Septemeber 1 2006 by Sreekanth Sastry

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From The Editor

One of the constant bugbears of a CIO’s life is ensuring management or business

Conveying Value Business buy-in is more than merely justifying a project’s worth.

buy-in for IT projects. At a more basic level, the process begins with communication and conversation between IT and business leaders. The feedback that I’ve got from the CIO community and in particular our Advisory Board tells me that this process works best when all concerned have established their credibility with each other based on earlier collaboration. Of course, the best way to gain the confidence of top management is to implement a bunch of successful projects. Invariably, CIOs tell me, success in communicating IT value stems from expressing a particular project’s benefits in terms of the organization’s overall strategic game plan as well as those of its competitors — in terms that business executives can easily grasp. And, a good practice to ensure that IT projects match business goals is for CIOs and business leaders to constantly discuss those objectives. This also keeps CIOs alive to the strategic priorities of the organization. Map the IT rollouts to that, and you’re going to get buy-in. Putting the right tools in Getting business buy-in is more than place to educate business merely justifying a project’s worth. Methods leaders can be a critical for tracking that value also form a part of this communication plan. (CIOs who proactively component in conveying track and provide reports on their projects the value of IT. get an edge in future negotiations.) While educating business leaders is most definitely a CIO’s job, putting the right tools in place can be equally critical in communicating the value of IT. I recently learnt about an interesting initiative in this regard by Carl Wilson, executive VP and CIO, Marriott. Wilson has created ‘Technology Now’, a slick, short presentation that showcases his company’s IT direction and the ways by which it enhances business value. The self-playing presentation, complete with voice-over, was originally made to Marriott’s board of directors late last year, though there is now a formal plan in place to ensure that ‘Technology Now’ is shown at all levels of the company. (Marriott’s gone on to translate the presentation into Spanish, Chinese and German.) Wilson and his colleagues use the presentation to basically create communication opportunities and then tailor the final message depending on the project and the group they’re speaking with. How do you communicate the value of IT to business? Write in and let me know what works best for you.

Vijay Ramachandran, Editor vijay_r@cio.in

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content SEPTEMBER 1 2006‑ | ‑Vol/1‑ | ‑iSSuE/20

Outsourcing Strategies

Executive Expectations

COVER sTORy | OuTsOuRCINg mAsTERs | 28

VIEW FROm ThE TOp | 38 Ashok Soota, chairman & MD of MindTree Consulting, on why business should require that IT be seen as a strength, not a cost.

In strategic outsourcing and insourcing, the CIO has two focused outsourcing models that will help ace his IT requirements, and also add extra drive to his organization's business.

CoVE r: ImagIng By BInESh SrEEdharan

Feature by gunjan Trivedi & sunil shah

Interview by Balaji Narasimhan

It’s All About The Execution VIsIBILITy FOR ThE BOARD | 22 With boards of directors under increased scrutiny by audits, CIOs should consider creating a digital dashboard to give them key performance indicators of the business. Column by michael schrage

Customer Service ANsWERINg ThE CALL | 42 Companies are investing in advanced technologies and at-home agents to connect with customers, not put them on hold. Feature by susannah patton

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content

Laptop Breaks Management | Deconstructing Team Dynamics Security | Terrorism on the Net Compliance | SOX Improves Communication Management Report | Six Trends will Drive

Sustainable Developmemt

Essential Technology | 59 Operating Systems | On the Lookout for Vista

By Dylan Tweney Open Source | Notes from the Catalyst Conference

By Bernard Golden

From the Editor | 4 Conveying Value | Business buy-in is more

than merely justifying a project’s worth. By Vijay Ramachandran

Inbox | 14 NOW ONLINE

4 8 Govern Follow the Money | 48 Khajane is Karnataka’s G2G initiative designed to keep tabs on the flow of funds, no paper clips attached.

For more opinions, features, analyses and updates, log on to our companion website and discover content designed to help you and your organization deploy IT strategically. Go to www.cio.in

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Feature by Ravi Menon

Catalyst for Technology Initiatives | 54 Rajkumar, secretary for information technology, Gujarat, recapitulates the process behind implementing an IP-based governance model, and explains how it is the first step towards a vision of digitally empowering the state. Interview by Gunjan Trivedi

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reader feedback

your efforts to keep the community together. pRoF. s. sadaGopan Director, IIIT-Bangalore

Getting IT Right The interview that delved on the Karnataka State Crime Record Bureau’s wide area network (Connecting The Dots, August 15, 2005) made for interesting reading. However, it focused more on the infrastructure aspect than usage. There could have been more emphasis on its utility — say the verification that is made possible with the existing database, or the statistical reports that officers use in order to be apprised of the crime situation in the area where a particular police station is located. InspecToR KasIm Raj Karnataka State Police

one more for the Farmer We were pleased to read the article ‘Infoseeding Infoseeding The Farm’ in CIO (July 1, 2006), especially the information kiosks in the North-East. The project is in the same vein as aAqua, a portal for farmers that we have developed at the Developmental Informatics Lab in partnership with agriculture experts from Krishi Vigyan Kendra, Baramati, and Vigyan Ashram, an NGO in Pabal. The portal has been providing answers to farmers’ queries in Marathi, Hindi and English since December 2003. Rahul swamI

It was a pleasure to be at the roundtable. Such excursions from office routine are always a welcome break. The session was educational and fun. It was heartening to hear that CIOs across the board are facing similar security issues, and some radical ideas like ‘eliminate people’ or ‘Rama rajya’ were interesting but impractical. Going forward, this should be something you need to focus on. You need to prioritize pain points of CIOs and tailor these sessions to address these pain areas, maybe through a brief ‘Best Practices-cum-technology’ presentation followed by an open house. That should make it interesting for CIOs who have now progressed enough in their careers to abstract a few levels above hardware and software details. Gopal shuKla Director-Business Systems Group Hindustan Coca Cola Beverages

Our company is currently emphasizing on greater security at all layers. The roundtable’s discussion has given me food for thought as I consider enhancing our security defense mechanism. It’s heartening to see that all the other CIOs were sailing the same boat where information security is concerned. My suggestion is that you make available the information related to

Developmental Informatics Lab, IIT Bombay

cIo o RoundTable The roundtable, ‘Layered Security: Prudent or Paranoia’, was excellent and met the need of the hour. CIO must now run a column based on the observations made at the roundtable. Carry on with 14

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What Do You Think? We welcome your feedback on our articles, apart from your thoughts and suggestions. Write in to editor@cio.in. Letters may be edited for length or clarity.

editor@c o.in

“This might be the time for an activity with an agenda that transcends companies, like evolving a model security policy for corporates.” security solutions in the market on a CD, so that participating CIOs have a ready resource of vendors and different solutions available for all layers. Going a step further, you could give the CD with the magazine. This would help CIOs immensely. s.p. p aRya p. AVP Corporate (Systems) Lakshmi Precision Screws

I enjoyed my participation at the Bangalore roundtable, as I gained more by listening to the discussion than I could contribute. My view is that there is dearth of right information about security with CIOs. Your effort to present right information on such subjects is laudable. The format of the event was good, but its reach is limited. One has to work towards building on this further and ensuring it reaches more CIOs. dR sRIdhaR mITTa mITT MD & CTO, e4e Labs

Thanks for organizing the roundtable. It was a fine opportunity to know and hear what other professionals think. This might be the time to sustain such activity with an agenda and purpose that transcends companies’ boundaries. For instance, maybe it would be possible to evolve a model security policy for corporates. It will be tough, but more productive. Do let me know if you have the energy for such an activity. BalaKRIshnan V CIO, Polaris Software Lab

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new

hot

unexpected

The Curious Case of

ImAGING BY UNNIKRIShNAN AV

Ph OTO BY SRIVATSA ShA NdIlYA

Evidentiary Data F O R E N S I C S Which came first to Bangalore: state-ofthe-art equipment or improved cyber vigilance? It is worth pondering over, given the many developments over the past year at the Karnataka State Police’s (KSP) cyber crime police station. The department, based in the Corps of Detectives (CoD) in Bangalore, invested in digital forensics by buying a Rs 25-lakh cyber image backup system (CIBS). It's probably how the cyber police brought 41 cases under investigation in 2005. For years, that figure hovered close to 10. More interesting is the cyber police’s continued efforts to imbibe best practices in computer forensics. For instance, the CIBS now helps the police ensure that evidentiary documentation is a tamper-proof digital copy — and that original forensic evidence remains untouched. Here’s how: data is transferred from a storage device to the CIBS in a read-only format. The device produces a ‘bit-stream’ image of the

D I G I TA L

original media. It then generates a hash value (digital ‘fingerprint’), making the image tamper-proof and usable for investigation. CIBS is an advanced form of the data recovery analysis computer (DRAC). The cyber crime station invested Rs 14 lakh in a DRAC workstation and in two Rs 3.5 lakh mini-DRACs in 2003, which can be taken to the scene of crime. Its findings are admissible in court. The cyber police is now working to develop its technical prowess. For this, it is working with IT companies in Bangalore, says Sanjay Vir Singh, deputy general of police (economic offences), CoD. “The idea is to bring together the mind of the technologist and the department's investigation skills,” he says. Nasscom and Canara Bank recently announced setting up a cyber crime laboratory in the CoD office to train police personnel on IT laws and the detection of cyber crimes. — By Kunal N. Talgeri

IT Workers Top ‘Stressed Out’ List S T A F F M A N A G E M E N T Are you driving your IT staff crazy? According to a recent survey, there’s a good chance you are. A third of all IT workers claim that they are unable to work properly thanks to interfering managers. In fact, IT professionals topped the list of most stressed individuals at work today, beating even those working in health care, according to a survey of 3,000 professionals, conducted on behalf of online learning provider SkillSoft. Employees claimed to feel put-upon and suffered most at the hands of their managers

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— blamed for lack of support, increasing pressure, interruptions and bullying behavior, the survey indicated. Results also showed that while 37 percent of staff found it difficult to meet deadlines, 31 percent stressed about taking on other people’s work. Not surprisingly, a disgruntled 28 percent said they lacked job satisfaction, and preferred to work elsewhere. A third of people said they would rather be their own boss, and have complete control over their daily duties. Kevin Young, managing director of SkillSoft, says: “Our research was sparked by a recent Gartner report which claims that

the untrained or under-trained desktop user will cost an organization five times more to support than a well-trained worker. This led us to thinking about how much pressure this must also put on the IT professionals who have to provide such support.” The poll also revealed that 97 percent of people working in IT claim to find their life at work stressful on a daily basis, and a quarter of IT experts are under such enormous pressure to perform at work they have taken time off suffering with stress.

— By Radhika Praveen REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

IllUST RATION BY BINESh SRE EdhARAN

Spam’s New Image

— By Robert Mcmillan

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DoN’T BE SuRPRISED WhEN YouR LAPToP

Breaks M O B I L E C O M P U T I N G It’s unlikely your laptop will catch fire, as a Dell notebook did in Japan earlier this summer. But nearly one-fifth of all notebook PCs will break down during their lifetime, needing a new hardware component to fix the failure, according to a Gartner study. Motherboards and hard drives fail most frequently. Desktops suffer from the same weaknesses, but they break less often. Five percent of new desktops will break within 12 months, and 12 percent will break within four years, Gartner estimates. In comparison, 15 percent of laptops will break within a year, and 22 percent within four years. Broken screens used to be the most common laptop failure, says Leslie Fiering, research vice president at Gartner. But manufacturers have reduced screen breakage by making the notebook casing and screen bezel more rigid, and by providing more clearance between the screen and keyboard when the lid is closed. Now motherboards are more complex. Technicians used to be able to replace parts like a network interface card, but today such parts are integrated into the motherboard. The entire motherboard must be replaced to fix one component. Such repairs average five days, depending on how busy technicians are, at a cost of at least Rs 11,250 in lost productivity and administrative expenses. After motherboards and hard drives, the next most common notebook hardware failures are latches and hinges on the chassis, lost key caps and the aftermath of drinks spilled on the keyboard.

— By Ben Ames

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TRENDLINES

Just when you thought you’d mastered the art of filtering spam, the spammers have crafted another way to infiltrate your inbox: images. Spammers are now using .gif or .jpeg files to embed their pitches for pharmaceuticals and penny stocks. Because this image-based spam typically doesn’t contain any text, it’s harder for filters that look for known URLs or suspicious words to block them. Anti-spam vendor Cloudmark sets traps, known as honeypots, to lure spammers to its network, and the company reports that half of the incoming spam it snares consists of images. “About a year and a half ago we started seeing a little bit of it, but it wasn’t until the past six months that it became a serious issue,” says Adam O’Donnell, a senior research scientist with the company. Meanwhile, Craig Sprosts, senior product manager with IronPort Systems, says image-based spam has jumped from about 1 percent of all spam messages in June 2005 to around 12 percent today. This growth is helping to fuel a global resurgence in spamming, Sprosts says. Spammers now generate an estimated 5,500 crore messages per day, according to IronPort. A year ago that number was 3,000 crore. The combination of greater volume and more sophisticated techniques has meant more complaints for network administrators. “I’ve had users complaining in the last few weeks about the overall increase in spam and I’ve personally noticed an increase in the percentage of it that’s image-based,” said Jonathan Forster, computing manager with the University of Arizona’s psychology department. Administrators at electronics distributor Avnet have started stripping certain embedded image files out of all messages after seeing an uptick in image-based spam two months ago, said Rob Kudray, manager of messaging services. E-MAIL

Deconstructing Team Dynamics with other group members, and individuals are more likely to come to them for advice. At the other end of the spectrum are the ‘social loafers’ — team members who rely on others to get things done. There can be social loafers in both large and small groups. having a leader who is clear about task delegation and deadlines — and who provides a structure for the team’s work — discourages loafing, says Klein. Performance evaluations that incorporate 360-degree feedback also help. If individuals value their coworker’s opinions, Klein says, they may feel a greater sense of accountability due to social pressure.

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has been its ability to broadcast unfiltered messages to audiences that would otherwise never see them; to organize geographically dispersed groups in an effective way; and to allow instant, secure transmission of operational information. When fundraising, money transfers and recruiting join those activities, the result is virtual nationstates that exist everywhere and nowhere, able to materialize and vanish, divide and multiply almost at will. To accomplish most of their goals, they do not need to hack into government systems or crash networks. Terror on the Internet provides a useful framework for understanding and analysing emerging security challenges. The value of the Internet to terrorists lies in creative convergence: digital media and the propaganda value of atrocities intersect when al Qaeda can disseminate videos of violence that conventional

— By Katherine Walsh

Lesson-1

How to make a

media have censored; online tutorials teach willing students how to use easily obtained materials to create bombs; and the developed world’s commitment to open public information creates vast databases that terrorist planners can use to create bigger and better threats. — By Richard Bray

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IllUST RATION BY BINESh SRE EdhARAN

TErrorism on ThE nET SECURITY Terror on the Internet hardly sounds like a book title to reassure public sector IT security organizations. But, ironically, it does. Written by security researcher Gabriel Weimann and published by the United States Institute of Peace, the book acknowledges that war is being waged on the Internet but argues that the greatest threats are beyond the scope of system administrators and IT staff. After years of study, Weimann concludes that there has never been a successful example of ‘cyberterrorism’, a pure electronic attack that caused physical injury or loss of life. On the other hand, he writes, the Internet has opened up other resources and opportunities for terrorists, and IT organizations have little or no control over those threats. One of the greatest benefits of the Internet to international terrorism, Weimann argues,

TRENDLINES

Teams perform better when they share similar ideas about how to get things done, according to research from the University of Pennsylvania’s Wharton School. Katherine Klein, a professor of management at Wharton, and her colleagues examined what they call the shared mental models of work groups — how team members organize their tasks and determine their goals. Klein observed that when team members think alike about how to execute a project, they are able to anticipate one another’s actions and coordinate their behavior. Thus, they are likely to perform better than teams whose members have different ideas about how a project should proceed, says Klein. Provided the team shares “mental models about goals, values and priorities,” it’s also important that team members possess a diverse set of skills, she says. Klein also studied the interpersonal dynamics among team members. She found that the most valuable members of a team are high in both intellectual and social capital, meaning they are experienced and even-tempered. Team members who exhibit these traits are more likely to have good relationships

MANAGEMENT

compliance Improves communication COMPLIANCE Increasingly, to keep themselves and their companies out of trouble, members of the Information Systems Audit and Control Association (ISACA) are turning to an IT governance tool, the control objectives for information and related technology, or Cobit. Although Cobit has been around since the early 1990s, the SarbanesOxley Act is pushing new interest in the tool, said users who have implemented it. Cobit is also getting updated: a new version of a SOXspecific tool that uses Cobit, the IT Control Objectives for SarbanesOxley, is being finalized by the IT Governance Institute (ITGI). Public comment is now being accepted on the updated tool, which includes recent US Security and Exchange Commission guidance. A major update of Cobit, Version 4, was released in December by the ITGI. Cobit and the SOX framework are both available as free downloads from the www.isaca.org Web site.

Cobit creates a common framework for business and IT management and in a “non-technical way” explains about building controls around a business process, said Steven Suther, director of information security management for American Express Technologies, the IT arm of American Express Co. Cobit allows “my business folks to actually understand IT processes for the first time ever,” he said. The management focus of Cobit differs from the Information Technology Infrastructure Library (ITIL) that is gaining data center adoption. But both are complementary, and the latest version of Cobit has improved integration with ITIL, said Robert Stroud, an IT service management evangelist at CA Inc., and contributor to Cobit. — By Patrick Thibodeau

Six Trends will Drive sustainable Development Sustainable development will steadily advance over the next 10 years, with six major trends influencing various industries world-wide, according to a recent PricewaterhouseCoopers’ report, Corporate Responsibility: Strategy, management and Value. The challenge of creating strategies that meet immediate needs without sacrificing the needs of future generations will be driven by the growing influence of: global market forces; revisions in corporate governance; high speed innovation; largescale globalisation; evolving societal

Il lUSTRAT ION BY UNN IKRIShNAN AV

MANAGEMENT REPORT

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requirements; and communication, the report says. “Sustainable businesses balance their economic interests with the need to be socially and environmentally responsible. The companies that succeed over the long term are those that integrate ethical considerations into company decisionmaking, and manage on the basis of personal integrity and widely-held organisational values,” said Sunny misser, PricewaterhouseCoopers’ global leader of sustainable business solutions. Of note to CIOs, innovation, particularly in core industries, was seen

as a key trend. The report said changing economic conditions will expand the rate of innovation exponentially to include changes in behaviour, product design, supply chains and geopolitical structure, in addition to technology.

— By Team CIO VOl/1 | ISSUE/20

TRENDLINES

SOX

Computer Grid to Predict storm surges urges

Universities in several Southeastern states are jointly building a computer grid and application that they hope can help scientists predict storm surges well in advance of approaching hurricanes. A storm surge is a body of ocean water pushed onshore by high winds during a hurricane. The pile-up of water, above the average sea-level, has caused many deaths in the past. Such a system could give government officials a better idea of when to order evacuations. Improving storm surge forecasting requires the harnessing of large amounts of computing power to quickly analyze meteorological and oceanographic data that is needed to develop forecast models, project leaders said. “The challenge is to create a product” that can extend the window for accurate forecasts to 72 hours, said Gary Crane, director of IT initiatives at the Washington-based Southeastern Universities Research Association (SURA), which includes 62 schools. Crane said current storm surge forecasts are accurate about 24 hours ahead of time. The storm project, called the SURA Coastal Ocean Observing and Prediction Program, is funded by the National Oceanic and Atmospheric Administration and the US Office of Naval Research. The grid itself has been in development for two and a half years and to date links about 14 SURA members. It is used for a variety of research projects, noted Crane. There are currently about 900 CPUs in a heterogeneous environment on the grid, a number that’s expected to double with the recent purchase of IBM Power servers by three member universities. The expanded system is likely to boost the computing power of the grid from about three trillion floating-point operations per second, or two trillion calculations per second, to about 10TFLOPS, Crane said. Earlier this month, IBM announced the start of a three-year contract to provide hardware and software to Louisiana State University, Georgia State University and Texas A&M University and work closely with university researchers to exploit the large-scale computing capability of the grid.

W E AT H E R

FORECASTING

The efforts by universities to share a grid may also help solve some problems facing commercial grid developers.

— By Patrick Thibodeau

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Michael Schrage

IT’S ALL ABOUT THE EXECUTION

Visibility for the Board With boards of directors under increased scrutiny by regulators and other entities, CIOs should consider creating a digital dashboard that gives them a view into the key performance indicators of the business.

tad tired of those demanding Sarbanes-Oxley and other compliance implementations? Want to dramatically raise your profile with your CEO, CFO and corporate counsel? Do highimpact professional risks intrigue you? Then consider making an offer your company’s board of directors may dare not refuse. Create a 'digital dashboard' and database that puts all the information a non-executive director might need right at his fingertips: compensation levels, capital spending histories, changes in accounting rules and so on. Treat the board like a business unit. Support directors as if they were C-level peers. Turn them into valued customers and clients for your IT shop. Learn from them. And yes, give them tech support if they ask. The reason is as obvious as, say, an Enron trial in Houston. Litigators and regulators are making directors ever more accountable for their actions and inactions. The future of global enterprise doesn’t merely reside in better management or superior leadership; it’s now contingent upon good governance. That’s not an annoying business trend — it’s a transcendent legal principle. Companies defy it at their peril. And the importance, liability and legal exposure of nonexecutive directors will be even greater five years hence. Once upon a time, independent directors with sterling résumés could successfully plead ignorance if their board-approved mergers, acquisitions, hiring, firing or audits went awry. Today, they can still plead ignorance. However, they’ll be doing so under oath before judges and juries legally empowered to interpret ignorance as negligence. Ignorance isn’t bliss. There are good reasons why Directors & Officers’ insurance rates have skyrocketed.

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Michael Schrage

IT'S ALL ABOUT THE EXECUTION

Of course, non-executive directors are free to trust whatever data they get from the CEO, CFO and the auditors. However, if you were on a board that was increasingly being held to stricter standards of accountability, wouldn’t you like to have your own information window into the enterprise? Wouldn’t you like to show a court of law that you demonstrated fiduciary 'due diligence' as a director by digging deeply into the data? Yes? Then 'Hello, CIO!' The harsh truth is that the law is herding directors into investing more time and effort into more serious governance. The simple fact is that you can’t have good governance without good information. The challenge is shockingly obvious: CIOs should be taking the lead in working with their CEOs, CFOs, corporate counsels and, yes, the auditors, in developing customized systems to support the board.

A smart CIO will work with his CEO, CFO, corporate counsels and yes, the auditors, to develop customized systems that support the board. Might this put the CEO, CFO, corporate counsel and the auditors in an awkward position? Absolutely. Doing the right thing is always risky. Then again, not doing the right thing is even riskier.

Time to Show Initiative Let’s be blunt: the overwhelming majority of the time, CIOs are reactors. They’re desperately responding to whatever lastminute requests come from the lawyers or the investment bankers or the CFO on some board-level issue. When they successfully scramble to deliver the goods on deadline and in desired formats, they’re taken for granted. When the data is late or missing, they get blamed. That’s life, but there’s nothing proactive about their role. The rise of accountability-driven governance is an excellent opportunity to change that. Smart and gutsy CIOs will make the most of it. They will work with their CEOs, CFOs and corporate counsels to work with the board. They’ll be proactive. They’ll informally chat with lawyers and nonexecutive directors at other firms to get a sense of what kind of customization is necessary. They’ll mock up some digital dashboards and take them into, say, the CFO’s office and ask, “What do you think?” A CIO at a billion-dollar U.S. retailer did exactly that and the CFO’s initial reaction was outrage. Who the heck did the CIO think he was? The CEO was more relaxed. He calculated that this proposal would make him look smart. He had the CIO 24

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present it as a trial balloon. The directors didn’t want their own system but they did want earlier access to the CFO’s numbers. So IT set up a secure webpage on the corporate site for the directors to log into. Everybody was better off. The key? The CIO demonstrated initiative in a way that didn’t threaten the CEO but addressed an unexpressed desire of the board. (The CFO was reportedly still annoyed but now took the CIO much more seriously as a corporate player.) The best way to accomplish this is to partner with one’s C-level peers and colleagues to better serve the board. Then again, some colleagues are better partners than others. Of course, if the CIO really wants to raise her profile, maybe she informally raises this offer to a sympathetic director who serves on the compensation or audit committee (the two board committees most likely to get an independent director in trouble.) That’s truly high-risk. Disintermediating your colleagues is corporate hardball. If the corporate counsel, CFO or CEO isn’t amenable to creative collaboration around 'director dashboards', maybe that’s vital data for the CIO to know. A serious independent director might find that informal conversation useful and revealing too. So would a director who’s nervous about liability. Can this be done without undermining the CEO? Of course. The better question is whether your company’s board understands and appreciates that it must have executive relationships above and beyond the counsel, the CEO and the CFO. A healthy and productive relationship with the board is a reasonable goal for a world-class CIO. Moreover, in this era of complex compliance infrastructures and global regulation, a healthy and productive relationship with the CIO is an essential goal for a world-class board. For CIOs, productive board-level relationships are essential for professional development. While there’s a wealth of management literature about how CIOs should lead their people and better collaborate across the enterprise, there’s a paucity of information about 'managing up' — that is, what role CIOs should play not only in empowering C-level executives but also in improving information, interaction and governance at the board level. Using IT to help the board manage itself may be as important for tomorrow’s CIO as using IT to cut costs and grow revenue for the enterprise. As crucial as IT governance may be, corporate governance is even more important. CIOs should recognize that and act accordingly. CIO

Michael Schrage is codirector of the MIT Media Lab’s eMarkets Initiative. Send feedback on this column to editor@cio.in

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Larry Ponemon

KEYNOTE

Privacy is Good Business When it comes to collecting your customers’ data, less is usually more.

t seems that not a day goes by without news about lost or stolen personal data. Some of the most widely reported breaches involve personal data collected and stored on company networks. Crackers recently stole credit and debit information from a BJ’s Wholesale Club customer database, and in another incident, accessed the credit card, debit card and checking account information of more than 1.4 million customers of DSW, a shoe discounter. The problem is not limited to individual corporations. Data aggregators such as Acxiom, ChoicePoint and LexisNexis collect and sell personal information on virtually every American. At one time or another, each of these companies has had to notify hundreds of thousands of individuals across the country that their personal information was accessed by unauthorized individuals. The Federal Trade Commission recently fined ChoicePoint Rs 67.5 crore after it sold sensitive personal information to con artists who then used the data for fraudulent purposes. Yet, despite growing concerns about privacy and the security of personal data, most American companies still collect too much personal information from their customers without giving them a choice on how this data is used, shared, sold or retained.

Opt-out, Opt-in — Same Difference Indeed, just over half of large U.S.-based companies offer an opt-out choice to customers, according to a new study by the Ponemon Institute (the company I founded). And even fewer companies — 23 percent — operate on a consent or opt-in approach. (With an opt-in policy, companies will not collect 26

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Larry Ponemon

KEYNOTE

personal information unless their customers specifically consent or opt in.) Even if companies do offer opt-out, it can be a very frustrating experience â&#x20AC;&#x201D; much like calling customer service at your telephone company to complain about their billing error. And there is no guarantee that personal information will actually be stricken from the companyâ&#x20AC;&#x2122;s customer contact database. Not only are Americans increasingly worried their personal data may fall into the wrong hands but they are also becoming more anxious about omnipresent surveillance of their personal lives by the government. In January, the Ponemon Institute conducted a survey on whether search engine Google should release Internet search information to the federal government. More than 56 percent of respondents in our study said that Google should not release Web search information to the government. Some recent surveys indicate that privacy concerns are behind the recent plateau in the numbers of people who bank online. And privacy experts say that they foresee an increasing number of lawsuits against corporations from angry consumers whose personal data has been breached. Recent government enforcement actions have also raised the bar for companies. In its ruling against DSW, the FTC required the shoe retailer to establish a comprehensive information security program that includes administrative, technical and physical safeguards.

whose data has been entrusted to them. That means posting privacy policies that are easy to understand. Remember, not everyone has a law degree. Transparency also requires the company to explain clearly how personal information is being used and why it may be shared. CIOs should also consider installing technologies that make it easier to manage customersâ&#x20AC;&#x2122; privacy preferences and track illegal data movement. Effective use of these technologies will promote a higher sense of confidence that your organization is committed to protecting privacy, thus protecting your brand or reputation. As you put these technologies in place, keep in

Failure to properly secure personal information can be very costly. Hence, it is always a good idea for companies to be honest and open with people whose data has been entrusted to them.

Where the CIO Fits in I believe that it is 'good business' for companies to be more responsive to customer and employee privacy concerns. After all, when a company succeeds in creating a trusted relationship, many customers do, in fact, appreciate the personalization of marketing messages that making their personal data available can enable and are therefore willing to share more information about their purchasing habits and lifestyle. As the chief information steward for their companies, CIOs are in a position to take a leadership role here. When all is said and done, you are most likely the executive who has to create a cohesive data protection strategy within your enterprise and, if your company is outsourcing, outside it as well. It is up to you and other top executives to ensure that all of your business partners maintain the same level of vigilance as you do over the information entrusted to them.

What you can do to Safeguard the Data One of the lessons learned from recently publicized data breaches is that the failure to properly secure personal information can be very costly in terms of lawsuits, fines, diminished reputation and customer churn. Hence, it is always a good idea for companies to be honest and open with people

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mind that not all personal information is considered equal in terms of potential sensitivity. CIOs should know where in the organization the most sensitive types of personal data (Social Security numbers, credit card accounts and health records) reside and make sure this data is secured at a higher level than other types of information. IT executives should also make sure that their companies do not collect too much information. This is tricky, since marketing departments often have ambitious goals for targeting customers to increase revenue and that, in turn, results in pressure to collect as much information as possible. In the privacy game, however, less should always be preferred to more. The key is to collect just what is needed to get the job done. In addition, CIOs need to take steps to ensure that personal data the company collects is accurate and current. One way to improve accuracy is to provide customers with the ability to access and, if necessary, correct, personal information collected about them. And when personal data is no longer relevant (or required by law), companies should get rid of it. The storage of stale or outdated personal information is almost always a threat to privacy. The CIO must be proactive in making sure the organization can 'walk the talk' when it comes to its privacy and data protection commitments. While this is a difficult and politically risky task, in the end your company will thank you for taking on this leadership role. CIO

Larry Ponemon is founder and president of the Ponemon Institute, a research think tank dedicated to privacy management. Send feedback to this column to editor@cio.in

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9/6/2006 7:06:56 PM

Manish Gupta, general manager-IT, Whirlpool India, and V.K. Magapu, director & senior VP (IT), Larsen & Toubro, have leveraged two outsourcing models that are a departure from the multi-vendor strategy.

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By GUNJAN TRiVEDI & SUNIL SHAH

Imaging by b ines h s reedh aran

On the outsourcing turf, the one-vendor approach and insourcing are two strokes under par that can help ace IT requirements, and add extra drive to your organization's business. Reader ROI:

How to develop a working relationship with a vendor How to attune users to new outsourcing approaches The case of application development

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Cover Story | Outsourcing

Ever since outsourcing captured the imagination of enterprise in India, the spotlight has — for the most part of it — been on the transactional approach: a multi-vendor strategy. In recent years though, two other models have become more popular — strategic outsourcing and ‘insourcing’. While the former involves leveraging a single IT vendor, insourcing lends a greater degree of ease and control because an enterprise creates its own division to meet its IT needs. Both models have thrown up a series of challenges: efficiencies, for one. Further, the strategic outsourcing deal

entails a higher level of dependence on the vendor — and thereby puts the onus on the CIO to familiarize users with the vendor. Five years ago, Whirlpool India took the plunge and is now excited enough about the model to embark on its second strategic deal. Similarly, Larsen & Toubro has profited from the insourcing model — literally. At the very least, the two models allow a CIO to focus on a single party to fulfill its IT needs. And both serve as a change for the IT leader wary of being squared by an outsourcing deal when his organization is a round peg. Can either of the models work for you?

i.t within, i.t. without Larsen & Toubro hasn't felt the need to look beyond its own IT subsidiary when it comes to 'outsourcing' its requirements.

or a technology-driven engineering and construction company like Larsen & Toubro (L&T), outsourcing its IT functions and operations wasn’t something it had in mind, to begin with. The Rs 13,900-crore group has managed their own show for the past three and a half decades, and has invested in technology — right from the big daddies of mainframes in the 1970s to the newer, faster mainframes in the 1980s and ERP running on New Age servers in the 1990s. Throughout this period, L&T’s divisions never shied away from managing it all in-house. However, during the IT boom of the late 1990s and early 2000, excessive attrition of IT staff brought the in-house teams under tremendous pressure: L&T lost 3,500 employees in a decade. The group then considered the idea of outsourcing its requirements. This is where its story took an interesting turn: the IT functions never went ‘out’ per se! L&T’s six divisions did outsource their IT functions, but their work orders or contracts did not go out to any external, third-party vendors. The vendor was one of its own subsidiaries, L&T Infotech, which took on a major chunk of the work as the group adopted a relatively new concept in India, loosely termed ‘insourcing’. It can be said that L&T stumbled upon the idea of outsourcing its IT functions to its Infotech division. "Servicing the internal customers by L&T Infotech began as a request from internal divisions because they were unable to manage the attrition of IT workforce,” says V.K. Magapu, L&T's director & senior vice president (IT & technology services). L&T Infotech itself was never originally designed to do this. It was primarily set up to earn dollar revenue by exporting IT services. Banking on its confidence with 30

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developing IT solutions, L&T floated an international software division as early as 1992, which enjoyed phenomenal success because of the ensuing Y2K-related services boom. This became a natural course for a subsidiary formed with HR policies and salary structures that were distinct from the other divisions in the group. “We wanted to make the most of the flourishing IT market. In 1997, we registered our subsidiary and decided to have the new entity do IT business in the new millennium. Hence, L&T Infotech was born,” recalls Magapu, who is also the chief executive of L&T Infotech. The Rs 814.5-crore IT subsidiary effectively became an ‘insourcing’ entity for the L&T divisions as it undertook a bulk of work in terms of maintenance and new implementations under contractual obligation. “The term ‘insourcing’ is used in various domains with different connotations. Quite a few US companies use this term to describe their setup of having their IT work outsourced to one of the their subsidiaries on a contractual basis. Since we do something similar, this term can define our arrangement as well,” says Magapu. The L&T divisions basically pose two kinds of IT requirements: maintenance and introduction of progressive technologies. L&T Infotech supports and maintains the IT systems in tandem with the existing internal IT teams of the divisions. Each division has maintenance contracts with L&T Infotech, duly supported by service level agreements (SLAs). In effect, it supports and maintains almost the entire IT infrastructure of the L&T divisions. Its 'L&T' team, comprising 100-plus members, works on the shared services model and maintains 14 SAP implementations across the group. It looks into other

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Cover Story | Outsourcing infrastructure-related issues too: hosting, maintaining servers for the divisions, and the group’s WAN comprising various connectivity mediums such as leased lines, VSATs and RF links. However, it doesn’t manage maintenance work for the entire group, largely because of geography. Some of the business units that are not located in Powai, Mumbai, have chosen to manage infrastructure management and support on their own — like its plant at Hazira in Gujarat. Still, over the past decade, as its infotech subsidiary has evolved, the insourcing functions have increased. Earlier, it might have overseen only SAP maintenance. Now, specific apps based on core ERP of SAP are also developed at L&T Infotech, such as the SAP product lifecycle management for the electrical and electronics business group, or the SAP corporate finance management implementation for L&T’s corporate treasury. Even for the deployments of cutting-edge technologies at the divisions, L&T doesn’t look beyond its IT subsidiary. The divisions issue internal work orders to L&T Infotech, requesting it to embark on implementation projects. In case it doesn’t have the required skillsets to implement a specific project, the divisions are free to float RFPs to external service providers. “It is not as if the divisions are forced to come to Infotech. As a group CIO of L&T or as chief executive of L&T Infotech, there is never an imposition of sorts on divisions from my office. We ask the divisions to follow the IT strategy that snugly fits their requirements. Once in a while, the divisions float tenders in the market as well. Nevertheless, we usually intend to have Infotech as the first choice when it comes to the deployment of cutting-edge technologies,” says Magapu. In its own manufacturing performance areas, the strategy L&T has adopted is that each division takes the IT course best suited to them. The IT subsidiary plays the role of an advisor during the conceptualization stage. Sometimes, it also acts as a center of excellence for certain technologies, which it had already rolled out for its external clients. Despite the freedom to choose any vendor, the divisions usually stick to their sister concern for all their IT needs. Most recently, L&T Infotech kick-started a process to deploy pilots of ID management & access solutions at various divisions. The corporate IT team and L&T Infotech

are in the process of conceptualizing SOA and enterprise architecture projects for L&T’s divisions. Says Magapu, “Usually, people go to market to try different vendors to enjoy the benefits of competition. This also means that all the time, the people working for the division will be new to the vendor’s offerings. This doesn’t happen when you work with your own team.” Companies generally go out to external vendors because they lack the in-house team to take on critical projects, he feels. “Our IT subsidiary operates globally and has garnered valuable experience by working with different companies in multiple verticals. It brings a lot of expertise and skillsets to the table,” he adds.

Driving Benefits home L&T's management believes that its insourcing alliance has succeeded in driving twin benefits for the group. “Generally, before L&T Infotech introduces its cutting-edge solutions to the market, it convinces one of the divisions to adopt the technology and deploy it,” says Magapu. The divisions thus enjoy the early mover advantage by successfully deploying n ew t e ch n o l o g i e s and solutions ahead of time. It also means that L&T Infotech gets to do handson implementations of its solutions in a real-business environment, and develop a proven track record and showcase performance to its external clients ahead of the competition. I n t e r e s t i n g l y, though L&T Infotech addresses almost all of

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Cover Story | Outsourcing

Even for the deployments of cutting-edge technologies at the divisions, L&T doesn’t look beyond its I.T. subsidiary.

the group’s requirements, it doesn’t rely on the group companies to profit in the market. Ranked the 10th largest Indian software service exporter by Nasscom, L&T Infotech predominantly operates in the US and European markets, and sees almost 95 percent of its revenue coming from its clients in the developed economies. Indian customers constitute three percent of the revenue pie and the group companies sum up to about two percent. “Though we have the Infotech division looking after our internal needs, it hasn’t lost focus of the market and we continue to earn dollar revenue from it,” says Magapu. Although the group divisions are just a blip on the Infotech’s revenue radar, the IT subsidiary maintains a different equation with these divisions from what it has with its external clients vis-à-vis technology deployments. The clients roll out the solutions only after an acceptance test. Though the L&T divisions adopt a similar approach, its post-implementation phase varies from that of Infotech's external clients. The systems deployed at the L&T divisions go live almost immediately after its rollout, with no test runs as such. So, L&T Infotech has to be on its toes to ensure a smooth rollout. “Usually, with the external clients, once the solution is successfully tested and deployed, the solution provider moves off the scene. Unless the client calls, the vendor doesn’t go back. Here, internally, it doesn’t matter whether the testing is over or not. Divisions can

call the L&T Infotech people for fine-tuning any time and any number of times, irrespective of the contracts,” notes Magapu. The biggest advantage L&T enjoys with insourcing, according to Magapu, is trust. “The only advantage L&T can get when it goes to third-party is either the perception that we will have to pay less or we will have faster fulfillment of services. In normal activities where the stakes are not high, it does happen,” says Magapu. But, the scene changes when latest technologies are involved. The stakes are definitely higher because generally the divisions are early movers in many of the pioneering technologies, and the deployments are done without any prior implementation example or referral point. “Every cutting-edge implementation has a habit of lingering for at least two years after the deployment. If we give it to a third party, we are concerned that the vendor may never turn up after the final payment is made,” says Magapu.

The Right Panacea? The million dollar question is: does insourcing alleviate all outsourcing pain points and make key business sense for all large non-IT organizations? “Not really!” exclaims Magapu. He reasons two factors for it. The first stems from the fact that familiarity breeds complacency. “It does sometimes. And, SLAs are the answer to it because if something goes amiss, it is the SLA tracking

The Way Forward Seven steps towards a successful outsourcing relationship after the deal is underway. Don’t assume the hard work is over during the ramp-up period. Healthy relationships require continuous improvement throughout their lifecycles and periodic re-examination.

Keep close tabs on vendor staff turnover. Pay attention to all levels, from the executive ranks to middle managers to line workers; defections at any level can have a negative effect.

Hold quarterly meetings with seniorlevel representation from both customer and vendor.

Work with your provider to cushion against the sudden loss of key employees. For example, on an important project, place an extra resource who can be ready to jump in if necessary.

Rotate people out of the relationship management position after a few years in order to prevent burnout.

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Make sure performance metrics mesh with reality. If they don’t, come up with new metrics that do. S urvey business users and internal IT staff about their experiences with offshored support or projects on a regular basis. They can be your best measure of how well or poorly the engagement is delivering.

— Stephanie Overby

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system and not a person who makes more noise. One needs to have stringent SLAs, even internally, to make sure that the entities perform as per expectations,” he says. SLAs help avoiding complacency, as there are several matrices that the service or solution provider needs to watch out for, and have to perform optimally. “Earlier, we did not have too many reference points but as we started negotiating international SLAs, we imposed the same SLAs upon ourselves. Whatever stringent SLAs we have with Gillette, Freescale or Chevron, we impose similar SLAs internally with the divisions. Divisions might not have knowledge of what to ask for in the SLAs, but we ourselves impose the SLAs similar to the kinds we signed with external clients,” Magapu points out. “In addition to SLAs, people at the divisions are able to use several other areas of escalation to ensure that L&T Infotech performs,” Magapu substantiates. The second factor is the practicality of running an IT business. Magapu feels that though it makes more sense to insource, it is a huge responsibility and calls for a large management effort. “It is much like, ‘Let me float a new company in order to service myself better’. It becomes too large a burden to take only for catering to the insourcing need… and not all managements take on the task,” he says. It is a large investment in managerial effort, as it requires a tremendous cultural change from the normal operating culture of the group. Setting up an external entity and insourcing internal needs to it proves beneficial only when long-term business objectives are associated with such an entity. “It made sense to us because we also wanted to be in the IT business. Consequently, our IT division is tapping the market opportunities and not living off the corporate IT budgets while addressing the group’s internal needs,” Magapu adds. The insourcing alliance is proving fruitful for L&T — to both the operating divisions as well as the IT services division. The group has become more agile as the divisions are able to confidently adapt to the dynamic situations. Insourcing addresses the changing needs of the divisions. Magapu feels that a third-party service provider might have been slower to react to the ever-changing needs of such a large group. “Suppose, a division says that its database is overburdened and needs to be urgently upgraded, the response time is much faster. We don’t have to waste time in floating tenders or RFPs, etcetera,” he says. “We also get services and solutions for the divisions at discounted prices of about 20 percent of the going market rates. This is indeed the icing on the cake,” he smiles.

Leveraging Multiple Vendors If you have multiple vendors, here's how to keep the pack moving in the same direction:

Visit the developers’ office. There is no better gauge of vendors’ investment in their alliances than the number of developers they devote to the integration effort. If such an office doesn’t exist that means that neither company is serious enough about the alliance.

Get the vendors together in a room and observe how they work with each other before signing up. Get them to talk to you, as a team, about their products and observe how they work together.

Customer references from vendors have little value. No two installations of big, complex software such as ERP are alike, so don't expect one reference customer to help. If you want some guideposts, demand a list of all the vendors’ past and present customers, not just the few they’ve picked to showcase.

Two is bad enough; three is impossible. It is difficult enough for two vendors to coordinate their software releases and integrate them. More than two and the task becomes impossible — so keep it simple.

Get one throat to choke. Insist that one vendor be responsible for supporting the multi-vendor integration. Shared-responsibility leads to finger-pointing when something goes wrong and fixes take longer.

Vendors must be complementary, not competing. Partner vendors should not covet each other’s sales markets or software functionality. If they do, the alliance will fail — a victim of competition.

Be prepared to wait. Partner vendors will always attend to their core products first. Integration upgrades will inevitably lag behind upgrades of the individual software packages.

Become a market watcher. CIOs have to become financial and technology analysts and determine whether vendors’ alliances will hold together.

Don’t accept ‘coming soon’ integration. A vendor’s sales organization is normally ahead of its development group. You are likely to hear ‘We can’t show you because it’s in the next release, but it’ll be a knockout.’ Don’t fall for that one.

If the vendors can’t deliver,accept failure and move on.Stop the project after a year of trying if the integration between two vendors’ software isn’t working. Prolonging the agony will cause real damage to your business.

Senior correspondent Gunjan Trivedi can be reached at gunjan_t@cio.in

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—Christopher Koch REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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Cover Story | Outsourcing

one venDor for aLL Whirlpool has defied the stats, and is ready to take its faith in one vendor to the next level.

n business, change often connotes closure — and some pain. Winners normally take all. For the Rs 1,400-crore Whirlpool India, a subsidiary of one of the world’s largest manufacturers of consumer durables, a move from IBM to Accenture meant the end of a productive five-year relationship with its application and hardware support vendor. But Manish Gupta, Whirlpool India’s general manager-IT, puts the shift in perspective: “Times change, requirements change — and the entire delivery model changes. “IT at Whirlpool is a global organization. No more is it done on a country-to-country basis,” he says, referring to his 30-member team that reports to the parent company’s IT team. Interestingly then, at a time when, according to a CIO-CISR study, a greater number of one-vendor deals around the world are collapsing under the weight of their size, Whirlpool India is not just moving onto its second such deal — it’s also joining its parent company in raising the stakes. Whirlpool worldwide is thumbing its nose at the statistic and moving all its subsidiaries to Accenture. Most subsidiaries of the white-goods giant are already in mature stages of the move.

The change, which took place in June, was part of a global arrangement to run a planer over the rough areas of IT. “If IT is a global organization, there is bound to be some evenness and unevenness across countries. It then makes plenty of sense for Whirlpool India or Whirlpool China to outsource to the same outfit” as the rest of the group, says Gupta Says Piyush Gupta, director-finance, Whirlpool India, “A single vendor approach is like putting all your eggs into one basket, which is a risk not normally worth taking. However, we do have global scale, which we leverage continuously.” In March this year, Whirlpool acquired Maytag Corp., a deal which, according to reports, made the company the world’s largest home appliance maker with sales touching Rs 81,000 crore. The acquisition raised a case for multiple vendors. “With the takeover of Maytag, it would have been easy to have multiple vendors. But there are a whole lot of problems associated with managing them. From a business perspective, it becomes hard to pinpoint where problems originate from,” says Manish Gupta. Quite pointedly, Whirlpool’s outsourcing approach stems from its roots. It is a company whose IT applications run through 170 countries where it is present and 50 manufacturing and technology research centers. The choice has also been driven by business. As companies like Whirlpool reach out to tap markets away from their headquarters, the need to partner with companies that are “present and visible globally, with a 24/7 approach, and that have competencies” is becoming more urgent. Expansion also increases variables and dynamics — and the likelihood of coming under the ambit of compliance audits like Sarbanes-Oxley.

“There are a whole lot of problems associated with managing many frOm a buSIneSS vendors.f perSpeCTI CTIve, IT beCOmeS hard TOp pInpOInT where problems are coming from.” —Manish Manish Gupta, general manager-IT, Whirlpool India Vol/1 | ISSUE/20

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The increasing complexity drives heads of global businesses to seek more control over their IT organizations. IBM, Whirlpool India’s erstwhile partner, could have met its global needs, but the IT heads at Whirlpool Worldwide believed it would be easier to standardize the organization with its current vendor, Accenture. In a strategic outsourcing relationship, the choice of vendor is a touch complex for the CIO. Price alone doesn’t define the relationship, especially if he is looking for a deal spanning 10 years, as in the case of Whirlpool and Accenture. Proof of how dicey this model is lies in the numbers. According to research by CIO and the Center for Information Systems Research, half of all strategic deals fail. While problems in the Indian subsidiary of Whirlpool might not cause the entire Whirlpool-Accenture ship to sink, a slow rot in another part of the world could significantly hamper work in India. Gupta disagrees, as he reiterates the need for a working relationship with a vendor in such a context. The strategic approach is “need-based to some extent,” he asserts. Both parties need each other, and calling off the whole thing is the last thing on either company’s agenda. The choice of vendor may not have been in Gupta’s hands, but he still has plenty to do. A strategic relationship throws up a number of challenges for an organization. For starters, letting the vendor into your day-to-day functioning is inevitable, but innately intrusive. It entails providing an in-depth understanding to the vendor of what you do. Whirlpool India’s deal with IBM included outsourcing interoffice networks, hardware and helpdesk services, apart from implementation and support of SAP and cost Rs 2.6-crore in 2005. While the vendor seeks to create efficiencies by arranging various pieces of the business in order and fixing those that need it, the CIO must remember that in a strategic outsourcing deal, you might have to play by the vendor’s rules to some extent. For instance, putting processes in place to regulate Whirlpool’s policies is costing its people the liberty of just picking up the phone and asking for their work to be done ASAP. “Now, with the global model of policies and procedures, if business at Whirlpool India wants a new feature or a new application, it can’t just go ahead and buy it,” notes Gupta. The new process requires that every request be run through a process of talking to Gupta’s group, checking whether a local application already exists, and then analyzing the problem with the vendor. Says Piyush Gupta: “I am a little anxious about that [offsite servicing]. But this model has worked for corporates, and there is no reason why it shouldn’t work for us as well.” All this may not make Gupta’s department any popular, but he’s squared his shoulders to it: “When you introduce any change, there’s always some level of resistance. Initially, there’s always some adjustment.” Until now, the users’ needs were the prerogative of Whirlpool India’s IT department “from start to finish”. Even with the strategic deal with IBM, Whirlpool’s

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A VMO's Duties Some CIOs have set up vendor management offices to manage multiple vendors better. Here's what it can do: Set up formal RFP process and oversee all RFPs Monitor vendor performance using Balanced Scorecard or other methods Negotiate contracts with vendors Work with project managers to oversee IT budgeting Develop form agreements and contracts in order to avoid signing contracts always drawn up by vendors Learn vendor tactics and how to use them to the company’s advantage Stay abreast of market conditions and pricing trends Categorize suppliers into groups such as ‘strategic’ and ‘commodity’; a strategic supplier should have good access to the CIO — Susannah Patton

IT staffers were placed between the vendor and users. Both internal and external teams researched and tested together before getting back to the user. However, that process over e-mail and telephone made documentation — and, consequently, audits and service level analysis — impossible.

The New Order Whirlpool India’s new strategic relationship requires users to formally report problems relating to any application. Documentation can be done on paper or online. But, the enterprise is finding its new outsourcing approach different: the Accenture folk are a voice at the end of a phone located in the Philippines and Brazil. Strictly speaking, its earlier relationship with IBM was based on a co-sourcing model, whereby the vendor’s team sat in Whirlpool’s premises. Gupta’s and IBM’s teams, comprising six engineers for SAP and 10-12 hardware engineers, sat in the same office and shared the same water cooler. With the new deal, Whirlpool will have only one person from the vendor’s team on its premises. This setup has put the onus on defining even basic service levels. “For a problem of a certain priority, the service level says resolution will come in one day. But how do you count that day? Where does it start and where does it end?” asks Gupta. REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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Cover Story | Outsourcing Gupta’s worries about issues relating to communicating the change in work style and the higher level of interaction it required from business users. Towards this end, he began to work on a reporting tool, and continues to concentrate on creating user buy-in by using a mix of on-the-job training and classroom work, backed by awareness methods through leaflets that explain the new reporting process. As in the case of any outsourcing deal, monitoring service levels is critical. For this, Gupta has tempered the expectations of around 300 application users, tuning them to the new setup and training them on raising requests. He plans to make monitoring service levels a two-way street, where the facts of a request will be available online. In doing so, he’ll be able monitor the vendor and his users. Given the iterative process of making a request and finding a solution — from business user to IT staffer to Accenture and back (if the vendor needs more information) — Gupta wants to ensure that his users won’t be the ones holding up the process. “Our business understands that we have outsourced on a global model. This is a very big mindset change,” he says. In real terms, the GM-IT of Whirlpool India appreciated the need to create a great first impression with his users to make the strategic relationship work. To tune in to the new order, he introduced a unit, the business process advisor (BPA). “This resource has a number of responsibilities. One of them is to analyze and categories request raised by users. It will also provide first-level support and solve the problem within the business,” he explains. The BPA isn’t your regular help-desk. It fulfills a hybrid role of an information kiosk, air traffic controller

problem arises, the vendor has a certain perception of the problem. According to the vendor, it might not be a highpriority problem, but to the user, it’s always a high-priority problem. Someone’s got to set that priority. [The BPA does.]” Further, it is important because it’s at the forefront of creating what Gupta considers vital for a successful strategic relationship: trust. “The vendor has to trust us [to the extent] that when we say it’s a problem, it is one,” he says. Gupta expects to save 10-20 percent from outsourcing, a bulk of which will come from creating global efficiencies. The payment model for Whirlpool is structured in such a way that every subsidiary chips in, depending on how much service they’ve used. Since they have a global model, implementations are one-time across the organization’s multiple offices, reducing costs heavily. “The biggest thing I would like to implement [with the new vendor] is to never over-commit, and have more variable [payment options] than fixed ones. Whenever you sign a long-term contract, you should always choose variable costs over fixed costs,” asserts Piyush Gupta. At a strategic level, the BPA will train users to help themselves and distribute the learnings of one center to another — something that, according to the company's GM-IT, neither a user nor a helpdesk would do. Another area of concern in a strategic relationship is vendor attrition. If you are using a unified approach, where you depend heavily on the vendor, then their problems become your problems. “The average [staff] buffer today at the supplier-end,” says Atul Vashistha CEO of consultant NeoIT, “is five percent, down from 15 percent a few years ago.” The average industry attrition rate is 30 percent, says Vashistha. (CIO’s third outsourcing guide breaks that figure into: 10-12 percent attrition at the entry level and 15-20 percent at the mid-management level). Many companies ask their vendors to buffer more. Vashistha suggests that more efforts should go into teaching them that knowledge should reside in processes not in people — another function fulfilled by the BPA. It helps fold in knowledge (from learnings that have come out of resolving problems in-house and from the vendor) and into the dough of Whirlpool’s processes. In the near future, Whirlpool plans to combine the various units to create smaller and more efficient outfits that will service borderless regions. “Learnings from a problem in India can then be distributed to all other related business users. And because we have centralized systems, the learnings can be spread across Asia and even globally.” The idea is still a work in progress, and will develop as the strategic relationship with Accenture evolves. There’s speculation over the number of people to deploy and where to get them from, since getting someone with both business

The business process advisor is at the forefront of creating what Whirlpool considers vital for a strategic relationship: trust. and more. At an airport, passengers may know the time of their flight’s departure, but would they know which terminal to get to? At Whirlpool, that’s what the BPA does: it reduces user hassles of going to the wrong terminal with incomplete paperwork. Whirlpool might have succeeded in automating the reporting process, but passing on the understanding of the process — where and to whom to deliver information and how to use the tools to do it — is what the BPA seeks to do. One of the benefits of the BPA is that it avoids escalating riff-raff problems to the IT vendor. It also manages to reduce misunderstandings between vendor and client. “When a 36

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Smoothening the Transition How Whirlpool India eased the path for its application users after its outsourcing deal. Post-outsourcing, are you afraid of user frustration? Of your own IT department atrophying from the benefits of outsourcing? Whirlpool had similar concerns, and so decided to introduce its business process advisor (BPA) to smoothen the change to outsourcing support, Here's how it operates: Analyzes user requests and categorizes them under a service level.

Provides first-level support. If the problem can be solved within the business, it’s not escalated to the vendor. This also helps keep some internal knowledge. Trains users continuously in managing the easy stuff themselves. Distributes learnings from problems solved in one region to other regions. User problems are unique to geographies.

thrown up fresh challenges before itself: Hiring people for this job can be difficult, says Manish Gupa, GM-IT, Whirlpool India. He suggests using existing resources initially for the new role. Devising a way to monitor the BPA. Trying to keep the group small — possibly just one group across a region that includes a few countries.

The business process advisor has also

— S.S.

and IT knowledge is hard. “We would like to settle with not more than three people in a country like India,” says Gupta. At the moment, Whirlpool across the globe is deploying existing resources from their own IT departments for the new role, with a blueprint to create regional pools, which will create efficiency and reduce the number of resources on the job. Its IT team has also taken the approach that the more said to its vendor, the better. Strategic relationships, more than others, require an open dialogue between partners. “At the moment, we talk to Accenture on an hourly basis. Eventually, management will speak to them on a weekly and then monthly basis. But, I expect both business users and the BPA to talk with them more often,” says Gupta. Continuing to create ownership, he also looks forward to giving greater ‘visibility’ to the user by introducing surveys and “motivational contests.”

The App Dev Frontier In the brave new world of giant suppliers, NeoIT’s Vashistha advises outsourcers to redefine success. No longer should they crow about the number of million-dollar accounts, but about how they can grow a million-dollar account into a $20million account. If they don’t imbibe this outlook as strategic value creators by 2010, they will be forced to shut shop as competition takes away the earnings, he warns. His word of caution also serves as a heads-up to CIOs. One way vendors can fend off competition and add value is by asking for the app dev account, which represents an enterprise’s cutting-edge technologies. However, even a company as sold out on strategic outsourcing as Whirlpool has decided to keep application development in-house. Part of the reason, according to Gupta, is that Whirlpool is still “evolving heavily in terms of applications” in its IT

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lifecycle. Further, many enterprises feel that handing app dev to their vendor is like giving them its IP. It’s something CIOs have grown wary of. “That competency, built in-house, is cost effective. And we can keep that competency with ourselves,” says Gupta. He foresees this phase to last for another five to ten years. Setting up its own app dev center will also help hurry improvements on apps they’ve created and stop a great idea from losing steam. Whirlpool India has already set up a separate team to create and implement applications for global operations, mainly in the US and Europe. The team has evolved from a group of five to 50 today. Keeping app dev at home also wards off the problem of not having enough work for your vendor. “You estimate so much work initially, but end up with a lot less. We’d be losing a lot of money,” says Whirlpool India’s GM-IT. It’s not something that Gupta is currently worried about though. With Whirlpool expanding, new apps are being pushed into the pipeline and more employees being added to its 68,000 existing ones globally. “The more development we have, the more we know we have to be outsourced for support later.” It's the sort of planning that stems from a team, which seeks to understand the whole picture. Strategic relationships are done best when both parties take true interest in each other’s concerns. Having said that, every effort must be made to monitor the vendor and face up to management to introduce new functions. Just because the stats are not on your side, it doesn’t mean you can’t pull off a strategic outsourcing deal. If your organization’s a round peg, there still a way you can avoid being squared by a strategic outsourcing deal. CIO Copy editor Sunil Shah can be reached at sunil_shah@cio.in

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Ashok Soota, chairman & MD of MindTree Consulting, reiterates how modern business demands the acceptance of IT as an area of strength, rather than a cost.

The Source of

Strategic Benefits By Balaji Narasimhan

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Ashok Soota: There can never be any one thing that leads to success. First, there is the hybrid business model that we have evolved, which is a high consulting low-cost model. It gives the customer the best of both worlds. Another important

View from the top is a series of interviews with CEOs and other C-level executives about the role of IT in their companies and what they expect from their CIOs.

factor that has contributed to our success is the high people and customer satisfaction that we have had from the very beginning. This is crucial because IT is essentially a customer business and a people business. Then comes the technologies and the intellectual properties which we have created, including the fact that we have acquired global leadership in the area of Bluetooth. We have also created frameworks

Imaging by an il t

CIO: What single factor has contributed to MindTree's swift success?

Photo by Sr ivatsa Shandilya

Thereâ&#x20AC;&#x2122;s no doubting the reputation of MindTree Consulting as an organizational success. Over the years, its emphasis on people, as an asset, and inter-personnel communication have seen it grow. MindTreeâ&#x20AC;&#x2122;s chairman & MD Ashok Soota sheds some light on the scope and possibilities of the IT department in the modern organization and highlights the immense potential of R&D outsourcing business outside India.

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View from the Top

Ashok Soota expects IT to: Facilitate change Leverage competitive advantage Expand the market and introduce new channels

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to reduce costs and improve productivity. Every year, over the last six years, we have added one technology vertical practice, and this has ensured that we have a fairly large suite of offerings that enables us to meet the requirements of our customers.

How does MindTree keep its people this satisfied? There are three or four reasons for this. One is a very conscious desire to be seen as a creative company that is a great place to work. We believe that people satisfaction is of high importance. This comes across thanks to four broad areas. One is communications: as a company we try and communicate better with employees in order to get them to understand issues. For instance, we literally share with the entire team the strategic documents that we share with our board. Another way we have combated attrition is through inclusiveness, by bringing together the families of all our employees. We have a communication called the Circle of Life, which we mail out to the parents of our employees. In fact, we don’t even use the word employee; we call our people MindTree Minds. It's our way of acknowledging that the minds of the people, who help us to build our business, are of great importance for us. We have also created facilities that enable women to be able to manage their work at different stages of their lives and careers because it is more difficult for them to achieve a work-life balance. The third one is a matter of policy. We may have been the 1,500th software company out of India, but we were the first services company to give stock options to our people. Now that we're heading into a pre-IPO period, the value of these stocks will go up. Talking about attrition, our lateral hiring, (which is) the ratio of what we hire from competitors compared to what we lose to them, is almost 4.5:1. So, it is not just an ability to retain people, but also to attract them. Finally, we have empowerment. We spend a lot of time talking with our people to find out what they need to become more effective. We 40

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“If the CEO understands that it takes time to deliver an IT project, then a lot of problems can be eliminated.” — Ashok Soota

focus heavily on the overall development of all our people, and this has helped us to both fight attrition as well as to hire the best minds.

CIOs are trained to deliver on time and under-budget. What do you think of this? I think there has to be an understanding between the CIO and the CEO. You hear so often about the CIO-CEO divide because a lot of companies take a long time to figure out what they want to get done, and then they want it overnight. In reality, the CEO and the other non-IT people must understand that it takes time to deliver an IT project. If you get this basic understanding in place, then I think a lot of misunderstandings can be eliminated. You must also remember that you cannot short-circuit processes. The CIO must

have the confidence to say that this process will take so much time, and ensure that he resists unreasonable pressure. But, having committed, the obligation then falls upon the CIO to deliver. So, it is a two-step approach. If the CIO allows himself to be bullied or overly persuaded into accepting what he feels is not deliverable, he will get into trouble.

Is it correct to view an enterprise’s IT department as a cost center? I think it would be tragic if it was. IT has to be seen as something that is strategic to companies, something that enables you to leverage competitive advantage. IT is a tool that enables you to transform the organization and open up new markets. IT also helps you to flatten your organization, and this improves communication both internally and externally. There is no reason to look at it as a cost center because IT is a source of strategic benefits.

How do you define the success of an IT project? In many cases, the success of IT projects are easily measurable. ROI in most cases can be measured in terms of improvements in cycle time and cost savings. For instance, when you are implementing an ERP system, you will see payback in 12 to 18 months. More important is the fact that, without IT, you wouldn’t be able to do certain tasks at all, because certain business models are unsustainable without IT. Ultimately, the success of an IT project has to be viewed primarily from where it has added value to an organization.

But if a CIO is not on the managing council, how can he be expected to add value to the business? I would view this at two levels. One: if you think of a managing council as an internal board, I think it is important that the CIO

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View from the Top

should be on it. With reference to the external board, there are always limitations, such as the size of your board. But, on the internal board, the CIO must be present. Otherwise, he will not be able to get an understanding of how the company functions. Also, when you talk about change, the person has to be seen as having a certain degree of presence and clout. So, if the CIO is relegated to a level lower than the department heads, he is always going to be requesting them for things, making it difficult to introduce change.

How can a CIO stop business from putting IT projects on hold when money is tight? Let me first give you a different sort of response before I come back to your question. If you look at outsourcing, the good thing is that when budgets are tight, people are looking for more cost reductions, and so there is a greater thrust towards offshoring. When business is good, there is a lot of work, and a lot of offshoring happens. Therefore, you will see that offshoring has had a steady growth. Of course, this is not the same as an organization’s imperatives in terms of its total budgets. During difficult times, it is important to understand the CIO when he says that one of his key areas is to help business, not merely to save costs. If the CIO is able to introduce projects that help to expand the market and introduce new channels — projects that have early payback — then he will be able to resonate very well with the heads of business. If the CIO is in tune with the needs of the business, then there is no need for an IT slowdown. But clearly, there are marginal projects that somebody will want to put on hold. The CIO must be able to acknowledge this as an organizational need.

What should a CEO look for in a CIO? It's a very important question. The job of a CIO is very demanding. In my view, the first thing that a CIO must be is a change agent.

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He must be implementing SNAPSHOT other industries don’t transformational projects have the same degree of IT and he must be able to see maturity today — industries MindTree the change. He must be a like energy and retail come to Revenues (2005-06): visionary with a roadmap mind. Another good thing in $100 million and must understand what India is that e-governance is Areas of his department has to achieve. becoming more important. Operation: Apart from understanding And, IT is also playing a larger e-Business technology and the directions role in rural connectivity. SCM BI technology is taking, he EAI should also have a keen grasp How do you view ERP of metrics and processes Indian companies Target Industries: because whatever he is doing that are turning Travel and leisure needs to be measured. He also Manufacturing to outsourcing IT BFSI needs to be innovative, and Pharmaceutical to create greater most importantly, understand CTO business. When you consider efficiencies? Kamran Ozair all these things, then you realize Let me give you the (IT Services) that the dimensions of a CIO’s most glaring example of job are really diverse. where outsourcing isn’t Quite often, the CIO has present. Take the R&D the largest capital expenditure budget in an outsourcing business out of India — like organization. So in effect, he also needs to be a the work that Wipro does for Cisco, or person who can manage his resources well. what we do for Symantec — and you will find that we are talking about a $4-billion industry. In India, are we doing As a pioneer of the Indian IT any outsourcing in that area? Not at all. industry, what do you feel Whether it is the government labs or the about the role of IT in large private sector, this is at best miniscule. Indian enterprises? On the application side, yes, there is There are two parts to this question: where outsourcing. Largely, this is happening in the user is today, and the role of IT in larger the area of infrastructure support. This is in companies. As far as the larger role of IT is contrast with the West, where it began with concerned, IT is related to knowledge and IT application development and support before for India is like oil to the Middle East — only going into outsourcing infrastructure. Right now, the domestic industry is oil is a diminishing resource to which one will find a substitute. But there is no substitute to growing at around 30 percent. Globally, IT and knowledge. Therefore, it is of critical this is a $20-billion industry, which is also growing at 30 percent. Considering and strategic importance to the country. Regarding the role of IT in larger that we haven’t even touched the surface companies, enterprises are increasingly of demand in India, in reality, the market seeking to become global players, and IT should grow at around 50 percent per is, therefore, becoming more important to annum for at least a decade. I don’t see that them. But progress is still slow, and there happening now. CIO are only a few sectors in which IT usage is completely state-of-the-art and comparable with the best worldwide, like banking and telecommunications, which are fairly IT- Special Correspondent Balaji Narasimhan can be intensive businesses to start with. Many reached at balaji_n@cio.in REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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An IllustratIon by MM sh anIth

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Customer Service

A nswering

Call

the

By SuSannah Patton

Everyone’s had a bad experience with a call center. But now companies are investing in advanced technologies and at-home agents to connect with customers, not put them on hold.

ith a corded phone clutched in one hand and a spatula in the other, the man gazes anxiously at a piece of meat sizzling on his stove. He’s on the line with his credit card company, but instead of speaking with a live human, he’s stuck in a series of automated prompts. Even as his dinner bursts into flames, he’s unwilling to let go of his phone for fear he’ll miss a chance to speak with the next available agent. Reader ROI: how CIos can champion He tries to put out his flaming dinner with a broom, only to have the broom customer service within catch fire. their organization This telling exchange between caller and company — part of Citibank’s how to boost caller ‘Simplicity’ card ad campaign — isn’t just a clever send-up of a common satisfaction with your customer service problem. It also reflects growing frustration with automated contact center self-service applications that don’t work. Citibank’s response is the ‘dial 0’ the pros and cons campaign, which stresses that it’s easy to call its 800 number and find a real of VoIP

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Customer Service human being. But while Citibank proclaims it will no longer trap callers in an automated loop, most companies are still struggling to improve clunky call center technology that can make it hard to get quick and efficient service. Organizations that are listening to customer frustration are responding in several key ways: by updating call center technology, by making it easier to reach a human agent if necessary and — in some cases — by moving from far-flung call center agents to at-home customer service representatives. This strategic about-face marks the emergence of a new breed of call center — one that employs technology to connect with its customers, not put them on hold. It also represents a pull back from a trend that started five years ago, when industry leaders such as Dell and General Electric sent their call centers offshore and automated as many calls as possible to cut costs. Companies achieved substantial savings with these tactics, but firstgeneration touch-tone systems were cumbersome for customers to use and offshore agents were sometimes hard for callers to understand. The result? Customer backlash. And forward-thinking companies are realizing that, while they still want to save money, they need to focus on satisfying customers or risk losing them. To improve communication while reducing cost, they are integrating the existing call center model with new technologies. These range from voice over IP (VoIP), which makes it easier to oversee a remote

David Barbieri, CIO, Red Lion Hotels: "About 75 percent of our ticketing calls can be handled with voice recognition in the future."

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workforce but poses technical challenges for early adopters, to software that sends easy-to-answer calls to an interactive voice response (IVR) system while connecting the most valued customers with complex requests to highly trained agents. Customers are a company’s most vital asset. For that reason, CIOs need to know about technology that can help their companies improve customer applications and satisfaction. While contact centers are often managed by operations staff, CIOs generally maintain the networks and the systems that run them. They can also be in charge of purchasing and implementing new technologies such as voice recognition, work management systems that track agent schedules, and CRM applications that provide easy access to customer information. Clearly, the CIO can play a key role in fine-tuning call center service. “All the technologies we need for the next generation of call centers are with us today,” says Steve Boyer, CIO of call center outsourcer StarTek. “It’s a matter of figuring out how to integrate them, adapt them and use them to attract and keep customers.”

The Call Center Grows up Shortly after Alexander Graham Bell invented the telephone in 1876, he offered to sell his device to telegraph giant Western Union. Western Union declined and wrote in an internal memo that, “This telephone has too many shortcomings to be seriously considered as a means of communication.” Western Union was wrong, of course, and companies soon saw the new contraption as an excellent way to communicate with customers. As early as the 1920s, phones started appearing on the desks of those whose primary duty was to deal with customers, setting the stage for the advertising cliché, ‘Our operators are standing by’. Phone agents didn’t really take off, however, until 1967, when AT&T developed the toll-free 800 service that reversed charges from customers to the companies they were calling. Soon after, the Federal Communications Commission ruled that equipment made by businesses other than the Bell System could be connected to the public telephone system. The decision opened the door for competing companies to develop technologies such as the modern PBX, IVR systems and automatic call distribution systems, which made it easier for businesses to handle large call volumes at a more reasonable cost. As telecommunications technologies advanced, US call centers boomed. Datamonitor estimated that in 1998 there were 69,500 call centers nationwide. By the late 1990s, however, major corporations sought to cut customer service costs and began to investigate how to save money by moving call centers offshore. In one of the earliest high-profile announcements, Dell said in July 2000 that it would open a call center in Bangalore, India, and signed on with outsourcer

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Customer Service Tata Infotech. Other companies in the U.S. and abroad followed suit, and the Indian call center industry took off, followed by similar developments in the Philippines, Latin America and beyond.

A Checklist for Customer Satisfaction

Customer Dissatisfaction Customers have been less enthusiastic about offshoring. Many complained that it was hard to communicate with foreign operators due to their accents, and that scripted answers left them frustrated. A political backlash against offshoring ensued, which led Dell to announce in 2003 that it would bring technical support calls for business customers back to the US Dell did follow through on the move. But in March, it announced plans to double its Indian workforce to 20,000 over three years, a figure that likely includes some call center workers. Technology hasn’t been a cure-all for customer satisfaction, either. The widespread use of technologies such as voice recognition software and IVRs also left some callers alienated and unhappy. A 2005 study by Opinion Research found just 35 percent of those surveyed said call centers fully met their expectations. Despite customer grumbling, companies are not giving up on automation. In fact, the call center of the future will likely be highly automated and globally dispersed. The offshore call center industry is growing and companies continue adopting voice recognition, IVRs and other technologies to help them answer basic questions for less money. It’s easy to see why: transactions that cost Rs 90 to Rs 450 when handled by a human agent cost only Rs 0.90 to Rs 9 when automated, according to McKinsey & Co. Today, 79 percent of North American enterprises and at least 50 percent of European companies have IVRs, according to Forrester Research. Forrester’s report also notes that replacing traditional touchtone IVRs with some speech recognition technologies provides greater flexibility for companies trying to encourage customer self-service. To avoid caller frustration, however, companies must also make human help available as needed. And despite complaints, the automated agent, or IVR, is catching on as callers get acclimated to such services, analysts say. In fact, according to McKinsey, more than 60 percent of customers favor an automated option for simple interactions. To ensure good customer service, however, companies must focus not just on how fast the call is answered, but on what happens after it is answered. “If you’re outsourcing and putting in new technologies just to lower costs, you can run into problems,” says Elizabeth Herrell, VP in the telecom and networks research group at Forrester. “It’s not the automation or the outsourcing that’s the problem — it’s the lack of time spent on the details.” She stresses there is no one-size-fits-all solution to meeting customer demands while saving money in call center operations. The call center of the future, she notes,

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Track customer satisfaction with real-time surveys at the end of a call. Use voice recognition, but do it right. Let callers reach an agent if they want to with easy prompts or through voice analysis software that can detect a caller’s frustration. Consider ‘home-shoring’, the practice of employing customer service representatives working from their homes in North America. Investigate VoIP. Early adopters say that despite concerns over security and voice quality, the technology has improved to the point where it can help route calls more quickly and efficiently. Say goodbye to ‘hold’.

won’t follow a uniform model — some agents will answer calls in large contact facilities, while at-home agents will be hired as needed during busy periods to provide flexibility. Companies need to try different technologies and tactics while improving agent and supervisor training and tracking customer satisfaction with real-time surveys. “Customers will be unhappy when they can’t get information or when a system doesn’t understand them,” Herrell says.

Your Call is Important to Us There’s no denying that automating some calls can save a lot of money for a company and enhance service by helping callers get information such as flight times quickly. However, the investment in newer technologies such as speech recognition solutions can range from a few hundred thousand dollars to more than a million dollars, Herrell notes. The ROI from such investments can come quickly if businesses can answer more calls and avoid putting callers on long hold loops. Red Lion, with annual revenue of Rs 742.5 crore in 2005, is installing such software as a way to save money and provide some self-service for customers seeking simple information like a reservation confirmation. It also hopes to handle unexpected surges in call volumes with automation. The hospitality and leisure chain doesn’t outsource its contact centers. It employs its own agents at a primary call center for hotels in Spokane, Washington, and it has two others for its ticketing operations. But call volumes can be unpredictable, says David Barbieri, Red Lion’s CIO. During peak times, customers looking to make a hotel reservation or to buy tickets through the concert and event service REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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Customer Service would sometimes go into an ‘on hold’ loop if an agent wasn’t available. Red Lion was concerned that customers left on hold were likely to hang up and try a competitor. With Voxify’s voice recognition software, Barbieri expects to handle sudden volume peaks without losing calls. “It’s important the technology works and works quickly so that customers can have a stress-free interaction,” he says. Barbieri also expects to save Rs 1.35 crore a year by installing the software, which will go live in stages this year. He is in the process of developing application program interfaces that will link Voxify’s hosted voice recognition service to his two core systems that handle reservation and ticketing transactions. Barbieri estimates that about 75 percent of the company’s ticketing calls can be handled with voice recognition in the future. However, callers can request an agent anytime by pressing ‘0’. Experts agree that voice recognition has advanced to the point where it can be an important part of the call center. “But the key is not to penalize the caller when they want to talk to a human,” says David Brandon, senior technical call center consultant for Forsythe Solutions Group. Two years ago voice recognition software replaced touch-tone IVR applications that frustrated callers at Countrywide Financial, a Rs 70,650-crore specialist in home loans and diversified financial services. The result, says Lior Ofir, Countrywide’s first vice president for emerging technology, is improved performance with more customers completing transactions. The software from Nuance has helped the company achieve a return of more than 300 percent on its Rs 20.25-crore investment over the past two years, says Ofir. Still, Ofir knows it’s important to give customers the option of speaking with a live person, especially if they’re doing a complex transaction.

Information, Please Automatic call distributor: ACD telephone systems register incoming calls and handle them according to a database of instructions. Companies can use ACDs to validate callers and route them to the right agent. Computer telephony integration: CTI integrates disparate call center systems and provides to agents’ desktops useful customer information. A typical desktop CTI application may recognize a customer’s phone number

“The goal is to give our customers a clear choice,” says Ofir, whose group implements new technologies for the company’s US call centers. The new system, he says, recognizes about 300 variations of a request to speak with an agent, ranging from “I want to speak to a human” to “agent.” The system also uses voice analysis to detect when callers are having trouble and will then automatically switch them to an agent.

You Can Go Home Again While US companies such as Red Lion and Countrywide seek to boost service and cut costs through careful use of automation, others are banking on the human touch. In addition to newer technologies, they are experimenting with the ultimate virtual call center — agents working from their homes in North America. Companies including Office Depot, Vermont Teddy Bear and JetBlue already use hundreds of home-based customer service agents across the United States and Canada. Home agents don’t always replace offshore call centers at these companies. Instead — as in the case of Vermont Teddy Bear — they serve as extra manpower that swoops in during holidays or seasonal business peaks. They give a company flexibility to handle unusually busy days or even hours. In fact, the number of home-based agents is expected to triple to 300,000 by 2010, says Stephen Loynd, a senior analyst at IDC. Loynd says one reason the trend — which he has dubbed ‘home-shoring’ — is taking off is because it’s cheaper than outsourcing to a domestic call center. Newer technologies also mean the call center is becoming increasingly virtual. IDC estimates that it costs Rs 1,395 per employee per hour

A critical glossary of call center technologies.

Interactive voice response: IVR systems allow touch-tone phones to interact with a database.

Voice over IP: VoIP sends voice signals over data lines instead of phone lines. Call centers and outsourcers are adopting the technology to better handle routing and call volume; it can send calls to an agent anywhere in the world. VoIP does pose some security risks and quality of service concerns.

Speech recognition: Software that allows companies to automate calls that don’t require a human agent. Newer versions are proving more accurate than before.

Workforce management: Also known as job scheduling, workforce management software uses projected call levels to forecast the number of onduty agents needed at a given time.

when the call comes into the PBX or IP line, access the customer’s purchasing history from the host computer and display the information to the agent.

— S.P. 46

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Customer Service (including overhead and training) to operate a traditional call center in the US, but only Rs 945 per hour for a home-based agent. That’s still higher than rates for offshore agents, which start at Rs 450 per hour in developing countries of Southeast Asia and Eastern Europe, according to Forrester Research. On the plus side, at-home agents are generally older and better educated, Loynd says. “If you have enthusiastic, hardworking agents with a flexible work schedule, they’ll be better on the phone,” he says. They’re also more likely to stick around. While some traditional call centers report attrition rates of 80 percent to 100 percent annually, outsourcer Willow CSN (which uses only home-based agents) claims an annual attrition rate of just 15 percent. Vermont Teddy Bear agrees that home-based agents can boost customer satisfaction, although it won’t divulge actual figures. The company, which reported annual revenue of Rs 297 crore in 2005, doesn’t automate its calls or use offshore agents. Instead, it operates a small call center in Shelburne, Vermont. In addition, it has used home agents from outsourcer Alpine Access since 2000. Most of the time, says contact center manager Chris Powell, the center’s 170 seats are not filled. But the maker of handcrafted bears experiences major peaks in business during holidays such as Valentine’s Day and Mother’s Day and can go from 50 agents to 700 on its busiest days. At these times, home agents help the company respond to orders and shorten customer waits. Powell says the ability to staff up for short periods of time was more important than cost in the company’s decision to add home agents to its call center strategy. But judging by the average per-order conversion rate (the number of orders per call), home agents excel, Powell says.

The Virtual Call Center Routing calls and managing a global workforce presents it own set of challenges including making sure that roundthe-clock scheduling runs smoothly. One way to manage agents and route calls from a central location is to use VoIP technology to replace traditional phone systems. VoIP was originally touted for its ability to help companies cut longdistance costs. Now, for call center operators, it promises a greater ability to oversee a disparate workforce. VoIP helps companies save money with reduced longdistance charges and elimination of individual phone lines since all voice and data travels over the Internet. But, the technology is in its early stages and users have to overcome security vulnerabilities and quality of service hurdles. For example, calls that travel over data lines can be subject to Internet worms and viruses. “The driving force should be to have 24-hour support service, multimedia contact centers with Web, e-mail or voice. That’s easier with VoIP,” says Mojgan Lefebvre, international CIO at TeleTech. Analysts also point out that VoIP eliminates the need for call center managers to integrate voice and data networks, as they do in traditional call

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centers. Companies don’t have to run distinct infrastructures for automatic call distribution and IVR applications. VoIP also supports agents regardless of location. For Roto-Rooter, VoIP helped create a system in which there are few service interruptions or delays in answering calls, says CIO Steve Poppe. In the past, the emergency plumbing company had ‘mini call centers’ in each metro area it served, which meant agents could get backed up and callers might stay on hold. Now, three call centers in Baltimore, Chicago and Fort Lauderdale take a million calls a year.

Lior Ofir, vice president (emerging technology), Countrywide Financial: "Customers need the ability to reach a live agent during complex transactions."

With VoIP, the regional centers are better equipped to handle peaks in call traffic. If there is a problem in one center, for example, the system automatically routes callers to the next available agent, wherever that agent may be. Since installing VoIP at the centralized call centers about two years ago, Poppe says fewer calls are dropped. “We’re doing a better job of capturing every call,” he says. Poppe foresees a time when the highly trained RotoRooter agents will work from home and its call centers. “The location of the agent is not important,” he says. “What’s crucial is taking care of the customer. If you don’t, they’ll move to the next company in the phone book.” CIO Send feedback on this feature to editor@cio.in

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Follow the Money B y R av i M e n o n

Khajane is Karnatakaâ&#x20AC;&#x2122;s G2G initiative designed to keep tabs on the flow of money, no paper clips attached. 48

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Reader ROI:

How eliminating paper from a system saves costs, time and tracking issues How computerizing cheque-validation and delivery across multiple locations How to effect payments without overdrafts or fraudulent withdrawals

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rguably, money is all about cheques. And, checks. Which is what Karnataka’s treasury department wanted to put in place with the Khajane network: check-mate inefficiency, data inaccuracy and the misappropriation of funds at the department level. Pension disbursal, money control and tracking government expenditure were also the prime roles of the Khajane solution. Burrowing further down, the treasury wanted to monitor the movement of cheques — thousands of them simultaneously — and report on the what, where, why and how of the taxpayer’s money being spent. The efficiency of Karnataka’s finance department has an impact on the efficiency of various state departments. It affects the lives of 3,00,000 state employees and millions of pensioners, widows and disabled people. Each department sends its bills to the treasury for payment. But since Karnataka has a fixed budget for each department, it needs to know how much it has in its kitty before it can clear

a payment for that printer that the department of transport needs immediately. It’s akin to knowing how much your account contains before you use your debit card. Without Khajane, it would take up to 45 days before a department’s consolidated bills reached the treasury, and were cleared. The Khajane network was built on a business services architecture that enables plenty of scalability. Another basic, yet paramount, need was for the application to be able to take the pressure of being re-used hundreds of times. The treasury also looked at the project to gain 360-degree control, towards which ‘Kubera’ — the central dual-core Sparc server named after the Hindu god of wealth — was made the repository of instructions that guided the Khajane network. It also aimed to introduce new online channels to deliver funds. The application electronically credits pension and government funds, maintains bill process logs and generates pay orders. Online check printing and easier paid-check reconciliation ReAL CIo WoRLD | S E P T E M B E R 1 , 2 0 0 6

Il lUStrat Ion by P C an ooP

e-payments

e-payments more disks are mirrored to various operating systems used across all locations. While digitizing the treasury data into masterfiles was the foundation for developing an efficient funds management system, the SNAPSHOT Khajane exercise of budget control was done through a streamlined online budget system (OBS). Districts and sub-treasuries: “A real-time online budget system, 216 introduced in April 2004, was one of Ministries covered: Khajane’s killer apps,” says Prabhakara. 29 “OBS helped collect and collate district-wise Total funds spending information, receipt collection and processed (FY ’06): other figures. I get my progress report on the Rs 82,000 crore first of every month.” Total pensions Bill and cheque data is generated 24/7, payout (FY ’06): so the system had to be fully automated Rs 1,200 crore in order to validate (checking for the Government availability of sufficient funds and getting beneficiaries: 7 lakh to 7.5 lakh approval) bills presented anywhere in the state. “The bill capture and validation Somasekharaiah retired as GM of the functions were a double-edged mission for Karnataka Vidyut Karkhane in 1992. He may Khajane. While the data was used to quickly not know it, but the pensioner is part of a vast create reports for government departments and other ecosystem in which thousands of transactions by government, quasi-government schemes, we also utilized the same treasury, banks and hundreds of local organizations fly back information to generate classified accounts and various and forth everyday. Its complexity, clubbed with a manual FMIS (financial management information system) reports,” approach, produced inefficiency. says Prabhakara. At one point, he had between 300 and To pensioners like Somasekharaiah, Khajane has become 350 people burrowing down into classified accounts like a veritable lifeline. He remembers traveling many miles to DA, TA and electricity bills. the treasury every month pursuing his pension cheques and Budget-monitoring, keeping tabs on revenue collection and dealing with the verification process. “Once I received the expenditure, and formulating financial progress charts are no cheque, the chain of queries from my side and clarifications longer a choice between a paper tiger and the sting in its tail. from the treasury’s end would follow. These problems don’t Heads of over 200 departments are able to verify daily sales exist now with direct online credit to my bank account. I have tax collection. Both plan and non-plan expenditure across a clear idea of my finances at all times.” government sectors are mapped by database reports, which With Khajane, data put on paper is gaining the curiocan be generated across departments. Heads of scheme-heavy status of a phonograph. Earlier, the high volume of arms of the government — like agriculture and horticulture paperwork led to data-entry errors. And cutting through — can now access scheme-wise expenditure and returns under the clutter of thousands of folders to track down specific different classifications like special state or central funding, data was tedious, at best. “It was like climbing a mountain apart from zilla parishad and district-level plans. And watch which gained height all the time,” says Karnataka’s director the cheque-meter while they are about it. of treasuries, M. Prabhakara. Prabhakara points to a dashboard featuring strings of Bringing order into public finance management isn’t a task numbers surging upward by the second. “That’s our chequefor the faint-hearted. The dynamics of the cash flow between meter,” he says. It’s the very heartbeat of the treasury he government departments, municipalities and local bodies was heads, a real-time tracker for the hundreds of checks being never measured in real-time, forget about being viewed as a encashed or pending in virtual, serpentine queues. “We consolidated database. Replying to queries ran into days. know how many cheques are being encashed at any point Inaugurated in July 2003, Khajane aimed to remove these of time.” For a network which processed Rs 82,000 crore systemic deficiencies by harnessing high network availability in fiscal 2006, keeping a stern finger on the flow of money and accessibility, and creating pinpoint accuracy by replicating is vital; the smallest tracking error could mean crores of all existing treasury data into masterfiles. rupees lost, says Prabhakara. The virtualization of information platforms proved to be With the OBS monitoring all payments and receipts, the a breeze because of the right amount of planning. Kubera treasury department is fast eliminating confusion and the handles 1,000 connections at a time, with three of its five expenses incurred on account of overdrafts, misclassification hard disks configured to a RAID storage area network. Two

with the bank ensured that authentication was improved. The electronic approach also helped pass data — like financial requests and approvals — in realtime and access revenue collection data. This, in turn, made budget monitoring and management (expenditure versus allotment) easier. The most substantial physical bandwidth cannot compensate for lack of data bandwidth, Khajane provisioned for both. In a world where financial architectures provided anytime information on total payments, and banks offered features to calculate department-wise accounts outstandings, Khajane, too, wanted to offer this service from the secretariat level down to the far-flung taluks of Karnataka.

Strong foundation

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and fraudulent withdrawals. The system has strong in-built controls with deterrents if someone tries to divert funds or make fraudulent claims. “We’ve introduced biometric identification down to the district level for quick and accurate authentication of different heads of departments who use the network to draw money,” says Prabhakara. The network covers 228 heads of department in 29 ministries and their authentication is password- and role-based. The system clears access to specialized functions depending on the user’s seniority, Prabhakara adds. Online budget control deducts funds as users file requests, and also helps the treasury access user patterns. The OBS is also helping the treasury transfer funds from districts that do not need the funds to those with greater need.

Cheque-point amalgamated Khajane covers all 21,274 drawing and disbursing officers of 104 departments and about 10,000 line items under budget monitoring. About 21,000 district and taluk-level drawing officers now use the system to draw money from the treasury. Beneficiaries include 7 lakh to 7.5 lakh government and grant-in-aid employees. Over 3.5 lakh family and retiree pensions are also distributed across Karnataka every month. The network routes the payment of about 14 lakh social security pensions to widows, destitutes and the physically handicapped. During fiscal 2006, the treasury has disbursed Rs 1,120 crore as retirement pension. “We have totally done away with money orders,” beams Prabhakara, as he points out the numerous bottom lines that the IT-integrated revolution has ushered in. Kubera’s validation engine mandates bill clearance from all 216 treasuries, generating department- and district-wise MIS reports. These reports give state department officials information on check receipts and pending bills at any point. The transparency inherent in the system has enforced greater efficiency and discipline in treasury operations and accounts management, attests Prabhakara. “Data is uniformly replicated across all locations on the network. This uniformity and a fully-automated application engine have facilitated the access and verification of accounts at any time.” And because accessing the application is location-independent, the department now also has a holistic approach to operations procedures

at all the locations it covers. The application is passwordprotected and enables user-defined access function. The process is further air-tightened by maintaining a user-wise transaction log on the central server. At the bill clearance module, it’s first-in, first-out; the application’s direct link with the treasury helps validate a check instantly. “Validation of government checks is done at local treasuries where expenditure, gross amounts, deductions at the local level are captured. Salaries are automatically routed to the system, validated and then forwarded to various departments for payout,” says Prabhakara. Placing the right authority in contact with the right bill has its advantage. Electronically ‘tagged’ bills prevent misrepresentation and this saves the processing/approving authority a lot of time in validating a bill. “The agreement to set up a statewide money control network was signed with CMC and STPI in 2001. The first version of the application software for the network was developed by CMC and was ready by November 2001. From December that year, we did a pilot which continued till May or June 2002,” says Prabhakara. The pilot was done at Tumkur, Hubli, Shigaon in the Haveri district of Karnataka and the Bangalore Urban district. “Deficiencies noticed during the pilots were corrected and incorporated in the next software versions,” Prabhakara says.

total Revamp The first edition of the application software was up and running in October-November 2002. While content

Photo by Sr IVatSa ShandIlya

e-payments

“Dealing with paperwork was like climbing a mountain which gained height all the time.” — M. Prabhakara, director of treasuries, Karnataka

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e-payments management planning is an essential part of all G2G service architectures, they rarely result in a total revamp of the fund disbursals and accounting system. This was a revolution that the Rs 72-crore (initial cost) Khajane initiated. Capacity-building was a bottom-up initiative. In the first phase, LANs were set up at local treasury sites with the aim of creating a shared-services network. “We then connected the treasury sites with the state WAN powered by a VSAT backbone. We also set up ‘Lakshmi’, our mirror site in Dharwad, to serve as a disaster recovery site for the project,” says Prabhakara. The high-speed state WAN proved to be strong incentive for government departments to port their data onto Khajane, he says. For example, Bhoomi, the trendsetting land record registration project, and the state commerce department’s VAT system use the network extensively. Kubera, the central server, is the interlocutor in the highspeed flow of work between different state departments and the treasury, which is linked with district treasuries running on Unix servers. Win 2000 servers run the sub-treasury servers. “All district commissioners have online accounts with the treasury department with direct access to calamity relief and miscellaneous spending accounts,” says Prabhakara. Quick access to statistical information on payments made at the taluk level and funding requests from state departments was the key goal of the project, say Khajane officials. As a consequence, developing access apps and creating information integration through master-data management took up at least

60 percent of the project time, says Prabhakara. About 2.5 lakh government employees, mostly school teachers, were among the first to be covered under the scheme. Former Karnataka IT secretary and a guiding spirit behind the network, Vivek Kulkarni, says that Khajane’s success is powered by two key factors: “The network helped save a lot of money by accounting government spending and returns. Khajane also put in place a real-time balance-sheet for drawing offices across the district and sub-treasuries.” The banks handling pension funds and department allocations for the treasury are the RBI (for government accounts), SBI, SBM, Canara Bank and Syndicate Bank. They have been key to providing revenue collection data, which is transferred back to the treasuries and helps them track pending bills. Kulkarni says that they’ve migrated masterfile data of over six lakh government employees onto the Khajane databases. “We were able to sensitize employees first to the advantages of the system and that helped us go ahead with the training programs,” says Prabhakara. “At least 1,000 people were trained in computer operations in the first phase. In the second phase, 75 to 80 people were trained as systems administrators across the district and sub-treasuries.” In-house training to government staff was imparted on weekends and the treasury set up a helpdesk to answer queries from users. Adds Kulkarni, “What counts most today is that Khajane has worked well for over four years without a single hiccup or complaint.” Khajane’s next phase will incorporate a database of pensioners before 2002. This is in addition to managing the annual influx of 11,000 to 12,000 pensioners onto the treasury rolls. Coping with changes in fund allocation is also an easier task with Khajane. “Political interests and bureaucratic Pulling off a Khajane isn’t for the faint-hearted. Here’s upheavals cause changes in fund allocation. where to expect the problems: Revisions to initial fund allocations for government departments are common, especially before the state budget is LAyInG THe RoAD. Creating the required network infrastructure was a key presented in February and March. step towards building capacity for the system. In remote areas this proved to Supplementaries are not infrequent be a challenge. either; these are updated very quickly on the Khajane database. The ramifications beInG A CHAnGe AGenT. Motivating people to accept change. Training was of this on taluk-level spending are realized an important component of this project. equally fast.” For, when money is all about cheques and checks, a strong dose buILDInG youR DATAbASe. Creating masterfiles of data on government of network helps. CIo and other spendings. At one point, between 300 and 350 people were drilling down the data pool to the level of classified accounts like TA, DA and electricity bills to create masterfiles.

Key CHoKePoInTS

beInG PATIenT. Scaling up is always a challenge. Whenever a new feature is added, a gestation period of three to six months is inevitable. A lot of testing, modification, piloting, training and the implementation modalities have to be contended with.

Assistant editor Ravi Menon can be reached at ravi_menon@cio.in

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For Rajkumar, IT secretary of Gujarat, says IT can enhance the digitally-empowered social fabric in the state.

Gujarat is credited with the implementation of an IP-based e-governance model, which it says is one of the largest IT projects in the Asia-Pacific region. Its success is founded in a WAN, which the stateâ&#x20AC;&#x2122;s department of science and technology deployed, to ensure that e-governance initiatives can benefit citizens in remote areas. Rajkumar, IT secretary of Gujarat, recapitulates the process, and explains how it is the first step towards the departmentâ&#x20AC;&#x2122;s vision of digitally empowering the state. 54

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Interview Interview | Sanjeev | Rajkumar Gupta

Catalyst r Technology Initiatives By Gunjan Trivedi

ImAGING by UN NIKRISHNAN AV

P HoTo by Al PESH D HolAKIA

CIO: What impact has the IP-based e-governance model, and the WAN in general, had on Gujarat? RAJKUMAR: The Gujarat State Wide Area Network (SWAN) has been a catalyst for overall growth in the state. Though we had begun to bring in e-governance even before the WAN deployment, it has managed to usher in many more e-initiatives at various levels in the state. It is one of the largest IP-based networks in the Asia-Pacific region, running on more than 35,000 km of optic fiber with satellite communication nodes integrated. More importantly, it has evolved into a core medium of communication between government and citizens, and between departments, connecting all 25 districts and 225 blocks in the state. The network is centered at the Secretariat in Gandhinagar with spokes running down to all districts. Further, it horizontally connects all the district headquarters and vertically percolates down to other district-level offices and talukas (blocks). It is primarily used to enable data communication and video conferencing. With the S-WAN, we have been able to cater to the specific requirements of departments as it becomes far easier to collate information and data across the state. For example, the tribal development department can now collect data pertaining to its projects in the remotest areas through dedicated applications Vol/1 | ISSUE/20

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deployed at block levels and interconnected directly to the core systems of the department. Armed with this information, the department is in a much better position to review the performance of its projects and works, make amendments and updates as and when required, and plan for new projects by extending its reach to the grassroots. Why is it necessary for the state government to have its own nodal agency for IT (Gujarat Informatics) as opposed to transacting directly with third-party IT solution providers?

Gujarat Informatics Limited (GIL) was established as a nodal agency for IT development in the state in early 1999. The objective was straightforward and simple: to act as a hub or a nodal point for all government departments and agencies, synergize their efforts to adopt and implement IT, and accelerate the process of e-governance in the state. Having such an agency helps departments and the government to concentrate more on their core areas and leave GIL to focus on deploying IT solutions to address the requirements. The departments donâ&#x20AC;&#x2122;t have to waste time in developing IT competencies and figuring out which solution to deploy. This proves effective in terms of both time and costs because the departments can save a lot by enjoying the shared resources of the IT-pool of the nodal agency. REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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Interview | Rajkumar What competitive advantage has GIL given Gujarat over other states?

This can best be answered by state governments which haven’t adopted the dedicated nodal agency approach yet. For us, such an agency has helped develop cost-effective and cutting-edge IT solutions to meet various requirements, mitigate different risks and challenges, and do so in much shorter time spans. The success rate of various e-government projects is much higher in Gujarat because the dedicated agency concentrates on what to deploy, while the departments focus on what to do with it — and not waste time and resources on R&D. The dedicated, nodal agency also results in larger cost cuttings. For example, if there are requirements for hardware or software from multiple departments, GIL aggregates the requirements and gives bulk orders to the IT vendors, thereby enjoying cost benefits. We can thus

And it was next to impossible to collect information from the remote areas. With the SWAN extending its reach across the state, the data now collected and fed into the systems is fresh, correct and comprehensive, and enables precise hazard mapping. It helps the government, its departments and agencies to get a far clearer picture of the weather in the state. Furthermore, all district headquarters are provided with International Mobile Satellite (Inmarsat) phones and backup support of transportable V-SAT terminals capable of establishing voice, video and data communication services with short notice. This enables agencies to have on-field intelligence to a large extent, apart from quicker and sharper decision support. It also strengthens the response capability of the stakeholders of the state’s disaster management group, and helps the government prepare for ensuing disasters.

“A nodal agency like Gujarat Informatics helps government departments to concentrate on core areas, while it looks at what to deploy.”

get the best at least prices. The vendors also prefer this approach as they don’t have to go from pillar to post with any department to get their orders. Considering that Gujarat is one of the largest coastal areas in the country and is prone to natural disasters, what role has the SWAN played in disaster management?

As I said earlier, it is one of our core means of communication. The WAN plays an important role in disaster planning and management as it enables the departments and agencies concerned to interconnect seamlessly and collate information, such as amount of rainfall and related data from 225 blocks on a real-time or near real-time basis. Earlier, the data pertaining to rainfall in the state was neither precise nor comprehensive. 56

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The SWAN enables seamless movement of data across departments, and helps in resource management during a crisis. Requests can be placed for resources and deployed without wasting too much time on inter-communication. How much headway has the G2C initiative, Mahiti Shakti project, made in terms of facilitating the Right to Information Act — and transparency in general?

The Mahiti Shakti project was conceptualized in 2000 and rolled out a year later. Its fundamental premise was to extend the government’s reach to the remotest areas of Gujarat and provide information at the doorstep of rural citizens. Telephone booths — enabled with basic computer facilities — and cooperative dairies functioned as ‘Mahiti Shakti Kendras’.

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Interview | Rajkumar With this facility, citizens in remote areas could seek information there, fill up relevant forms, and apply for ration cards, pension, etcetera, without having to travel long distances. The project has been successful in bringing the government closer to citizens, but hasn’t been able to extend its reach to far-flung areas primarily because the project was deployed before the SWAN materialized. Without an extensive network, we were unable to harness the full potential of the Mahiti Shakti project. Nevertheless, with SWAN in full swing, we are re-initiating the Mahiti Shakti project by extending the G2C and C2G reach across the state through kiosks. The concept of the project remains the same, and so the invigorated Mahiti Shakti will empower citizens and ensure transparency with periodic display of progress or information on status of various schemes and plans. It will facilitate the citizens’ Right to Information and provide adequate reach to various support and access mechanisms. How have other e-governance projects in Gujarat, such as State-Wide Attention on Public Grievance by Application of Technology (Swagat) and Talim Rojgar, made a difference to citizens?

from the talent pool. It helps both the jobseekers and employers, and enables them to overcome difficulties related to geography.

SNAPSHOT

Gujarat Area covered by OFC network:

> 35,000 km

No. of operational ISPs:

Reach of SWAN:

25 districts, 225 blocks

No. of jobseekers managed online:

> 2 lakh

Online forms available for citizens:

> 120

No. of grievance redressal books online:

> 3,400

Citizens of the state now have access to even the chief minister. The CM, through Project Swagat’s video conferencing, connects with citizens at the grass-root level, and also with the departments and agencies concerned with resolving long-pending issues. Under Swagat, complainants can visit the CM’s office to register complaints, which are digitized and sent to the departments online. The departments have to be ready with their replies before 3 PM on the same day, when the chief minister communicates with the districts in question using a video-conferencing facility. The CM then discusses the issues with citizens on a one-on-one basis, and reviews their grievances vis-à-vis the department’s replies. Administrative directives are then issued to all the entities in question to resolve the issues at the earliest. These activities are logged on the Swagat system as individual case files, which can be reviewed later on. Swagat is a perfect example of successful G2C reach, which increases the administrative efficiency of the government. Similarly, the citizens are benefiting from the e-employment initiative. Various employment exchanges are now networked online using the S-WAN, sharing the extensive database of the registered jobseekers under the Talim Rojgar project. Jobseekers can register online on talimrojgar.org, and various prospective employers can scan through the database to select

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Has IT at inter-state border check posts reduced corruption and increased revenues?

The e-enablement of the interstate border check posts has been tremendously productive. Gujarat is the first in the country to automate and link all the RTO check points with the head office in Ahmedabad for online transactions. Earlier, whenever trucks passed through the RTO check posts, they would be overloaded. The checks require them to pay a fee or penalty for weight beyond the set limit. Earlier, the scope of corruption was high as the data pertaining to the overweight trucks could have been manipulated at will. With the entire RTO process automated and the Supreme Court’s ruling against admittance of overloaded trucks, the scope of corruption has been effectively ruled out. This IT project recovered its entire cost in the first year of operation itself, and boosted revenue by almost 300 percent to Rs 237 crore.

The Gujarat government has a vision of an e-governed environment in the state by 2010. What is the roadmap to achieve this goal?

Independent agencies have ranked Gujarat as one of the most e-prepared states in the country. To hone its leadership, the state government has a Vision 2010 that will translate into a pervasive e-governed environment. The government plans to usher in transparent, accountable and efficient governance by integrating all government departments, boards and corporations. This vision is supposed to enable a digitallyempowered social fabric throughout the state. The first step to realize this vision was to set up a statewide pervasive network, which we have achieved by deploying SWAN. The next step is to roll out kiosks as common civic centers across the state, ensuring seamless and effective interaction between the government and citizens. Various mini-pilots are in the process of implementation as steps to be a single point of access to various information and services. Later, building on this fabric of networked civic centers, the state will percolate egovernance down to the grassroot level. CIO

Senior correspondent Gunjan Trivedi can be reached at gunjan_t@cio.in

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Essential

technology Microsoft’s next big operating system upgrade has a wealth of new business features — but how badly do you really need them?

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From Inception to Implementation — I.T. That Matters

On the Lookout for Vista BY DYLAN TWENEY

Operating systems | Microsoft’s first major operating system upgrade in five years,

Windows Vista, is expected to hit the retail shelves in January. Originally scheduled for 2003, Vista’s release date was pushed back many times due to development delays. And the delays have created openings for the growth of competitors, such as Apple on the desktop and Linux on the server. But Microsoft’s market share remains overwhelming. Like it or not, Vista will eventually become Microsoft’s default OS. So the question is not whether you’ll be making the switch to Vista, but when. In fact, if your company has a volume licensing agreement with Microsoft, you’ll have a chance to upgrade to the client version of Vista as early as November, when the operating system will be shipped to computer manufacturers and other large customers. (The server version of Vista, still nicknamed Longhorn, isn’t scheduled to ship until 2007.) Still, there are good reasons why IT managers are saying “wait and see.” Upgrades are time-consuming and expensive, requiring lots of testing, training and support. Then there’s the hardware. Vista’s almost certainly not going to run well on older machines. REAL CIO WORLD | S E P T E M B E R 1 , 2 0 0 6

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essential technology

“IT managers probably won’t make the investment [in upgrading] until after Vista has been on the market for awhile,” says Jim Michael, secretary of the board of directors of Share, an IBM users’ group with more than 2,000 member companies representing a majority of the Fortune 500. “You may not see widespread enterprise deployment until after the first service pack comes out.” And that could be as much as a year after Vista first ships. But you’d better begin planning now. Once the OS is widely available, end users (like your CEO) will start asking about it. It will begin showing up on new desktops and laptops. And, if there’s a major security attack aimed at legacy Windows XP systems, you could find yourself under very serious pressure to upgrade fast.

make it easier for developers to customize their own authentication strategies with biometrics and tokens. Almost equally important are Vista’s management features. “Vista will help ease the pain of deploying, supporting and managing desktops,” says Michael Burk, a product manager in the Windows client division of Microsoft. Microsoft claims that administrators will be able to control desktop settings remotely via command line, eliminating the need for your IT staff to visit every desktop when, for instance, it’s time to upgrade client virus-scanning software. To streamline installation, Vista will ship with a suite of disk imaging and installation tools so IT departments can configure standard installations easily and then copy them onto new computers with a minimum of fuss.

Security and Manageability

Vista’s new interface and multimedia features may be the system’s most visible enhancements. Windows XP is looking a little long in the tooth, and Vista’s new Windows Aero interface is a lot slicker

Vista offers some enticing features for CIOs. Perhaps primary among them are its numerous security enhancements. “This is an operating system that was

AShiny New Interface

Vista’s new interface and multimedia features may be its most visible enhancements. Still, it’s unlikely that the new interface is going to be a major factor in a CIO’s decision to upgrade.

Vista System Requirements Windows Vista will almost certainly require that you upgrade your older systems or replace them with newer models. Here are the minimum system requirements for reasonable performance over the expected three-year lifecycle of a new Vista desktop, according to Rob Enderle, principal analyst for the Enderle Group: CPU: 2GHz processor or faster RAM: 1GB or more Hard drive: 80GB (10GB required for installation); Microsoft recommends Serial ATA drives Optical drive: DVD required for installation. Current generation discrete graphics systems with 128MB of memory or then current generation integrated graphics and increase system memory to 2GB of fast dual-channel memory. Both need to support DirectX9 (DirectX10 is preferred) and the Windows Display Drive Model for Aero. — D.T.

where the big payback for the enterprise is for a cooler-looking Windows interface,” says Share’s Michael.

Two for the Business built and architected in the age of the Internet,” says Michael Gartenberg, VP and research director for JupiterResearch. In contrast to Windows XP, Vista will be much more resistant to Internet-based attacks, he says. Vista also offers authentication via smart cards in addition to user name and password checking, provides more nuanced user account restrictions and offers strong, hardware-based encryption, which can protect documents when an employee’s laptop is stolen. It will also 60

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(and a lot more Mac-like), with transparent windows and a variety of 3D effects. All those effects require fairly serious graphics processing power. However, there’s an option for systems with slower video subsystems. If a PC’s graphics processor can’t handle Aero, the user can turn it off, defaulting to a plainer but less resource-intensive interface. Still, it’s unlikely that the new interface is going to be a major factor in a CIO’s decision to upgrade. “OK, so it’s a coolerlooking Windows interface. I’m not sure

Windows Vista will ship with two businessoriented versions: Windows Vista Business and Windows Vista Enterprise. “Windows Vista Business edition is optimized for small to medium-sized businesses, but it’s designed to meet the needs of organizations of all sizes,” says Microsoft’s Burk. Vista Business will include IT management tools, end user search tools for organizing and sorting through large quantities of business documents, and Tablet PC support. Vista Enterprise is aimed at larger organizations and adds enhanced

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essential technology

application compatibility tools, disk image management tools (for creating and distributing standard installations), and the ability to run Unix applications on Vista PCs. Vista Enterprise will be available only to corporate customers that are enrolled in Microsoft’s Software Assurance program or a Microsoft Enterprise Agreement.

Proceed with Caution If there aren’t compelling business reasons to make the switch to Vista in 2006, consider putting it off. Alternatively, you can let Vista creep into your enterprise gradually as you buy new systems that have the OS pre-installed, recommends Rob Enderle, principal analyst for the Enderle Group. One reason for taking it slowly is that Vista’s hardware requirements are steeper than those for Windows XP, and that means

And don’t underestimate the amount of work an operating system overhaul can require in a large enterprise. “Those of us who have done it will tell you it’s never painless,” says Jeff Reed, CTO of Logicalis, an enterprise IT service provider.

Time to Get Ready Now is the time to start learning about Vista by studying the product details that Microsoft has published on its main site and on the Microsoft Developer Network site (see msdn.microsoft.com/windowsvista). If you can get into Microsoft’s beta program, you will gain firsthand experience with Vista and, even more importantly, can begin testing its compatibility with your company’s key applications. Once the OS ships, you want to be prepared with an upgrade plan — and you will be upgrading, sooner or later.

Even though you are not planning on installing Vista for a year or more, you still should pay attention to its hardware requirements. a lot of your old computers won’t have enough horsepower to handle it. Although Microsoft has published its requirements list for Vista, Enderle has compiled his own list. But, he acknowledges, “the ideal hardware will be designed for Windows Vista — and that won’t show up until the fourth quarter of this year.” Even if you’re not planning on installing Vista for a year or more, you still should pay attention to its hardware requirements. “Anyone who’s buying hardware this year needs to consider getting hardware that’s sufficient for Windows Vista,” says Ann Westerheim, president of Ekaru, a technology service provider for small and mid-size businesses. That’s because the typical corporate PC has a three-year lifespan, and over the next three years, you’ll almost certainly need to run Vista.

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“It’s a question of whether you want to deal with a bunch of patches and fixes for XP when you can get everything that’s already incorporated into Vista,” says Gartenberg. Microsoft says it will continue to maintain Windows XP and is planning to issue Service Pack 3 for XP in the second half of 2007, but the trend is clear: Vista is coming and will eventually replace XP. The pressure will only increase in January, when (or if) Vista hits retail shelves. “Right now, Windows XP, with all its foibles, is working OK. IT managers are not chomping at the bit to rip the thing out by the roots,” says Enderle. “But that could change dramatically once this thing ships.” CIO

Alt-Upgrades Upgrade, shmupgrade. You can get many of Windows Vista’s features for free (or low cost) today, with these downloadable utilities. Microsoft Windows Live Safety Center Provides online virus and spyware scanning; can enhance PC performance by removing junk files and optimizing your hard drive. A related service, Windows Defender, continuously monitors your computer for spyware. Both are betas. Cost: Free. Kensington PCKey Software-and-hardware product protects hard drive with 128-bit AES encryption. Unlocked only by USB key and password. Cost: $70. Microsoft Color Control Panel Applet Art geeks will appreciate Vista’s color management tools. Marketing department can’t wait that long? Give them this colormanagement utility for Windows XP. Cost: Free. Axantum Software AxCrypt Freeware utility integrates into Explorer and lets you encrypt any file folder with 128-bit AES encryption just by right-clicking. Cost: Free. Microsoft Alt-Tab Replacement Stardock WindowBlinds Makes Windows XP ‘skinnable’, so you can redecorate your interface with any of several thousand downloadable themes — including some very Vista-like looks. Cost: $20; site offers a 60-day free trial.

Dylan Tweney is a California-based science and technology writer. Send feedback on this feature

— D.T.

to editor@cio.in

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Pundit

essential technology

Notes from the Catalyst Conference Only Sony Online Entertainment felt open source was ready – and it created an enormous revenue. BY BERNARD GOLDEN

| I had a funny conversation with a fellow presenter at the Catalyst Conference. We got talking and I shared with him my work with open source. He told me that his company had been getting ready to create a large portal and did a bakeoff between IBM, Plumtree (BEA), a couple of other commercial portal products, and Liferay, a well-known open source portal. “Our folks found Liferay to be easier to install,

open source

Many attendees at the conference were aware of open source and its potential benefits, but felt it was not “ready for prime time”. A fellow presenter, Adam Joffe of Sony Online Entertainment (SOE), offered a different perspective. SOE hosts multi-player online games like Field Commander, which can have thousands of simultaneous participants. And it’s mostly run on open source — thousands of Linux servers, applications

You need to hire a certain type of employee — one who would prefer to solve his or her own problem, rather than wait in a telephone queue for tech support help. It may be tempting to dismiss SOE as irrelevant to your situation. Certainly, the magnitude of SOE’s computing infrastructure forced it to select open source. However, the explosion of data and Internet-based commerce activities (e.g., SOA) implies that

The implications of open source: you need to be willing to chart your own course and you need to hire employees who prefer solving their own problems. easier to configure and implement, and easier to run,” he said. Here’s the kicker — he then said, “Of course, we would never use it.” (Due more to the company’s practices than his personal choice.) The tone of his observation was one typically associated with matters of faith. It was clear that the corporate decision wasn’t a case of too few facts; facts were irrelevant to the decision. Open source just wasn’t good enough for this organization, end of story. I couldn’t help but be reminded of a 1970s belief they had in Detroit: Americans will never drive Japanese cars. They’re too small and junky. The Japanese seem to have done pretty well, even as Detroit is mired in endless restructurings and an inability to consistently build cars that appeal to consumers. 62

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written in open-source scripting languages, and even open source-based databases. As Adam explained it, the scope of SOE’s infrastructure dictated the use of open source. Licensing costs for commercial alternatives would have driven the price of the final service too high. SOE designed a business based on the economics of open source, and created an enormous revenue opportunity. About its prime-time readiness, Adam said that it was high quality — even better than commercial software. He made some observations about the implications of open source: You need to be willing to chart your own course. There’s much less vendor assistance, so you need to make your own decisions and educate yourself about your options.

many organizations will begin to take on characteristics of SOE and need to address licensing economics. In my view, the evolution of our economy toward an information-intensive environment means that the old scarcitybased software licensing models are unsustainable. While your vendors will never help you move toward a business based on widely-available (but cheap) computing, you won’t have a choice. Start getting ready for tomorrow’s world of ubiquitous software, with all it implies. CIO (Concluded) Bernard Golden is CEO of Navica, an open-source consultancy, and the author of Succeeding with

Open Source (Addision-Wesley, 2004). Send feedback to this column to editor@cio.in

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