enabling us to add more subscribers,” says Batra. The fact that both MBonus and mAd have been successfully accepted in the market is due to the foresightedness of Batra, who came up with two innovative solutions. “We have always tried to come up with fresh mobile platforms in the market and both MBonus and mAd have shown that our thought process behind conceptualising these products is accepted by the customers,” avers Batra. “I have high hopes from mAd and in the coming months, we hope to add several new customers to our portfolio,” sums up Batra.
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MMFSL founded: 1991 headquarters: Mumbai, India parent: Mahindra Group
Suresh Shanmugam CIO, MMFSL believes in having a human connect in technology
Using Human Connect in Technology
MMFSL has been able to achieve success in the rural market by leveraging innovative technology solutions
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Subsidiaries: Mahindra Insurance Brokers Limited, Mahindra Rural Housing Finance
t h e g r o w t h c i o | CO V ER S TOR y
Mahindra and Mahindra Financial Services Limited (MMFSL) is one of India’s leading non-banking finance companies. Through a vast network of branches, it provides personalised finance for the widest range of utility vehicles, tractors and cars, focusing on the rural and semi-urban sector. MMFSL’s rural financing is considered as the cornerstone of poverty reduction, rural development and inclusive growth in many parts of the country. With a majority of India’s population living in rural areas, MMFSL loans to over 20,00,000 customers belonging to the low-income groups has proved to be a catalyst in helping rural India surge ahead in a big way. Technology has been the backbone of the company growing in the tough rural markets of India. What Suresh Shanmugam, CIO, MMFSL started in 1997 as a small IT department, now serves as one of the cornerstones of the company’s success with 300 team members serving over 600 locations. The company is expected to grow at rate of over 25 percent in 2012-13. In order to help the company achieve such astronomical targets, Shanmugam believes technology needs to play an essential role. He believes that, “creating value systems and human connect to make technology successful” is the only way to create acceptance around a technology solution and to make these solutions achieve their true objectives.
The Situation Mahindra & Mahindra Financial Services decided to focus on support and service delivery efficiency to create differentiation for the company. In the past, customers in rural areas would take about two days to reach to the nearest centre to deposit cash, documents or to collect the information they required. Due to this, the management had to wait for several days to access the funds availability situation across the country. Moreover, the sales executive had to make several visits to a customer to attain different information, verify documents and collect money. Due to this delay, their incentives also took up to six months to land into their accounts. Finally, the customers needed information in real time for their specific needs and in their local language.
The Solution “We believe that business information technology solutions are a strategic tool for our business to gain competitive advantage and to improve overall productivity and efficiency of the organisation. All our technology initiatives are aimed at enhancing our Corporate Customer Care towards Solutions Support Services (3C=3S) levels to rural customer and convenience, remote servicing improvements on new business initiatives loan administration for timely collection and recovery while minimising costs,” Shanmugam opines. Describing the solution, he says, “It is a unique model being the first of its kind in rural financial industry, to
“We believe that business information technology solutions are a strategic tool for our business to gain competitive advantage and to improve overall productivity and efficiency of the organisation” —Suresh A Shanmugam, CIO, MMFSL
demonstrate reach and speedy services at all times. We were the first to launch EPoS Transactions through GPRS, VSAT and CDMA connectivity in rural India. We initiated a device to launch a unique dynamic currency conversion solutions which address rural cash issues through FSS in all our rural locations.” PoS HUB supports acceptance of signature and PINbased credit, debit and prepaid cards PoS transactions through PoS concentrator. MMFSL launched GPRS terminal, for NBFCs to route transactions through GPRS, GSM, and mode of connectivity. MMFSL also launched various alternate networks for routing PoS transactions. Through FSS, a new payment through card using VISA and master card systems is accepted for SBI and all banks.
The Benefits To enable the customers, websites and IVR numbers were setup to provide them information in 11 different languages. This made it easier for them to connect to the company and get the information they wanted in a jiffy. By enabling the sales representatives with the right tools, customers could submit their payments and documents in just two hours. The same took two days in the past. The sales representatives gained significantly by a new solution called Employee Point of Sales or EPoS solution that was a device that worked both in online and offline mode, provided all the information that was required by customers, printed payment receipts and worked even without electricity. To charge these made-in-India devices, sales reps were given bike chargers, car chargers as well as regular AC chargers. With this, the incentives are now given out automatically by the system and the sales representatives receive the incentives in just two days of collecting the payments from the previous six months. The most important part of the implementation was the visibility that it provided to the management. With live inputs done through the EPoS devices, management knows the exact funds availability status of the day that helps them take strategic decisions.
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ion ial ct ec se Sp ship er ad le
“Leadership is practiced not so much in words as in attitude and in actions.”
—Harold S. Geneen
December 2012
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Introduction
CIO&LEADER This special section
on leadership has been designed keeping in mind the evolving role of CIOs. The objective is to provide an eclectic mix of leadership articles and opinions from top consultants and gurus as well as create a platform for peer learning. Here is a brief description of each sub-section that will give you an idea of what to expect each month from CIO&Leader:
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Leading edge An opinion piece on leadership penned by leadership gurus. Plus, an insightful article from a leading consulting firm
top down
This feature focusses on how CIOs run IT organisations in their company as if they were CEOs. It will comment on whether IT should have a separate P&L, expectation management of different LoB heads, HR policies within IT, operational issues, etc. This section will provide insights into the challenges of putting a price on IT services, issues of changing user mindset, squeezing more value out of IT, justifying RoI on IT, attracting and retaining talent, and competing against external vendors
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ME & MY MENTEE
Cross leveraging our strong traction in the IT Manager community, this section will have interviews/features about IT Managers and CIOs talking about their expectations, working styles and aspirations. In this section, a Mentor and a Mentee will identify each other’s strengths and weaknesses, opine on each other’s style of functioning, discuss the biggest lessons learnt from each other, talk about memorable projects and shared interests
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SHELF LIFE
A one-page review of a book on leadership
24B
December 2012
Top Down Ashok Sethi CIO, Sapient
Delivering Innovative Services
Ashok Sethi, CIO, Sapient believes that five years down the line, CIOs will become more growth oriented The meaning of leadership has taken a very different shape today. Five years down the line, IT leaders will become more of business strategists with increased focus on customers. As consumerisation of IT grows stronger, the CIO’s job will entail working closely with other business leaders in his organisation to address this trend. Given the economic scenario, the management wants the CIO to not only manage IT but also earn more revenue for the enterprise. A technology leader will, therefore, have to liaise with strategic partners to bring about a tangible impact on the top line of the company. He will need to be ever more agile and connected to business demands and industry trends. Five years hence, CIOs will have to look at delivering innovative services, while effectively addressing regulatory demands, managing cyber-security and mitigating risk exposure. Under his domain of governance, an enterprise technology decision maker
will need to manage the nuances of globalisation (stemming out of his company's organic or in-organic growth) which may be cultural, local, regulatory, linguistic or technology related. To prepare any organisation to meet these challenges, it is important to nurture talent. With the changing times, companies are understanding the importance of grooming talent in a proper manner so an employee realises his potential and delivers the best. At Sapient, we have an innovative programme called “Nurturing Leaders” under which we identify employees within the organisation and invest in them in terms of training, coaching, rotation of work, and further studies. We assess the strengths and weaknesses of each employee through our performance and competency assessment process and try to help improve their skills to make them more efficient and effective in their domain. We believe that these young talents are going to be the leaders of tomorrow. Showing them the right path and giving them ample opportunities will help them in reaching a stage where they can in turn become good mentors. — As told to Atanu Kumar Das
December 2012
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Leading Ananth Narayanan, Asutosh Padhi edge and Jim Williams
Designing Products for Value
How leading firms combine insights about customers, competitors, and costs to develop innovative products By Ananth Narayanan, Asutosh Padhi, and Jim Williams
A rising tide of prosperity in developing economies is reshaping the nature of competition among global product makers, offering both the promise of new markets and the perils of having to face nimble, innovative, and highly ambitious rivals. In fact, the speed of newcomers (unencumbered by legacy issues) makes still more problematic an insidious challenge large manufacturers everywhere face when they try to innovate: insular thinking and functional disconnectedness that, if unchecked, can gum up product-development processes, drive up costs, and distract companies from paying attention to competitors—and, ultimately, customers. Recognising the challenges of the new
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environment, a few product makers in industries as varied as appliances, automotive, consumer packaged goods, high tech, and medical devices are taking a different approach. By encouraging more focused collaboration among multiple functional groups (notably marketing and sales, operations, engineering/R&D, and procurement), these leaders are combining deep insights about customers, competitors, and supply bases to strip out costs and amplify what customers truly value. The results—including better products, happier customers, higher margins, and, ultimately, a stronger ability to innovate—should serve these organisations well in years to come. In this article, we’ll look at three such
companies. Their experiences offer insights for any product maker hoping to improve its competitiveness.
Case 1: Appliance maker The challenge Senior executives at a large, low-cost manufacturer of appliances and white goods were concerned about the sluggish performance of the company’s household fan business. It had long been among the top leading players in the company’s home country—an emerging market—but was now losing domestic share in two important, and fiercely competitive, product categories. The company’s leaders suspected that a stagnant product portfolio was partly to
A n a n t h Na r a y a n a n , A s u t o s h Pad h i a n d J i m W i ll i a m s | L e ad i n g e d g e
niches for fans with built-in, rechargeable batteries (to be used in case of power outages), as well as portable models for families that wanted one fan to serve several purposes—say, venting cooking odors in the kitchen and personal use elsewhere in the house. The company began actively pursuing these and other designs, including concepts tailored for consumers in developed countries.
illustration BY photos.com
Study the competition
blame; they had been focusing a considerable amount of attention on operations and had neglected to revisit fan designs for a couple of years. Meanwhile, an innovative upstart, also from an emerging market, had begun competing with the manufacturer, both at home and in developed markets. The threat served as a wake-up call: establishing a stronger platform for growth, the executives realised, would require the company to step up its product-development capabilities while maintaining—or even improving upon—its low-cost edge.
Focus on the customer The company started by conducting focus groups and ethnographic research aimed at identifying unmet needs among middle-
income (and aspiring middle-income) families in emerging markets. As these approaches started generating concepts for new products, the company ran surveys that forced consumers to choose between various product features and price points and then used conjoint analysis to discern how much customers were willing to pay for various options. Its results were intriguing. For example, the ethnographers observed that middleclass aspirants in urban areas hated how dirty the blades of typical ceiling fans became after prolonged use. Conjoint analysis showed that some of these consumers would pay a premium for models that were easier to clean. Similarly, the work identified profitable
Next, the executives brought together a group of designers, purchasers, marketers, product engineers, and others to conduct a series of product teardowns involving the company’s—and the competitor’s—fans. By seeing how different models stacked up, the executives hoped to spark fresh thinking in the team that would improve the new designs and also to help determine whether competing products had unexpected cost or technological advantages. The exercise helped the company to meet both its goals. Purchasers and product engineers, for instance, believed that it was already striking the right balance between quality and price in its materials and components. Yet the teardown showed that as compared with competitors, the company was “overbuilding” its products significantly and that identical—or even better—product performance was possible at a lower cost if the team was willing to rethink its design approaches. Some of the resulting design changes were quite straightforward and even, in retrospect, obvious. Yet the team acknowledged that the new ideas didn’t click until the teardown, when the evidence was spread out on the table for discussion. By modifying the cover of one type of household fan, for example, the team made it unnecessary to include an internal bracket assembly that had supported the original cover—a savings of seven percent per unit. This change, like most cost-saving opportunities the team identified, was invisible to customers and didn’t matter to them (for an example of one model, see diagram). Many of the individual cost-saving opportunities the team identified were small. But the collective impact was huge—helping the company to reduce the total cost of manufacturing its fans by more than 10 percent, against a cost base that was already
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L e ad i n g e d g e | A n a n t h Na r a y a n a n , A s u t o s h Pad h i a n d J i m W i ll i a m s
Diagram of design changes
Packaging Redesigning box to use less cardboard lowers cost by 3.0%.
began assembling a clearer picture of how the product looked from the outside. The picture wasn’t pretty. While the manufacturer did enjoy a lead over the competitor in product quality, as the R&D team had insisted, the gap was smaller than expected. Moreover, the manufacturer slightly lagged behind its competitor on several other critical attributes that mattered more to customers, despite investments it had made to differentiate itself in these very ways (exhibit). The conclusion: the two products were about equal in customers’ eyes—until the competitor’s lower price tipped the balance in its favour.
Study the competition Blade Using smaller shank lowers cost by 3.7%..
Motor Shortening spindle lowers cost by 0.7%.
Smaller routing sticker lowers cost by 1.1%.
Cover Replacing screws with snap-fit attachments lowers cost by 0.2%.
Motor Redesigning rotor using less aluminum lowers cost by 2.8%.
Eliminating polybag for warranty/instructions lowers costs by 0.5%.
quite competitive. Meanwhile, consumers received the new designs well, and that contributed to a 50 percent jump in operating profit in the first year of their introduction and helped elevate the company to the number two spot in the market (up from number three) over that time span.
Case 2: Medical-capitalequipment maker The challenge A large manufacturer of medical devices and capital equipment was losing market share to an Asian-based entrant offering lower prices for a key product. The manufacturer’s R&D team was perplexed. By its estimates, the competitor’s costs to make the product should be about 20 to 25 percent higher than the company’s costs for its own product. A head-to-head comparison of product characteristics clearly indicated that the attacker’s was inferior on many dimensions, including quality. The consensus of
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the R&D group was to stay the course—the competitor, they grumbled, was selling below cost to grab market share and would eventually have to raise its prices. Skeptical company leaders decided to investigate further. Many of the R&D team’s key personnel were longtime company veterans who had been instrumental in the design and commercialisation of its product from day one. While they were stellar R&D performers, some executives felt that the team didn’t have enough facts to support its conclusion about the competitor and might even be too close to the situation for an objective view.
Focus on the customer To get more information, the company’s marketing experts analysed the situation from a customer perspective. By conducting surveys and in-depth interviews with current and prospective customers, as well as channel partners and their sales staffs, the marketing team
To gain further insights and formulate a response, the company brought together a group of R&D product engineers, marketers, procurement people, and finance specialists to dismantle the competitor’s product and compare its features and components with those of the company’s offering. To the group’s surprise, the effort uncovered technological differences between the two products—differences suggesting that the competitor’s product cost less, not more, to manufacture than the company’s did. What’s more, the nature of the differences suggested that the competitor had considerable room to lower its costs further in the future and thus to make its product even more attractive to customers. Ultimately, the team determined that just three components in its product accounted for most of the cost differences it observed, and these components all involved aspects of the product’s performance that weren’t important to customers. This conclusion was sobering: the manufacturer’s product was better on these dimensions, though in a way that drove up its costs, only marginally improved its performance, and ultimately didn’t matter to customers. In response, the company quickly moved to close the cost gap, generating ideas that bridged 80 percent of the cost disadvantage, without compromising features that users valued. The exercise also gave the company’s marketers and sales personnel an important new (and more targeted) set of customer-prioritised attributes to use in differentiating their product.
A n a n t h Na r a y a n a n , A s u t o s h Pad h i a n d J i m W i ll i a m s | L e ad i n g e d g e
Taking the customer’s perspective can reveal which product attributes pay off. Disguised example: product from a medicalcapital-equipment manufacturer Product attributes
Importance to customers1 Low
Manufacturer
Competitor
Customer perception of manufacturer vs competitor High
Less favorable
More favorable
Price Quality attribute A Quality attribute B Performance attribute A Ease of use Software Graphical user interface Downtime Service quality Servicing time Training2 Performance attribute B Power Size Throughput
A new start
1Derived from conjoint analysis. 2For example, in device operation.
Case 3: Medical-device manufacturer The challenge An acquisition created big expectations— and challenges—for the operations group of a medical-device maker. The company’s leaders had set an aggressive cost reduction target of 15 percent after examining the various operational synergies possible from the deal. Hitting the target would require the company to, among other things, rationalise its product portfolio while modifying how it designed and sourced its products. The merger had left two business units making, in some cases, essentially the same product. The natural place to start, the operations executives recognised, was therefore to redesign the product with the highest degree of overlap. By bringing the two R&D teams together to work on the effort, the executives hoped to generate new ideas that would help the company meet its cost reduction targets, improve the product, and strengthen the cohesiveness and culture of what was ultimately to become the new R&D unit.
didn’t like the heft of either existing version of the company’s product and asked for a lighter alternative that was easier to set up. Substituting lighter, and cheaper, carbon steel for stainless steel could meet this need and save about $15 a unit. Similarly, some of the more advanced electronic functions of the company’s products were seldom used and not valued highly, much to the surprise of the team. It identified substantial opportunities to save costs by eliminating these features and simplifying the electronics of the new design. Of course, not all of the cost-saving design changes the team identified were as noticeable to customers. Many involved subtle tweaks and manufacturing changes inspired by the differences between the company’s two versions of the product. For example, the team changed the specs of several parts to reduce the number of welds required and simplified the packaging to reduce waste and lower costs.
Putting it all together To ensure that the effort remained grounded in customers’ needs, the new R&D team began by familiarizing itself with the results of a series of customer and dealer interviews the company’s marketers had conducted in a parallel effort. Armed with that information, the team carried out a series of teardowns on three versions of this kind of product: two of its own overlapping variations and one version sold by a competitor. In some instances, the customer feedback led to minor design changes or none at all. For instance, customers preferred one version of the company’s control mechanism, so it was selected for the redesigned product with almost no changes. Similarly, interviews with dealers revealed an opportunity to improve customer satisfaction by making a simple ergonomically inspired addition. In other instances, the consumer insights work had identified design, feature, or functionality changes that would not only cut the cost of manufacturing the new version of the company’s product but also make customers more satisfied with it. For example, some customers, particularly older ones,
The teardown proved an important milestone in the effort to meet the company’s goal of cutting costs by 15 percent, a target it ultimately realised—and exceeded. More important, the effort helped the company’s R&D and procurement groups begin to work together in a new, more collaborative way. “Instead of us working in our ‘silos’ on a day-to-day basis,” said one executive, he noticed “much more of a propensity for people to be attacking a problem in packs rather than alone.” By combining deep insights about customers, competitors, and costs, a few leading companies are finding the “sweet spot” in product development: lowering costs while designing better products that customers value more. Along the way, these companies are strengthening organisational capabilities that will help them thrive in an era of heightened global competition. Ananth Narayanan is a principal in McKinsey’s Chennai office, Asutosh Padhi is a director in the Chicago office, and Jim Williams is a consultant in the Seattle office. The authors wish to acknowledge the contributions of Dave Fedewa, Shivanshu Gupta, Vivek Khemka, Amresh Kumar, and Ashish Tuteja to the development of this article.
December 2012
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me & my Mentee
MENTEE
MENTOR
Ashok Cherian CIO, JK Cement
Amitab Saxena General Manager-IT JK Cement
“Mentor by delegating work properly�
What do you look for in a mentee? Ashok Cherian There are various qualities or attributes that are required in a mentee and this depends on what role the mentee is playing. If it is a business facing role, then the mentee needs to be proactive, should have a partnering approach and he should be open to sharing his knowledge with his peers and juniors. A mentee should have the skill sets required to be engaged with the business dynamics and he should be able to control situations and avoid conflicts. Some of the other traits that are a must include being trustworthy, level-headed and an expert in his field.
tions and also do skill mapping. It also depends on the mentee's interest level and how much he wants to grow in the organisation. In our organisation, we have formal training sessions which the mentee can attend to improve his professional abilities. In the informal case, the mentor tries to find out the interests of the mentee on a day-to-day basis which enables the mentor to realise what are the additional things the mentee can do apart from his routine role. The idea is to provide maximum amount of responsibilities to the mentee as this comes across as the best form of training and improving professional skills.
What do you look up to in your mentor? Amitab Saxena According to me, a mentor should be a visionary leader. He should have the passion to achieve the company's goals and should have an open mind. The mentor should provide proper guidance and he needs to give the mentee constructive feedback. For the mentor to spend quality time with the mentee, organisations should make this interaction a formal process. It should become a culture within an organisation.
Do you think your mentor spends enough time with you? How do you think your mentor could contribute more towards your professional growth? Amitab Saxena Yes, I am fortunate that whenever I need any guidance from my mentor, he is always available to show the direction. Additionally, the availability of modern technology helps as it ensures that we need not be physically present to have any interaction. Ashok Cherian is a person who is always open to share his experience and ideas, which helps me a lot. I personally feel that when the mentor understands the double benefits of mentoring investment, it is a win-win situation for the organisation and its employees. If a mentor provides the right guidance, then he is preparing the next leader in the organisation and this way both the organisation and the employees are benefitted.
How do you identify the priority areas where you think your mentee needs to focus on for further professional development? Ashok Cherian There are formal and informal ways of doing this. In the formal case, I have discussions with the mentee to find out about his professional aspira-
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image BY subhojit paul
A s h o k C h e r i a n & A m i ta b Sa x e n a | m e & m y M e n t e e
“A mentee should have the skill sets required to be engaged with the business dynamics”
“The highest level of motivation is derived from the sense of ownership”
How do you think your mentee can take more responsibilities and take more bigger decisions? Ashok Cherian I as a leader have always believed in delegating work. There will be 99 percent instances where you will find me delegating work to my juniors. In this way, I am preparing my mentee to be the next leader in the organisation. If you don't put the mentee in a position where he is answerable for his actions, then the whole scenario becomes a waste. The best way to learn is to take up responsibilities and think in a manner where you are the business leader. Once you expose the mentee to greater responsibilities, he will learn to take bigger decisions and his confidence will also increases manifold.
basis. We have constructive debates and I am a person who always listens to the other person and doesn't force an idea on anyone. I will agree to my mentee's suggestion if he is able to convince me on the reason for a particular solution being implemented. I believe the fact that we share a healthy relationship is because we have healthy discussions and we only do things that are good for both of us and for the organisation's goals.
Does your mentor delegate enough responsibilities to you? How would you like the situation to change? Amitab Saxena Ashok Cherian delegates a lot of work to me and I believe this is the best way to distribute the responsibilities. The highest level of motivation is derived from the sense of ownership. The mentee then wants to put in that extra effort which is more than just achieving the role which the mentee is assigned to do. This in turn ensures that decision-making becomes easy for me as I am aligned with the organisation goals. Are there any conflicts between you and your mentee? If so, how do you resolve them? If not, what do you think is the secret of your smooth working relationship? Ashok Cherian There has been no conflict between me and my mentee. The issue is basically on what the organisation wants from the IT department and are we able to deliver that on a day-to-day
Please describe your working relationship with your mentor and how the two of you address key challenges together or resolve any conflicts of opinion? Amitab Saxena We have a very professional working relationship. To address key challenges, we wear different thinking hats to evaluate the challenges and examine the solutions. I have the liberty to wear different hats at different times. We coin all the options and possible outcomes and finally thresh out a consensus which is beneficial to the organisation. I am very happy to be associated with a boss like Ashok Cherain. What are your views on the need for a mentor for IT managers in realising their full potential? Amitab Saxena There is an evolution happening in the area of IT. Adaptation to the change and upgrading oneself with the new technology is the need of the hour. The mentor needs to also understand the potential of the team so that the right job can be assigned to the right team member. —As told to Atanu Kumar Das
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OPINION David Lim
Lessons from Qinghai’s Mystery Mountains Climbing the
virgin 6104 metre-high Longyala Peak in China braving biting cold and howling winds is no mean task. And as always, there are many leadership lessons to be learnt from scaling peaks
ABOUT THE AUTHOR David Lim, Founder, Everest Motivation Team, is a leadership and negotiation coach, best-selling author and twotime Mt Everest expedition leader. He can be reached at his blog http:// theasiannegotiator. wordpress.com, or david@ everestmotivation. com
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Sometimes you have to leave the comforts of home to find out what you are made of. And thus began the adventure this year to seek the group of mysterious mountains situated in remote southwest China in Qinghai. Located just about 100 kilometres from the northern Tibet border, the glaciers centred around Longyala Peak ( 6104-metres above sea-level) fanned out like broad spokes of a wheel from a central hub. None of the peaks in this area had been climbed and Google does not have a single clear photograph of any of them. For two days, we were driving in very inhospitable terrain to identify the right glacial snout from which to launch our expedition. It was over these eight days that I learnt and re-learnt some valuable lessons in leadership.
Beware of co nfirmation bias aff ecting decisions On atleast two occasions, I thought we were at the location where we had planned to be. I began to inadvertently believe we were in the right place by matching and confirming information that supported my viewpoint. I quickly snapped out of this after a day, and realised we were way off course, and decided to move our camp to another location three hours away. In a workplace environment, do we have people around us who are happy to challenge our viewpoint when that viewpoint merely seeks information to
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merely confirm we are on the right path? Cultivate such people so that you make high quality decisions and not be blindsided.
Do n’t take the easy route Carrying a large pack of over 20 kilos at altitude is similar to running a race on a 400-metre track. The difference on a mountain is that you will need to repeat the cycle of work and rest several hundred times, and a long load carry. At times like this, it is easy to give up short of an ideal campsite. This is what happened to us, and I had to cajole, persuade and push my team mate to carry on as far up the glacier as possible to put us in an advantageous site. Very often, the last 10 per cent of effort pays a 100 per cent dividend later. Too often, in my opinion, we give up, just as we start to see the payoff, and all the effort to that point is often wasted. Simply refuse to take the easy way out when you know that payoff is well worth the extra effort.
Any foo l can suffer, make sure you suffer for a reason Imagine for a moment, spending a week, sleeping, eating, cooking and changing, all in a tent with a footprint
Too often we give up, just as we start to see the payoff, and all the effort to that point is wasted. Refuse to take the easy way out when you know the payoff is well worth the extra effort no larger than a single-superior bed. Imagine a tent so small, when you smile, your teeth touch the walls. I exaggerate of course, but not about the actual size of the tent. A quarter inch foam mat separates you and the ice beneath, and you can hear the groaning and crackling glacier underneath as it pops, and snaps as it moves downhill an inch at a time. There’s a squalor in a tent as you try to eat and drink hot food and liquids without getting any into your clothes, hair and equipment. Smarter people suffer for a good reason, and find ways to make this suffering a part of the whole process to achieve a goal. Too often we forget, in our whiny, whimpering selves, why we do what we do; instead of focusing on the the big pay off, and the suffering , a necessary part of that journey.
Redefining Succ ess On September 23, 2012, after a short if very windy climb, Rozani and I stood on a nameless, virgin peak, in a remote glacier in a remote region, being very surely the first humans ever to explore and climb in this massif. That in itself took the edge of the 80 km/h gusts that raked the top of the peak. The summit itself was at or nearly at 6000 metres. Not a bad effort I said to myself at the time. On one section, the unstable overhanging ice fringes or cornices shifted direction and faced north. Looking at our time left, and energy level, and the risks involved, we decided not to proceed further. Had we missed tagging the top of our main objective? Yes. Had we succeeded in making the highest virgin peak ascent by any SouthEast Asian mountaineer? Definitely. In work and life, it pays never to define success too narrowly. Externalities change, expected performances don’t come up to par, and the most enthusiastic people I have met are constantly reframing challenges without selling out on the main elements of a goal. DAVID LIM IS A LEADERSHIP AND NEGOTIATION COACH AND CAN BE FOUND ON HIS BLOG http:// theasiannegotiator.wordpress.com, OR subscribe to his free e-newsletter at david@everestmotivation.com
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SHELF LIFE
“A leader has to incorporate strategy to reach desired results and tower over others in the firm having similar vision” — gary burnison
The Twelve Absolutes Of Leadership The core value of leadership is formed by confidence, grace and touch
Gary D Burnison,
CEO, Korn/Ferry International, while describing the complexity of leadership, in his book The Tweleve Absolutes of Leadership writes “Leadership is the eighth wonder of the world- better seen and felt than defined and said.” No doubt that Burnison, as a leader of Korn/Ferry International, has proved himself before writing a guide on effective and inspiring leadership. In his day-to-day life, he is responsible for the decisions that are bound to make an impact on the lives of thousands including employees and stakeholders. Besides, he also interacts and breaks deals with some of the people on the top of the ladder of success. In the book, Burnison coverts his experience into a plan to build skillsets for aspiring and existing leadership. The author captures the true essence of leadership and expresses his views and ideas on understanding the principles through an organised framework model. As per the CEO of one of the largest executive search firm, the criteria for true leadership excellence is complete commitment, cent percent engagement and a great
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sense of responsibility. He strongly puts forward the point that there are no half measures for leadership. The book points out that strategy is a part of leadership but leadership is largely about having a right sense of judgment. Burnison, while writing on the bottlenecks in the making of a leader, accepts that commitment to leadership for engaging and inspiring others is a key challenge. He goes on to say that sometimes just getting a sense of leadership is a discouraging task. The core value of leadership, he says, is formed by confidence, grace and touch. To achieve the desired results, a leader, taking his starting point as reference, must understand the past, present and future. A leader has to incorporate strategy to reach desired results and tower over others in the organisations having similar vision. The key guiding force of the book is the authors’ presentation of the Twelve Absolutes of Leadership model in an attractive and simple format. Burnison shares his experiences and conveys that the meaning behind each of the twelve absolutes that a leaders must understand and
ABOUT THE AUTHORs Gary D. Burnison is CEO of Korn/ Ferry International, a leader in executive recruitment and a premier provider of talent management solutions. Korn/ Ferry employs more than 2,500 people in 40 countries. He is also a member of the Firm's Board of Directors.
follow. In simple words, the author says that leadership is all about people. He provides directions to the art of leadership. The books says that despite various systems, techniques and concepts, leadership is more of an art than science. In another critical observation, the CEO and author recommends that a leader should first understand himself and practice self-mastery. During the process of self awareness, a leader realises that he is not the most important purpose despite having a leadership position. It is all about guiding others to achieve results and leading the organisation to a bigger and better future. Burnison, presents a model based on abiding human facts, which can be applied to anyone and everyone in the leadership role and arena. All one needs is to practice and adopt it with full dedication and determination. This book is highly recommended to leaders or aspiring leaders looking for a proven model for developing skillsets and strengthening the organisation and benefiting all. —By Akhilesh Shukla
Best of
Breed Features Inside
illustration by photos.com
Battle-Test Your Innovation Strategy Pg 37
100 Days of a New CIO: Nine Steps For Success It’s critical to get a good start. Consider several measures when you shape your course
By Michael Bloch and Paul Willmott
T
he early months of a CIO’s tenure are an extremely important time to learn about a company’s culture and critical issues, shape an agenda for change, build relations with peers and senior leaders, and make decisions—on people, funding, and other matters—that will provide a solid foundation for the future. Ian Buchanan, who has served several financial institutions as CIO or COO, says: “In the first 100 days, you have to make your mark. In that period, you also need to formulate a compelling vision, because if you want to lead, as opposed to executing the visions of oth-
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B ES T OF B REED | m a n a g e m e n t
ers, you do need to come out quickly with a story that everybody can align around.” By working over the years with many senior executives stepping into this role, we’ve learned about elements to cover, priorities to make, and mistakes to avoid. We have attempted to distill the most important topics to address during these critical first months. Of course, the particulars of each situation will have an impact on the priorities of each CIO. But we believe every new CIO will benefit from reviewing these elements and using them as a starting point to shape his or her own course of action.
1. Start the first 100 days before your first day Use the interview process to understand organisational dynamics and expectations. Ensure you see all stakeholders, such as corporate directors, to form a better perspective. Talk with systems integrators and other outside experts. Start building a hypothesis of your plan.
2. Clarify and strengthen your mandate Understand what is expected of you and how you will be measured, for example, with regard to new business capabilities, cost targets, automation levels, and projects to fix. Set out your “strategic posture”—for instance, emphasising IT as a driver or enabler of strategy. Set clear expectations with the CEO and other stakeholders on the levers that you must have control over, such as the freedom to cancel projects, change reporting lines, replace business unit CIOs, or outsource functions. Enlist CEO support for early symbolic actions, for instance, stopping a high-profile project or replacing an underperforming executive.
3. Build relationships with business unit executives You only get one opportunity to make a strong first impression, so prepare for these meetings well. Get input from members of your team who know the executives you’re meeting. Learn as much as possible about their priorities and concerns up front. Form a hypothesis of the likely answers, and test and refine them in every discussion.
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“There are many levers for improving IT, but the most effective transformations focus on just a handful” Develop alliances across the group. Set meetings with business unit heads and other key executives, for instance, client account managers and R&D leaders. Focus on the business imperatives that IT can enable or transform with regard to, for example, channels, customer relations, and products. Set the tone for peer relationships and avoid conversations about executives’ IT concerns. Challenge current priorities and plans when appropriate. Educate others when necessary. Many executives are nervous about IT simply because they don’t understand it.
4. Understand the upside and downside Understand the specific role of technology in the industry and how it creates value. Study the best and most admired users of technology in your industry. What do they do that your company does not? Ensure that an IT-enabled innovation pipeline is in place. Start building this capability if needed. Make sure you understand the IT-driven risks in the organisation, for instance, regarding cybersecurity and large, ongoing programs that might not deliver on expectations. See to it that regular review and mitigation plans are in place.
5. Develop the plan Create transparency on performance and health. Develop a fact base not only on IT performance—for instance, cost levels, service levels, head count, and key projects—but also on IT health with regard to architecture, capabilities, culture, and delivery. Understand your technical assets and
benchmark them against best practice. Consider technological discontinuities, such as cloud computing, mobility, and social media, and study how you can leverage them. Choose levers selectively. There are many levers for improving IT, but the most effective transformations focus on just a handful. Sequence improvements to build capabilities. Partner or outsource where required to fill capability deficits, but make sure to develop internal capabilities as part of the plan.
6. Build your team Start with organisational design. Incumbent team members might be effective in their current roles but not in a new structure. Aim high. Sketch out the profiles of your “dream team” rather than shuffling existing players. Take some risks. Consider a range of options, for example, external hires and transfers from business roles. Promote unrecognised high performers. Be aware that you will send a strong signal through your choices. Test them with trusted colleagues. Act decisively and swiftly.
7. Rally the IT organisation Establish trust early by communicating a vision for IT. Give people compelling reasons to support your cause. Develop a simple stump speech that everyone can understand. Set bold aspirations. Link business success to IT success. Communicate consistently and persistently in order to cascade your vision throughout the organisation. Use town-hall meetings and blogs to get key messages out. Make yourself visible. Visit major sites.
m a n a g e m e n t | B ES T OF B REED
Give opinion formers and rising stars personal attention. Think through the capabilities your organisation most needs to improve—for example, architecture, customer interactions, innovation, and large-scale program management—and develop a plan for addressing the gaps.
8. Demonstrate leadership through visible results and actions Find some quick wins. Killing off an ineffective sacred-cow project can be an effective way to rapidly demonstrate leadership. Initiating outsourcing and offshoring deals can have the same effect. Assess the project portfolio and the business benefits it delivers: — Which projects must be canceled because they are not aligned with business priorities, have no clear business case, or have made no visible progress in six months?
— Which projects must get Find mentors who will help extra resources, for example, with your transition and supbecause of a mismatch port your personal developbetween requirements and ment. Internal mentors can resources, to deliver results help you with the culture and worldwide increase on time? Which projects must politics, give you honest feedin semiconductor be rescoped to meet a critical back, and watch your back. revenue in 2013 milestone for the business? External mentors are good compared to 2012 sounding boards who can Respond thoughtfully to educate you about areas you “blockers” in the organisation. know less about. Find sources Change will surface these of freshness. Industry outsiders blockers, and your initial can feed in new ideas. response will shape how you are perceived. Pace yourself. The first 100 days are only the start of a marathon. Maintain a bal9. Continue your personal journey anced lifestyle to sustain the pace.” Invest in yourself. Recognise that a new role brings a need for new skills and behaviours. Set an agenda for person— Michael Bloch is a director in McKinsey’s al development. Educate yourself in the Tel Aviv office, and Paul Willmott is a director business areas you know less well. in the London office. Draw on internal and external sources to — The article is printed with prior permission learn the business fundamentals. from McKinsey Quarterly.
5%
Battle-Test Your Innovation Strategy Firms use war games to focus on their competitors, while improving the way they identify, shape, and seize opportunities to innovate By Marla M. Capozzi, John Horn, and Ari Kellen
Y
ou thought you did everything right—gathered market research and consumer insights; brainstormed, prototyped, and tested a promising new idea; developed detailed financial models and a solid marketing plan. Yet your company’s new product or service didn’t perform as expected. What did you overlook? If you answered “the competition,” you’re far from alone. In our experience, companies making decisions about developing and launching new products commonly fail to anticipate their rivals’ motivations and actions. Moreover, the failure often contributes to innovation-related disappointments, many of which are below the radar and quite insidious: your rival, for example, discounts prices to encourage customers to stock up on its product rather than try
yours, ties up distributors so you can’t get shelf space, or duplicates your service to dissuade consumers from switching. Unfortunately, in the heat of competition it’s extraordinarily difficult for players to identify such threats, because the tendency to overlook rivals is deeply ingrained in human behaviour. Indeed, neglecting to think about competitors is one of dozens of natural human biases—along with excessive optimism and overconfidence—that subconsciously affect strategic decision making. Addressing the challenge requires tools and processes that help companies “debias” their decisions. Recognising this problem, some companies are tackling it head on by integrating war games into their innovation activities. By simulating the thoughts, plans, and actions of competitors, these compa-
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B ES T OF B REED | m a n a g e m e n t
nies are improving their products and services, while gaining a deeper understanding of how their innovation assets compare with those of rivals—insights that help them better identify, shape, and seize opportunities. In this article, we’ll look at how companies use war games to sharpen their products and services as they wrestle with three interrelated types of innovation decisions: those involving individual products, portfolios of offerings, and market-entry strategies. We’ll focus on situations involving medium-term innovations—new products or services expected within one to three years. While it’s obviously important to keep an eye on rivals at all times, competitive insights gleaned at this stage are particularly actionable, and a company’s ability to adjust its approach relative to competitors, and thereby to change the outcome, is high.
The development team of a consumerelectronics company was debating the mix of components and features to include in the next version of an important product. Advances in the underlying technology meant that the launch, planned for the following year’s holiday season, could well represent a significant upgrade that would influence several generations of the product. To see how the competitive landscape might evolve—and be shaped—the company ran an in-depth war game. Over three days, cross-functional teams of product designers, marketing and sales experts, and supply-chain managers, assuming the roles of executives in the company and a leading rival, participated in a series of games representing three consecutive holiday seasons. The choices the opposing team made were revealing, for it identified several new components and technologies the competitor might include in its own update of this kind of product. While there were obviously no guarantees the competitor would act as predicted, the rigorous preparation the company had undertaken to ensure that players on both sides would behave realistically suggested that the competitor’s rationale for making the moves would be strong. Moreover, if the competitorwas thinking along the lines the simulation predicted, the resulting changes to its product and market positioning would be significant, requiring a speedy and decisive response from the company. Fueled by these insights, the company went on to identify a host of moves it could make to seize the initiative—including partnerships, bets on particular technologies, and an attractive, untapped consumer segment it could target to spur growth. Ultimately, many of the game’s predictions did materialize, and when the competitor moved as expected with its new product, the
image by photos.com
Product-level decisions
The failure often contributes to innovationrelated disappointments
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company was ready. Its own updated product was a hit with consumers, and it went on to sell more units than the competitor did over the following three holiday seasons. An additional insight the war-gaming process sparked was that meeting the needs of the consumers the company was targeting wouldn’t always require using the very latest technology. In some cases, an older—and cheaper—one was more than adequate. The company used this knowledge to its advantage in subsequent sourcing and pricing decisions. To increase the likelihood of gaining such insights, the consumerelectronics company included a range of framing questions when it designed and ran the game. We include a sampling of them here as thought starters for any company looking to plan and run a productfocused war game of its own. How much of a lead or leap—technological or otherwise—must we make in the next generation of our product or service? How might our new product or service stand up to the pressures of the existing—and, potentially, the new—competitive landscape? What price point will our product or service support and sustain?
Portfolio-level decisions War gaming can also help companies develop and deploy their product portfolios more strategically across geographies and customer
m a n a g e m e n t | B ES T OF B REED
That’s what happened when a financialgroups. Consider the experience of the services firm wanted to determine which global high-tech company whose leaders of a handful of promising new services had wanted to better understand how changing the greatest potential to reach global scale competitive dynamics would affect the comquickly and thus should be fast tracked. pany’s B2B business. Company executives were particularly keen For years the company had sold a comto test one technology-driven service that prehensive range of specialized TV models they felt had the potential to catch rivals off to hotel chains across the price spectrum. guard and to capture additional revenues (Compared with the company’s consumer from much-coveted business customers. models, the hotel TVs were more robust, The company ran a series of simulated had additional software features, and in launches pitting itself against three rival some cases were more energy efficient.) teams whose members began the games Recently, though, new competitors had unaware of the new service. Executives were begun arriving on the scene in force, and surprised to learn how quickly and convinccompetition had increased broadly. To learn ingly the opposing teams reacted to the offerwhat effect the new conditions might have ing and developed a version of their own. Worse, in some on the company’s portfolio of products and how they cases an opponent team’s offering appeared superior to were positioned, it created four rival teams, each repthe company’s, or at least close enough that company resenting a new or established competitor, and ran a executives felt it would be tough for business consumers series of war games against them. to differentiate between the two. “If we go to market with The results suggested the threat was bigger than this offer,” said one team member, “we’ll get creamed.” the company had suspected. Notably, several of the decline in pc This exercise had a sobering effect on the executives, games quickly degenerated into value-destroying price production in 2012 who began to recognise that overconfidence and exceswars. That outcome helped company leaders underglobally sive optimism had clouded their thinking. The company stand how quickly its high-end TVs would migrate down has since gone back to the drawing board and is using to the buyers from lower-cost hotels as rivals discounted many of the observations gathered from the war game to prices on their own higher-end units to gain market help improve the new service and its market positioning. share. If the company were to maintain its pricing Notably, the company’s team of developers has also begun identipolicy, the executives recognised, the resulting profit squeeze would fying ways to use the service’s underlying technology to create entry be enormous. barriers that could help delay a competitive response by up to a year. In response, company leaders essentially decided to ignore certain Given the tendency of players in the industry to copy good ideas market segments, where price competition would be fiercest—areas quickly, the ability to create such barriers—and to include this skill it had strongly contested before. Instead, the company would place in regular development activities—should serve the company well in its biggest innovation and marketing bets on serving midscale years to come. Questions that it considered in the design and execuhotels. In this growing segment, it had a better chance of differention of its game included the following: tiating some of its existing products and services, and of creating more value for customers (by helping hotels capture additional reve What ideas could put our product or service out of business in the nue streams, for example). The company went on to identify several next one to three years? possible partnerships with players in the industry value chain. It has Can we create value and continued appeal with our service given successfully leveraged these partnerships to begin implementing the possible responses of attackers and other competitors, our the new strategy. responses to them, and their responses to our responses, over a Useful questions the high-tech company considered when plandefined period of time? ning and running the game included the following: What next versions and extensions are required to keep our idea in play, sustainable and scalable, and how do we start building Which product classes will face the most competition, and will them now? supply-side dynamics or customer demand drive it? War games are a tried-and-true strategic tool, yet relatively few com Can we adapt any of our existing products to differentiate them panies use them to innovate. Those that do so effectively can not further for the geographies or segments that will face the most only avoid the problem of overlooking what the competition might pressure? do but also determine how likely their new products and services Which customer segments will our competitors focus on, and how are to survive in the crucible of the marketplace. do these segments overlap with the ones our new offering targets?
War games are a triedand-true strategic tool, yet relatively few companies use them to innovate
3%
Go-to-market decisions Finally, war games are a useful way of testing and refining launch strategies to help ensure that new product and service offerings get the most traction in the market.
— Marla Capozzi is a senior expert in McKinsey’s Boston office; John Horn is a senior expert in the Washington, DC, office; and Ari Kellen is a director in the New Jersey office. — The article is printed with prior permission from McKinsey Quarterly.
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NEXT
illustration by raj verma
HORIZONS
Future of Software Pricing Excellence US government will coordinate information sharing and ensure that agencies that use classified computer networks protect info 40
December 2012
T
he shift in the enterprise software sales model from license to services is amongst the most dramatic and traumatic upheavals in the technology industry since the unbundling of software and hardware more than four decades ago. Moving to a services-based model is proving to be tremendously disruptive to the industry’s internal organisation, management and processes, as well as its customer relationships. Indeed, anything as a service (XaaS) already accounted for more than $26
M a n a g e m ent | N E X T H O R I Z O N S
billion of 2011 revenues of the 100 largest software companies, according to a new study by PwC. PwC first alerted the industry in 2007 to the wide and deep impacts it could expect from the proliferation of software licensing models from perpetual to term as well as the cloud-based shift to SaaS. Since then, we have developed an extensive knowledge base of strategies and tactics to help the software industry transition to new business models—whilst still maintaining traditional models where the market demands it. This transitional period is affecting the industry across the board. A small minority, primarily infrastructure software providers, remains committed to the traditional pricing model, at least for now. However, a small but growing number—start-ups but for a handful of notable exceptions like Salesforce.com—are focused exclusively on emerging models. The remainder, including most consumer and enterprise software companies, are combining both traditional and emerging pricing and licensing approaches in a hybrid model (see Figure 2). The majority of the companies in the industry, therefore, faces significant challenges due to the hybridised nature of their current approach to pricing. Many companies currently find themselves straddling two or more radically different types of business models, incurring the costs and complexities of the traditional and the emerging models. This paper is an introductory overview of the changing ways that software is valued, priced, delivered and consumed. Over the next several months, PwC will present a series of reports exploring the issues in greater depth, with particular attention to how these changes have and will continue to disrupt the software industry’s internal operations and customer relationships. In addition, we’ll present our recommended strategies and tactics for the industry to overcome the challenges implicit in the shift.
Unprecedented challenges facing the software industry Shifting from permanent licensing to per-use, time bound or other type of subscription
A new era for the software industry The extent to which top software companies have already begun to adopt new business models is clearly visible in the PwC Global 100 Software Leaders report for 2011, to be published in early 2013. This exclusive report, based on data compiled by IDC from public and non-public sources, lists the percentage of total revenues the world’s 100 largest software companies earned in 2011 from “as a service” offerings (XaaS), including software, business application services, highlevel storage services, backup as a service, and security as a service (XaaS does not include bulk storage solutions, network services and cloud servers). Amongst the Global 100 Software Leaders: • Total revenues, 2011: $1,171 billion • Total software revenues, 2011: $237.3 billion • Total XaaS revenues, 2011: $26.2 billion This is the first time the PwC Global 100 Software Leaders annual report has extracted revenues from XaaS offerings as a percentage of software revenues. As a result, it is not yet possible to track over the past few years the rise of XaaS revenues as compared to revenues from the traditional software sales models. However, given how the uncertain global economy of the last decade has consistently driven organisations to seek out cost efficiencies, it seems likely that enterprise software will continue to move toward SaaS, term licensing and other pricing and delivery models that maximise perceived value.
model requires a fundamental rethinking of pricing and delivery. For understandable reasons, many vendors are reluctant to overhaul their business all at once and are instead taking a piecemeal approach. This decision may satisfy both vendors and customers in the short term, but over time, it challenges vendors to explain to their customers’ satisfaction that the transition to alternatives such as cloudbased and hybrid models delivers equivalent value for the price. Further clouding the environment is a huge shadow over the industry as the customer perception of value itself is shifting. In addition to comparing the cost of an enterprise application license purchase to the cost of competing products versus developing a solution in-house, customers now commonly consider how much business value they believe they can derive from their purchase. Billing incrementally by time is the worldwide or per user— one of the emergmarket size of ing models growing in popuflat panel smart larity—may lower the initial tvs in 2012 barrier to purchase. However, it also gives customers greater leverage to negotiate prices
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downward based on actual and projected patterns of consumption. Vendors therefore need strategies to create new value relative to price. New pricing and delivery models are also emerging at the same time that several broad industry trends are also buffeting pricing and the expectations of value, in both directions. As a result, the software industry is seeing far-ranging shifts in fundamental aspects of its business operations. For example, the consumerisation of IT has raised the expectation that technology can deliver high performance at low cost. As a result, the perceived value of software may drop as cost-conscious users accustomed to consumer smartphone apps that rarely cost more than a few dollars balk at paying higher prices for enterprise solutions, even those more powerful and complex than anything found on the consumer market. Other important industry trends pressuring software industry pricing and margins include the following: Mobile has become a priority for software developers, but the proliferation of mobile devices and mobile interfaces requires vendors to develop multiple versions of each product. Developers must integrate security into
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N E X T H O R I Z O N S | M a n a g E m ent
Figure 2: One pricing model replaced by five Traditional Model Customers pay to license software as a product.
Emerging models Subscription SaaS
Pay-as-you-go
Freemium
Combines a software subscription model with cloud deployment.
Customers pay for actual usage based on transactional metrics.
Basic service is free; customers pay for premium features.
Hybrid model Vendor offers both traditional and emerging solutions.
Source: PwC
cloud and mobile delivery platforms, as the sheer number of potential touchpoints for these platforms makes securing each touchpoint individually both impractical and excessively expensive. Globalisation and market consolidation are drawing significant investor attention, driving royalty revenue, and spurring innovation around existing product portfolios. Virtualisation enables multiple users to run a single programme from a central server, reducing sales of individual software licenses. Managing hosted applications across on-premise, hybrid, and cloud environments requires vendors to increase their investment in infrastructure, services and support. The rise of Big Data and Analytics require companies to create efficient, automated processes to manage and analyse the vast amounts of unstructured, contextually relevant data they collect each day. Figure 3 summarises the macrotrends shaping the technology industry.
Positive and negative impacts of new business models In the face of these trends, PwC has observed a number of overlapping areas in which moving to new licensing, pricing and delivery models has already begun to affect industry business models and internal processes:
Pricing and profitability Pricing. As customer perceptions of value continue to drive prices lower, vendors are revising their value propositions to include service and support whilst more explicitly linking the price of products to the business benefits they deliver.
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Profit margins. SaaS vendors have a lower gross margin almost by definition, as cloudbased delivery inherently involves higher infrastructure and related expenses. In general, new business models must be carefully structured and managed in order to avoid eroding margin with discounting and other pricing choices. Several pure play adopters of the emerging subscription SaaS and payas- you-go models are already struggling with this challenge.
Finance Revenue recognition. Software delivered as a service (i.e. where the customer accesses the software via systems belonging to a vendor or third party instead of licensing it to run on its own systems) is considered a service, not a product delivery, by Generally Accepted Accounting Principles. Vendors must recognise the revenue incrementally over the service period—a change that minimises fluctuations in sales and income cycles, but leads to less upfront cash. Several of these leading edge adopters have
Globalisation is drawing significant investor attention, driving royalty revenue, and spurring innovation around existing product portfolios
had substantial challenges explaining their income statements and balance sheets to investors more familiar and comfortable with the industry’s more traditional revenue recognition policies. Cash flow. Replacing up-front payments with ongoing fees reduces cash flow volatility, allowing vendors to forecast budgets with greater accuracy. On the other hand, it also increases the difficulty of maintaining sufficient cash reserves to fund R&D or carry a new company through its earliest years before break-even and positive cash flow. These emerging model vendors must consider new approaches to financing and develop additional opportunities for revenue. A few of the more mature emergingmodel vendors using one or more of the emerging pricing models have already developed substantial consulting and implementation revenue streams.
Research and development As already noted, steadier cash flow offers fewer opportunities to stockpile cash reserves for R&D spending. In the early stages of the transition to a new business model, particularly SaaS, vendors that lack an established reserve must limit their R&D budgets to available capital, which may be minimal. Vendors who are settling into the business model shift are approaching R&D less as a series of discrete releases and more as an ongoing series of functional improvements.
Customer relationships Sales and marketing. New business models are nudging software sales from a “push” to a “pull” model by lowering the initial barrier to entry for new customers. The lack of a large up-front payment per incremental customer enables customers to “try before they buy” whilst making it difficult to justify in-house sales forces focused on landing big accounts. Since most companies are currently in the hybrid model, they have the worst of both worlds—supporting a sales force and at the same time offering online self- service, sales tool development and support. Customer service. As customers adopt the periodic payment model, customer service is becoming increasingly central to retention and further sales. Vendors are learning
M a n a g E m ent | N E X T H O R I Z O N S
these elements on an ongoing within a framework basis, it can adjust its pricing that includes pricing strategy, and product offerings as it gathprice formulation, transaction ers competitive data on new management and managing business models, bundles and performance. All four of specific wins and losses. Comthese elements must be taken drop in worldwide panies can also use this data into account across the organsemiconductor to clarify target markets and isation’s internal process, revenue in the first use models, prevent multiple organisation, technology, data half of 2012 business models and product and analytics: Ecosystem management lines from cannibalising each Pricing strategy requires SaaS in particular dramatically reduces the other and develop innovative companies to analyse their portrole of channel partners as the intermediary approaches to customer service. folios, overall strategy and specific goals (by between vendor and customer, though this We do not currently see many companies products, segments, customers, etc.). change has not been widely discussed. On that have mastered all four of these elethe other hand, cloud-based delivery creates Price formulation must note all the segments, a few companies have adopted some the potential for a more robust ecosystem of ments that require specific prices and aspects of one or more. For example, it is software partners offering complementary ensure that the organisation has rules becoming significantly more common for functionality. Creating this new partner ecoaround discounting at various levels. software companies to use analytics to supsystem—or converting existing partners to Transaction management demands that port the sales team in introducing pricing by a new form of relationship—requires capaorganisations consider “real” costs to cresegment and in measuring and managing bilities and technology strategies not often ate reasonable discounting thresholds and pricing performance. Our upcoming reports found in traditional software companies. floors, define and appropriately price bunwill provide more detail about the current Figure 4 summarises the functional dles of products and services, and deterand future adoption of these four elements impacts caused by the macrotrends. mine the number of approval levels withby emerging model companies as well as Establishing the right pricing strategy in the company for various types of sales. those remaining in the hybrid environment. has proven particularly challenging in the To do this, the organisation must clearly face of evolving business models, so we understand its channel programmes and take a close look at pricing excellence in the the value of various customer segments. Conclusion final section. Performance management, a key compoIn 2007, when PwC foresaw the coming nent of pricing, delivers the best results shift to new pricing, licensing and delivery when a company has ample holistic and models, we predicted, “Savvy vendors will Pricing excellence as a discipline real-time analytics to inform its applicaadjust their pricing models to create a winPricing excellence is achieved by a dynamic, tion portfolio and pricing model. Corwin scenario, where customers can see the proactive process of optimising the price of porate dashboards that include pricing value of software more closely reflected goods and services based on understanding performance across products and vertical in their business processes and vendors what customers value, predicting what the segments, key pricing metrics and cuscan reduce their internal costs and realise customer is willing to pay, and aligning varitomer retention rates allow vendors to more of their revenue from recurring payous functional areas (finance, R&D, sales, track what is and isn’t working. ments.”1 We no longer need to speak of marketing and other functions) to ensure Figure 5 is a schematic representation of those changes in the future tense; they’re products meet customer needs at an attracPwC’s pricing management framework. upon us. The business model has already tive price. When an organisation monitors all four of begun its irrevocable shift. This strategic process needs to take place To achieve the win-win scenario PwC knows is possible, vendors must bring their Figure 4: The varied impacts of the macrotrends on selected software compapricing framework into tighter alignment nies’ operations with the concept of “pricing excellence.” In Most vulnerable Other affected Relative severity this paper, we have provided an introductory component functions of the impact overview of the basic principles. Finance Profit margins Cash flow, revenue Substantial Our forthcoming series of reports will recognition delve more deeply into pricing excellence, Customer service Customer expectaSales, ecosystem Substantial along with the impact of new pricing, tions of value management licensing and delivery models on other parts R&D Funding consistency New release schedule Moderate of the industry. These articles will help softSales Large in-house sales Channel partners Substantial ware vendors make wise tactical and finanforces cial choices as their product portfolios and Source: PwC business models evolve. from the open-source ecosystem, in which customers who are satisfied with essentially free products have proven happy to pay for support and add-on services that further enhance value. Just as importantly, closer customer relationships provide an ongoing stream of data that allows vendors to adjust pricing dynamically.
3%
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N O H O L D S B A R R E D | J a y balan V ela y u dhan
DOSSIER Company: Schneider Electric industry: IT & electrical equipments Headquarters: France Products: Data centre management solutions, UPS, etc.
Achieve Energy
President & CEO Jean-Pascal Tricoire
Efficiency Gains In an interaction with CIO&Leader, Jaybalan Velayudhan, Director, Strategy & Business Development, Schneider Electric, discusses the different aspects of energy efficiency and shares his views on the mega trends in the Indian market
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J a y b a l a n V e l a y u d h a n | N O H O LD S BA R R ED
There are new challenges confronting our planet. How has Schneider's vision changed as a result of these challenges? One of the major challenges confronting today’s world is the energy dilemma, and there is no denying the fact that it is here to stay. Electricity demand is going to double by 2030 while overall global energy demand is going to double by 2050. More than 70 percent of the world’s energy is consumed by infrastructure, industry, buildings and residential markets. On the other hand, there is an urgent need to reduce carbon emissions by 50 percent by 2050 to avoid any dramatic climate change and its aftereffects. So, some of the tangible effects that are going to hit us closer to home are rising energy cost, unreliable power supply and increasing conflicts for access and control of the limited resources. Though there has been some progress in reducing CO2 through cleaner generation, bio fuels, and generation mix, the most important and tangible impact would come from increasing energy efficiency. In view of this, Schneider Electric’s vision has been to become the global specialist in energy management, helping customers all over the world to address the business, environmental and regulatory issues that drive their need for energy efficiency. Schneider Electric’s solutions reduce carbon emissions and consumption of electricity, water, air, gas and steam, while improving business performance and employee productivity. Beyond business solutions, we cover all the aspects of sustainable development: society, governance and environment. And because you cannot manage what you cannot measure, we follow our improvements with a unique tool: the planet and society barometer. How important is energy management in a data center? How are you helping CIOs in more efficient energy management? As energy costs and demand for power continue to skyrocket, running a data center efficiently has become just as mission critical to every company’s bottom line as maintaining uptime. Here are some well known but often overlooked facts to consider –
Energy typically is the fastest growing expense in a data center Energy often consumes up to 30 percent of an operating budget The total cost of energy to run a data center can cost as much as the actual cost of the equipment itself In view of these, the important question is - How can you adequately achieve both short-term and long-term energy efficiency gains? The answer is simple: Schneider Electric data center energy management services. As The global specialist in energy management and the industry’s thought leader in data center power and cooling, we can help assess, audit, monitor, and manage energy use across entire data center physical infrastructure — from building to rack turning energy insight into energy savings.
“Some of the major trends that we are witnessing in the market include the evolution of cloud and increasing virtualisation and the rise of Big Data” Schneider Electric’s energy management specialists place efficiency recommendations within the context of availability, capacity, flexibility, and performance. Our services help streamline energy use while safeguarding uptime. We can reduce energy spend by helping right-sizing infrastructure, optimising airflow, running equipment at efficient levels. And we ultimately can keep CIOs better position themselves to focus on business-critical spending and operations, ensuring that the data center is businesswise and future-driven. Our energy management services portfolio includes the Schneider Electric Energy Sustainability Tiered Efficiency Programme, or EnergySTEP—a unique, scalable energy management service that enables the CIO to easily align energy savings goals with investment capabilities. EnergySTEP simplifies
the often complex energy reduction choices that confront executives, by providing a straightforward, flexible solution that creates ongoing, measurable savings. EnergySTEP frees up capital that would otherwise be used for energy expenditures, allowing one to readily fund strategic initiatives that are vital for long-term success, while creating a measurable path forward for sustainability and environmental efforts. What are the top two-three trends that you see emerging in the Indian market? What is Schneider doing to make the most of these trends? Some of the major trends that we are witnessing in the market include the evolution of cloud and increasing virtualisation, the rise of Big Data and analytics driving datacenter growth, and energy efficiency and monitoring. To address these trends, Schneider Electric offers end to end solutions across the data center life cycle –design, build, operate and maintain, manage, optimise and assess. Our value proposition lies in our ability to maximize availability and uptime, enhance productivity, improve utilization of assets, minimize operating cost and optimise energy consumption. Schneider Electric is the only company to view the data center as an interconnected environment. We call it the data center physical infrastructure, because it bridges all key data center subsystems and is the clear cost effective path to the highest availability and maximum efficiency. Power, cooling, rack systems, management, services and physical security – Schneider Electric delivers expert solutions and services across these complex domains. Through these efforts we ensure overall reduction in both the OpEx and CapEx. This reduction stems from reduced energy consumption, alignment of IT and infrastructure needs with high efficiency, and achievement of business objectives. The business also gets increased visibility and accountability with monitoring as the CFO is able to access energy-cost information and there is compliance with energy supply contract requirements. The CIO is able to get improved reliability and performance and is able to attain green initiatives. We help technology leaders in achieving this by limiting the number of equipment failures.
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TECH FOR
image by photos.com
GOVERNANCE
10% Data Briefing
Decline in worldwide wafer fab equipment spending in 2013
Essentials of a Chief Compliance Officer While all CCO positions should be “fit-for-purpose� there are 5 features which are consistent to all positions By Thomas Fox
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M
co m p l i ance | T E C H F O R G O V E R N A N C E
Most of Shakespeare’s histories involve issues relating
to kingship and how a king might reign. In some of the plays, such as Henry V, the example is of a positive nature. In others, such as Richard III, you may need to draw from the inverse to see how one should decidedly not govern. The tragedies tend to emphasise a tragic flaw which brings down someone who is not necessarily a king, such as Hamlet or Coriolanus. What are some of the characteristics of the position of a Chief Compliance Officer (CCO) for a company subject to the Foreign Corrupt Practices Act (FCPA), UK Bribery Act or other international anti-bribery and anticorruption laws? That question was recently explored in an article in the Society of Corporate Compliance and Ethics (SCCE) bi-monthly magazine, Compliance & Ethics Professional, in an article entitled “Five essential features of the Chief Ethics and Compliance Officer position,” by author Donna Boehme. She believes that while all CCO positions should be “fit-for-purpose” there are five essential features which are consistent to all such positions. They are as follows:
1. Independence
It is incumbent that any CCO must have “sufficient authority and independence to oversee the integrity of the compliance programme.” Some indicia of independence would include a reporting line to the company’s Board of Directors and Audit/Compliance Committee but more importantly “unfiltered” access to the Board. There should also be protection of employment including an employment contract with a “nondiscretionary escalation clause” and a requirement for Board approval for any change in the terms and conditions of employment.
2. Empowerment Boehme believes that a CCO must have “the appropriate unambiguous mandate, delegation of authority, seniorlevel positioning, and empowerment to carry out his/her duties. Such can be accomplished through a “board resolution and a compliance charter, adopted by the board.” Additionally the CCO job description should be another manner in which to clarify the CCO “mandate, and at a minimum should encompass the single point accountability to develop, implement and oversee an effective compliance programme.”
3. Seat at the Table Boehme believes that the CCO must “have formal and informal connections into the business and functions of the organisation — a seat at the table at important meetings where all major business matters (e.g., risk, major transactions, business plans) are discussed and decided.” She argues that, at a minimum, the CCO should participate in “budget reviews, strategic planning meetings, disclosure committee meetings, operational reviews, and risk and crisis management meetings.”
4. Line of Sight Here the author urges that the CCO should have “unfettered access to relevant information to be able to form independent opinions and manage the [compliance] programme effectively.” This does not mean that the CCO should have veto power over functions such as safety or environmental or that such functions must report to the CCO, but unless there is visibility to the CCO for these risk areas, the CCO will not able to adequately assess and manage such risks from the compliance perspective.
5. Resources It is absolutely mandatory that the CCO be given both the physical resources in terms of personnel and monetary resources to “get the job done.” I have worked at places where the CCO had neither and the CCOs did not succeed because they never even had the chance to do so. Boehme focuses on both types of resources. Under monetary resources she points, as an indicia, to the independence of the CCO from the General Counsel (GC), “rather than a shared budget”. This can also bleed over to ‘headcount’ and shared or dotted line reporting resources. — This article is printed with prior permission from www.infosecisland.com. For more features and opinions on information security and risk management, please refer to Infosec Island.
December 2012
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POINTS
Any CCO must have sufficient authority and independence to oversee the integrity of the compliance programme CCO must have the appropriate unambiguous mandate to carry out his/her duties CCO must have formal and informal connections into the business and functions of the organisation CCO should have unfettered access to relevant information to be able to form independent opinions CCO should be given both physical resources in terms of personnel and finance
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VIEWPOINT ken oestreich
illustration by raj verma
Apps and Desktops and Clouds — Oh My! The important mix of cloud and mobility
A bunch of people have asked me about my new gig with Citrix. “You’re doing VDI and XenApp now? I thought you were a Cloud guy?” Yes, it’s true... and it’s due in part to today’s announcements byCitrix about Project Avalon, the explosion of the Mobile Enterprise, and the Path to the Cloud. And it’s about helping corporate IT think and operate more like Service Providers do.
With appropriate cloud management and orchestration, much of the guesswork of infrastructure sizing, machine provisioning and network adjustments can be obviated. Management of heterogeneous apps, VMs and OS’s is a breeze. Serving-up mobile apps — and even entire virtual desktops — out of a cloud infrastructure is a natural. And therein lies beauty in this new technology.
Mobility: A Perfect Use Case for the Cloud
A Perfect Step
Consider the use case to deliver huge numbers of applications and desktops across hundreds, thousands, or tensof-thousands of mobile clients – Challenging for IT due to configuration, set-up, monitoring, management, network optimisation and scaling. Doubly challenging when you consider the different topologies of virtual servers, licensing servers, provisioning servers and more, all scaling at different rates to maintain service levels. What better use-case than to apply a cloud operations model within which to deploy such a solution?
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To accomplish this, Citrix – partnered with customers and Service Providers – is embarking on a 2-stage journey called Project Avalon. This will let enterprises and/or service providers deliver Windows apps and desktops as a true cloud service from private, public and hybrid clouds for users on any device, anywhere. In the first stage of the journey, the approach to installation, management and monitoring of the base infrastructure for virtual desktops and apps will be massively simplified (Get the Tech Preview here). Also, features such as the visual experi-
About the author: Ken Oestreich is a marketing and product management veteran in the enterprise IT and data centre space, with a career spanning start-ups to established vendors.
ence will be extended. Then in the second, this infrastructure will be fitted with the ability (a) to mix-andmatch any underlying cloud platform (b) mix-and-match different Citrix and Windows platforms, and (c) integrate with sophisticated management and orchestration to provide scaling, fail-over and cloud platform migration. Consider the possibilities – the ability to stand-up a complete mobile enterprise solution either on your private cloud, and/or public cloud. Think: CloudStack, Amazon, Azure. Or a combination.
Goal: Help SPs Be More Efficient The point of all of this is to deliver mobile desktops and mobile apps from any cloud to any device. Some Citrix service providers (CSPs) are doing this now and Project Avalon will further simplify their effectiveness to deliver from their public clouds. They’ll be able to stand-up massively scalable mobile desktop and mobile application environments (think 0,000’s and more).