February 1 2006 by Sreekanth Sastry

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From The Editor

Servicing Business Needs Web services keep CIOs even more focused on developing services that help foster business.

In hindsight it’s surprising how prophetic somethings can be. Just under six years ago, the term ‘.Net’ was introduced to the world in a six-page white paper called ‘Microsoft .Net: Realizing the Next Generation Internet.’ In the white paper, the word ‘revolution’ in its variations was used nine times and the phrase ‘next generation’ or ‘new generation’ six times. But, I bet, the people at Redmond never guessed just how radical an impact .Net would have on CIOs and enterprise computing. A part of our cover story looks at .Net, Web Services and the End of the Vendor Era, and notes that CIOs who once looked upon it as a tactic to lock them into a host of Microsoft products are now applauding it as a robust and ‘nice’ development framework to develop Web services on. And, far from being an lock-in mechanism, it turns out that .Net “fosters the technology neutrality they’re learning to expect.” Pertinently, as the article discovers, the market drove the change that led Microsoft and its competitors to sell products like .Net that help flatten the barriers of proprietary software. Since Web services are so standards-based, technology platforms are fairly “fungible commodities,” thus diminishing technology risks. If a development environment turns sour on you, it can be switched without the technology architecture unraveling. Since Web services are The stress therefore has turned from the standards-based, technology architecture to development tools and their platforms are fairly management. That’s a good thing, since it keeps ‘fungible commodities,’ thus CIOs even more focused on developing the serdiminishing risk. vices that help foster business. That’s where the critical promise of Web services gives organizations a strategic advantage. For, it allows them to integrate with customers, employees and business partners that they wouldn’t otherwise be able to easily do so. That’s why I believe Web services will become the dominant way in which business solutions are built. If you haven’t already hopped onto the Web services bandwagon or are planning to do so shortly, this issue of CIO might be able to help make up your mind or resolve a few issues. The first part of the cover story on page 26 combines the ‘serious’ with some ‘fun’ — it’s a quiz with a dozen questions that I hope will help you figure out what your Web services readiness quotient is. Take the test, and drop me a line telling me what you think about it and the other articles in this issue. Please mail me at vijay_r@cio.in with your opinion.

Vijay Ramachandran, Editor vijay_r@cio.in

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FEBRUARY 1 2006‑ | ‑Vol/1‑ | ‑issue/6

Executive Expectations View From The Top | 36 Chairman and Chief Mentor of Infosys Technologies N.R. Narayana Murthy states that the quest for value and not benefit must drive IT investment. Interview by Vijay Ramachandran

Career Lonely Ascent | 22 Congratulations! You’re the new boss. And your former colleagues don’t like it. Column by Patricia Wallington

Keynote “Always look for value,” avers Infosys Chairman N.R. Narayana Murthy.

3 6

Web Services

COVER STORy | Are You Ready For Web Services? | 26 Building Web services is not simply about buying technology. Nor is it just about defining business needs. Introducing Web Services to your enterprise demands a deep understanding of your business culture and processes. Think you’re ready? Feature by Christopher Lindquist and Scott Berinato

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Outsource, Don’t Abdicate | 18 Regardless of what business processes you move outside your corporate borders, you can’t lose sight of your ultimate responsibility for ethics and the end result. Column by Ben Gomes-Casseres

Govern Graining Control | 46 Pilferage and rotting grain forced the Food Corporation of India to move away from a manual approach of tracking inventories and forecasting purchase. Putting together a solution on such a large scale, however, called for local knowledge relationshipbuilding and plenty of foresight. Feature by Rahul Neel Mani

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content

Essential Technology | 54 Virtualization | Testing, 1, 2, 3...

By Meridith Levinson Pundit | Boiling Up Data By Eric Knorr

From the Editor | 3 Servicing Business Needs | Web services keep

CIOs even more focused on developing services that help foster business. By Vijay Ramachandran

Inbox | 10

4 0

NOW ONLINE 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

c o.in

Govern Inflexion Point | 50 e-governance has got into the trenches to create a groundswell of computerization and IT literacy. It was grassroots work that paid off and R. Chandrasekhar, Joint Secretary, e-Governance, Ministry of IT, predicts a tide of applications ready to flow in the next two years.

1 8

Interview by Rahul Neel Mani

Wireless Mastering Mobile Madness | 40 Wireless devices are multiplying, making more people more productive...and creating enormous management, support and security headaches for CIOs. Here's a plan to juggle those new gadgets. Feature by Thomas Wailgum

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advisory board

M anag ement President N. Bringi Dev

COO Louis D’Mello Ed ito ria l Editor Vijay Ramachandran

Bureau Head-North Rahul Neel Mani

Special Correspondents T. Radhakrishna Balaji Narasimhan

Senior Correspondent Gunjan Trivedi

Anil Nadkarni

Arindam Bose Head IT, LG Electronics India, a_bose@cio.in Arun Gupta Sr. Director - Business Technology, Pfizer India

D esign & Production

Creative Director Jayan K Narayanan

Designers Binesh Sreedharan Vikas Kapoor Anil V.K.

Borland

Cisco

Epson

a_gupta@cio.in Arvind Tawde VP & CIO, Mahindra & Mahindra, a_tawde@cio.in Ashish Kumar Chauhan

Editorial Director-Online R. Giridhar

ADC Krone

Head IT, Thomas Cook, a_nadkarni@cio.in

COPY EDITOR Sunil Shah www.CI O.IN

Advertiser Index

Hewlett Packard

Advisor, Reliance Industries Ltd, a_chauhan@cio.in M. D. Agarwal

IBM India

Interface Connectronics

Chief Manager – IT, BPCL, md_agarwal@cio.in Mani Mulki VP - IS, Godrej Consumer Products Ltd, m_mulki@cio.in Manish Choksi VP - IT, Asian Paints, m_choksi@cio.in

Microsoft

Jinan K. Vijayan Unnikrishnan A.V. Photography Srivatsa Shandilya

Neel Ratan Executive Director – Business Solutions,

Rajesh Uppal

Raritan

Toshiba

General Manager – IT, Maruti Udyog, r_uppal@cio.in

BUSINESS Manager Naveen Chand Singh

brand Manager Alok Anand

Marketing Siddharth Singh

Bangalore Mahantesh Godi

Santosh Malleswara Ashish Kumar

Delhi Sudhir Argula

Nitin Walia

Mumbai Rupesh Sreedharan

Nagesh Pai

Japan Tomoko Fujikawa

USA Larry Arthur

Jo Ben-Atar

Pricewaterhouse Coopers, n_ratan@cio.in

Production T.K. Karunakaran Mar keting an d Sales

Oracle

Singapore Michael Mullaney UK Shane Hannam

Prof. R.T.Krishnan Professor, IIM-Bangalore, r_krishnan@cio.in S. B. Patankar

Wipro

4, 5

Director - IS, Bombay Stock Exchange, sb_patankar@cio.in S. Gopalakrishnan

COO & Head Technology, Infosys Technologies

s_gopalakrishnan @cio.in S. R. Balasubramanian Sr. VP, ISG Novasoft, sr_balasubra manian@cio.in Prof. S. Sadagopan Director, IIIT - Bangalore. s_sadagopan@cio.in Sanjay Sharma Corporate Head Technology Officer, IDBI, s_sharma@cio.in Dr. Sridhar Mitta Managing Director & CTO, e4e Labs, s_mitta@cio.in

All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher. Address requests for customized reprints to IDG Media Private Limited, 10th Floor, Vayudooth Chambers, 15–16, Mahatma Gandhi Road, Bangalore 560 001, India. IDG Media Private Limited is an IDG (International Data Group) company.

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Printed and Published by N Bringi Dev on behalf of IDG Media Private Limited,

10th Floor, Vayudooth Chambers, 15–16, Mahatma Gandhi Road, Bangalore 560 001, India. Editor: Vijay Ramachandran. Printed at Rajhans Enterprises, No. 134, 4th Main Road, Industrial Town, Rajajinagar, Bangalore 560 044, India

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reader feedback

point-of-view and from a clarity point-ofview, the images have been good and far superior to what is seen in most IT or business publications. Great work! AlAgu BAlArAmAn Sr. VP, Godfrey Phillips

Spotlight Please Emerging Technologies Having been a regular reader of CIO.com, I was delighted when CIO was launched in India. CIO.com was a bookmarked site because it balanced enterprise trends, insights and risks with articles that talked directly to CIOs about their work and careers. The Indian edition has also moved to get that mix correctly. It has given it a more real feel since the people and the context are much better known. Going forward, I would be keen on articles that examine emerging technologies that affect the way businesses work. Back-end technologies are easier to monitor, evaluate, plan and implement, but when new technologies are brought in by users, we seem to play a game of catch up as CIOs. Often, these technologies change personal productivity and processes. IM and USB drives come to mind on this score. We started acting on them only after they were pretty well entrenched in the workplace. It would be nice to have a look ahead at what’s coming up, even if there are a few false positives. It was good to see that production standards have improved. The initial issue had a few errors in it, but it looks like things have tightened up. This comment does not hold true about photographs, though. The quality of photographs in CIO has been high all through. Both from a creative composition 10

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kudos for the excellent magazine that you produce, addressing the needs of the CIO domain. In the last few years, the responsibilities of a CIO have expanded substantially. These are no longer the days when his responsibilities ended within the walls of the datacenter. Today, he needs to take care of the datacenter(s), the network, infosecurity, disaster recovery, business continuity, customer needs, various compliances and certifications, audits by the various agencies, and more. It would be impossible to address all these unless he has a team of next-level people. Your Ones to Watch issue is an excellent attempt to bring these people to the limelight. Congratulations on a job well done. It would be nice if this can be a regular feature focused on three or four individuals at a time. HAriHArAn S. Sr. VP, i-flex Solutions

The theme of the Ones to Watch issue was really good and has given exposure to the next level of people. The article How Stars Are Made was interesting as it threw light on the skills that CIOs need to develop leaders. I also found The Traits of an IT Leader very 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.

“as new technologies are brought in by users, we seem to play a game of catch up as cIOs.”

interesting. I must congratulate the entire CIO team for the excellent effort. lEkHA BAjPAi Sr. Manager, AFL

keep it Fun I have to compliment CIO on the brilliant quality of its paper and production. The first look makes one want to open it instantly. The combination of well-written, crisp articles and very good presentation also holds a reader’s interest longer. I’d appreciate page markers or tabs sticking from the magazine to make it easier to get to specific articles quicker. Also, why doesn’t CIO carry some ‘fun’ articles as well? Please bear in mind that CIOs are also human beings and need to relax. Anil nAdkArni Head of IT, Thomas Cook

The quality of the layout and overall presentation of CIO are in line with global benchmarks. The topics covered, too, are more in tune with CIO requirements rather than the generic IT articles one sees in other magazines. This is a move in the right direction. mAniSH CHokSi VP, Asian Paints

editor@c o.in Vol/1 | ISSUE/6

new

hot

unexpected

Game, Theory, Match! S T A F F M A N A G E M E N T Imagine this — vacancies for five engineers are available at the Karnataka Power Transmission Corporation (KPTC) in Bangalore, but eight people want that posting. Now, if all were to apply, then naturally three will have to go away disappointed. Can this be turned into a situation where everybody wins? To answer this, we have to journey to 1713, when James Waldegrave first came up with Game Theory, which was further refined by John von Neumann and Oskar Morgenstern in 1944. Later, John Nash of ‘A Beautiful Mind’ fame created his Nobel-winning theory in 1950. But what role does the Game Theory play in transfers? Plenty. For one, it enables employees to get closer and understand underlying issues. According to G. Kalpana, Director (Personnel), KPTC, “transparency and accountability are enhanced by the system, which curbs nepotism. Our approach combines an online transfer request form, pre-promotion consultation, and a transfer policy.” From the technology angle, the online transfer request form plays a crucial role. Before this system was used, people desiring transfers had to come to Bangalore to consult with their seniors. Now, the request can be made by the employee from the place of current posting, like Mysore or Gulbarga. The online system also makes it easy for the decision makers to get a bird’s eye-view of transfer requests, and enables people desirous of a transfer to interact with each other and consider issues from dif different perspectives.

Nash’s theory is an offshoot of von Neumann’s ‘zero sum game’, which works in situations like chess, where both parties are rivals and only one can win. The Nash equilibrium is more effective in situations like the one faced in real life by KPTC staff because, in most scenarios, the parties are not rivals in the strictest usage of the term though they have their own personal motives. This makes for a radical approach to transfers, especially in government organizations. For, in government, it’s often whom you know and not what Nobel-winning theory you subscribe to that determines where you end up. —By Balaji Narasimhan

Il lUSTrATIO n JAYAn nArAYAn An And BInESh SrEEdhArAn

Who Uses Google ONLINE

ADVERTISING

Google users tend to be richer and have more Internet experience than those who primarily use competing search services from Microsoft, Yahoo and others, according to a new study. A survey of 1,000 Internet users by S.G. Cowen & Co. found that the longer people have been using the Internet, the more likely it is that Google will be their search engine of choice. These

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frequent Google users are more likely — than people who use competing search engines — to have higher than average househouse hold incomes. Google is also the most popular search engine: 52 percent of respondents chose it as their primary site for general Web searches. The study finds that among the search engines, Google is the current leader in paid search, a rapidly growing form

of online advertising. “The study crystallizes a view that’s already out there: That Google is doing better because it is a more attractive site for advertisers,” says Jim Friedland, S.G. Cowen director and senior research analyst. “On the demographic issue, advertisers will look to advertise to higher-income customers.”

—By Juan Carlos Peréz

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numbers are subjective: Understand the factors that influence them and you’ll be able to challenge them. bOOk R E V I E w Creating corporate financial statements is an art, and it’s one that every manager (or anyone who aspires to be one) should be able to converse about intelligently. Karen Berman and Joe Knight have written Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean to teach us how. Their most important lesson is that financial numbers — whether for revenue or expenditures, profits or losses — are subjective. Accountants who

craft financial statements make assumptions that determine how revenue and expenses are accrued and allocated. Managers who make decisions based on the data that accountants present to them often lack any understanding of these biases, and thus accept whatever they are given at face value. But when you know where the numbers come from, Berman and Knight argue, and you understand the factors that have influenced them, you’re able to challenge them when

warranted. The authors offer Enron as an extreme example of the role managers fail to play in keeping numbers honest. On a daily basis, however, understanding finance can also help you make more effective requests for things your department needs and help you suggest ways your company can improve its performance. Berman and Knight, co-owners of the Business Literacy Institute in Los Angeles, provide a concise tutorial, explaining the basics about income statements,

balance sheets and cash-flow statements. They illustrate key concepts by showing how you can apply them: How to put together a capital expenditure proposal, for example. When you have the knowledge and skills to ask questions, you will make more informed decisions about business. Everyone in a company reaps the benefits of that.

—By Katherine Walsh

here’s to Your Glass Being Full S E N S O R S It’s Sunday afternoon at your favorite watering hole, and there are five minutes left before tea. India’s got ten runs to make with one wicket in hand. Your beer glass is empty, and it looks like it’s going to be a while before the waiter makes it back your way. Do you take your chances at the crowded bar, where you can’t see the screen, or do you watch the final minutes sans libations? If Robert Dörr has his way, you won’t have to choose: A sensor-equipped coaster will ensure your drink is refilled before you can say, “Howzzat.” Dörr, a computer-science student at Saarland University in Germany, and Matthias Hahnen, a former product design student at Saarbrücken School of Arts, have created a coaster-like device that can alert bartenders when their patrons’ glasses need refills. The devices are embedded with sensors, which can record the weight of a glass placed on top of them.

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Radio transmission units called Smart-Its, created by the Swiss Federal Institute of Technology, read measurements collected by the sensors and send them to a base station that’s connected to a host computer. “A terminal behind the bar shows where the empty glasses are,” Dörr says, and alerts the bartender. Other applications for the technology include interactive voting (lift an empty glass from the coaster and return it to vote yes; turn the coaster over to vote no), and teaching beginners the basics of dancing or gymnastics (because the sensors measure gravity as well as weight, the device can be attached to a person’s clothing to record and analyze their movements). Dörr and Hahnen conceived the smart coaster for a cooperative class offered by their two schools. It is made of plastic foam. Ordinary coasters that provide advertising and absorb moisture can be secured on top of the device. To date, the duo has received a number of inquiries from vendors that want to license and produce the device, but they haven’t accepted any offers. — By Margaret �ocher

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TRENDLINES

Get to Know the Numbers

Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean By Karen Berman and Joe Knight, with John Case Harvard Business School Press, 2006; Rs 1,347

Struggle with Online Customers T E C H N O L O G Y High-tech and computer companies aren’t doing a very good job when it comes to respecting their online customers, according to a new survey of the industry by The Customer Respect Group. The high-tech industry had an overall average rating of 6.4 in the study, which examined how companies handle customer privacy and e-mail queries. That 6.4 rating was the same as in the previous six-month period. Scores in ‘The First Quarter 2006 Online Customer Respect Study of the High Technology and Computer Industry’ range from a low of 1 to a high of 10. The best sector in the industry was Internet services companies, which got an average rating of 7.0 and was led by online auction company eBay Inc., with a rating of 8.4. The worst-performing sector was computer and data services, with an average score of 6.1 despite an excellent rating for Electronic Data Systems Corp., which scored 8.7. EDS was the most improved company in the latest survey. Surprisingly, 37 percent of the companies reviewed by The Customer Respect Group received a lower rating than they did six months ago; just 23 percent improved their scores. “In the area of privacy, it was interesting that there was an increase in the number of companies that had an excellent mark in the privacy policies,” said Terry Golesworthy, president of The Customer Respect Group. The study found a 50 percent increase in the

Il lustration UNN IKRISHNAN AV

MOBILE

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number of companies with excellent ratings for privacy practices, while another 25 percent scored poorly on that benchmark. In terms of e-mail, Golesworthy said the high-tech industry is among the worst offenders when it comes to ignoring customer queries. “In most industries, we’re seeing it coming down to the 10 percent to 15 percent range that don’t get responded to, whereas the high-tech industry is still in the 30 percent range,” Golesworthy said. “We’ve found that this time previously very good performers are starting to fall down.” Here are some of the other findings: All company Web sites now provide an online privacy policy, and 48 percent of those policies have a friendly tone. Most companies share data, but 20 percent of companies share data within their business group, 15 percent share with business partners, and 3 percent share data with outside parties without explicit permission. Just 37 percent of companies allow users to opt for ongoing e-mail marketing; the rest use implied consent and demand action by those customer who prefer not to receive e-mails. All but one of the companies reviewed use cookies, but just 25 percent provide a full explanation of why cookies are used. Sixty percent of companies do not always use strongly contrasting colors for the site text, making it harder for navigation, especially for people who are visually impaired. —By Linda Rosencrance, Computerworld

trendlines

China Bets on Linux O P E N S O U R C E The Chinese government is trying to prove to the West that it is serious about reducing software piracy. And so China’s government agencies and businesses are turning to Linux as their desktop operating system of choice, a trend with potential to influence how the world uses the opensource software. According to Gartner, only about 1 percent of companies in the United States and Europe currently use Linux on the desktop, and only 3.2 percent are expected to by 2008. Linux appeals to users in China because it’s free, it can be deployed without running afoul of international copyright agreements and it is easily customized to fit local needs. Because China has 1.3 billion citizens who are potential end users, the country’s widespread adoption of desktop Linux will push Linux developers to create better desktop software, says Dan Kusnetzky, VP of system software research with IDC (a sister company to CIO’s publisher). According to China’s Ministry of Information Industry, almost 70 percent of all software purchases last year were of Linux-based products. Meanwhile, provincial governments, installed 45,000 desktops with Linux operating systems. Now private businesses are following suit. Early adopters of desktop Linux include major enterprises such as government-owned railways and telecom companies, says Chris Zhao, president of Red Flag, a major Chinese Linux vendor. Tokyo-based Turbolinux recently announced an enterprisewide deployment with China’s largest commercial bank, the Industrial and Commercial Bank of China. — By Maria Trombly with Wendy Yu and Sumner Lemon

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trendlines

by JON SURMACZ

The Hard Truth:

Most Important

Soft Skills Matter

The

Soft Skills for IT Staffers

Many companies offer non-IT training to IT pros. It’s not enough anymore to be a crack programmer or a nimble network administrator. These days, CIOs need IT staffers to share more of the burden of business, to interact with other departments and to communicate effectively with colleagues. These non-IT skills (business acumen, communication, leadership, project management and so on), often called ‘soft’ skills, are increasing in importance as IT becomes more strategic. That’s why 53 percent of CIOs said they offer IT employees training in non-IT areas, in a survey of 1,420 CIOs done by an independent research group for Robert Half Technology, a global provider of technology professionals. “IT people need to have the ability to communicate at the board level,” says Katherine Spencer Lee, executive director at Robert Half Technology. “Being able to understand the

business needs of an organization and translate that to a technological solution — to me, that’s where the rubber meets the road.” According to the survey, midsize to large companies (those with more than 1,000 employees) are more likely to provide non-IT training to their IT group than smaller companies. Lee explains that larger companies are able to benefit from volume discounts on programs and materials. The survey also showed that 70 percent of business services firms invest in soft skills training — more than any other industry sector. Lee says such firms place a very high priority on customer relations and therefore see to it that all their employees have well-developed interpersonal skills. She expects that more and more companies across all industries will offer soft skills training in the future.

37%

Interpersonal skills

20%

Written or verbal communication

Who offers soft skills training?

53% of all companies surveyed. 62% of companies with more than 1,000 employees. 70% of business services companies. Best Practices Partner with your staff development or HR department. Once you determine what your staff needs (business training, communication training, presentation skills and so on) you can approach these groups to determine what is already available internally or to research what is commercially available. Think big but start small. While it is important to provide your entire staff with training and development in ‘soft’ skills, you should start 16

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with a small group of individuals whose training could most benefit your organization — this can also help to ‘build a case’ for additional employees receiving this training. Get involved. Spend time with the employees who are receiving the training — know what they are learning and how they are planning to implement and execute their new skills in the workplace. Then develop action plans with your team for further training if necessary. Look outside. If your company

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doesn’t provide internal training, encourage staff to participate in industry associations and user groups. Such organizations often provide seminars on technical and non-technical issues, and the additional interaction will help build interpersonal skills. Support the program. Whatever format is used to develop these skills, whether it’s internal or external, if management doesn’t provide staff members with the flexibility and support to take advantage of the training, they likely won’t do so.

17%

Ability to work under pressure

11%

Overall business acumen

Professional demeanor

Other/Don’t know

SOURCE: robert Half Technology

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Ford Touts Truck Line as Mobile Offices M O B I L E T E C H N O L O G Y For truck-driving workers who are always on the go, Ford Motor, Microsoft and Stargate Mobile are making it possible for them to take their offices with them. Available in F-Series trucks, the F-Series Mobile Office, dubbed Fordlink, will feature a Global Positioning Systemenabled handheld computer with a touch screen mounted on the transmission tunnel and powered by the truck’s battery, said Steve Weiner, Ford’s Super Duty Assistant Marketing Manager. The setup is designed to enable workers, such as plumbers, contractors and cable installers, to stay in touch with their offices while on the road, Weiner said. “We’re targeting it initially to the contractor-type customer, someone who drives an F-Series pickup and is out on the job site and who needs to stay in communication,” Weiner said. “You can use GPS to get to the job site, you can check e-mail, you can access plans and diagrams, and you can order supplies over the Internet to have delivered to you. Anything you would do from your office, you can do at the job site.” The Ford mobile-office system features a Stargate Mobile tablet PC running Windows XP Professional with full Microsoft Office capabilities, GPS navigation and broadband Internet access, according to Weiner. The computer is a rugged lightweight model, he said. The driver can remove the tablet computer and take it from the truck just as a user would use an ordinary laptop, he added. The computer itself is built to withstand the rigors of a typical construction job site, Weiner said. A special console will be available for optional accessories such as a printer, digital camera and credit card scanner. The Internet connection is through wireless broadband. You could use cellular as a backup, but it works best with wireless broadband. “It’s an open configuration, so whatever your service provider is, you can go with them — we’re not going to choose service providers,” he said. “It’s all flash memory, so it’s more durable. It’s designed for the job site. The screen is bright enough so you can actually see it outside — you can undock it from the mount and carry it around the job site,” Weiner said. The target price for the system is around Rs 1.35 lakh (US$3,000), which would include the tablet computer, the carrying case — which has a keyboard and a mouse in it — as well as a desktop mount and charger, Weiner said.

—By Linda Rosencrance, Computerworld

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Ben Gomes-Casseres

KEYNOTE

Outsource,Don’tAbdicate Regardless of what business processes you move outside your corporate borders, you can’t lose sight of your ultimate responsibility for ethics and the end result.

Illustrat ion UNNIK RISHNAN AV

y favorite post-Enron cartoon, by Dan Wasserman, has two captains of industry discussing what to do about the fallout from corporate scandals. “We are seen as ethical disasters,” says one of them. “How are we going to rebuild public trust?” In a flash of brilliance, the other answers: “We could outsource it!” Behind the sarcasm there lies an interesting question: When a company sheds operations through outsourcing, does it also shed its responsibility — ethical and otherwise — for how those operations are run? Companies today rely more and more on partnerships with third parties for everything ranging from supplies and manufacturing to product design and distribution. In this so-called extended enterprise, where does management’s responsibility for good governance begin and end? Lawyers and accountants will surely have an answer (or several) to this question, based on their reading of Sarbanes-Oxley and other regulations. But top management’s answer should go beyond current laws and professional practices, as the question also relates to performance, reputation and, yes, even ethics. Corporate governance, writ large, means how and to what ends top management exercises its authority and influence. But authority over what? The financial statements of a company begin and end at the legal boundaries of the company’s property. What it owns or controls is included; what it doesn’t, is not. The problem is that partnerships and outsourcing often fall in a gray zone — they are not usually owned or controlled by the company, but they can be critical to its economic performance. In effect, the economic boundaries of the company stretch well beyond the legal boundaries. And it is this broader economic scope of operations that companies should govern well, 18

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Ben Gomes-Casseres

KEYNOTE

not just the legally defined core. Those who don’t, risk suffering penalties — perhaps not legal penalties, but penalties no less in their performance, their brand reputation, or in the public’s perception of their ethical integrity. A few examples will illustrate what I mean.

A poorly governed extended enterprise can cost your company dearly.

Auto Alliances: Turbocharged or Stalled?

designs and declining market positions. Two weak companies seldom make a strong one. It seems that the same Fiat management remained in place after the deal was signed, and that GM’s contribution amounted to a few new joint projects. This was evidently not enough to pull Fiat out of the red. A poorly governed extended enterprise can cost the company dearly. The cost can come in the immediate bottom line, as for GM, or in reputation, which can be just as important in the long run. Ford and Firestone learned this lesson the hard way. The relationship between Ford and Firestone goes back to the birth of the modern automobile industry. In those days, the devotion to quality and innovation of each generated a halo effect on the other. But over time this relationship became driven more by cost concerns, as the auto and tire industries turned fiercely competitive. In the summer of 2000, both companies were put on the defensive by deadly accidents involving Ford Explorers equipped with Firestone ATX tires. Who was to blame? Was it the tires or the vehicle? Were the companies aware of the risk? Did they do anything about it? In a sense, the precise technical answers did not matter. Both companies were sued by consumers and by state governments. Both eventually settled out of court. And both took a hit to their reputations. A Harris Poll of corporate reputation found both companies near the bottom of a list of 60 major companies in 2002, just above Enron, WorldCom and Adelphia. To be sure, Ford and Bridgestone (Firestone’s parent) both have since moved up in subsequent polls, but wounds remain.

Compare the tales of two automotive joint ventures. Such ventures are common ways for automobile companies to extend their reach into new markets, share manufacturing costs and source technology abroad. Toyota, the world’s second-largest auto company, is often cited for the critical advantages it derives from its well-managed network of external suppliers. Not so for General Motors. While GM has had foreign joint ventures and sourcing arrangements since the 1970s, somehow it never got the hang of how to govern assets it did not fully own and control. Its recently-failed investment in Italy’s Fiat is only the latest example to prove this point. In 2000, GM paid Rs 10,800 crore ($2.4 billion) for a 20 percent stake in Fiat, with the aim of gaining access to Fiat’s diesel-engine technology and sharing manufacturing costs in Europe. But their efforts in managing this joint venture were ineffective, and within two years, Fiat was hemorrhaging money. After difficult divorce proceedings, with a court battle looming, GM agreed to pay Rs 900 crore ($2 billion) to terminate the deal in 2005. Moody’s Investors Service cited this costly settlement as a reason for downgrading GM’s credit rating. Contrast this with the story of Renault and Nissan. Like GM, Renault was not known for its savvy management of alliances. So when the French company paid Rs 22500 crore ($5 billion) for 37 percent of an almost-bankrupt Nissan in 1999, most observers frowned. But Renault sent a top-flight management team to Japan, headed by Carlos Ghosn, a Frencheducated Brazilian who grew up in Lebanon, and launched a serious effort to coordinate operations between the companies. Nine cross-functional teams, backed by cross-company task forces, were charged with reducing costs at Nissan, promoting global integration of operations, and reviving lagging product development and sales. Top management of the two companies met regularly in a process that engendered mutual trust. Within a few years, Nissan was making healthy profits and boosting Renault’s share price. Ghosn was promoted to CEO of Renault and became a superstar in Japan — with his own comic book character! Why the difference? The answer is no doubt complex, and the facts hard to ascertain — companies are always loath to talk honestly about their failed alliances. But we know that more than half of such ventures fail. The reasons usually lie in a combination of poor up-front design and poor post-deal management. In the case of GM and Fiat, one must wonder whether the two companies really had much to add to each other: Both were struggling with heavy payrolls, outdated 20

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Your Partner's Reputation isYour Reputation Can companies avoid such hits to their reputations by improving the governance of their relationships with external parties? The evidence suggests they can. In the airline industry, Star Alliance, led by United and Lufthansa and including 14 other members, aims to give customers a seamless global service. It has strict standards of service, safety and customer orientation that new members must meet to join and use the Star logo that is shared by the group. The group knows that the reputation of one member airline can help or hurt the reputation of the others. Pharmaceutical companies have taken the concern with reputation one step further. For most of them, good relationships with innovative biotechnology firms can be a key source of new drugs. As a result, they have vied with each other to be seen as ‘partner of choice’ and so attract the most promising partners to their network. Eli Lilly, for example, created an extensive alliance management organization and trained its professionals how to effectively govern these

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Ben Gomes-Casseres

KEYNOTE

sensitive external relationships. They introduced processes and practices that helped Eli Lilly communicate better with its partners and resolve conflicts more rapidly. As a result, Eli Lilly developed a reputation for good alliance management and its ranking rose in industry surveys that aim to measure partner attractiveness. Thus, good governance of the extended enterprise can generate both better performance, and better reputation. What about corporate ethics? Where does management responsibility for ethical behavior begin and end? The idea of outsourcing social responsibility together with outsourcing manufacturing is, in fact, nwot far-fetched. But it seldom works. Early in the controversy around dangerous chemicals in the workplace, Allied Chemical tried to distance itself from responsibility for dangerous emissions and spills at a supplier in Hopewell, Virginia, to which it outsourced production of Kepone, a DDT-like pesticide. Public outcry, legal suits, and congressional action eventually led to a settlement, and to strict new industry regulations. Nike, too, initially distanced itself from charges of child labor and unhealthy conditions at its suppliers offshore in the late 1990s. In this case, the risk to its brand image no doubt helped lead to a change of heart. Today, Nike periodically produces an extensive corporate responsibility report that reviews working conditions at

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all its suppliers. “Corporate responsibility challenges us to take a good, hard look at our business model, and understand our impact on the world around us,” concludes Nike’s 2004 report. Evidently, its leaders have come to believe that their responsibility for good governance extends well beyond the boundaries of their firm. The lessons from Ford, GM, Nike and others do not apply only to their industries. In fact, technology and service companies are just as exposed to the risks of poor governance of their extended enterprise, if not more so. Outsourcing of production, design and marketing has gone further in technology and service industries than elsewhere. With that trend comes the risk that a delegation of operational tasks will become confused with abdication of responsibility. In this sense, the term ‘outsourcing’ is an unfortunate one. With every outsourced task, comes a new responsibility to govern that task properly. The burden of manufacturing a part or running a call center of course is shifted outside the company. But the responsibility for managing the supplier and for ensuring customer satisfaction doesn’t budge. Denying this amounts to governance myopia. CIO Ben Gomes-Casseres is a professor at Brandeis University’s International Business School. He also consults on alliance management and is coauthor of the book Mastering Alliance Strategy. Send feedback on this column to editor@cio.in

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Patricia Wallington

total leadership

Lonely At The Top Congratulations! You’re the new boss. And your former colleagues don’t like it.

ongratulations! You have just been selected from among your team members to become the new CIO. A promotion is always exciting, but with it comes this challenge: How to get off to a good start as the new boss of your former colleagues. Don’t assume that your existing relationships with colleagues will continue as before. Some of them who also aspired to the position may be jealous. Former pals may no longer welcome you to their social gatherings. A resentful few may even try to sabotage you. Meanwhile, you may have to treat differently those who remain your friends so that you don’t appear to be playing favorites. And you will have a new set of alliances to build among both former colleagues and the senior managers whose ranks you have joined. Navigate these obstacles successfully, and you’ll be able to enjoy the new opportunities available to you to grow as a leader and have a lasting impact on your organization.

Passive-Aggressive Colleagues When you become the boss, your former peers will fall into one of four categories: Leavers, testers, passive resisters and boosters. Leavers are those who, for a variety of reasons, won’t stick around. Let them go. Holding on to people who have already psychologically separated themselves from the organization is, at best, a temporary victory. At worst, you have marginally motivated employees who are probably second-guessing their decisions to stay. You will find it easier to rally the organization behind you when those who are dissatisfied are gone. Testers are uncertain about your leadership. They will find ways to challenge your style of management and your 22

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Patricia Wallington

total leadership

expectations of your staff. Testing is normal and can be used to develop constructive relationships with your former peers. In your response to such challenges, the organization gets to see how you operate. Deal with testers by being patient. Take every opportunity to clarify your position. Support experimentation by your staff as they learn how to meet your expectations. Passive resisters will test your patience as they disagree with every idea. Even when they express agreement, they will often follow their own agenda anyway. Get passive resisters in-line by encouraging them to, according to the adage: Lead, follow or get out of the way. I remember one instance in which a former colleague was continually undermining me outside the office with his associates. I engaged him in a brief discussion, during which I

Give everyone a chance to adjust to new roles and relationships. told him he should bring his disagreements to me personally. I informed him that much of what he said outside the office got back to me, and who knew if it was translated effectively? A few examples proved my point. The public attacks stopped, and we were able to develop a constructive relationship. He learned that I would work with him on issues he brought to me personally. Boosters are those who are happy to be working with you, and they’ll tout your leadership to others. Boosters can be anywhere in the company, from the CEO to an entry-level employee. They are your allies because some connection (an idea you shared, a joint accomplishment or a compatible personality) has created a positive relationship. Nurture relationships with your boosters, and they can be your advocates whenever you need support.

Redefine Your Relationships Now that you’re in charge, you will need to balance the pull of the past with the requirements of the new job, which call for you to play a bigger role in the operation of the company. You have friends in the organization, and you will want to keep them. At the same time, you must avoid favoritism. You can do this by being even-handed in how you allocate time to employees, and by being objective in how you distribute praise and awards. In addition, recognize that your position as the boss changes the chemistry of the team that made you successful. Give everyone a chance to adjust to new roles and relationships. Being able to strike the right balance between friendship and fairness, and between bossing and 24

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teamwork, will be a key factor in gaining the organization’s support of your leadership. Establishing new relationships with your former colleagues will not be the only challenge you face. You also will need to discard your junior image and redefine yourself to the company. Don’t assume you know what is expected of you. Take the time to learn what your superiors and your internal customers want from you. At the same time, assume the new role with vigor. In other words, don’t act subservient as you contribute your ideas toward advancing the company’s goals. But also be mindful not to adopt an arrogant attitude. (Humility is a desirable trait.)V

Don’t Stop Explaining Despite the challenge of redefining yourself, there are many advantages to being promoted out of the crowd. You know everyone, you have an established network of supporters, and you know your company’s products and processes. And now you have the opportunity not only to enhance your skills but also to put your own stamp on the company. As the CIO, your challenge now is to understand the broader issues facing the company. As you learn more, you can set the tone for your organization’s growth by sending the message that continuous learning is not only accepted but expected. As you define your strategy, consider building on existing plans. This is another way to get the organization on your side. (If you have been mandated to create a new strategy, you will have a greater challenge.) Change often comes across as criticism to those being asked to do something differently. Perhaps technology choices you criticized in the past are things you are championing now because you understand better the constraints that guide these choices. Remember how you felt when you believed that the direction of IT was misguided. Use this experience as a basis for explaining what you’re doing, and encourage everyone affected to share their ideas for making your initiatives successful. Once, when I was in such a situation, my staff kept telling me what I was proposing wouldn’t work; we had tried that before. I explained to them that the current conditions for success had not been present during prior attempts. This was enough to get their support, and we went on to achieve our goals. Don’t forget, you want this job. The challenges can be invigorating. Redefine yourself and your relationships successfully, and you will be on the way to making your mark on your company. CIO

Before retiring in 1999, Patricia Wallington was corporate vice president and CIO at Xerox. She is now president of CIO Associates in Sarasota, Fla. Send feedback on this column to editor@cio.in

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Are You Ready for

Building Web services is not simply about buying technology. Nor is it just about defining business needs. Introducing Web services to your enterprise demands a deep understanding of your business culture and processes. Think you’re ready? Take this quiz and find out for sure. By C H r i sTo p H e r L i n d QU i sT

Thousands of companies use Web services every day, but thousands more have yet to take the plunge. How well is your company positioned to benefit from Web services? To find out, take this quiz to assess your own Web services readiness quotient. Answer each question honestly, checking all answers that apply. (Some questions may have more than one answer.) If no answers apply, skip the question. When you finish, tally your score to see where you stand. Then turn to ‘.Net, Web Services and the End of the Vendor Era’ on Page 29 to find out more about the Web services development landscape. 26

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Questions 1.Web services is: a. any Web-based application b. client-server computing by another name c. a standards-based means of machine-to-machine interoperability over a network

2.For something to be a Web service it

The biggest needs in my IT architecture are:

a. HTTP: Hypertext Transfer Protocol, the basic communication protocol of the Web b. SOAP: Simple Object Access Protocol, a standard for exchanging XML messages c.WSDL: Web Services Description Language, an XML format d. UDDI: Universal Description, Discovery and Integration, a ‘directory’ format for exposing Web services e. XML: Extensible Markup Language, a flexible, standardized tool for describing various types of data

our business processes is:

operate as follows:

a. organizing my development around business processes b. optimizing the sharing and reuse of software components across the enterprise c. inexpensively tying together the mix of applications that we have

4.My greatest needs for the IT group’s relationship with the business are:

a. allowing business leaders to determine how IT is used instead of IT limitations determining business processes b. providing simpler, less expensive integration with my partners and customers c. reducing our reliance on proprietary file formats and application interfaces

a.what business are we in again? b.adequate but not exceptional c.above average d.so deep they could run the business themselves

7.My development team members

a.what’s an SOA? b.in the planning stage c.in the pilot stage d.fully implemented

6.My development team’s knowledge of 11.I’ll fully engage in Web services:

My greatest needs for application development are:

(SOA) is:

a. cross-platform integration b. legacy system integration c. integration with external systems and applications

must use the following standards:

10.My service-oriented architecture

a.they usually fall back on personal approaches to development because we don’t have many established procedures b.they often fall back on personal approaches to development despite our attempts to establish procedures c.they generally adhere to our policies but may deviate occasionally when they feel the project warrants it d.they strictly adhere to our development processes and understand the need for following established procedures

8.I plan to develop Web services in: a.Java b..Net c.other (such as Macromedia ColdFusion, Ruby on Rails, Ajax)

a.when all appropriate standards have been established b.when all security standards have been established c.piecemeal, wherever standards are available d.right now, pragmatically extending and occasionally replacing proprietary pieces of my services with standards- based options

12.My company plans to deploy Web services in the following way:

a.no plans to deploy Web services b.plans to deploy a few Web services in back-office applications c.plans to deploy a few Web services to business users d.plans to deploy a few Web services to partners and/or customers e.plans to use Web services enterprisewide to integrate applications and business processes f.plans to use Web services enterprisewide to integrate with systems and business processes of partners and/or customers

For the bulk of my Web services development, the most critical feature of any application will be:

a. performance b.security c.scalability d.cost

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Answer 1. Points: A & B = 0; C = 5 Web services offers a standard way of connecting two applications across a network and provides for efficient reuse of code. But you can’t call any Web application Web services. Unless the application provides a uniform, XML-based interface for other applications to automatically take advantage of, it isn’t Web services. And while some aspects of Web services mimic client/server computing, Web services isn’t as restrictive: Two servers can act as peers and share data over a service, or even two clients.

2. Points: A,B, C & D = 0; E = 5 Web services doesn’t need to employ an alphabet soup of standards. The technology can work across a variety of protocols, including HTTP, SMTP and FTP. Alternatives to SOAP exist (Representational State Transfer, or REST, has numerous adherents). If you’re only producing a handful of services or don’t plan on making them widely available, you won’t need a directory. And if you do need one, you aren’t restricted to UDDI.

3. Points: A,B & C = 5* Web services is not a silver bullet for aligning

software development with the business. But if properly implemented, Web services can help you to build a software development framework that fits business processes more like a second skin than a back brace. Web services allows both for easier reuse of previously written code and a simpler way to make applications communicate.

4. Points: A,B & C = 5 * Companies that have become heavy users of Web services offer their services as a menu from which business users can assemble new processes (for instance, integrating a helpdesk app with CRM tools to let salespeople see which customers are having problems) that IT can deliver quickly. That makes it easier for the business to develop new products or relationships, and frees IT from the shackles of proprietaryformats,allowingittoconnectapplications wherever that makes business sense.

5. Points: A,B & C = 5 * Web services can handle any of the listed scenarios. Many companies use the technology as a way to make features from older systems or applications available to new applications. But it also works just as well for connecting a pair of Windows or Unix machines.

Are you ready for Web services? Tally your score and see. 0 to 39: Neophyte. You’re still laying the groundwork for Web services before you’re ready to get going. But you’re thinking in the right direction.

9. Points: A & B = 0; C = 3; D = 5 If performance and security are your primary concerns for a given project, Web services might not be the best approach. The loosely coupled, asynchronous nature of Web services and the paucity of mature security standards don’t lend themselves to high-performance computing or tight security. But if scalability or cost is the key consideration, Web services should work.

10. Points: A = 0; B = 1; C = 3; D = 5 You don’t need an SOA to start working with Web services — but it doesn’t hurt. Developing an overarching plan for an SOA, of which Web services may only be a part, will provide a development map that you can follow no matter what business problem you need to solve or technology platform you decide to use.

11. Points: A = 0; B = 1; C = 3; D = 5

Web services works best if it maps to business processes rather than the other way around. As a result, having a development team that’s deeply aware of how your business works will help you make good choices, not only about how to create and manage services but about which services to create in the first place.

If you wait for all the standards to become established, you’ll never move to Web services. WS-Security, the core Web services security standard, took years to reach its current state. And many open-source advocates are peeved that implementing it requires a license from IBM and Microsoft because they own patents for some of its technology. Friction between standards bodies and software vendors guarantees that standards development will go slowly.

6. Points: A = 0; B = 1; C = 3; D = 5 Scoring

you’re committed to Unix, start with Java). But it’s good to keep your options open. Using multiple development environments allows you to take advantage of emerging technologies regardless of platform.

7. Points: A = 0; B = 1; C = 3; D = 5

12. Points: A, B, C & D = 1; E & F = 3

40 to 79: You’re getting your priorities in order. If your services are mainly in the pilot phase, it’s time to think about moving them into production. If you have fully implemented some services, it’s time to develop an enterprisewide strategy for Web services.

Undisciplined gunslingers aren’t the best players in the Web services game. You need a development team that plays by the rules. That means you have to establish a development process that values code reuse and cooperation among developers.

Web services are like fax machines: The more you have, the more useful they become. Connections between applications you might never have imagined connecting become possible with broad use of Web services. So keep your eyes open for new opportunities. CIO

8. Points: A & B = 5; C = 3*

* Choose one or all.

80+: Ace. You’re ahead of the pack. As an early adopter, you’re already getting business value from Web services. Keep doing what you’re doing.

Despite what some vendors tell you, there’s no single best way to develop Web services. It pays to start with what you know (if you’re a Microsoft shop, start with .Net, if

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Chris Lindquist is Technology Editor. Jonathan Eunice, principal analyst of technology research company Illuminata, also contributed to this quiz. Send feedback on this quiz to editor@cio.in

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.Net, Web Services, and the End of the

Vendor Era

When Microsoft announced .Net, Bill Gates called it a ‘bet the company thing.’ But in the process of becoming far less than Microsoft had dreamed, .Net has become much more than CIOs had hoped for and is pointing the way to a new definition of the CIO role, creating a world in which vendors — including Microsoft — matter less and less. B Y S C O T T B E R I N AT O Reader ROI

What .Net really means for CIOs Why Web services standards will transform the CIO’s job How to operationalize Web services Vol/1 | ISSUE/6

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Cover Story | Web Services

Five years ago, CIOs worried that .Net, which Microsoft was proclaiming a

revolutionary new software architecture, was just another name for lock-in. “I’m not confident that Microsoft .Net will be compliant with open standards,” Brett Kottman, then the e-commerce director for Excellence in Motivation, told CIO magazine.

He wasn’t alone. In a CIO Research Report from that year, seven out of 10 CIOs said they wouldn’t adopt .Net. Just one in four said Microsoft’s motivation for launching .Net was technical; almost 60 percent said the motivation was marketing. Fast-forward to last year when FedEx executive VP and CIO Rob Carter built a Web service that allows his people to print to a nearby FedEx Kinko’s business services centers from inside Windows Office applications. He used .Net to build it. But here’s the surprising part: On the back-

After decades of holding customers captive, Microsoft and its competitors are selling products such as .Net.

Why? The answer is: The market made them do it. end, the platform it connects to is not Windows and, says Carter, “It’s really of no consequence that it’s not.” But Windows has never connected easily to anything but Windows. Nor, for that matter, has vendor’s software easily linked with anyone else’s. Indeed, CIOs used to be defined by which technology architecture they bet on, and the software business used to be defined by which vendors got CIOs to bet on their stuff. As Rick Berk, the CIO of private bank Brown Brothers Harriman, puts it, “Vendors have always created things to pin us down.” So how can Carter be so casual about mixing architectures when that’s always been excruciatingly complex and expensive and therefore ill-advised? What happened to lock-in? Web services standards happened. If your native tongue is .Net or J2EE, C# or Java, WebLogic or WebSphere, Windows or Linux, or anything else, all countries are starting to com30

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municate using the lingua franca of XML and associated specs like UDDI, WSDL and SOAP. And so far, software vendors have adhered to those standards in their products, including Microsoft with .Net. After decades of holding customers captive inside the walls of proprietary software, Microsoft and its competitors are selling products such as .Net that help tear down those walls. Why? The answer is, the market made them do it.

CIOs Made Them Do It “They didn’t really have a choice,” says Brandie Fennell, CIO of the Mortgage Bankers’ Association of America. “We were going in this direction anyway,” asserts Marc West, CIO of H&R Block. That direction is a product of the profound change in IT brought on by Web services. The CIO’s entire solar system is tilting on its axis, away from technology and toward services. The religion of technology is giving way to the agnosticism of development. And the foundation of the IT industry is shifting from vendors to integrators and services companies. At the same time, the CIO’s role is changing. Once judged by the efficiency of the technology architecture that he bet on, the CIO is now judged by the value of the services he provides to the company, to partners and to customers. Nolan Jones, CIO of the Colorado State Department of Revenue, is using .Net, Avanade and other technologies to build the new Colorado State Titling and Registration System (CSTARS) for registering motor vehicles, but “the .Net aspect of this is just in the background,” he says. “All of this is focused on business process, not tools. What’s been nice is we haven’t heard, ‘Well, that’s a system limitation, we don’t do that.’ It’s more like, ‘What’s your process, how can we unify that process across counties?’” “The real question is: Do individual vendors matter?” asks Hossein Moiin, VP of technical strategy at T-Mobile International. “And the answer more and more is: No, they do not.” For the software vendors, it’s a cruel irony. In a world running on Web services standards, technology platforms are fungible commodities. Once dreaded by CIOs as Microsoft’s

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Cover Story | Web Services next big lock-in strategy, .Net is now applauded by CIOs as a nice development framework that fosters the technology neutrality they’re learning to expect. The shift from technology expert to process maven will not be easy for many CIOs. If they don’t provide value now, it won’t be the vendors’ fault. It will be theirs.

The ‘Bet the Company Thing’ Microsoft introduced the term ‘.Net’ in June 2000, in a sixpage white paper called ‘Microsoft .Net: Realizing the Next Generation Internet.’ A judge had just ordered the company split in two and, predictably, its stock price was suffering. In its white paper, Microsoft used the word ‘revolution’ (in all its variations) nine times and the phrase ‘next generation’ or ‘new generation’ six times. Bill Gates said that it was a ‘bet the company thing.’ .Net, it seemed, was supposed to brand Microsoft’s software business under one umbrella term. But .Net was also supposed to be a product — or products — although what kind wasn’t clear. The white paper spoke of ‘constellations of computers’ and embedding products in an ‘electronic fabric,’ and promised ‘zero management’ for end users and a ‘new era of dynamic trading relationships.’ The paper cited XML and Web services heavily as some of what would make .Net go, but it wasn’t clear how, or to what end. Joel Spolsky, a software developer and now a frequent blogger on software development issues, summed up the attitude toward the .Net fanfare at the time: “I’m not saying there’s nothing new in .Net,” Spolsky wrote in 2000. “I’m saying there’s nothing there at all.” For the next two years .Net came to describe nearly anything forged in the Redmond smithy. Microsoft’s major products gained a .Net appendage: Windows Server.net, Office.net, Visual Studio.net, MSN.net, .Net Passport, .Net My Services. Vista, the company’s next operating system (it was called Longhorn at the time), was advertised as something that would be built on top of several pillars of .Net — even if it wasn’t due out for years. .Net was ubiquitous. And mystifying. Mortgage Bankers’ Fennell says that when .Net first hit, “It was a buzzword thing. People just didn’t understand what it meant or what resources were available for it.”

By late 2002, Microsoft was retreating. CEO Steve Ballmer conceded that “We probably made [.Net] a little harder to understand than we [should] have.” Gates admitted to a ‘misstep’ with the .Net launch, telling Wall Street that certain elements of the strategy were ‘premature.’ Microsoft tacked the other way and lopped off the .Net appendage from many products, notably Windows. (A few kept the suffix, including the development tools Visual Studio and Visual Basic.) Eventually many of the .Net-based features promised in the Vista OS were eliminated. In 2002, Gates offered a simpler definition of .Net: “Software to connect information, people, systems and services.” But that didn’t really help; lots of software is supposed to do that.

.Net Gets Real What .Net eventually came to mean (and to be) was a set of development tools and an environment or framework in which to use those tools. While .Net’s

The real question is: Do individual vendors matter?

And the answer more and more is: No, they do not. Once dreaded as Microsoft’s next big lock-in strategy, .Net is now applauded as a nice development framework.

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marketing floundered, Microsoft’s technical team was busy building those tools and the framework that would, in fact, foster a revolution in how Microsoft developers built applications. Microsoft just marketed the revolution before it had the tools. And the new tools were turning out to be superior to Microsoft’s older Win32 development platform and associated tools. Arcane technical advances aside, what Microsoft did with .Net was to allow programmers to use many languages — C++, VB, VB.net, C# and so forth — and run them in one environment, making it easier to recruit affordable talent to develop in the Windows environment. In addition, the tools were accessible in a way that made them easy to learn, accelerating training and development. CIOs give .Net high marks on other fronts too. “It really facilitates rapid development, particularly on the front-end GUI area,” says A.J. Sutera, director of application services at JetBlue, which has used .Net since the airline launched in February 2000. Two reasons for this: .Net development uses automated memory management, which means developers don’t have to spend time worrying about how applications grab and give back memory to the computers running REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6

Cover Story | Web Services the programs. And .Net allows for managed, reusable code. Processes don’t have to be written every time, but rather can be grabbed from a repository and plugged into the application being built. By 2004, standards for Web services, such as XML, SOAP, UDDI and WSDL, had been hashed out well enough (with the unlikely cooperation of Microsoft and IBM keeping the standards moving forward), and Microsoft and its competitors adopted them in their development frameworks. That helped CIOs start to take Web services more seriously. “Right now, we’re seeing the advances in the technology, much more

than a couple of years ago,” says MCI executive vice president and CIO Elizabeth Hackenson. “We’ve gotten through the bad times and now we can put this stuff into our strategic plans.” The robustness of the .Net development framework allowed CIOs to ignore its marketing. “It’s a development environment,” says Berk of Brown Brothers Harriman. “You either develop with it or you don’t. It’s that simple.”

Free at Last

For Microsoft, binding .Net to Web services represents a profound shift in the company’s strategy. Microsoft has pried open a space between its development tools and its technology architecture. What has been created is not the technology independence that Java makes possible (you’re still developing Windows applications), but Windows Redmond is betting CIOs will have to connect their Web services applications can now easily talk to other offerings to Office and Windows — a bet Google is willing to call. applications through the Web services layer. By now, .Net was supposed to be the centerpiece of Redmond’s empire. Yet when Rick Roy, CTO of CUNA Mutual Group, calls it Microsoft met with Wall Street analysts this past summer, the company didn’t focus a “loosely coupled application environment.” on .Net. Instead, CEO Steve Ballmer concentrated on ‘anchor businesses,’ such as Microsoft admits that this is a big change. Windows and Office. “Customers have existing large investments But the latest version of Windows was five years ago; the next isn’t due till later this year. in terms of staff, hardware and software for Microsoft is facing so much skepticism on Wall Street that in late September the comback-end systems,” says Microsoft’s John pany announced a huge reorganization. The reorganization is “part of driving softwareMontgomery, director of the .Net Developer based services in competition with anybody else who thinks they’re going to use that Product Marketing Group. “It could be an strategy to get ahead in the marketplace,” Ballmer said in a Wall Street Journal interview. OS/390, AS/400, WebSphere, SAIP, Siebel, “We’re not the only guys who are going to try to deliver software that has a service-based whatever. And the larger the company, the component. We need to get there aggressively and quickly.” more likely that software is running on Big But Microsoft still has faith that your average businessperson weaned on Excel, Outlook Iron. Historically, a Microsoft salesperson and Word will continue to prefer those applications to anything Web-based. Windows and would have said, ‘Rip all that out and put in Office, Microsoft argues, can simply do more than a browser — better graphics, more comthe Microsoft technology stack.’ With .Net, plex applications, more immediacy than the click-and-wait world of the Web. CIOs will want our intention was to overcome the either/or to develop Web services for Windows and Office because of these‘rich’features.And Microand get to a point where customers can choose soft is doing everything it can to encourage Web services development on top of Windows what they want where it’s appropriate, instead and Office, including creating a development toolset specifically for Office. One product of of having a religious conversation about the that would be Mendocino, an effort to use Office as a front end for SAP’s ERP software. technology stack.” Microsoft is betting that if you try to take Windows and Office away from users — no So, as profound as this change is for matter how much sense it makes financially or from a development point of view — they’ll Microsoft, .Net and its link to Web services revolt. The appeal of Mendocino is that it’s something everyone is comfortable with — represent a more profound change for CIOs, Office — fronting something everyone is uncomfortable with, ERP. As FedEx Executive VP who finally can choose the development tools and CIO Rob Carter says of his decision to integrate his .Net Web service with Office, “The that are best for the service an application vast majority of the world finds the Microsoft desktop productive and standard. For people will provide, rather than having to use the who want it, we could provide a browser interface. It just won’t be the same.” tools that are determined by a preselected But what if it became the same? Users are comfortable with browsers too. And techtechnology architecture. Plus, the fungibility nologies, such as Ajax, are being developed right now that make browsers quite rich, with of Web services means technology risks are the kind of immediate gratification and deep visual and complex transaction capabilities diminished. If one development environment of a desktop application. Front and center with these kinds of Web applications is Google, doesn’t work out, it can be changed, and Microsoft’s new nemesis. (Many observers say it’s this threat — Google, its applications that failure won’t ripple through the entire and the fact that it keeps taking Microsoft developers away — that spurred the massive technology architecture. CIOs can not only reorganization in Redmond.) Google Earth and Google Suggest, among others, are just tolerate heterogeneity, they can embrace it, hints at what Web-biased developers want to do with the Web: Take it out of its click-andinside their companies and out, with partners wait heritage and take on Microsoft. and customers. —S.B.

Microsoft Goes All In

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Cover Story | Web Services “The age-old IT question was, ‘What do we do about standardizing on a platform?’” says JetBlue’s Sutera. “That question’s not so important with Web services. It gives you a freedom you didn’t have before that is exceedingly attractive. Just use the right tool for the right job.” It is a great unburdening. The weight of technology decisions — the very decisions that used to be at the core of the CIO job — have been lifted from CIOs’ shoulders. Instead of thinking about the technology, they can focus on the business — what services to expose to whom, what business processes to improve. And because they don’t have to match up different technologies, they don’t have to spend all that time on integration. “We can look at process instead of code,” says H&R Block’s West, who credits Web services and .Net for getting his client acquisition system up and running much faster than it could have been in the old days. “We have the opportunity to do more-valuable work. We used to spend a lot of time on .Net versus Java. That’s so much less relevant now.” “I couldn’t care less what developers use,” says Scott Osgood, CTO of Noel-Levitz, a subsidiary of Sallie Mae. “I’ve been freed up to worry about what we’re trying to accomplish rather than technical interfaces.” At supercomputing research organization Cornell Theory Center, David Lifka, who is director of computing and information sciences, recalls a great example of how Web services provides leading-edge interoperability. “We had this collaboration with several universities; they’re all rocket scientists doing materials modeling at the atomic level. But they all have their own platforms. It’s a three-year grant, so we said, ‘We can spend three years porting all the data to one platform, after we argue forever about which one will be best, or we use the Web services glue.’ Obviously, we did the latter and it took less time and worked out great.” “It’s just so completely logical that this is how we should develop,” says Mortgage Bankers’ Fennell. “It’s surprising we haven’t always done it this way. Then again, we didn’t have the tools from the vendors.”

on standards, they’re still sniping when it comes to marketing their particular tools to CIOs. But what’s interesting about this competition for CIOs’ attention is that, for the most part, CIOs aren’t paying much attention. CIOs aren’t betting on either .Net or WebSphere. They’re betting on Web services. .Net and WebSphere happen to be means to that end. As Lifka says, “What you really care about is that .Net supports Web services and managed code. That’s what makes it attractive.” Many CIOs use both .Net and WebSphere and will continue to. There is no consensus on which tool is better. Many are choosing to operate with Microsoft on the client side and IBM technology in the back office; old habits are hard to break. But standards have made allegiance to

The age-old IT question was: What’s to be done about standardizing on a platform? That question is not so

important with Web services. It’s a matter of using the right tool.

Some Things Never Change As CIOs start to put .Net and WebSphere (its archcompetitor from IBM) to work for Web services, the old question of which technology architecture do you subscribe to may be gone, but there’s a new question: Which tools are appropriate where? Despite the fact that IBM and Microsoft have played nice

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any one vendor out of date, says Bob Laird, chief IT architect at MCI. “Look, if one person’s cement deteriorates, or can’t hold up, we can always put the other person’s cement in.”

The Importance of Standards With Web services, CIOs have a common language for easier integration, the capability to expose their companies and others to a whole new range of services, and less risk in choosing technology at the outset of projects. Vendors have to compete on merit, not by virtue of lock-in. It sounds like the dawn of a golden age for CIOs. But there are risks. If vendors don’t adhere to standards, CIOs could end up where they started, having to do tricky and expensive integrations of proprietary technologies — and dealing with angry businesspeople wondering what happened. “Keeping to standards overshadows everything else,” says Northrop Grumman vice president and CIO Tom Shelman. “Like many CIOs, I’ve placed some pretty big bets [on Web services]; we’ve sold this architecture and the promise of easier integration and lower costs to other executives. So the applications vendors have to play fair and keep it open. When they start getting outside the standards, they start putting CIOs like me at risk.” As commodity development allows Web services to take off, standards must be honed and further developed, and companies building Web services need to discipline REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6

Cover Story | Web Services themselves to adhere to the standards while pressuring vendors to do the same. To date, the MAD (mutually assured destruction) theory has held standards together. As West at H&R Block says, “We’re not going to use anything that’s hard to run in other environments.” In other words, if a vendor doesn’t hew to standards, West will walk away.

Meet the New CIO No longer technology czars, CIOs need to be business experts who understand services. When decisions are dictated by the technology architecture, it’s limiting but it’s also a crutch. The limitations of the technology could explain a lot away. In a Web services world, the CIO carries the weight. A new job in a new landscape means different challenges, not fewer. Shadman Zafar, Verizon’s VP of architecture and eservices, argues that the CIO’s new central mission is simple: Operationalize Web services. By that, he means create an SLA-like model for the Web services that programmers develop. It has to be clear to anyone who might want to develop or use a Web service how it can scale, what its level of security is

Do you want to spend years porting all your data to one platform, after arguing over which is best? Or use the

Web services glue?

and so forth. And if others want to use that service, the group that developed it needs to be compensated for its work. If anything, Zafar says, a vendor such as Microsoft with .Net should focus on helping CIOs manage the tools and services rather than focus on the tools themselves. Zafar has operationalized his development with ‘IT Workbench,’ a formal and standard procedure for application development. “As soon as you start a project, you go and search for parts, for code already developed [which is stored in a taxonomic, searchable repository] that can help, and you’ll know what that code is capable of. You get what you can use and develop the rest” — in .Net, WebSphere, whatever is most appropriate — “and then all of it is thrown back on the shelf for others to use.” This takes time and money to get up and running. Web services is no free ride. Ian Goldsmith of SOA Software, which works with Verizon, compares the current environment to the challenges faced by auto manufacturers in the 1990s when they began revamping their assembly lines to build several 34

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models of cars on a single platform, using shared components. At the time, the changeover required a huge investment in time, money and training in order to realize the savings that were deferred by the initial investment, says Goldsmith. But today those savings are beginning to be realized. “The complexity of the governance problem that you have to deal with in a services-oriented environment is big,” says Keith Glennan, Northrop Grumman’s CTO. “The CIO has to sink time and money into planning and operation,” says Zafar. Otherwise, he says, Web services is just a bunch of “toys and “tricks” — little pieces of code that do neat things but that can’t help the business in any meaningful way. Without operationalization, Zafar says, “Web services is just a little bit of magic — and magic runs out.”

A Different Revolution Microsoft announced a revolution in 2000 and said .Net was it — the biggest change to computing since the Internet. But as it turned out, .Net was the result of a revolution, not the cause of it. What brought .Net to its current status — a solid set of development tools among several solid sets of development tools — were forces outside of Microsoft’s control: CIOs’ need to rein in out-ofcontrol, heterogeneous environments in a low-cost way, the development of XML outside of any vendor’s purview, the development of Web services standards as a reaction to the development of XML. The Internet. “To me, the revolution occurred 10 years ago, when transactions moved to the Internet,” FedEx’s Carter says. “If you look back, just 10 years ago, everything we did to connect mainframes, and Unix and Windows and VAXes, was proprietary network linkage. How we reached out to customers was with dedicated lines, dial-in services, SNA and DecNet and TTY dial-up, terminal emulation. In a mere decade, we’ve gone from all these expensive and private custom interfaces to an assumption that everyone can touch the interface layer. And now we’ve got this services orientation that lets us touch that interface layer in a much easier way still. It’s making computing very horizontal. It’s profound.” Carter gives credit to Microsoft for making .Net real. “.Net launched with a flourish and a lot of fanfare before there was a ‘there’ there,” he says. “Now it’s evolved to the point where it’s useful, and it’s time to put it to work. “It’s time to put points on the board.” CIO Send feedback on this feature to editor@cio.in

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Chairman and Chief Mentor of Infosys Technologies N.R. Narayana Murthy states that the quest for value and not benefit must drive IT investment.

Value Beyond

Price By VIJAY rAMACHANDRAN

As the iconic chairman and chief mentor of Infosys Technologies, N.R. Narayana Murthy is probably the one person most responsible for putting Bangalore on the global centrestage as an IT powerhouse.

coming FEB 15: Habil Khorakiwala, Chairman and MD, Wockhardt. 36

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CIO: What is your vision for IT within Infosys and beyond it? N.R. Narayana Murthy: The role of IT in any society is three-fold. One, to make corporations more efficient and effective and help them compete on a global scale. Second, to make governments more responsible, responsive and accountable, since they play such a huge role in our lives. And finally, to make the lives of people better, more so in a country like India where a majority are poor. They need to get the best

Photos by: Srivatsa Sh an dilya

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

Known to speak his mind frankly, he feels that the reason that many IT projects fail to meet their goals is because users can’t be bothered to take ownership of the projects. Constantly on the lookout for the value proposition, Narayana Murthy feels that CIOs must look for efficiencies, ideas and innovation in companies that they partner with. “IT managers need to prioritize applications in terms of value,” he observes, while pointing to the high numbers of failed IT implementations. He does add that CXOs have to take ownership of IS as well.

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Infosys Chairman N.R. Narayana Murthy believes that CIOs must seek value for money in all they do.

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SNAPSHOT

Infosys HeadQuarters:

Bangalore

Primary Business:

value for whatever little money they have. In all these areas, developing countries are far behind the developed nations. Apart from increasing efficiency, the role of IT within Infosys is to make the organization person-independent and to improve our competencies in virtual team operations, since our business depends on virtual teams with members spread across the globe.

What would you like to see improved about IT? Clearly, the record of IT companies and IT implementations is not very good. All across the world, we see a significant number of projects running into cost and time overruns because of quality or productivity problems, or as a fallout of trying to solve the wrong problems. The primary issue is one of enhancing the completion rate of projects on time, within budgeted costs and of the requisite quality. If we can ensure that, we can then claim that IT delivers.

What should CIOs tell their managements to boost the success of deployments? First, IT managers need to prioritize applications in terms of value for money. Second, they need to learn to implement systems. The failure rate of information systems in the government is pretty high, because users do not take ownership. The success of the system is not just the responsibility of the vendor, it depends on the users as well. The corporate world too, in India, doesn’t seem to realize that they too have a certain responsibility after a vendor is hired. When it becomes a team task and both have a stake in the success of the project, failure rates will go down.

And how should CXOs view IT within their enterprises? Today, IT is as critical for enterprises as breathing is for humans. In any case, scaling up is not possible without good 38

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Software services Ideally, a CIO is a great systems. This means that even Revenue (31 March person to lead an organization if a market exists and even if 2005): Rs 6,859.66 and is in an extraordinary an organization has the people crore position to do so. The reason and raw materials, it won’t be Total Employees: is quite simple. I can’t imagine able to succeed. And, as the 46,000 anybody having a better complexity of the organization IT Staff: About 800 handle on the health and increases, there is no other Global Offices: 16 progress of an organization way of managing it without IT. Locations in India: 11 than the CIO. This has to be realized at the There is however a drawhighest levels of management. back in the career CIO: He Also, CXOs shouldn’t feel that is someone who has risen that because they have a CIO, through IS ranks and who has reveled in the the responsibility for the success of the warm embryo of the organization and has also information systems lies with him or her. not faced the reality of the outside world. It CXOs have to understand that they are part might be difficult for such a person to handle of the solution. They have to take ownership other responsibilities as well. of IS as well. It’s simply wonderful to have someone who had been head of sales, been involved Should CIOs be early with production, and gone on to be CIO. The adopters of cutting-edge lesson for organizations is to look for peotechnologies? ple with a range of experience when they choose CIOs. At Infosys, we have always tried to be pioneers. If you run a race, and lead it, you have the whole horizon in front of you and can Should Indian companies decide where to go. However, if say you’re manage their own IT or second, you’re seeing the back of the leader. outsource it? You don’t know what lies ahead. Being the leader brings with it the posAt Infosys we’ve come up with the sibility of failure. But the probability of concept of ‘modular outsourcing’. What failure decreases as you keep improving this entails is that a company like ours may the fitness of the organization in terms of not take up end-to-end outsourcing (which evaluating technologies, producing proper involves taking over the data centers or all project plans, monitoring progress and the people). Instead, what gets taken over is ‘owning’ the solution. software, which is our strength and offers I believe in being the leader everytime. the client better value for money. We’ve done this in several cases outside India. As Geoffrey Moore, the guru of the concept of Shouldn’t CIOs be part of ‘core and the context’, says, organizations top management? need to outsource the context and in-source or keep the core. The core is essentially all Traditionally, IT came under the finance that gives strategic, competitive advantage in department. It’s only over the last 20 years a direct manner. that CIOs have emerged. Slowly, they’re The other way to look at outsourcing is getting recognition. Several companies to consider the theories of Ronald H. Coase, have also put CIOs on the board. Once the a Nobel Laureate in Economics. Coase said CIO community takes it as their charter to that when the cost of a transaction in the become the frontrunners, responsible for marketplace becomes lower than the cost of the success of their organizations, we’ll the transaction in-house, then, like it or not, automatically see a change.

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you have to outsource. Otherwise you won’t be able to compete. This is a good algorithm to determine what should be outsourced.

How should CIOs leverage outsourcing? In 1984, when we were bidding for a project in a very well-known apparel company in the US, the CIO asked me why should they give the project to Infosys and not do it in-house. I replied that the difference between doing it in-house and outsourcing lay in the following: If the project failed, his organization would not close down, though there was a danger of mine shutting shop, since all it would take was one negative remark from him about Infosys to other CIOs. The criterion that Indian CIOs must look for in companies that they outsource to are economies of scale, efficiencies, ideas and innovation. That and value for money should be the determinant and not how cheap or expensive outsourcing works out. As economists define them, price is what you pay, value is what you get. As long as a CIO remains focused on deriving value for money, he’ll come out a winner. CIOs should look at an equation where value/price equals much more than one. And, to do that they have to model the value, since value is more than mere benefit. In this scenario, when one talks of benefit, one implicitly holds the vendors 100 percent responsible for it. With value, CIOs bring themselves into the picture as well. For instance, when a new system is installed, and a CIO reengineers the thinking or the mindset of the users, then the organization derives better value.

How does Infosys handle scalability? Scalability is the biggest challenge that we face. The software services industry has somewhat of a linear relationship between revenues and the number of people

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“Price is what you pay, value is what you get. As long as a CIO remains focused on deriving value for money he’ll come out a winner.”

employed. That’s why scalability becomes even more crucial for growth and profitability. Scalability is primarily handled by technological investments, physical investments and by basically enhancing the energy, enthusiasm, aspirations and confidence of people. The last one is tackled by leadership; by creating more and more leaders who can communicate a uniform message of vision, hope and the future. They walk the talk and thus have high credibility. But speed, imagination and excellence in execution come into direct play in the area of technological and physical infrastructure. For instance, when we put up Building No. 1 (the Heritage Building) in the Bangalore

campus, it took us 14 months to create 70,000 sq.ft. of workspace. Now, we’re able to complete 250,000 sq.ft. of office space in just six months. Similarly, we used to take a month to populate 600 nodes with desktops, laptops and servers and the associated software. Today it takes us three to four days to do the same for 250,000 nodes. In 1994, we could train about 300 people a year. By end-2006, Infosys will have the capacity to train 45,000 a year. Imagination is all about good ideas, for instance, of communicating effectively to large groups, by training the trainers better and using technology in the form of e-learning to convert what was a synchronous process into one that is asynchronous.

Finally, does Infosys actively pursue projects with large Indian corporates? In 1989, we took a decision to operate only in the packaged software area in India. However, over the past few years we did a re-think and have bid for projects within India. But, I find that Indian IT companies, even the larger ones, compete so severely on price, that it makes it very tough. For instance, two years ago we bid when a big Indian media house wanted to implement leading-edge information systems. So did two of our competitors. One quoted a tenth of our bid and the other 30 percent of it. Because we wanted to do the project, we were willing to forego another 10 percent. Though the lowest bid was eliminated, the other IT company was willing to go 20 percent lower than their earlier quote. I don’t want to comment further on what happened. That’s the reason for our reticence to compete for projects in India. Fortunately, this is not the case with our banking product. Since organizations have evaluated it and get an immediate solution, they are willing to pay a decent sum for it. CIO Editor Vijay Ramachandran can be reached at vijay_r@cio.in

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Wireless

Mastering

Madness Wireless devices are multiplying, making more people more productive…and creating enormous management, support and security headaches for CIOs. You need a plan for juggling these new gadgets. Here’s the plan.

Reader ROI

How to determine who needs what device Why your beta testers should not be technologically sophisticated The hidden costs of deployment 40

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You like to be in control. What executive doesn’t? But mobile and wireless devices, for all their potential and allure, introduce an element of lawlessness to your carefully crafted systems. They take data outside the walls of the enterprise, and the moat you’ve dug around your digital castle — the hardwired firewalls and virus protection that guard your desktops — means less than nothing to them. And there’s no controlling the demand for these handy new gadgets. Everyone wants a Wi-Fi-enabled laptop or handheld so they can e-mail their colleagues while sitting in the airport lounge or access critical sales applications on their network while

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Wireless capabilities so [that our users] are not constrained by the device,” meeting with customers. And now everyone wants a smart phone, a says Steve Novak, CIO of law firm Kirkland & Ellis. converged device that combines cell phone and handheld functions. Which sounds like a goal to which every CIO can subscribe. At worst, these gadgets are status symbols. At best, they increase your workforce’s agility and improve productivity. And since all these geegaws have become relatively cheap, how can you say no? DO THE COST-BENEFIT ANALYSIS But the problem, says Richard LeVine, global lead for mobile secuWhEn CIOs bEgIn evaluating a mobile and wireless device, they must rity at Accenture, is that CIOs can only “try to align [their policies] with first ask themselves: Is there a business need? the users or butt heads with them. “You have to look at the benefit of what that person can get with “And if you butt heads, the users are just going to go around you.” the tool versus the added overhead cost of accommodating the tool,” What CIOs need desperately is a strategy for managing mobile says Brian Bonner, CIO of Texas Instruments (TI). Bonner and TI and wireless devices. Elements of a good strategy include: First take a pretty hard line on adhering to their mobile device standards. identifying if there’s a business need for a device; segmenting your TI’s users know that if a new toy doesn’t correlate to TI’s customer employees by job function; deciding on a list of devices that IT will base or products, or if it creates an unnecessary risk, then Bonner (and will not) support; and last, devising a training plan for users isn’t going to go for it. “It has to relate to how we serve a customer and help desk staffers, as well as enforcement mechanisms that will better or get a product to market quicker,” he says. ensure device security. So if the cost of the device, or the risk it generates, doesn’t equal If you try to fly without such a plan, you’re sure to end up sitthe business benefit, CIOs should just say no. ting amidst the charred ruins of a security and privacy disaster. “It’s no different than use of desktop PCs or laptops,” says Eric Cautionary examples are multiplying daily. The recent incidence Maiwald, a senior analyst for Burton Group who published an of laptop loss and theft — including the MCI financial analyst’s extensive report on handheld device security. “CIOs should use laptop that went missing in April 2005 containing 16,500 names those same requirements and analyses with handhelds.” In the and Social Security numbers of current and former MCI employBurton Group report, Maiwald points out that handheld devices ees — underscores the importance of securing devices with much are expensive for companies, both in terms of the direct cost of the more than a password. And then there’s one of the more infamous devices as well as the added costs of protective mechanisms, such accounts of BlackBerry boneheadedness: The Morgan Stanley exec as encryption and authentication features, to secure them. “The who sold his dead BlackBerry on eBay for Rs 680 ($15.50) after he use of handheld devices may increase employee productivity, but left the company. Turns out the batteries had just run out, and the it may also increase the risk to the organization,” he says. new owner found hundreds of confidential Morgan Stanley e-mails So, just what devices should CIOs roll out? Today’s untethered still on the handheld. knowledge worker usually needs a wireless laptop, and a handheld “If you allow people to bring in devices off the street, you are and cell phone — or a smart phone. Sales of mobile PCs, PDAs and going to have a loss of control,” says John phones grew 66 percent in 2004, according Killeen, director of global network systems at to In-Stat/MDR, and 90 percent of laptop PCs UPS, which supports nearly 200,000 wire-are now shipped with WLAN cards. Also less devices worldwide. “You need policy, stan-appearing on the CIO’s radar: Camera phones, dards and enforcement.” tablet PCs, Wi-Fi broadband connections for If CIOs can maintain a visible and enforcehome workers, handheld scanners and RFID able policy, and involve users in the process devices, and new hybrid Wi-Fi/cell phones from start to finish, then the security of the arriving in North America from Asia. What is the largest devices will almost take care of itself. “At least Clearly, CIOs have a lot of options and need to obstacle to acquiring 70 to 80 percent of adherence to corporate decide which device will work best, what capawireless technology? security policies is self-enforced by the peobilities are needed, what security features will be ple,” says Roger Entner, vice president of wirecritical and where the hidden costs lie. security 35% less telecom company Ovum. “If they have a For example, David Rensin, CEO of wireCost 19% positive attitude, you will have much more less and mobile consultancy Reality Mobile, Reliability 16% cooperation [with security].” says that the first step most companies take is Manageability 9% What follow are lessons from CIOs in four to offer a wireless e-mail solution, frequently Availability 6% industries that cover the entire lifecycle of the BlackBerry. What happens next is that one scalability 4% mobile and wireless devices. Through some group in the company will decide that having Compatibility 4% pre-planning, risk management and trainaccess to, say, the CRM system through a Treo Don’t know 5% ing, they’ve gained a measure of control over device would really improve productivity. And mobile devices while still allowing their then you end up with what Rensin calls ‘mixed employees enough flexibility to get their jobs deployments’ in which the various devices nOTE: Percentages do not add up to 100 because of rounding. done. “Our challenge is to support multiple don’t share a common infrastructure. Blackdevices with multiple operating systems and Berrys require a BlackBerry Enterprise Server, sOURCE: Forrester Research

WhAT YOU WORRY AbOUT

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gOIng MObILE — FAsT while Treos usually use a GoodLink server. Rensin says that’s why the deployment of multiple device types can double costs. On the flip side, Burton Group’s Maiwald says, while handhelds have a number of communication options, not all of them may be necessary. For example, a device that a salesman for a distribution company uses to take orders from customers may not need WLAN connectivity if the orders can be synchronized when the salesman returns to the office. “The added communication capability may introduce a higher cost and [security] risk without materially benefiting the organization,” Maiwald asserts.

DECIDE WHO TESTS WHAT AND WHEN DECIDIng WhO shOULD be in the beta testing group is just as important as what device the group will test. “The first group of guys [in the beta test] is always the technology savvy, geeky testers,” Rensin says. “That’s usually a recipe for disaster.” The problem is that the geeks will troubleshoot problems on their own and make sure whatever you give them works. “The last guy you want to do the testing is the technology geeky guy,” Rensin says. CIOs should divide their users into buckets. Here’s how Rensin breaks it down: First, the techno-geek power users. Second, the adventurers willing to try the new gadget. Third, the executive and management ranks. And fourth, the Luddites who will probably fight using it all the way. Then, take a small group (anywhere from 3 percent to 5 percent of the total) from two of the buckets — the adventurers and executive/managers — train them, and have them test the device over a couple of weeks, using it for at least 15 minutes a day. Next, survey them regularly about how the device is working. Here CIOs can look for patterns in features that aren’t working. If all goes well, then CIOs can start rolling out to the other buckets, saving the power users — the geeks — for last. At Texas Instruments, Bonner set up a group for testing mobile devices three years ago. By design, it’s a combination of average users from marketing, sales and other knowledge workers, as well as some technical staffers. “You don’t just want gearheads,” he agrees. Bonner’s group has been able to keep tabs on the needs of the users and decide on appropriate devices and testing mechanisms. For example, the group discovered that because TI is a global operation, any new smart phone would need functionality that could work for both voice and data all over the globe. “And when they traveled,” says Bonner, “people wanted to carry just one device.” Segmenting your employees also allows CIOs to designate who will get what device, as well as what kind of access to the network and applications each employee will have. “You don’t just willy-nilly give the devices out. You have to do the proper requirements analysis [of each group],” says Burton Group’s Maiwald.

WHEN LESS IS MORE TODAY’s UsERs ARE CLAMORIng for even greater wireless access to corporate databases. Gartner estimates that 60 percent of Global 2000 workers have mobile access to corporate applications. So, does the executive suite really need souped-up laptops with access to CRM and the latest finance metrics, or can they make do with just a BlackBerry or Treo with e-mail and calendar access? “Most exec-

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Companies are adopting mobile devices faster than planned. 2005 2004 plans deployed Wireless e-mail or BlackBerry Personalized contacts and calendar Content/information for employees Sales-force applications Field service applications Customer-facing applications

39% 30% 23% 20% 20% 19%

51% 56% 44% 30% 26% 28%

sOURCE: Forrester Research

utives are oblivious to the security challenges,” Ovum’s Entner says. “You have to disarm all the security stuff because the executive can’t figure out how to work it.” Therefore, less device (and less functionality) is becoming the norm, though security challenges persist because the smaller the device in physical size, the more easily it can be lost. Just because a device may be small doesn’t mean it’s any less important to secure. At UPS, Killeen, as well as most of the top executives, have recently switched from laptops to either a BlackBerry or Treo handheld for purely functional reasons — the new devices enable execs to securely and easily check their e-mail, schedules and the Web, and make phone calls. Killeen’s segmentation plan is simple: If the user’s primary need is to access e-mail and the Web, she gets a smart phone. If the user needs to access business applications to do her job, she gets a laptop. “I don’t use my laptop any longer,” says Killeen, who has deployed about 3,000 BlackBerrys and 500 Treos. Killeen has rolled out BlackBerrys to 1,800 field technicians in UPS’ 2,400 facilities. “Before, they were running around with what we called utility belts — cell phones, pagers, all kinds of devices,” says Killeen. The BlackBerry performs all those various devices’ functions — voice, e-mail, access to intranet and work orders — in one device, and Killeen says the drivers are able to accomplish more while reducing wireless expenses by more than 10 percent.

THE STANDARDIZATION WARS may raise user hackles (it feels oppressive), and when it comes to deploying mobile and wireless devices, CIOs need to pick their battles carefully. The risk of alienating users (who, if frustrated, will try to go around IT with their own devices) is high. “You need to find a balance between minimizing the support costs and making your people happy and cooperative,” Entner says. CIOs Bonner, Killeen, Novak and Intelsat’s Joe Kraus have all standardized on their laptop offerings — there’s no choice

PUshIng sTAnDARDIzATIOn TOO OvERTLY

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Wireless permitted there. “It allows us to eliminate one variability in the mobile device environment,” says Kirkland & Ellis’s Novak. But for cell phones and smart phones, these CIOs offer options. For Novak, his strategy takes into account the realities of his industry. His law firm’s partners work with many clients, who have dif differing technology needs. So he tells his users what he can support now, letting them know that IT will do its best to work with the partners on any new device that they may need to use with a client. In return, he asks that his users let him know if they’re using a device that he hasn’t authorized. “What you don’t know will come back to haunt you, so we’re much more proactive,” Novak says. “We set expectations that IT is an open-minded organization.” Right now, the firm officially supports BlackBerry devices, but Novak still provides limited support for Palm and Windows CE

devices necessitated by attorney-client requirements. However, Palm and Windows CE users don’t necessarily get all the functionality of the BlackBerry. Right now, there’s no Palm and Windows CE device for e-mail access that is supported by the firm. “You’re always seeing the latest and greatest technologies,” Novak says. “But what we’ve rallied around is standardization of what we can support.” UPS’ Killeen has pushed hard on standards for the past several years, after spending years with none and hooking everyone’s PDA into their Outlook e-mail application if they so desired. “What happens is that when there are problems, it’s a support nightmare for those company devices that aren’t really company devices,” Killeen says. He now supports BlackBerrys and Treos, and employees can either buy their own or, if it’s a part of their job, UPS buys it for

YOUR MObILE AnD WIRELEss DEvICE PRIMER LAPTOPs

WIRELEss hAnDhELDs FOR ACCEssIng E-MAIL AnD APPLICATIOns

MObILE PhOnEs

COnvERgED MObILE DEvICEs AnD sMART PhOnEs

Prime players: apple, dell, hP, IbM/lenovo, Panasonic, sony. Uses: has everything that the road warrior, telecommuter or traveling VP needs. best used by: Knowledge workers who need mobility and flexibility. strengths: Portable. Virtually all notebooks come with wireless connectivity these days. Weaknesses: though new models are lighter, they still can be a pain to lug around. and don’t forget about battery life issues. Fact: In May 2005, notebook sales in the us market topped desktop sales over the course of one full month for the first time.

Prime players: Fujitsu, hP, Motorola, nokia, Palm, rIM, sony-ericsson Uses: Checking e-mail from outside the office and some personal information management capabilities. best used by: White collars who need access to e-mail as well as blue collars who need wireless application capabilities. strengths: Keeping your e-mail inbox under control while you’re away from the desk or laptop; accessing the network from the field. Weaknesses: easy to lose. Meatier enterprise applications take their toll on battery life. Costs rise as security features are added. Fact: the four main operating systems for these devices are: Palm, rIM, symbian and Windows Ce.

Prime players: Motorola, nokia, samsung, sonyericsson and many other manufacturers. Uses: Global communication is just a phone call away. best used by: everyone. strengths: Compact and cheap. new models have lots of features (such as multimedia) and can connect from almost anywhere in the world. Weaknesses: all-in-one devices can be confusing for users. and those cameras are a security hazard. Fact: the 180 million wireless subscribers in the us use more than 1 trillion mobile minutes. Worldwide, there are more than 1.5 billion wireless subscribers.

Prime players: Fujitsu, Motorola, nokia, Palm, rIM, sony ericsson. Uses: access to e-mail, calendar, applications, telephony, personal information management and more. best used by: Knowledge workers, field techs and execs who want enterprise access without the laptop. strengths: Can do almost everything reasonably well and can be taken most anywhere in the world. Weaknesses: When you cram all that into one (tiny) device, issues such as typing on the (tiny) keys can be annoying. and the more features you add, the greater the security issues become. Fact: 2004 marked the first time that converged mobile device sales in the us surpassed those of regular handheld Pdas.

sOURCEs: Burton group, Canalys, CtIA, Current Analysis, Forrester Research, gartner, IDC and CIO reporting

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Wireless them. “Devices will change constantly,” Killeen says. “And we don’t want to be in the device business.” For his tens of thousands of cell phones, Killeen and other CIOs take a firmer approach. “People at UPS cannot purchase a cell phone unless they come through us,” he says. “My organization has established contracts with carriers, and everybody’s got to abide by us.” These CIOs also make it clear that if an employee wants to purchase a non-IT-approved device, they’re on their own if it breaks or fails to work the way they want it to. That’s part of the enforcement function. But that’s not to say that, once a CIO makes a decision on a standard, nothing can change. “If there’s a new need for a product set, we’ll jump on it,” TI’s Bonner says. “Being a high-technology company, we have a lot of savvy users, and we try to run faster than them.” Running faster also means keeping pace with the security functions that should be on the devices. One of the most critical functions is being able to wipe a device remotely if it’s lost or stolen. According

low security guidelines — regardless of their computer proficiency. “You don’t raise your children by yelling at them constantly,” says Accenture’s LeVine. “You explain to them: If you use this device in a compromised way, you may sink the firm and lose your job and your retirement.” That’s not hyperbole, LeVine says, just reality. This past summer, Intelsat’s Kraus held an information security awareness day for all employees of the satellite communications company, where he made sure that everyone knew about virus protection, identity and password management, wireless devices and protecting home PCs. At his law firm, Novak says he spends a lot of time in coaching sessions for security best practices. He also sends out e-mails on tech tips that take users no more than 10 minutes to read. “Once you can explain in business terms why this is important, they can carve out the time to read it,” he says. CIOs also need to make sure that the help desk is well-versed in these new devices before they’re rolled out to a single user. “That’s where the

Not smart:56% of users store confidential business data on their smart phone. But 60% of users surveyed say their company does not have corporate rules regarding the security of confidential data stored on their smart phones. to the Burton Group report, all data can be removed from a handheld device, such as a BlackBerry, by doing a hard reset. For a remote wipe, an administrator sends a command to the device to perform a hard reset, or the administrator can set a policy that a hard reset will occur after a specified number of failed attempts at logging on. Other risk considerations for CIOs include making sure that basic power-on passwords are on the devices, encrypting wireless transmissions that contain sensitive corporate information, and ensuring that employee devices don’t have cameras on them that they can bring into the office. The camera phone is the CIO’s latest bane. Do you want customer service people taking photos of customer information? Bonner doesn’t want employees taking snapshots of new design work. His policy is simple: “You can’t have that,” so phones need to be shut off when an employee enters the office.

SECURITY AND ENFORCEMENT How much training CIOs should do is dependent on how technically pro-

ficient their workforce is. For TI’s Bonner, making his users sit through two hours of how to operate their new cell phone or smart phone would be a waste of time, not to mention insulting. Novak’s lawyers simply won’t make the time. In organizations where users may not be quite so sophisticated (or difficult), CIOs should offer as much training as the user base needs. “Training costs time on the front end, but it really saves a lot of time on the back end because you don’t have 25 people asking questions later, one by one,” Ovum’s Entner says. CIOs have to ensure that users know how important it is that they fol-

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disconnect happens,” says Reality Mobile’s Rensin. Far too often, the help desk gets thrown the BlackBerry or Treo training manual after the fact, and then they have to learn it while dealing with cranky users. Time and money lost in that process may be hard to quantify but “there’s never any way to recover it,” Rensin adds. Enforcement of a device security policy is one of the biggest pieces of any overall mobile device strategy, especially in light of regulations such as Sarbanes-Oxley, HIPAA and Gramm-Leach-Bliley. If CIOs are going to “allow these devices, then they need to make sure their policies are enforced,” says Maiwald. One way to enforce a security policy is to track rogue devices, especially if you’ve decided not to allow any unapproved devices on the network. Tracking requires security software that can, for example, scan for unauthorized device-to-desktop synchronization, or unauthorized devices accessing your network through your wireless LAN. If such a policy is in place but is not enforced, the risk to the organization may be greater than if the organization were to simply ignore the problem. That’s because the existence of the policy may give the enterprise (and the CIO) a false sense of security, Maiwald writes in the Burton Group report. And if any employee leaves the company, CIOs have to make sure that his device has been wiped clean of all company information. In the end, any mobile device “is only as secure as the human operating it,” Ovum’s Entner says. “No amount of software can change that.” CIO Send feedback on this feature to editor@cio.in

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1/27/2006 12:46:01 PM

Increasing demands on the Food Corporation of India to purchase, stock and distribute grain led to a three-year experiment that culminated in an integrated food grain management system.

IMAGING BINESH SREEDHARAN

By Rahul Neel MaNi Reader ROI:

How to involve top management to ensure project support Why end user inputs are critical in developing a usable application How to train end users who are not computer literate 4 6 F E B R U A R Y 1 , 2 0 0 6 | REAL CIO WORLD

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Inventory Management

ntil 2000, discrepancies in food-grain data supplied by the Food Corporation of India (FCI) formed a sizeable chunk of India’s large and worrying food security problem. Somewhere between buying, storing and distribution, grain was going missing, or worse still, rotting in warehouses while India’s poor starved. And the FCI, driven by necessity, continued to increase the volumes of grain it purchased, souring the problem even worse. The cost of distributing grain, sugar and kerosene forms about three percent of India’s GDP and touches the lives of hundreds of millions who live below the poverty line. In 2003,

of 10,000 bags of grain everyday between producing states and consuming areas using rail, road and inland waterways. It was a task whose numerous variables made for a hard juggling act. But it wasn’t enough. The government needed to mobilize more food. It needed to buy and store more. The last two decades, grain procurement by government agencies had jumped to 250 lakh tons from 40 lakh tons. FCI’s own constraints to distribute grain while maintaining satisfactory levels of buffer stock pushed it to procure between 15-20 percent of India’s wheat production and 12-15 percent of its rice. Fire-fighting became the norm as everyone using the system extracted their day’s work and struggled with crisis as they cropped up.

he project attempted to include as many stakeholders as it could, starting from the FCI chairman. The NIC also put up a project site to keep interested parties in the loop, reducing the risk of the project floundering for a lack of user support.

stories of rotten grain being dumped into the sea while tribals in Orissa subsisted on mango kernels, made national headlines. The hot glare of the media spotlight brought the FCI under the scanner of the Comptroller & Auditor General of India (CAG). The incongruities in data reached into lakhs of tons, sparking off controversies in the corridors of power. The CAG took a firm stand and asked the FCI to change the way it worked.

Slash and Burn Which is not to say that the efficient distribution of grain wasn’t a priority with the FCI and the government. The Public Distribution System (PDS) was created in 1939 in an effort to reach the urban as well as the rural population and protect consumers from fluctuating grain prices. The system (then almost completely manual) used a network of 4.7 lakh ‘fair price shops’ and provided grain to millions of Indians living below the poverty line. As their numbers grew, an ungainly system was put under increasing pressure. The PDS moves an average

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Food grain management necessitates handling large volumes — mainly at the field level in remote locations — and across over 1,600 FCI offices. “It’s absolutely crucial to track the commodity from the time it’s propro cured at the mandi (market) till it’s dispatched both because it is government property and because we want to make sure it reaches the right people,” says Pushp Raj Singh, General Manager MIS, FCI. But the FCI had little to work with. The infrastrucinfrastruc ture they had didn’t use computers below the district level. This meant that all 1,450 depots, where most of the procurement took place, tracked grain data using ledgers. This inefficiency left offices higher up on the decisionmaking pyramid — regional and zonal bureaus — in the cold. “We had inaccurate information on current stock availability. Data at various points did not match. I didn’t know what was in transit,” says Singh. It was clear enough that FCI’s information management was creating plenty of bottlenecks. On the outside, it seemed like a simple problem that digitizing and networking could solve. Tracking commodities REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6 4 7

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Inventory Management

SNAPSHOT

FCI

Sowing New Seeds moving in and out of depots and maintaining records was a task Food security was high enough on the national PROjECT COST: Rs 96.7 crore computerization could do well. agenda for the Prime Minister’s Office’s (PMO) to But merely computerizing the step in. The PMO and the Planning Commission FCI DEPOTS: 1,450 system wouldn’t work if it didn’t initiated an integrated project to upgrade the FCI’s STRATEgIC take into account that the people IT infrastructure and fix missing links between the PARTNERS: responsible for handling the grain depots and the head offices. The IISFM was commisFCI, NIC, NIC at the depot were not computer sioned with the FCI, NIC and National Informatics Services Inc. literate. This enlarged the scope Centre Services Incorporated (NICSI) as partners. TARgET USERS: FCI of the challenge. The project was broken down into three phases offices, Ministry of Civil Supplies & Second, there was a question that were planned between 2003 and 2006. The Food, State of quality. The price grain sells at IISFM prototype connected a depot to a national Government Civil depends on its quality and there are level office and ironed out standardization and codSupplies a number of variables that define it, ing issues making data entry compatible across Procurement including moisture. depots. “The prototype showed how information Agencies, CWC, SWC “Once a train or a truck enters cracks could be filled using an online web-enabled Depots a depot or grain procuring yard, it system,” says Nagpal. TECHNICAL has to be off-loaded immediately. The project attempted to include as many stakeSUPERvISORS TRAINED: 300 You can’t keep it on hold while holders as it could. Starting from the FCI chairman, you verify the entire lot. And this the prototype took suggestions from people leading DATA ENTRy becomes a problem six months the hardware, software, and security areas of the OPERATORS: 1,700 down the line, when you need to project, reducing the risk of the project floundering TECHNICAL SUPPORT issue the same grain. Buyers will for a lack of users. PERSONS: 124 ask for exact measures of weight The NIC also put up a project site to keep interand moisture – and these figures ested parties in the loop. The site carried changes had discrepancies,” says Singh. to the project, updates and other new policies that Different grains, arriving via a mix of transportation were created as the project evolved. Around the same including trains, trucks and bullock carts, packed in time it spent 18 months developing a software applicaa variety bags contributed to the problem. Manually tion to Web enable the giant corporation. recording all incoming grain produced flawed data and The solution was aimed at providing three key funcdispatching the grain quickly was almost impossible. tions to the FCI. A Transaction Data System would This swirl of inaccurate figures quite literally gave enable the FCI to share information between depots top FCI brass a headache. Every time a zonal head asked and district level offices. Primary data of how much for accurate statistics on food grain, there weren’t any grain was coming and going into a warehouse would available. The data was often unsound and the people be fed into an MIS. Information compiled using the putting it together, at the depot-level, were forced to MIS would form the second function of the solution. recompile it — an additional burden. These reports were forwarded to regional and zonal “The stock’s position changes every hour. Getting offices to aid a more efficient movement of grain. These data, even on a weekly or fortnightly basis, was a reports were also crucial for the third function: Forenightmare. The volumes and number of transactions casting supply and demand. were just too large. It became very very complicated,” “The system enabled the FCI with decision making says Ranjana Nagpal, Senior Technical Director, NIC at the apex level. Now, headquarters can better analyze (National Information Centre) who is also in charge grain movement, quality and demand,” says Nagpal. of the Integrated Information System for Food Grains In the next two phases they implemented the Management (IISFM). solution at various locations. To bypass confusion and It was a problem whose repercussions were felt win the trust of stakeholders, the applications were in India’s remote villages. The lack of live data often pre-loaded onto the servers before dispatch. resulted in loss, theft and damage of food grain, “I personally went to the factory to make sure which hit the rations of the needy. It also hurt FCI’s that before the hard disks were shipped out, they chances of maintaining an optimal buffer stock for were tailored to suit the demands that FCI would put national calamities. on them,” recalls Nagpal. Interestingly, it used an 4 8 F E B R U A R Y 1 , 2 0 0 6 | REAL CIO WORLD

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integrated approach where both application and infrastructure were accounted for under one plan. The NIC foresaw a need to jumpstart the project’s implementation with trained people if its success was to be ensured. Working in parallel, the FCI identified staff from an internal pool to fill new positions at three levels: Nodal officers, FCI technical staff and data entry operators. Over 2,000 FCI employees were trained by the NIC to manage the IISFM. NIC also deployed technical support personnel at key locations during a six-month hand-holding phase till the FCI’s internal staff were confident about coping with critical parts of the system. Extending itself so far was a first at NIC and demonstrated the department’s determination to make IISFM a success. “It was also necessary to create an IT infrastructure that could be used by non-IT people at the depots,” says Singh. The system was designed keeping in mind 1,450 depots where the information cycle began. NIC teams visited depots across the country, interacting with first-hand users of the future system. The NIC provided a system based on a web application with distributed servers. Data is entered using a Web browser. Applications were made accessible through a WAN and via dial-up connections. Data including receipts, stock figures, warehouse storage capacities, sales and grain movement converges at the NIC headquarters, where the application is hosted. The data center is connected to all FCI locations through a secure virtual private network. “I doubt there is a better example of e-governance at work than an integrated MIS for such a large organization. Its impact is huge,” says Singh. At present, only FCI-owned depots have been provided necessary computing infrastructure but as an extension of the plan, other depots hired by FCI for stocking its food grains, will also be covered by the project.

Reaping Dividends The government allocated Rs 96.7 crore to implement IT across FCI. Today, they’ve only spent 60 percent of their budget and have already connected 800 locations. The solution, which has an intranet-based Web interface, allows all other department work on the same database. All modules have been linked to each other. “We required a stable and robust network to connect all our offices for daily and real-time data transmission. Using IISFM, we are able to collect, store, analyze, communicate and share information more effectively,” says Singh.

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he most important benefit is the availability of accurate statistics which leads to better management of grain supply across the country. It will also empower us to take more informed decisions on export, import and supply of grain. — Pushp Raj Singh, General Manager MIS, FCI

Reports required by FCI and the Ministry of Food and Civil Supplies are now prepared periodically and without any delay. “The most important benefit will be the availability of accurate statistics, which leads FCI to better manage grain-supply. It will also empower us to make more informed decisions on export, import and supply of food grain across the country,” says Singh. But this is only a beginning. FCI sources reveal that the corporation may soon trade its surplus wheat and rice in the domestic commodity exchanges through futures transactions. IISFM will then play an even bigger role in Asia’s largest food-procurement agency. CIO

Bureau Head North Rahul Neel Mani can be reached at rahul_m@cio.in.

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1/27/2006 12:47:11 PM

Consolidating back-end systems and networks is required if India is to make a leap into the e-governance future, says R. Chandrasekhar, Joint Secretary, e-governance, Ministry of IT.

iNfLEx ON iNfLExiON

POINT

The future of e-governance in India depends on the availability of shared nation-wide infrastructure. R. Chandrasekhar, Joint Secretary, e-governance, Ministry of IT, sees the National e-governance Plan steering Indiaâ&#x20AC;&#x2122;s IT needs to fulfillment. By Rahul Neel MaNi

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Interview | R. Chandrasekhar C I O : Is a consolidated approach to e-governance the way to go? R. ChandRasekhaR: The focus of e-governance in a developing country like India is to enable a great number of its citizens. It is also extremely useful in gauging how citizens perceive the government. When you look at e-governance from a citizen’s point-of-view, you sense a need for a common framework and approach. It may not be a grand holistic blueprint for the entire country, but it should be a foundation on which governments and departments can provide citizen services.

IMagIN g: JINaN KoTT IKKal

What are some of the short-term goals of this blueprint?

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SNAPSHOT NeGP n Central

Departments: 20 n States/UTs: 30 n State-level

Departments: 360 n Implementations:

500

n Sites: 2 lakh n Projected

number of assisted services centers: 100,000

infrastructure hassles associated with the back-end. Evidently, we will need to separate the two ends. There are gateways and middleware to enable this. What is the status of the NeGP?

The framework has been in place for over a year. We are in the process of getting approval to put it in operation. It is a learning process. Conceiving a network, casting it in stone, only to discover its limitations is not the best approach. It’s better to evolve a framework that is approved by a majority. Once we have grasped all the imperatives, we can come up with a composite plan.

There are both physical and conceptual aspects that various players in the n Estimated budget framework have in common and these This will mean a delay. Is it justifiable? for the next five require to be tied in. For example, it is I don’t think it should be looked at as years: Rs 20,000 sub-optimal for every department to a delay. It is merely a process of evolucrore own a datacenter. It is also not feasible tion. The process of governance in India for them to create individual networks. is very complex, but there is a broadenApart from being expensive, numerous ing and a deeper penetration of e-govnetworks could lead to myriad technical ernance applications, which indicates snags, which would lead to inefficient serthe success of our approach. Individual vice delivery. It is advisable to have common infrastruc- projects are much more a part of the e-governance plan ture that departments and states can draw from. than they are IT achievements of the department of IT. Second, we need to build capacity. It is evident that It is not meaningful to look at the delivery timeline of there is a serious shortage of capacity to implement e- the program as a whole. governance projects. While it’s great to propose a confluence of business, technology and financial know-how, it is Was benchmarking the projects harder when you also true that there is much to be desired in the build-up. drew up the national plan? People with the required skills, for example, need to be We are a multi-lingual and multi-cultural society. developed. We need to work towards building a common India is a typical example of a multi-layer federal pool of resources across the country. structure that doesn’t have many parallels in the Third, it is essential to separate the back-end of a world. More relevantly, we are a developing counproject from its front-end. A common back-end can be try whose computerization and back-end integracared for separately, leaving the front-end in the hands tion happened much before the mass penetration of those at the state and department level. phenomena of the Internet. If e-governance is to be made all-pervasive in India, With the advent of the Internet, developed counit’s necessary to start work on a national framework tries only had to worry about connecting their disthat would bring together common physical infrastruc- parate computer systems to enable their citizens to ture, policies, and standards. This is what the National access new services. In India, we didn’t have extene-governance Plan (NeGP) is about. sive computerization or deep telecom penetration. Our level of IT literacy requires assisted services at this point, and this means that we have to plan Can you clarify what you mean by separating the systems that are multi-lingual. These are complexiback-end from the front-end? One of the goals of the national plan is to deliver ties that are typical to India. The only cue that we services through shared assisted-service centers. can take from developed countries is to consolidate We plan to construct almost 100,000 centers under our back-end, making integration with various fronta public-private partnership so that state govern- ends easier. This will enable more citizens to access ments don’t have to deal with the technology and services immaterial of where they are. REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6

Interview | R. Chandrasekhar We have also consulted with national and international agencies for different aspects of the national e-governance plan, although there is no one umbrella consultant. To a large extent, we have had to stitch our own quilt.

the kind of service. Some services have recovered their costs, which has enabled a swifter spread because they are not dependent on budgetary allocations. In some cases, however, the price may be different from the cost. Pricing is a matter of government policy.

While building the plan from ground up, which were the areas you sought to concentrate on?

How much has been allocated in the past years?

The NeGP admittedly doesn’t cover the entire spectrum of governance. It is rather a statement to create efficient systems in high priority areas. There have been strong voices concerned with focusing on areas that affect large groups of people, like agriculture, health, and education, which have been put on top priority. Is there a level of denial from government employees?

The plan represents a transition from a totally manual to an e-enabled outlook and change brings anxiety. Acceptance — both inside and outside government — saw initial

Current spending on e-governance is in the tune of Rs 2,000-3,000 crore a year. NeGP budget and spend will not be differ significantly from the past years. At best it may require about Rs 20,000 crore over the next five years, which is not very different from the current spending pattern. It also has the government’s willingness to allocate and spend money because the project has very high priority. The real issue before us is implementation. And implementing means doing it all: Changing technologies, changing processes, building capacities, managing transition, ensuring both the delivery of services and that people to use them.

In 2006-07, we will see extremely exciting developments in the e-governance space. Common infrastructure for service delivery will be put up. apprehensions. There was a belief that only young people could implement and use IT and employees feared losing their jobs. This hasn’t come true. Today, the people who plan and implement these projects feel secure. Governments across the board accept that the plan is a priority. Assisted services are a huge success as a concept and if there has been a failure, it has been in making these services available in a reliable and consistent manner. We can achieve this only when we have a strong and shared backend, which the NeGP addresses.

Is there a formula for quicker implementation?

We are already seeing changes. There is no magic wand to enable this transition overnight. We are progressing fast. In a country, as complex as India, when something becomes a movement, it develops very fast. We are seeing the beginning of that movement. We have already seen e-governance go from being supply-driven to demand-driven. How then do you explain the success of only 15 percent of projects?

We see the harsh reality of that figure. The question Where the services are of a reasonable quality, before us is how to deal with it. First, we have to do away the centers have not needed selling. Experience has with both holding someone responsible for failure and shown that despite a nominal fee, citizens prefer to with it the fear of failure. We are in an experimental stage use the services. But, to make centers all-pervasive — we are bound to see some failures. What a 15 percent success rate tells me is that the problems were far more we need to improve service-oriented architecture. complicated than were anticipated. NeGP will deal with some of these issues. How will the NeGP finance itself to ensure continuity? Fifty percent of the failures are typically small pilot The cost of delivering any service under the NeGP is the sum of three parts: Back-end systems and projects, which gives us room to make a call on dumping processes, front-end and the middle-ware including them or starting afresh. Of the 35 percent that were pargateways, datacenters, networks, security, etc. On the tial successes there is a litmus test. Has it given value for other end, there are a range of prices that depend on money? If it has, then irrespective of its part success, we So far, have people taken to the assisted centers?

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“In a country as complex as India, when a movement starts, it develops very fast. We are seeing the beginning of that movement.”

should strive to scale it up. We have to keep in mind that successes involve a change in mindset. This has been a teaching exercise. Some of the lessons we have taken away include the need to invest in people who have skills. Second, failures should only occur at the lower levels. Therefore, our approach is to start small and scale up fast. NeGP is a giant project, but this doesn’t mean that we should go the whole hog in a single shot. What happens to failed projects?

There are several cases of failed projects that other states carved success from. There are many projects around common service delivery models that succeeded but even greater number of such projects that failed. Each of these failed projects has driven a different set of people to make them a success. How transparent are e-governance projects?

As far as procedures are concerned, they are all laid out. It is a public process. Transparency is an area in which we have taken best practices from across the world. In this respect all governments have the same kind of issues. Simultaneously, one must recognize that in the knowledge domain there are many services whose deliverables cannot be tacked down to our grid. Those that pose a difficulty include consultancy and advisory services. Their processes are not conducive to evaluation. Therefore, we sometimes look at them through the lens that is applied to a different space. In this paradigm, cost is not the only variable to consider. One of our challenges is to device evaluation methods that are not only consistent to government procedures but also cost effective — though not necessarily the cheapest solution.

What is the concept behind e-champions?

Part of the NeGP is to build capacities on a largescale, including capable people — or champions. These include CIOs and CTOs, though they don’t have to be IAS officers. In fact, most officers will come from government domains. They will drive the overall vision of a project, and not be bogged down with its day-to-day functioning. The program will train people already working on projects and those who have shown an inclination for egovernance. They will be positioned for specific projects and will have fixed tenures. However, a project will only be funded if a person agrees to be accountable for it. What’s your advice to younger government IT leaders who want to drive successful projects?

First, it’s important for them to define an e-governance project. They have to look at the outcome of project and evaluate how it benefits citizens. If they cannot spot a social benefit, then it is merely an IT project. Second, to be able to achieve results, they must keep in mind two mantras: They must work as a team and there is no shortcut to success in e-governance projects. What can we expect to see in 2006-07?

In 2006-07, we will see extremely exciting developments in the e-governance space. This is the period during which common infrastructure for service delivery across the nation will be put up, including the State Wide Area Networks (SWANs), datacenters and delivery centers. Capacity building will happen simultaneously. Various departments involved in these projects will be ready to deliver services within the next two years. CIO

Are there mechanisms to audit these projects?

This is one area we are looking at. Under the NeGP, there is a clause called ‘assessment and awareness’. Assessment forms part of what we know as an audit, although it is not restricted to a financial point-of-view.

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Bureau Head North Rahul Neel Mani can be reached at rahul_m@cio.in.

REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6

Essential

technology Illustration by JAYA N NARAYANAN

From Inception to Implementation — I.T. That Matters

Next to requirements, testing is the most overlooked, most underfunded, most rushed, yet most critical aspect of the software development cycle. Here are 11 ways to boost the level of success.

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Testing, 1, 2, 3... BY MERIDITH LEVINSON TESTING| Three years ago, Station Casinos came up with a great promotion to lure customers: Rs 1,125 ($25) worth of free slot play on their electronic loyalty cards. It worked like a charm too. Gamblers flocked to the casino in droves. That should have been a good thing. But one Friday night, shortly after the promotion began, when players inserted their cards into the slot machines, nothing happened. The sheer number of people trying to access the machines — at the same time the accounting department was running a number of financial applications — caused the servers that stored all the promotional information to freeze. Irate, players threw their loyalty cards on the floor and raised a ruckus. That was a bad thing. The source of the problem? Testing. Marshall Andrew, Station Casinos’ VP IT and CIO, says Station Casinos never anticipated such an overwhelming response to the promotion. Consequently, IT did not test the system for such large volumes of activity, and certainly not while other programs were running. Station lost the cash they would have made that Friday, alienated customers and had to run another campaign to apologize; the casino invited some customers to return another weekend for Rs 2250 ($50) worth of free slots.

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essential technology

The moral: Testing is essential to developing high-quality software and to ensuring smooth business operations. It can’t be given short shrift; the consequences are too dire. Businesses — and, in some cases, lives — are at risk when a company fails to adequately and effectively test software for bugs and performance issues, or to determine whether the software meets business requirements or end users’ needs. “The important thing when you roll out a system is to make sure it works,” says Andrew, who has made significant changes to his testing organization (known as quality assurance, or QA) since then. First, he changed the testing process itself. Previously, developers had a great deal of freedom to change code while it was being tested to keep the project moving. Now, there are tight controls on the developers’ access to test code. To keep everyone honest, Andrew had the QA specialists begin reporting to the business analyst group rather than to the development group, whose work it was evaluating. Next, he hired more QA specialists — with business training — and involved them in the development process earlier, when business analysts are creating requirements documents, so that they can then develop test scripts based on business specifications right from the beginning. The following list of best practices for testing software and running your testing organization were gleaned from interviews with companies that have rigorous testing needs and standards. These tips go beyond the ‘test early and often’ mantra and will improve your IT organization’s testing capabilities — not to mention the quality of the software you release.

1] Respect your testers. In many companies, testing is an entry-level job. As a result, testing isn’t done well. Instead of hiring people off the turnip truck, recruit candidates who are detailoriented, methodical and patient. Look for people who know how to code. Your developers will respect them more, and they can code some of their own testing tools. “If the development organization and the

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The High Cost of Flawed Testing A brief, sad but instructive history of futility and failure. Bugs in connections between Hewlett-Packard’s legacy order-entry system and SAP systems

caused a backlog of customer orders for servers beginning in June 2004. The computer

problems and resulting backlog cost the company Rs 180 crore ($40 million) in lost revenue. A failure to test for specific conditions contributed to the August 2003 blackout that affected

much of the northeastern United States and parts of Canada. Insufficient testing was one of the causes of Nike’s failed i2 demand forecasting software

implementation in June 2000, which reportedly cost the company more than Rs 450 crore

($100 million) in lost sales. EBay’s 22-hour outage in 1999 prompted the online auctioneer to re-engineer its technology

organization, including systems architecture and development, and testing approaches. Glitches in the software controlling London’s emergency response system resulted in

ambulances being dispatched to the wrong locations and citizens not getting proper medical

care in a timely manner in 1992. During the 1980s, the user interface of a computerized radiation therapy machine, the

Therac-25, was not adequately tested, and undetected bugs in the device’s radiation

administration engine made it possible for technicians to program the wrong doses of

radiation. As a result, several patients died or sustained serious injury from overexposure.

—M.L.

QA organization don’t respect each other, we won’t be able to achieve our high-level quality goals,” says eBay’s VP in charge of QA, David Pride.

2] Colocate your testers and developers. Putting developers and

not report to any group that’s evaluated on meeting deadlines or keeping costs down for a project, according to John Novak, senior VP of hotel chain La Quinta. Having testers report to the development group is the worst choice of all, Novak says. If developers are behind or having trouble with code, they will be tempted to keep testers out of the loop. Instead, Novak has testers report directly to him. Andrew has testing report into his business analyst group as a way to foster communication and to get testers involved in the development lifecycle early.

testers together goes a long way toward improving communication between two groups that often lock horns (after all, testers are paid to find fault with developers’ work). Physical proximity ‘facilitates the nuances of testing’ that are best communicated through personal interaction rather than by e-mail or an application development workflow tool, says Pride.

4 ] Dedicate testers to specific systems. At Barnes &

3] Set up an independent reporting structure. Testing should

Noble, one group of testers focuses on store systems, while others tackle financial and warehouse systems. Barnes & Noble REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 6

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essential technology

CIO Chris Troia says focusing testers on one set of systems deepens their understanding of how those systems are supposed to work and gives them the expertise to identify problems that might not show up in a formal test document. eBay takes the same approach, but goes one step further. The company has three distinct testing groups: One for site functionality, one for payments and one for data warehousing applications.

5] Give them business training. Station Casinos’ Andrew makes members of his testing department work the front desk, the casino floor and in different corporate departments so they can learn the lingo and better understand the systems they’re testing. (Most of his 125-person IT staff had never placed a bet on a sporting event at a casino prior to joining the company.)

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Businesses — and,in some cases,lives — are at risk when a company fails to adequately and effectively test software. 6] Allow business users to test too. Most testing involves banging on systems and fiddling with code — technical stuff — which can tempt IT to leave business users out of the loop. Bad mistake. At La Quinta, “the testers are always coming out of the business community,” says Novak, to ensure that the systems IT is developing meet their specs. For some applications, especially those that run in hospitals, getting end users to test applications is a matter of life and death. “ Technology people canonly go so far,” says Patricia Skarulis, VP IS and CIO of Memorial Sloan-Kettering Cancer Center. “We need to have users involved.”

7] Involve network operations. Nate Hayward, vice president and director of quality management with HomeBanc Mortgage, says that during testing, his company’s network operations group uses a software tool to monitor servers for performance issues that could originate from the way hardware or software is configured. Involving the network operations experts in testing also gives them the opportunity to rehearse a deployment before a system goes into production, ensuring that the actual implementation will proceed smoothly.

8] Build a lab that replicates your business environment. Four years ago, Station Casinos built a costly test lab that looks like a mini-casino

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essential technology

with slot machines, point-of-sale terminals and Web-based kiosks that simulate the computing environments at all 13 of Station Casinos’ properties. Ninety percent of the applications the company runs, including wireless apps, are duplicated in the test lab. For the other 10 percent of applications, which are too big or complex to create an exact testing replica, Andrew comes up with a scaled-down subset of the app to predict how it will run when it’s fully rolled out. Or he gets help. With Station Casinos’ last system rollout, he used Microsoft’s test labs to run simulation models.

9] Develop tests during the requirements phase. Companies traditionally have waited to do testing until requirements have been established and coding has begun — or finished. A growing school of thought says that testing can still be done effectively even if the require-

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ments have not been developed fully. Fans of ‘agile programming’ (see ‘Fixing the Requirements Mess’, Jan 1) believe that testing should be done continually from the beginning of the project until the end.

10] Test the old with the new. eBay uses a statistical analysis tool it built in-house to compare defects discovered by testers to the code that was tested during a particular testing cycle. The goal is to make sure that previously tested pieces of software still work properly when new features are added. Pride says the statistical analysis tool pinpoints where testers need to add test cases in the current project and also helps determine the overall effectiveness of current regression tests for forthcoming software projects. eBay needs to continually refine the tests because some new projects may contain the same functionality as previous projects. The

better those tests can be, the better future projects will be.

11] Apply equivalence class partitioning. This is a mathematical technique that testers can use to identify additional functional requirements that business analysts and users might have overlooked or not articulated, says Magdy Hanna, chairman and CEO of the International Institute for Software Testing. He says equivalence class partitioning gives testers a clear picture of the number of test cases they need to run to adequately exercise all of a system’s functional requirements. Pride says equivalence class partitioning is one way his group can determine all the ways in which eBay’s 157 million users might use its online auction platform. CIO

Send feedback on this feature to editor@cio.in

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Pundit

essential technology

Boiling Up Data An information stew brimming with bad data is likely to make you sick. By ERIC KNORR Business Intelligence | Bad information can have very aggressive advocates. On a wider scale than ever before, energetic hunters and gatherers collect raw data and throw it in the pot before anyone else gets a good look. Then they cook it into a dubious information stew. Such as: We’re not losing sales; we’re concentrating on a narrower segment of the market and doing better with it. Or: Our bonus structure is industry standard. Yet, even as deceptive information continues to balloon, the technology to bust it has sharpened. XML is opening doors everywhere for people to consume formerly siloed data. And new breeds of business intelligence (BI), network management and security monitoring software are actually starting to provide the smarts to make sense of it all. Tapping the key performance indicators (KPI) amid the raw data in someone else’s domain isn’t easy. That’s why I think the enterprise application challenge of our time is to present data hierarchically to people outside a domain so that they get not only accurate facts and figures but also an intuitive sense of those indicators’ relative importance. The problem with getting a balanced view is that it must penetrate the spin of parochial interests. BI, for example, often serves a relatively narrow purpose, such as finding hidden revenue possibilities in historical customer data. To parse and reassemble the interesting raw data underlying 58

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those BI reports requires smart sleuthing and reliable sources. We need more software embedded with the expertise to aid in that effort. One excellent example is security event management, which taps into raw incident logs across all channels of security systems in an organization. Algorithms in products from companies such as ArcSight or netForensics decide which security events or patterns might be significant, or else you’d be buried in meaningless data. The best graphical displays use historic data to frame KPIs. They use time, for instance, to provide a three-dimensional view of data so that you won’t be alarmed at the number of security attacks because you know the historic pattern. I’ve often wished journalism would do this. Scratch the surface of an online news report from Iraq, and just beneath you should be able to find not only the current number of casualties but how long Assyria and Persia fought, and why those wars will never be forgotten. Thinking about that sort of information architecture could cause vertigo. Yet, at the top of the BI pyramid is corporate performance management, which embraces just that sort of lofty ambition: A bird’s eye view of how your business is doing. For such a grand exercise to be effective, you need to ensure the accuracy and availability of data at the bottom of the pyramid, filter it according to its significance as you climb, and summarize

XML is opening doors everywhere for people to consume formerly siloed data; they only need to know where to look. the unsummarizable at the top as you flag the important drill-down paths. I think we’re only beginning to see dashboards for upper management that give comprehensive, intelligent readouts. XML provides the potential for creating scarily accurate data descriptions of reality, even as obfuscation thrives. I don’t care about the temperature of the catalytic converter; just tell me how much gas I have left. Internet protocols and XML have created a new democracy of information; they’ve also fostered a laissez-faire attitude toward facts and their interpretation. But with few exceptions, the majority of people who really understand any given domain mostly agree on which data is important. Coalescing that expertise in software to create filters and channels for data as it bubbles to the top is the Holy Grail for the post-XML generation of information applications. XML is opening doors everywhere for people to consume formerly siloed data; they only need to know where to look. CIO

Eric Knorr is executive editor at large for InfoWorld. Send feedback on this column to editor@cio.in

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