CIO July 15 2007 Issue by Sreekanth Sastry

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From The ediTor

Crossovers are not easy in most professions. You probably don’t need me say it,

Successful Crossovers It takes a combination of desire, grit, circumstance, and maybe a sense of adventure, for a CIO to find a career beyond IT.

but they are particularly difficult for CIOs. Years of carrying technology’s burden, it is felt, restricts a person’s vision and understanding of the larger issues of business. Consequently, not many CIOs are seriously considered for higher positions by their CEOs. In fact, many don’t even aspire for senior management positions. The problem is more acute in India where a typical CIO comes with years and years of technology experience, as opposed to CIOs in the US who, increasingly, come from more varied backgrounds. Obviously, crossovers need not be this difficult. In fact, they are not always so. Many CIOs have successfully made the transition to senior management positions. Some like Kris Gopalakrishnan, who served as Infosys’ CIO, have moved all the way up to the CEO’s position. Many others have taken There’s no doubting that smaller steps in that direction or even CIOs possess business turned entrepreneurs, preferring to savvy and can deservingly shape their own destiny. I believe all eye other C-level jobs. The of them are role models for technology question is: do they want to? leaders seeking more in their careers. On our cover, we have featured four technologists Alaganandan Balaraman, Lalit Pai, Sridhar Mitta and Varun Jha who hold far more important management positions today. All headed IT at some point in their careers and sought to rise beyond it, thanks to a combination of desire, grit, circumstance, and maybe even a sense of adventure. Mitta tapped his extraordinary technological prowess to first run a venture firm and later fashion it into a global technology and business services firm, e4e; Balaraman used his consulting experience to earn a position as head of strategy planning at Britannia; Jha worked his way up to a position in which he heads a greenfield project in Jharkhand for Tata Steel; and Lalit Pai has risen to head executive strategy at Quintiles, a US biomedecal research company with significant operations in Mumbai. Each’s career experience, I believe, has a message for many of you out there who might be in somewhat similar situations and are seeking change but do no know how to go about it. In interviews with our special correspondent, Kanika Goswami, the four also offered valuable tips for the ambitious technologist, dismissing the ‘Career Is Over’ prophecy for the CIO acronym as a cruel joke. Each is bold and forthright with his views. I am positive all of you will benefit immensely from reading the cover story. I, for one, think there’s no doubting that CIOs possess business savvy and can deservingly eye other C-level jobs. The question is: do they want to?

Bala Murali Krishna Executive Editor balamurali_k@cio.in

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3 4 Leadership

Executive Expectations

COVER sTORy | ON HIgHER gROuND | 34

VIEW FROM THE TOP | 48 Vijay Rekhi, president of United Spirits, sees the company’s buyout binge as yet another leap to reach out to new consumers with compelling brand propositions.

COVEr: d ESIgn by bInESh SrEEdharan PhOTOS by Sr IVaTSa Sh an dIlya, bhagIraT h and Shan kar

With IT playing a larger role in the business processes of large enterprises, the technology leader may not be far behind when it comes to managing business. A look at how four former IT heads made the cut – to strategy and planning. Feature by Kanika goswami gOINg FROM CIO TO CEO | 32 By figuring your executive quotient, you can determine how well you’re positioned to be the strategy-oriented CIO that businesses are demanding. Column by Carrie Mathews

Interview by Kunal N. Talgeri

Key to Innovation HERE’s WHy IT MATTERs | 24 IT can profoundly transform the economics of innovation, segmentation and differentiation for most businesses. Column by Michael schrage

Enterprise Architecture FROM HERE TO AgILITy | 52 Studies indicate that agile methodologies produce better results in software development and project management. Have you adopted them? Feature by Thomas Wailgum

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Essential Technology | 64 BPM | Nail Down BPM Succes By Galen Gruman Internet | Internet Endangered By Scott Berinato

From the Editor | 2 Successful Crossovers | It takes a combination of

desire, grit, circumstance and maybe a sense of adventure for a CIO to find a career beyond IT. By Bala Murali Krishna

Endlines | 68 Web 1.0 vs Web 2.0 | By Team CIO

Inbox | 14 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 Taming Urban Chaos | 60 Urban planning rarely gets attention, despite the fact that 40 percent of India could be living in cities by 2025. Swati and Ramesh Ramanathan, co-founders of Janaagraha, a Bangalore-based NGO, seek to recalibrate a dysfunctional system with a healthy dose of IT and governance.

2 4

Interview by Kanika Goswami

Overcoming Resistance | 28 The best insights into innovation cultures don’t come from the quantity and quality of their ideas, but in the nature of the resistance to their successful implementation. Column by Michael Schrage

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ADVISORY BOARD Manage ment

Publisher & editor N. Bringi Dev

CEO Louis D’Mello Editorial Editor-IN-CHIEF Vijay Ramachandran

Executive Editor Bala Murali Krishna

Bureau Head - North Sanjay Gupta

Special Correspondents Balaji Narasimhan

Kanika Goswami

Abnash Singh

Chief COPY EDITOR Kunal N. Talgeri

SENIOR COPY EDITOR Sunil Shah

Alaganandan Balaraman Vice president, Britannia Industries

Avaya

4&5

Alok Kumar Global Head-Internal IT, Tata Consultancy Services

Emerson

Anwer Bagdadi Senior VP & CTO, CFC International India Services

Fluke

Fujitsu

IFC, 1, 11 & 23

Arun Gupta Customer Care Associate & CTO, Shopper’s Stop

D esign & Production

Arvind Tawde

Creative Director Jayan K Narayanan

VP & CIO, Mahindra & Mahindra

Designers Binesh Sreedharan

Vikas Kapoor; Anil V.K.

Airtel

Group CIO, Mphasis

Senior Correspondent Gunjan Trivedi

Advertiser Index

Ashish K. Chauhan President & CIO — IT Applications, Reliance Industries

Jinan K. Vijayan; Sani Mani Unnikrishnan A.V; Girish A.V MM Shanith; Anil T PC Anoop; Jithesh C.C. Suresh Nair, Prasanth T.R

Photography Srivatsa Shandilya

Production T.K. Karunakaran

T.K. Jayadeep

Marketing and Sales P, Intl’ & Special Projects Naveen Chand Singh V VP Sales Sudhir Kamath brand Manager Alok Anand Marketing Siddharth Singh Kishore Venkat Bangalore Mahantesh Godi Santosh Malleswara Ashish Kumar, Chetna Mehta Delhi Nitin Walia; Aveek Bhose; Neeraj Puri; Anandram B; Muneet Pal Singh; Gaurav Mehta Mumbai Parul Singh, Chetan T. Rai, Rishi Kapoor,Pradeep Nair Japan Tomoko Fujikawa USA Larry Arthur; Jo Ben-Atar

Singapore Michael Mullaney Events General Manager Rupesh Sreedharan Managers Ajay Adhikari, Chetan Acharya Pooja Chhabra

C.N. Ram Head–IT, HDFC Bank Chinar S. Deshpande CIO, Pantaloon Retail

Intel

IBC

Lenovo

Select

Wipro

6&7

Dr. Jai Menon Director (IT & Innovation) & Group CIO, Bharti Tele-Ventures Manish Choksi Chief-Corporate Strategy & CIO, Asian Paints M.D. Agrawal Dy. GM (IS), Bharat Petroleum Corporation Limited Rajeev Shirodkar VP-IT, Raymond Rajesh Uppal Chief GM IT & Distribution, Maruti Udyog Prof. R.T. Krishnan Professor, Corporate Strategy, IIM-Bangalore S. Gopalakrishnan CEO & Managing Director, Infosys Technologies Prof. S. Sadagopan Director, IIIT-Bangalore S.R. Balasubramnian Executive VP (IT & Corporate Development), Godfrey Phillips Satish Das CSO, Cognizant Technology Solutions Sivarama Krishnan

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.

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: N. Bringi Dev. Printed at Rajhans Enterprises, No. 134, 4th Main Road, Industrial Town, Rajajinagar, Bangalore 560 044, India

Executive Director, PricewaterhouseCoopers Dr. Sridhar Mitta MD & CTO, e4e S.S. Mathur GM–IT, Centre for Railway Information Systems Sunil Mehta

This index is provided as an additional service. The publisher does not assume any liabilities for errors or omissions.

Sr. VP & Area Systems Director (Central Asia), JWT V.V.R. Babu

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reader feedbaCk

Another major concern to all CIOs in any organization is that 85 percent of data is unstructured and lies on desktop hard disks. Our agenda is to obtain a search solution to work on a company-wide network. This search tool will hopefully evolve into a classification tool. J. RAmeSh GM-IT, Mirc Electronics

A Case for Quick Takes Though the articles in CIO make for interesting reading, I am usually unable to find time to read large stories. Hence, I have a suggestion. Similar to what major newspaper dailies do, why don’t you start adding a small box to stories, which will carry the gist of the article, summarized in bullet points? It will help readers figure out quickly what the story is all about, and allow them to prioritize. The Reader ROI that accompanies CIO’s articles do not really give a crisp picture of what the story contains. Maybe, it is too short to do the job. SATiSh PendSe CIO, Hindustan Construction Company

Our dynamic Agenda It was great to be part of the CIO Focus: Network Infrastructure event. I wanted to summarise the agenda in front of us, CIOs, and point out why IT heads would need to take ownership of data on the desktops of an organization's employees. Among the issues on a CIO's agenda are growth-related challenges that still keep many of us busy. Our agenda here mostly covers IT infrastructure scalability and performance-related issues. Users' demands for an enhanced response from IT, be it in the form of ERP, the Internet or even at the level of their desktops, comes next. They want state-ofthe-art hardware and connectivity. 14

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Zero in On the industry

I read CIO's storage special with great interest. What I liked about it was that it shared a lot of good technology options for CIOs to look at in their bid to stay in tune with the needs of their businesses. What I also liked was that the articles looked at the supplier industry in general. Here, I would like to make a suggestion. Maybe, the articles should try to be more industry-specific and cover more industries. After all, the storage and capacity requirements of each industry vary enough for different flavors to emerge from each story. This approach in your articles would be of help, especially because different solutions perform differently under different circumstances — circumstances that are defined by different industries. I’d also like to add that maybe virtualization should be a topic of discussion at one of CIO’s events in the near future. I attended the CIO Focus: Storage event where growth and capacity planning were discussed. But, virtualization is the need of the day because of growth in every industry and What Do You Think? We welcome your feedback on our articles, apart from your thoughts and suggestions. Write in to editor@cio.in. Letters may be edited for length or clarity.

editor@c o.in

Virtualization is the need of the hour because of growth in every industry and the amounts of data produced thereof.

the amounts of data that such growth has produced. Where are we on virtualization? Where are we in the path towards managing all this data? SubRAT RAT KumAR KAnungO Engineer & staff manager-IT, Qualcomm

Where Technology is King

The content of CIO is interesting. I think this is because it focuses more on technologies, rather than on products. It’s a change from what your competition gives. The technology-focus certainly helps us in identifying emerging trends, look at early adopters, and understand what they are doing with new technologies. I’d like to make another point. Most of your articles are success stories, which bring value to IT organizations in terms of "what to do". I believe that coverage of failed implementations also have a value in that they talk about "what went wrong in projects." If CIO can provide case studies of implementations that might not have worked and analyze why, they would serve as referrals and useful lessons. RAvi A KiRAn mAnKiKAR Avi Deputy GM-credit & IT Shamrao Vittal Co-operative Bank

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IllUSTRATION By UNNIKRISHNAN AV

Late Projects Means Lower Profits... P r o j e c T M a n a g e M e n T According to a recent global survey, for over one-third of companies, 25 percent or more of IT projects are delivered late. The survey of 1,125 senior IT executives in organizations with a turnover of over Rs 2,250 crore was conducted by The Economist Intelligence Unit and commissioned by HP. It found that there was a direct correlation between slower delivery of IT projects and services and lower business profitability. Some 60 percent of surveyed in the UK said that faster IT delivery meant higher profits. Further, in 57 percent of surveyed firms, no more than one in two IT projects produce intended positive business outcomes over the last three years. Project failure rate in Europe, Middle East and

Africa (EMEA) was higher compared to the Americas region. The main consequences of project delays include delayed product launches for 41 percent, 47 percent losing anticipated revenues and 27 percent witnessing delays to planned cost savings — all of which impact company profitability. CIOs were also asked to chose two most common measures they would resort to if one of their IT projects was late. In the UK, companies indicated they would deal with the pressure to deliver by compromising in three ways: reducing the scope of the IT

project (63 percent), increasing IT spend (45 percent) and decreasing the application quality by speeding up performance testing (31 percent).

(Continued on Page 15)

Krugle it to Find Open-Source Code M a n a g e M e n T Krugle aspires to be the Google of software code search, even referring to itself as a verb. And recently, Krugle has started to become the go-to search site for opensource developers, partnering with key websites, including SourceForge. net, the leading repository for opensource software projects, to embed Krugle search. Krugle also announced a similar partnership with CollabNet, a community of 1 million developers. Co-founder and CTO Ken Krugler says Krugle soothes a pain point for developers: They spend 25 percent or more of their time searching for lines of code to perform certain functions that

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may already exist. There’s no sense in writing code that’s already been written, says Krugler. How does Krugle simplify code search on SourceForge? Developers typically visit SourceForge to find a project similar to the one they’re doing. But they end up having to download the whole project. Krugle lets them search through the project to see if it fits the bill without downloading it entirely. Krugle gives software developers one thing they need most, time, says John Andrews, CEO of Evans Data, a research firm. “If you could shave 10 percent of that [search] time off, that is a huge productivity improvement either in

costs savings, revenue generation or just spare time,” Andrews says. Google is still the first stop for many open-source developers, but as the volume of open-source code grows, as companies use more open source for development internally, and as more software companies open their previously proprietary code, Google may not be able to keep up, says Andrews. Krugle’s next venture will be search for open-source development within enterprises: an enterprise product currently in beta is slated for general release in the second half of 2007.

— By Robert Mullins

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Tips for Training Your Tech Vendors V e n d o r M a n a g e M e n T When you’re a mid-market CIO, you may often feel like you’re not receiving your vendors’ full attention. After all, the big boys have more money to spend and more staff to help manage vendor relationships. Want to learn a few new tricks? Here are some tips from your peers, traded at US CIO’s recent leadership conference:

Share the business plan. “I am very much into collaboration and find that sharing your future business plans often helps the vendor understand just what is at stake,” says Sandy Rasel, VP, global process and applications management, McCormick & Company. “you you are able to have a much richer dialogue that supports your y future direction and engages the vendor to work with you.”

When negotiating, Web search first. y you’ll be amazed at the invoices and price data that you can find online when you search on a particular hardware part number or software package, says a mid-market CIO who recently used this tactic when purchasing a WAN acceleration device and some high-end analysis software.

Show ‘em the competition. “One of the best things we ve done is a vendor appreciation day event,” says Kevin lupowitz, CIO for liquidnet Holdings. Typically a golf outing and lobster dinner, this “builds great partnerships and individual loyalty. It also lets our vendors see who else we’re working with, which helps maintain the sense of urgency to stay competitive.”

Hire away one of the vendor’s sales reps. Who’s better to manage your relationship with that vendor than someone who knows the players and angles?

Play the Google card. let vendors know that you’re interested in Google Apps. Better still, consider banding together with other CIOs and presenting Google with requirements regarding Google Apps, says Ben Allegretti, former US Marine Corps Systems Command CIO. “What if Google responded by building in added capabilities to meet our requirements? That just might change the entire dynamic of our relationships with some of our software suppliers,” he says.

— By laurianne Mclaughlin

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...And GawkyCompanies (From Page 15) While companies in the US and America region would also reduce the scope of the IT project (40 percent), interestingly companies would tend to increase automation of manual IT processes (41 percent) rather than decrease application quality (24 percent). This indicates that UK companies were more willing to compromise on application quality and shorten development cycles in order to deliver a project on time. “The commercial benefit to be on time outweighs other factors. Companies will spend more to not damage timing in order to get profit from faster delivery,” said Dave Clarke, presales business consulting manager for HP Software. Clarke added these IT tradeoffs put the business outcomes at risk. The most profitable companies, those with a 25 percent or greater profit growth since 2005, tended to have faster development times with an average of 68 percent faster IT, said the survey. Yet the study showed that one in four IT projects are delivered late, and the majority of those surveyed said no more than one in two IT initiatives produced positive business outcomes. Lack of coordination between IT and the line of business was cited as the most common cause of IT project delay, according to 45 percent of those surveyed in the UK. Use of external outsourcing was another major factor for delay, said 40 percent. “With outsourcing, there is a trade-off between efficiency and agility,” said Clarke. “The ability to change quickly is becoming more important. But when you outsource, you lose the ability to change quickly. That’s the hypothesis. It’s a conundrum: the more outsourcing partners and tiers of outsourcing, the higher the levels of complexity.” In the UK, nearly a quarter — 24 percent — of respondents understood the need to have better requirements definition upfront, whilst 40 percent agreed that more automation would help accelerate the delivery of IT projects and services. — By Siobhan Chapman

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Get Six-pack MarGinS o P T I M I z a T I o n If there’s one goal CIOs want to achieve this year, it’s to help drive revenue. Some shrewd CIOs have found a little-known route to get there: price optimization software. In fields like business-to-business manufacturing, chemicals, distribution, and industrial services, the software is helping companies drive big improvements to top line revenue. Margin gains of 10 percent and profit enhancements of 15 percent or more are typical, according to Gartner data. “Nobody wants to talk about this software for two reasons,” says Gartner Research VP Robert Desisto. “First, it’s a competitive advantage. Second, it’s not the kind of thing you want your distributors or resellers to know about. The benefits have been so substantial that companies want to hold onto it as tight as possible.” The software, typically based on sophisticated statistical modeling techniques, slices and dices historical data (such as that from your sales process) to maximize prices for margin, using factors like the uniqueness of an item, or the fact that customers in a particular geography will pay more. Travel industry companies

have priced this way for years, of course. But it’s a big change at manufacturing firms like Acuity Brands lighting, which sells a huge range of products, from industrial lights for commercial ports to streetlamps and home lighting fixtures. like many of its B2B manufacturing peers, Acuity had long used a 'cost-plus' model for pricing: figure out what it costs to make the product, then mark it up by a fixed percentage, says Pat Quinn, Acuity’s VP of information systems and technology. This traditional approach 'cheats' the company from realizing the best margins on many products, analysts say. Today, Acuity has dumped cost-plus pricing. “We try to understand the features the customer will pay for, then engineer it at a cost that provides the margin we need,” Quinn says. Using Zilliant’s price optimization software (ZPPS Optimization), which is based on statistical modeling, Acuity can now determine the best price it can get for a particular product from a particular type of customer in a given locale. — By laurianne Mclaughlin

web securITy In a recent MITHarvard study to determine online gullibility, 36 percent of test subjects logged in to their online bank accounts despite being presented with a strong warning saying that their bank site’s security certificate was not valid. Not one person noticed when HTTPS, the secure form of HTTP, was stripped away — they offered up their passwords anyway. Although our instincts tell us that better education might have saved these users, there is a growing consensus among researchers that education will never stop many people from clicking. The problem, says Markus Jakobsson, a security consultant and associate professor of informatics at Indiana University, is one of focus. “When people go online, they are focused on other things besides security,” he says. “They want to pay their bills online or talk to their friends. People don’t pay attention to security clues.” Even when they are reminded to pay attention to warnings. Meanwhile, the kind of information that lulls victims into a false sense of security

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is still widely available online. In a 2005 study, Jakobsson was easily able to find the Social Security numbers and mothers’ maiden names of millions of Texans online. “When the e-mail comes with your mother’s maiden name already in there, it’s a lot easier to click,” he says. So what to do? Some suggest issuing new passwords through electronic fobs called tokens each time someone logs in to a site, or requiring account holders to verify withdrawals via a cell phone call. But both solutions are costly, complex and potentially inconvenient to customers. The best answer may be to relieve users of the responsibility of security. Already, some ISPs are offering security software as part of their subscription pricing, judging that the extra cost is more than balanced out by reducing the risks they face

from the pipe-clogging spam and malware. With 2.4 million unsecured broadband connections in the US, it may be time for the IT industry to face that consumers will never close the security gap by themselves.

— By Christopher Koch

IllUSTRATION By MM S HANITH

Trigger-happy Web Users

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How to SeLL

DAShboArDS to Your Staff

Untrained staff

IllUST RAT ION By UNN IKRISHNAN AV

Slows RFId r f I d A shortage of trained personnel continues to hamper companies’ use of radio frequency identification (RFID) technology, according to a survey by the Computing Technology Industry Association (CompTIA). The survey, dubbed The State of RFID, was conducted between February and March and involved responses from 64 companies, which included technology resellers, value-added resellers, and systems integrators. Although RFID is becoming the technology of choice for tracking goods through a supply chain, two thirds, or about 69 percent, of the companies surveyed said there was 'an insufficient pool of talent' for recruiting purposes. That figure is down slightly from the two prior years; the number was 75 percent in 2006 and 80 percent in 2005. One key finding was that 68 percent of the respondents that believed there was a lack of trained personnel also believed the staffing shortage will slow adoption of RFID. “The skills shortage is not the most significant factor in the relatively slow adoption of RFID, but it is a contributing factor,” said David Sommer, VP of e-business and software solutions, at CompTIA. Growth of RFID use is not expanding at the fast rate that same observers predicted, but it still continues at a modest pace, he noted. Among other findings, the survey said the top three RFID challenges that companies face are gaining clients for RFID offerings (46 percent); training and educating staff (44 percent); and overcoming initial RFID implementation challenges (43 percent).

s T a f f M a n a g e M e n T As dashboards, tools that show IT performance metrics and other measures in one graphics-rich window, become more widely deployed, you must position them well to your staff, says Gloria Campbell, associate professor of business administration at Wartburg College. Selling dashboards in the right way, especially to the midlevel and lower ranks, will help you utilize the tools effectively, without employees thinking you’ve channeled Orwell and gone '1984' on them. Her advice:

Let employees help set the metrics. When employees help determine what a dashboard will measure, they’re more likely to think it’s a fair tool for measuring productivity and performance. “If people think the metrics are appropriately set, they’re not going to feel as threatened,” says Campbell. Stress the benefits of transparency. Tell employees they’ll see the type of data that years ago may have lived only in the office of the CFO. Employees can use the information to stay abreast of the company’s performance. When something substantial happens to the business, they won't feel broadsided. Explain the performance upside. A boss who’s using dashboards to track employee performance is not hiding a secret spreadsheet that tracks his winners and losers, only to be revealed at the end of the quarter. “You not only know how you’re doing, you know how your competitors are doing in other departments,” Campbell says. Show how dashboards can prevent problems. Employees can be less reactive, and more proactive, when using dashboards, anticipating problems and solving them before the boss even has the chance to pick up the phone. —By C.G. Lynch

— By Marc l. Songini 20

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Ferrari's High-octane Videoconferencing Think about video-conferencing with muscle and you’ve got telepresence. This ultrahigh-end technology features HD, large plasma screens and fancy acoustics in a specially constructed room. Participants appear on the screen in life size and with zero latency, says Claire Schooley, a senior analyst at Forrester. Should this emerging technology be on your radar screen? While telepresence may bridge the gap between meeting participants in a way that wasn’t possible with traditional Web video-conferences, it’s still cost-prohibitive for most companies. HP’s telepresence solution, HP Halo, rings in at Rs 1.7 crore. Cisco’s Telepresence 3000 (a six-seat, three-screen telepresence room) and solutions from Teliris, Polycom and Tandberg each cost around Rs 1.2 crore, Schooley says. Add on monthly fees for a concierge service to operate the meeting and room (sometimes offsite), and you see that this doesn’t suit a small organization. However, it’s effective for an executive who makes frequent trips among global offices. a P P l I c aT I o n s

“Since these executives would use first class fares, in the long run it’s more cost-effective to do telepresence,” she says. In industries where visuals are critical, telepresence could also earn its keep, she adds. An alternative: Upstart firm Telanetix is winning some attention for its approach. Customers can get started for Rs 40,000 a month on a financing plan, for a lower up-front investment. Telanetix says this makes its offering more attractive to midsize companies, as does the fact that its technology plugs into your existing meeting room, whereas the Cisco and HP products pose strict room and hardware rules. Telepresence users are still relatively elite, but globalization and the increasing need for collaboration will drive demand, Schooley says, as will frustrations with overseas travel. Research firm Frost & Sullivan estimates that revenues in the North American telepresence market totaled Rs 110.4 crore in 2006 and are likely to reach Rs 2,442 crore in 2013. — By Katherine Walsh

s o u r c e Linux supporters are thumbing their collective noses at Microsoft’s recent claim that it will seek royalties from users and distributors on 235 patents it holds for technologies in Linux and open-source software, saying they’re not worried about patent infringement litigation. The general consensus: Microsoft’s threats of litigation (in recent statements Microsoft executives made to Fortune magazine) show that the software giant is afraid of the competitive threat that Linux and open-source software pose. Joe Lindsay, CIO of mortgage company Secured Funding, says that Microsoft’s attempt to cause fear, confusion and doubt may scare some users in the short term but will not stop open source’s momentum. “It's like saying I have a big baseball bat, and I'm going to hit somebody,” he says. Linux distributors too were nonplussed,

oPen

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and Novell (which struck a licensing deal that included paying royalties on Linux to Microsoft last year) seemed annoyed. Horacio Gutierrez, Microsoft’s VP of intellectual property and licensing, compared the Novell deal as a model for how Microsoft wants to settle patent differences. However, Novell never admitted infringing on patents, a Novell blog pointed out. Some suggest that the threat of patent litigation could be turned: there’s as much potential patent infringement in Windows as in open source, says Jim Zemlin, executive director of the Linux Foundation, a nonprofit that promotes the OS. “Microsoft is certainly not the only owner of patents in this area, and perhaps not even the owner of the largest number of patents in these areas,” Zemlin says. (The Unix code on which Linux is based precedes Windows.) Lindsay calls Microsoft’s move a reaction

to competitors like Google. “Their business model is fundamentally changing and Microsoft is using the courthouse to extend their old way of doing business,” he says.

— By Elizabeth Montalbano

Il lUSTRAT IO N By MM S HANIT H

Microsoft Patent Threat F lls on Deaf Ears Fa

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Key to Innovation

Here's Why

Illust ration by an il t

ITMatters

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IT can profoundly transform the economics of innovation, segmentation and differentiation for most businesses. Vol/2 | I SSUE/17

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Michael Schrage

Key to InnovatIon

he Harvard Business Review is not famous for costs of doing business that must be paid by all but provide publishing satire. Then again, when a clever writer distinction to none.” Excuse me? Who says that resource scarcity is the key to pushes a clever idea well beyond the point of diminishing returns, the result can read like parody strategy? Why on earth is resource ubiquity inherently the low from the pages of the Harvard Lampoon. You’re not quite certain road to commodity? That sort of glib analysis gives Econ 101 a bad name. In fact, it’s shockingly easy to show there is virtually whether you should sagely nod or burst out laughing. Nicholas Carr’s controversial article IT Doesn’t Matter presents zero correlation between the availability of a commodity and its a brilliant example of this rare genre. Ever since its publication, effective role as a so-called 'strategic' resource. his thesis has provoked heated debate both in tech circles and Consider this thought experiment: Three companies bitterly the realms of senior management. Much of the debate has been compete against each other for market share and profit of the IT does too matter!!! variety, but Carr’s serio-comic screed — for example, FedEx, DHL and UPS; or American Airlines, Southwest Airlines and JetBlue deserves a rigorous dissection because Airways. Give them each Rs 400 he’s clearly struck a nerve as well as a crore. No strings attached. funny bone. So will these companies be equally Carr’s narrative deserves to be read better off in their rivalry with each as an intriguing technical argument other because they each have Rs in the service of grotesquely naive 400 crore to invest? Of course not. business assumptions. His facts may Some of the companies will enjoy be flawless and his historical analysis significantly greater returns on their smooth. But the business conclusions free Rs 400 crore investment than he draws are profoundly silly. CIOs the others. Capital is a commodity, had better understand why, because right? Yet somehow we consistently they may report to intellectually lazy see enormous disparities within CEOs and CFOs who actually believe industries in their return on capital. that the Harvard Business Review is 7 SEPTEMBER 2007. NEW DELHI We could keep feeding these giving its imprimatur to a powerful companies free capital and the argument when, in reality, it is cleverly disparities would persist. Would overhyping a clever little idea. Matter? So let’s cut to the heart of Carr’s case: “What makes a resource Harvard Business Review publish Capital Doesn’t Matter Suppose, instead, we offer these business rivals equal access truly strategic — what gives it the capacity to be the basis for a sustained competitive advantage — is not ubiquity but scarcity. to the very best and very brightest graduates from Harvard, You only gain an edge over rivals by having or doing something Berkeley, Stanford and MIT. Should we rightly expect each and that they can’t have or do. By now, the core functions of IT...have every company to get comparable value from this incredibly rich become available to all. Their very power and presence have talent pool? Or does reality — and bitter experience — dictate begun to transform them from potentially strategic resources that some companies will manage to get incredible performance into commodity factors of production. They are becoming from truly mediocre talents while others will blithely waste the

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MICHAEL SCHRAGE KEYNOTE SPEAKER

7 SEPTEMBER 2007. NEW DELHI

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Michael Schrage

Key to InnovatIon

time, effort and energy of their most gifted hires? Perhaps Harvard Coca-Cola treat television advertisements as commodities? Business Review should print Talent Doesn’t Matter. Should Dell treat its call centers as commodities? Now let’s give every single employee of every single company In truth, IT is more a suite of techniques than an arsenal of his very own free Wi-Fi-ed Linux laptop, PDA and cell phone technologies. So why does Carr compare IT to the way power along with all the training and technical support he needs. utilities are organized instead of, say, the way factories are Free. Does anybody in their right mind believe that this huge organized? Why not IT as the 'flexible information factory' endowment in personal technological capacity will equally lift instead of the ubiquitous information utility? Computer the productivity and profitability of Numerically Controlled machine tools these competitors? should be seen as a manufacturing Those three simple thought medium. Does the commoditization of experiments affirm an undeniable machine tools mean that Manufacturing truth: it’s not free and easy access Doesn’t Matter Matter? to a commodity that determines Let me offer one plausible its strategic economic value to the hypothesis: comparing IT to a factory company; it is the way that commodity instead of a utility would undermine is managed that determines its impact. Carr’s thesis. Why? Because the Management matters. The idea that future design of factories does matter companies can divorce their resources to the future of business innovation — no matter how cheap, powerful and and competitiveness. Carr clings ubiquitous — from the act of managing to the 'commodity infrastructure' 7 SEPTEMBER 2007. NEW DELHI them is patently absurd. assertion not because the weight of This should come as no surprise to evidence supports it but because it is a any serious reader of, say, CIO magazine framework that supports his case. or even Harvard Business Review. Yet the very premise of IT Doesn’t The real issue is whether IT’s business benefits unambiguously Matter is that the quality of management matters far less than the outweigh its costs. Carr argues, rightly, that too many businesses quantity of the commodity. The more persuasive argument is have spent too much money on IT with too little to show for it. that the quality of IT management matters even more as the IT Then again, a lot of companies have lost money using derivatives commodity becomes ubiquitous. as a tool to manage currency risk. Carr insists at great length that the quality of management What Carr fails to recognize is that IT can profoundly doesn’t matter because IT is really an 'infrastructure' technology transform the economics of innovation, segmentation and like electricity, the steam engine and the internal combustion differentiation for most businesses. And in that recognition lies engine. IT, he argues, ultimately devolves into commoditized the CIO’s ultimate opportunity. I bet Carr knows this. But it’s ubiquity, like lightbulbs and telephones. Infrastructure always easier to be provocative than do the hard work of turning technologies — unlike proprietary technologies — inherently commodity technologies into value-added preclude opportunity for sustainable competitive advantage. business products. CIO But why should IT be treated more like electricity and automobile engines than such media as telephones and television? Don’t companies creatively use call centers and television advertisements to cost-effectively manage customer Michael Schrage is co-director of the MIT Media Lab’s eMarkets interaction and build brand equity? Would Carr suggest that Initiative. Send feedback on this column to editor@cio.in

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MICHAEL SCHRAGE KEYNOTE SPEAKER

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Michael Schrageâ&#x20AC;&#x201A;

Key to Innovation

Overcoming

Resistance

The best insights into innovation cultures donâ&#x20AC;&#x2122;t come from the quantity and quality of their ideas but in the nature of the resistance to their successful implementation. 28

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Michael Schrage

Key to InnovatIon

y far the most common question I get from investing more in good implementations than in good ideas, then that’s where their capital should go. CIOs and their direct reports is some heartfelt Despite the fervent hopes of bright people with brilliant permutation of, “My IT group — our company — needs to become much more innovative. How ideas, successful innovation can’t be divorced from successful implementation. can we do it? How should we do it? Help.” The best insights into innovation cultures don’t come from Those questions are invariably followed by a tragic but true innovation tale: the well-meaning Jedi Knights of IT are the quantity and quality of its ideas but in the nature of the thwarted by organizational Darth Vaders ruthlessly intent on resistance to their successful implementation. Grasping the essence of an innovation culture is astonishingly crushing digitally-enabled change enterprisewide. easy. Simply fill in the blank. I nod sympathetically and brace Whenever a good idea is proposed, for what’s almost always said next: you’ll find the core values of an “Michael, I really need to come up innovation culture in the words that with better ideas faster.” follow this common phrase: “We Without hesitation, I say what I can’t do that because...” always say to frustrated innovators: Whatever reasons, excuses and “No, you really don’t. Honest.” evasions people use to explain away Nothing in the business world why good ideas can’t be implemented is more overrated than a 'good is the organization’s innovation idea'. Nothing. I’ve never gone into culture. Period. We can’t do that an organization anywhere in the because...it’s too expensive, the boss world that didn’t have — with a won’t like it, the lawyers won’t let us, little prompting and encouragement 7 SEPTEMBER 2007. NEW DELHI it’s not in the budget, we don’t think — more good ideas than it could it will work, the vendor will charge possibly use. Indeed, most firms us too much for changing the code, enjoy a surplus — a glut — of good marketing will take it from us if it ideas. As a rule, a glut of something actually succeeds, the woman championing it is a credit-hog, makes it less valuable, not more. Economics 101. By contrast, I’ve never gone into an organization where the IT shouldn’t be leading this kind of initiative, it distracts us process of implementing good ideas was fast, cheap, easy and from our main mission and so on. successful. There seems to be a terrible scarcity — a corporate famine — of good implementations. It’s Human Nature to Resist Simply put, good ideas are cheap; good implementations Sound familiar? Alas, these sources of resistance are the real aren’t. Experience teaches that aspiring IT innovators don’t 'brand attributes' of an organization’s innovation culture. need better ideas that make more sense. They need better Listen to them, learn them and respect them. They are how implementations that make — or save — more money. If organizations truly define innovation. Never fool yourself into organizations can boost their 'return on innovation' by thinking you’re just a good idea away from innovative success.

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Michael Schrage

Key to InnovatIon

Resistance, not ideas, is the most powerful lens for viewing her into the most influential internal ally the innovators could have ever hoped to have.) innovation behavior. Whether resistance is overcome by an act of persuasion, Doubt that? Most people in the Western world are significantly overweight; maybe you’re one of them. seduction, manipulation, intimidation or bribery, the fact Fortunately, there’s a proven algorithm — a very good idea is that it has to be overcome. In this context, the models — for successfully alleviating this condition: eat less, exercise — prototypes and simulations that IT builds — are less more. Alas, only a tiny fraction of the chunky population mechanisms to solve problems than ways in which to surface the real reasons for resistance. Bitter consistently implements this very experience affirms that individuals good idea on a daily basis. and organizations don’t hesitate But, honestly, just how good of an to offer dishonest, misleading or idea is 'eat less, exercise more' if so ignorant reasons for not wanting to few people actually implement it? implement an idea. The economic value of a good idea — At one bank, online marketing if it is, indeed, a good idea — lies more absolutely refused to allow a subtle in its successful implementation than yet important interface change to its clever articulation. be tested on its consumer site. IT Just as actions speak louder than convinced the firm to adopt the words, implementations are more change by making a similar change compelling than ideas. The infinite on the bank’s human resources varieties of how people cheat on 7 SEPTEMBER 2007. NEW DELHI intranet site and then quickly their diets and exercise regimes is debugging the problems associated a microcosm of the organizational with the modification. Resistance frictions that innovations can generate. After all, liposuction is one of the world’s fastest- was overcome by a cost-effective example. The smartest thing innovation-savvy CIOs could do to boost growing surgical procedures for a reason. For a growing segment of the marketplace, it really is faster, cheaper, easier their chances of success is to invest less time brainstorming and more thought targeting the sources of resistance to and more successful than 'eat less, exercise more'. Consequently, the innovation challenge is the challenge innovation implementation. Innovation initiatives should of diagnosing and overcoming organizational resistance. have explicit flowcharts and tactics explaining how internal When you hear: "we can’t do that because it’s too expensive", resistance will be identified and finessed. Overcoming the serious innovator’s obligation is to demonstrate that, resistance should be the driving dynamic for implementing in fact, the proposed innovation is cheaper. Build a demo innovations within the enterprise. Alas, even as I write this I can just see you muttering to or simulation that makes the case. A better idea isn’t yourself, “We can’t do that because...” CIO going to do it. When the resistance is that the boss won’t like it, the serious innovator’s response is to determine if the boss’s boss is a better target market for the innovation proposal. Perhaps some other constituency can make the boss see the error of his ways. (For example, one Procter & Gamble brand manager sent prototypes Michael Schrage is co-director of the MIT Media Lab’s eMarkets to his boss’s wife for her advice as a target customer and turned Initiative. Send feedback on this column to editor@cio.in

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MICHAEL SCHRAGE KEYNOTE SPEAKER

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7/13/2007 3:59:35 PM

Carrie Mathews

leadership

What It Takes for a CIO to Be a CEO Do you know your Executive Quotient (EQ)? By figuring your EQ, you can determine how well you’re positioned to be the strategy-oriented CIO that businesses are demanding.

elping the CIO profession fulfill its desired and necessary strategic role is the reason the CIO Executive Council developed the EQ competency assessment. To measure yourself, visit https://www.cioexecutivecouncil.com/programs/ futurestate/simple_csuite.html. The Council partnered with global executive recruiting company Egon Zehnder International. In 40 years of assessing executive talent, Egon Zehnder chose this set of competencies because of its predictive value in identifying top-performing executives. These are the behaviors that differentiate good executives from great executives, says Stephen Kelner, global knowledge leader of Egon Zehnder’s talent management and management appraisal practice group. Your CEO sets the benchmark for performance across all executive competencies. The good news is that the best CIOs stand up well against their bosses and even outperform them in many competencies. The bad news is that they underperform significantly in competencies unique to strategic business leadership. This gap defines the development goals IT leaders need to set in order to advance their individual EQ, their careers and the CIO profession as a whole. Kelner describes the competency of Market Knowledge in detail to illustrate the range in performance levels. The Market Knowledge score indicates how well an executive understands the marketplace, including customers, suppliers, competitors and regulators. “Level 1 CIOs are doing the basic,” says Kelner. “As they move to Level 2, CIOs can describe what the industry is doing and the basic forces of the market, including typical customers and obvious competitors.” At the higher levels,

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Carrie Mathews

leadership

CIOs know their market well enough to spot, anticipate and capitalize on trends. The highest performers make an impact on the marketplace by creating new businesses or new products through their understanding of technology, customer needs and market trends. Market Knowledge, according to Kelner’s six years of accumulated data, is a weak spot for CIOs.

The biggest deficits CEOs see in IT chiefs are the lack of a deep understanding of business opportunities and the inability to communicate strategically with highlevel internal and external stakeholders.

CIOs vs. CEOs Studying competency performance data based on interviews and 360-degree assessments of 25,000 executives, we find: 1. Outstanding CIOs (those in the top 15th percentile) score highest in Results Orientation, Strategic Orientation, Change Leadership and Customer Focus. 2. Outstanding CIOs perform much better than average CIOs in all competencies except for People and Organizational Development, where they are equivalent. 3. People and Organizational Development scores are relatively low for all types of executives assessed, particularly CFOs. 4. Outstanding CIO scores slightly surpass good CEO scores on most competencies. 5. Outstanding CEOs — the most well-rounded strategic leaders — perform significantly better than outstanding CIOs only in Market Knowledge and External Customer Focus.

How to ImproveYour Executive Quotient CIOs who want to devote more of their time and energy to driving business strategy and innovation should focus on developing and leveraging the three competencies most particular to the business strategist: Market Knowledge, Strategic Orientation and Commercial Orientation. However, to get a chance to be a business strategist, CIOs must be strong in foundational competencies such as Change Leadership, Collaboration and Influence, and Function Expertise. CEOs, who often rise from the sales ranks, have an intuitive customer focus and often form close relationships with key customers. Conversely, in most industries, CIOs concentrate on internal stakeholders and have not had much need to interact with external customers. An exception is George Chappelle, senior VP and CIO at Sara Lee Foods. He credits his external customer focus to his 20-plus years in the consumer packaged goods (CPG) industry. “CPG is all about the external customer. I have to have these skills as CIO because I am involved with customers from market research, new product innovation and throughout the supply chain,” says Chappelle. For CIOs who want to connect to the external customer, Chappelle suggests getting involved with new product or sales information initiatives. “Both require heavy IS support and will get any CIO linked externally,” Chappelle says.

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The Management Vacuum When it comes to People and Organizational Development, from the CEO on down, C-level executives are relatively poor performers. Rajinder “Raj” Gupta, adjunct professor and executive director of the CEO Perspective Program at Northwestern’s Kellogg School of Management, has interviewed more than a dozen CEOs from companies including Walgreen’s, AON and Northern Trust about the competencies data. “In general, I found that the premium for CEOs as they rise through the ranks is a deep understanding of the business and customers, not necessarily on how they manage their people. The CEOs I spoke with are definitely aware of the need to focus more of their attention on people development,” says Gupta.

What Do CEOs Want? According to Gupta, CEOs want strategic-minded CIOs. The biggest deficits CEOs see in the current crop of IT chiefs are the lack of a deep understanding of business opportunities and the inability to communicate strategically with high-level internal and external stakeholders. Market Knowledge, Commercial Orientation and Customer Focus plug in there. “In industries where business is closely entwined with technology, or where it can be used as a competitive advantage, that’s where CEOs are looking for CIOs with high EQ,” says Reynold Lewke, Egon Zehnder’s North American CIO practice leader. This trend is personified by Kumad Kalia, CIO of Direct Energy, and his CEO, Deryk King. King specifically recruited Kalia for his EQ. “I took great care to recruit someone with a good track record of operational excellence, strategic thinking, experience in customer service and a diverse career background,” King told the audience at the spring CIO Leadership Conference. “I expect a much broader contribution from my CIO; he has to be prepared to talk about issues outside of his immediate responsibility.” Kalia concurred: “The role of the CIO is more than just keeping things running,” he said. “We’ve had to acquire a lot of the skills of a traditional general manager.” Direct Energy was ready for a strategic CIO with an expanded role, but many companies still have a traditional, constricted view of the CIO as operations-oriented function head. CIOs need to create awareness and acceptance of their strategic potential. CIO Carrie Mathews is a senior program manager for the CIO Executive Council. Send feedback on this column to editor@cio.in

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Cover Story | Leadership

Higher Gro u CIOs have always sought to align IT with business. Now, many have climbed the corporate ladder and are ready to even run the business. InsIde 36 39 42 45

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The strategist The entrepreneur The Futurist The self-Motivator

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by KaniKa Kani a Goswami

o und

With IT increasingly playing a larger role in the business processes of large enterprises,

IllUSt ratIon by U n nIKrISHnan aV

the technology leader may not be far behind when it comes to managing business.

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At least one of the four senior executives — and former IT chiefs — CIO spoke to strongly believes that an IT head is among the frontrunners for coveted leadership roles. After all, the IT organization is no longer seen as a mere business enabler but as one with the potential to boost revenues. The question of business leadership opportunities for a technology head has often found favourable support from management thinkers. At a recent leadership summit in New York, Bart Bolton, a longtime IT management consultant and facilitator of the Society for Information Management Regional Leadership Forum, provided further encouragement. Even introverted technologists with the right qualities can be groomed for leadership, he said. “IT leaders have to develop a sense of self-awareness of who you are that leads to the self-confidence,” he added. Ross D’Silva, a HR consultant in India, concurs with the view (see “How to Get Ahead of the Curve”) as does Gartner. “It's CIOs’ lack of involvement with corporate executives in setting strategy — and a shortage of business skills — that has been constraining IT departments,” states the research firm in a recent worldwide survey of 1,400 IT leaders. CIOs surely have a lot going for them. They enjoy a so-called helicopter view of business processes, are party to some of the big challenges in enterprise such as high rates of attrition and managing processes, and have a tradition of justifying expenditure by showing ROI on IT investments. What is the way forward, then, for the CIO? And what are the potential areas of self-development? In the next 12 pages, four erstwhile IT heads who have risen to key leadership positions provide some answers. Drawing on their experiences, they suggest CIOs must strive to increase the visibility of their work beyond the boundaries of IT. The organizational environment must be conducive, they observe. Sridhar Mitta, managing director and technology strategy head of e4e, recommends that IT chiefs increase interactions with — and understanding of — other business functions. Lalit Pai, executive director at healthcare firm Quintiles, thinks IT heads need to proactively seek exposure to diverse areas. Varun Jha, a Tata Steel veteran who now heads a greenfield project in Jharkhand, says the CIO should closely align with his CEO in order to learn the ropes of the business. And Alaganandan Balaraman, a former IT head who is taking up a strategy planning position at Britannia, says: “Start thinking like a CEO right now — make a lot of business suggestions.” REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

Cover Story | Leadership

T he S trategi st

Processes Capabilities

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The world is a lot flatter, and much less hierarchical, than most technology leaders might immediately recognize. Ask Alaganandan Balaraman who has headed IT and corporate development at Godfrey Phillips for over four years. “In today’s world, impact is less about assigned authority and more about the ability to influence,” he says. “Businesses and business leaders need ideas, insights and usable critique. People who wait to be given authority before contributing will tend to be passed (over),” asserts Balaraman, who has recently been named the vice president of strategy planning at the Rs. 2,199-crore Britannia Industries. Balaraman’s quest for a strategic role in enterprise has come full circle. For most part of his quest, he has emphasized on the business-technology interface: to see how technology can be used to change the way business is done. “Often, technology itself has less of a benefit than usage of that technology, to work in a more productive or responsive manner,” Balaraman notes. The process needs to be changed to achieve that, he adds, citing IT’s alignment with business at Godfrey Phillips. “My colleagues there would be happy to leave all technical decisions to the IT team, but we all get very involved in discussing process and policy changes. This is to be expected,” he explains. Such an approach points to the need for communication skills. “Most of the training that IT professionals and those in specialized areas like research go through focuses on technical skills — not effective communication,” Balaraman says. “Some people even wear their off-hand communication style as a badge of technical superiority. It distinctly affects their performance on the job, wherein they are helping non-technical people deal with and use a large evolved base of knowledge that they don’t understand and often have misconceptions about,” he explains. Balaraman’s acquaintance with the ‘IT helps Business’ concept began during his threeyear stint at PricewaterhouseCoopers (PwC) in the late 1990s. The need to reach the top-most

Ph otos by Sr ivatsa Shan dilya, Bhagirat h an d S han kar IMAG ING BY ANIL T

The rise of a CIO requires boldness to test the capability of processes — and join the power struggle, if necessary.

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The Strategistâ&#x20AC;&#x2122;s Top Priorities

Process Innovation

Style of Communication

Desire to Learn

Key Business Skills

Tact & Diplomacy

Alaganandan Balaraman attributes his strategic role to an understanding of how to run a business.

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Cover Story | Leadership rung is a function of understanding what it takes to run a business, he reiterates. “My experience in sales and project delivery as a practice head in PwC was extremely valuable to understanding what running a business involves,” he recalls. “When in PwC, any IT strategy assignment involved a thorough understanding of business strategy and key organizational processes,” he says. In many cases, the time spent there and benefits articulated at this stage were more appreciated by clients than the actual technology solution, he explains. Ideas and ability apart, Balaraman believes that the skills a CIO develops

in planning, risk management and outsourcing easily lend themselves to the role of a CEO. He saw this firsthand as CEO of marketing consultancy Brandquiver between 2000 and 2003. In his opinion, a CIO needs to focus beyond the obvious technology if he or she is to achieve something. “Look at processes and the need for new processes and capabilities,” Balaraman says. After all, a technologist is in a good position to oversee processes in business. He cites his experience as a consultant to an FMCG multinational that sought to revamp its enterprise IT infrastructure. As part of the assignment, Balaraman’s team

The Road Less Traveled Most growth stories that concern CIOs are about technology leaders who become business heads. For Changappa Kodendera, the two roles occurred in reverse — albeit on a higher plane. He undertook the position of global CIO in the Rs. 1,729-crore Sapient shortly after successfully setting up its Indian subsidiary. Given that more than half of its 5,088-strong workforce operates from India, there might be an air of inevitability about his growth path. Nevertheless, it has come with its challenges: of donning two hats. As vice president of the Indian subsidiary, Kodendera believes that integrating technology skills and business skills has immense benefits in the overall optimization of resources. “It also helps a lot to have a good idea of how supply chains work, demand chains operate, and other processes function,” he says, referring to the levels of inputs before him while taking technology-related decisions. He does acknowledge though that technologists speak a different language from the rest of the business departments. “I don’t look at myself as limited by technology though,” Kondedera counters, “It is more important to have the ability and will to do something different.” Changappa Kodendera He joined Sapient Technologies in 1994 immediately after Vice president & CIO, his Masters in Computer Technology from the Massachusetts Sapient India Institute of Technology. After a few years of working in the US, he was offered the responsibility to set up and expand Sapient in India. Kodendera began his new assignment in 2000, taking over the role of joint managing director of Sapient’s Indian arm in Gurgaon. Thereafter, a significant amount of the processes involving application development moved to India By 2004, the company had expanded to two centers — the second one came up in Bangalore. With growing IT operations in India, Kondadera was identified for the post of CIO. In effect, he had moved from the position of joint managing director to global CIO, and then to the position of vice president (infrastructure planning). — K.G.

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was studying the order-to-cash process. “While mapping out the process in detail, we learnt that there were issues in handoffs, leading to weak credit control. They were actually not able to pinpoint what credit was actually being extended,” he recalls. This was hidden in the daily rush of activities, but was serious enough to have the head of sales insist on an immediate redesign of procedures. The lack of an overview of key processes can lead to hidden risks, Balaraman points out. Still, it is one thing to have a seat with a view, “and it is quite another if you have to decide on whether to invest in a business, evaluate a product launch or come up with a solution to gain market share. That requires getting involved,” he says. At Godfrey Phillips, Balaraman wore two hats that gave him an edge over the conventional CIO. “The strategic viewpoint of one and the operational details of the other complemented each other, making both jobs easier to execute,” he says. Towards this end, Balaraman put the building blocks in place a long time ago. A mechanical engineering graduate, his interest in an MBA from the IIM in Kolkata was primarily because he recognized the fact that while engineering would help him on the technology front, the management training would help him acquire a base in business acumen. Certainly, one important trait for a CEO is the skill to deal with uncertainty — be it an opportunity or a threat. “CIOs have an experience base that places a premium on de-risking and not on capturing opportunities,” opines Balaraman. “Apart from a skill base, it requires a significant outward focus on what is happening in global, national and local economies.” In every organization, there will likely be organizational politics but that should not make a CIO write off his involvement or allow egos to come in the way. Balaraman’s advice for technology heads aspiring to be business heads is: “Start thinking like a CEO right now. Make a lot of business suggestions. The number of suggestions that get implemented and the number of times the current CEO asks your opinion on business matters are the metrics to track your own development.”

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Cover Story | Leadership

The Ent repr e n eu r

Seek Pursue

CIOs can go beyond their core domain if they build ties with functional heads — and seek to learn even what is not part of their job.

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Dr Sridhar Mitta saw the IT industry come of age

from a vantage position at Wipro — and acquired expertise on the job. Unsurprisingly, during Wipro’s successful transition from a vegetable-products manufacturer in India to a global IT services company towards the end of the 20th century, Mitta himself went through a metamorphosis: from a CTO to a leader. He wasn’t alone. Other Wipro leaders like Ashok Soota, who founded MindTree Consulting in 1999, had turned entrepreneurs and strategic planners. The change was a product of organizational support as much as individual initiative, notes Mitta, attributing the personal growth stories to the environment at the Rs 14,227-crore Wipro Technologies. Today, Mitta is best known as the managing director and founder of Entrepreneurs for Entrepreneurs (e4e), which facilitates deployment and management of business processes. It started off in 2000 as a venture capital firm that invested in five fledgling enterprises, one of which went public: Aztec Software. The other four enterprises were integrated under the brand name of e4e, where Mitta now heads technology strategy. A CIO, he asserts, must seek to traverse beyond his core domain: technology. It all began very differently for him at a time when IT was far from becoming a buzzword. Mitta got his M. Tech in electronics at IIT Kharagpur. He sensed the invasion of the silicon chip, which led him to pursue a Ph.D in computers. In hindsight, he is convinced that a CIO who learns and uses new skills for further learning goes beyond his domain. A knowledge base in technology, in general, and computers and IT, in particular, prepared him for a paradigm shift in business caused by the advent of ICs. However, it was a good two decades before IT became the mainstay of business processes. Mitta’s tryst with IT on the corporate playground had only started by then. In 1973, he joined Electronics Corporation of India, where he developed real-time applications in the areas of space and atomic energy. During this stint, he was involved in designing applications that tracked and managed satellites like Aryabhatta and Bhaskara. He also served as senior technical officer on defense projects, designing real-time messaging systems for the army and air force. As a hobby, Mitta began independent research in import of chips, and made his own computer, which ECIL later helped launch as its microcomputer: the Micro78. REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

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Cover Story | Integration

The Entrepreneurâ&#x20AC;&#x2122;s Top Priorities

Self-development

Communication

Business Networking

Research

Mentoring

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In 1983, he received an interesting offer from the vanaspati company that was looking to open a computer division! After several discussions, Mitta accepted it, joining Wipro as an R&D manager. By 1998, he became the CEO of Wipro’s U.S. subsidiary. He attributes his rise to an inclination towards business, besides a keen interest in R&D. “I am only a doctorate in control systems,” he says modestly. “I was surprised when they gave me R&D when I was not even a computer person,” he adds, noting that the organizational support lay in the time that Wipro invested in him. The business bent of mind is a key area for CIOs’ upward growth, he asserts. “I used to read import policy documents even as a CTO. I did not have to do it, but I took an interest in knowing,” he recalls. “Similarly, I would attend almost all meetings of the corporate executive council, which helped me know other things that were happening.” The penchant for commerce perhaps came naturally for Mitta, who comes from a business family. His stint as the operations controller at Wipro gave him insights into almost all aspects of the company, and prepared him for higher positions. “The best thing that happened to me was: respect for other departments. Their issues were more visible to me,” he notes. Communication is an area that calls for attention if a CIO needs to rise above his rank, feels Mitta. It is well known that communication is the Achilles’ heel of many technocrats, but he says it can and must be acquired. “All departments — finance, production and purchase — speak different languages. I have made an effort to understand the language of market demand, so that I can understand how technology can help develop better and more products,” he explains. Mitta’s IT prowess helps him understand the commercial viability of these products. “I can explain their advantages to the marketing folk,” he says. The trick, in his words, is to “understand each person and sell the money story — to marketing or finance.” He recalls a project at Wipro when he required Rs. 2 crore to pursue a chip design, but that amounted to half of his capital budget. Mitta knew that of the

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How to Get Ahead of the Curve Unlike their counterparts in finance, marketing or HR, CIOs in the job market have yet to evolve as business managers, says consultant Ross D’Silva. “They continue to have the mindset of a back-office person,” says D’Silva, who runs Ross D’Silva Associates, a consultancy that recruits senior-level management professionals for industry. In fact, the primary reason why few CIOs make the cut is because business leaders themselves tend to treat IT function as secondary to all other functions, he notes. “Due to this kind of treatment, frustration does build up at some levels,” he explains. “The desire for change is universal in present times, more so among the younger lot (below 45 years) who seem restless despite a booming job market and escalating salaries. As a result, CIOs often seek change out of the core function and out of IT companies — to non-IT companies,” he adds. Still, CIOs can get ahead of the curve leading up to other C-level positions, says D’Silva, if they pay attention to the following basics: ross-functional Perspective: A CIO must seek to carve a niche in his enterprise, and C get involved in wider areas such as strategic thinking, risk management, management of internal complexities relating to people, etcetera. xternal Focus: Build social and intellectual capabilities required to deal with and relate E to people in external constituencies, such as the investor community, regulators, political leaders, bureaucrats, and advocacy groups. Experience reveals poor participation and contribution, even by senior CIOs in business decisions at top management meetings. Even outside the office environment at, say, social gatherings, CIOs tend to talk technology — not business. ye on the Future: View the long term for new trends and new opportunities. Focus E on tomorrow’s business, cut through details, and have the courage to make large commitments. Create new resources — capital and technology. evelop Leadership: Build a pipeline for future leaders by identifying and developing D leaders for different functions and at different levels. Work toward building your company’s leadership brand, and be the face of the company. — K.G. Rs 2-crore spend, hardware and software tools accounted for Rs 1-crore each. “I was confident I could train people. But before that, I caught the CFO and learnt that he had a lot of unused money at the end of the previous year: about Rs. 50 lakh-60 lakh. So, I went to Soota and said, ‘Sir, let’s buy Sun workstations worth about Rs 80 lakh’,” Mitta recalls. But software was still a problem. So while Soota sought details from the CFO, Mitta identified a company in the U.S. whose core competence was chip design. “I told VLSI, ‘I’ll get you hardware, and you get me legal software.’ They were fine with the proposal. I now had both software and hardware.” Subsequently, Mitta decided to invest six months to train

chip designers. He depended on VLSI, again, to train and use the designers over the period — at no cost at all. “These guys were so good that they started designing in two months. They would come back with designs; I also had a set of people who were ready to start manufacturing. Meanwhile, I got our first contract,” he says. “If I had not taken a part-technology approach, it wouldn’t have worked,” Mitta adds. “It also depends on how the organization thinks. Both the individual and the company need to go beyond the domain of specialization,” he says. “…to grow, they have to be very good at their own domains, and also learn about other domains. A CEO has to know enough to ask everyone questions.” REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

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Cover Story | Leadership

T he Fu turi st

Technology Vision CIOs are strong candidates for the CEO’s role because they know what future technologies can do to a business, feels Quintiles’ Lalit Pai.

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From the C-level, if anyone is going to make the jump to CEO, it’s probably going to be the CIO, believes Lalit Pai, executive director for the ECG services division of Quintiles, a research organization which serves the healthcare and biotechnology sectors. It’s a tall claim, but Pai backs it with reason. “In today’s scenario, it’s easier for a CIO to become a CEO more than anyone else, because they can see the impact of technology in the future,” says Pai emphatically. With the falling cost of technology, most organizations have fewer reasons to curtail technology deployments, which furthers the case for CIOs, he adds. As more businesses pump more money into technology, it’s an argument that is hard to get around. A recent IDC report on India, for example, shows that 200 of India’s biggest spenders invested an average of 27 percent more in IT. “The CIO, sometimes even more than the CEO, can actually develop a vision, or be part of the senior management that develops the visions for any company,” says Pai. But what really got him on the road out of technology-ville was running his own show. During the dotcom era, he joined a software solutions company aimed at the SME segment as a project manager. The company was called Internet Resources (IRPL), which later closed down. During his stint there, however, Pai learnt what it was like to call the shots. “The owners lost interest after 9/11, so we bought IRPL out,” he says. “We ran it for two years, increasing consolidation when spends [in the industry] were falling.” During a marketing trip to Mphasis, from whom IRPL wanted subcontracting work, Pai received an offer. He joined the ITES company as a business manager, which ended his stint as an operational head at IRPL, but continued his education

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The Futuristâ&#x20AC;&#x2122;s Top Priorities

Technology Vision

Business Exposure

Better Communication

Lalit Pai believes an ambitious CIO needs a supportive environment to succeed.

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Cover Story | Leadership as a future business leader. “I was moved to Singapore to head the APAC region for Mphasis. As business developer, I was doing a similar role, but with profit center responsibilities,” he says. The shift in jobs was not atypical of Pai’s career graph. As a chemical engineer, he started as a financial strategist at Citicorp Information Technology Industries in Mumbai. He later earned an MBA degree from the IIM in Kolkata and joined the Tata group as strategy planner for Tata Industries’ portfolio companies. Does he believe that his MBA provided him a foothold on the corporate ladder? It has been years since he passed out of IIM, but Pai is clear about where he stands on the debate. “I’m not so sure an MBA is necessary

to have to move beyond the CIO role. I’m sure it is helpful, but is not essential.” Pai only zeroed in on IT as a career during a stint at PriceWaterhouseCoopers (PwC) in the late 1990s. At PwC, he was part of a small group entrusted with the task of studying what the IT industry was all about. “About a decade ago,” Pai recollects, “IT was a nascent industry and it was the job of a strategist to understand why people should use IT, how they should use and measure it,” he says. This period provided him a very important lesson, one that probably shaped his career. It also formed the basis on which his team advised PwC clients. “This was our message to all the people we consulted for: IT is a means to an end, not an end in itself.”

3 Steps to Fortify CIO-CEO Bonds A recent Forrester survey found that CEOs are generally satisfied with IT. But it also showed that while CEOs would like IT leadership to drive business innovation and lead process improvement, less than one-third of CEOs really expect IT to be proactive in either area. Over half of the CEO respondents said they were unimpressed with IT’s ability to report on people and equipment assets. One thing CIOs can do is strengthen their relationships with other business leaders. Here are three steps: If you’re resting on the laurels of the CEO’s low expectations, stand up. If the gap between high satisfaction and low expectations characterizes your company, shake off the lethargy and brainstorm with your staff about what can and should be done differently. Move IT practices and processes to a higher level of maturity and stability, making sure that IT is well connected to business strategy and that business stakeholder relationships are well managed. If you’re doing more than the CEO can see, market it. If part of the gap in the perception of IT leadership is simply ignorance of the impact that IT is having on the business, your first task is to improve communication. Help the CEO understand IT in business terms, mapping business improvements to their underlying IT enablers. If an IT project accelerated the speed of servicing a customer, make sure that the boss knows. If the CEO and top executives don’t understand IT, educate them. Get on the agenda of an executive off-site gathering so you can provide an overview of IT’s basic vocabulary and current capabilities. If you don’t take on the task of educating the CEO and other executives about the business impact of technology, no one else is likely to pick up the slack. It is clear that IT and business initiatives and strategies will increasingly have to intertwine and overlap — forging a new business/technology organization and making the boundaries between business and IT more permeable. But to get there, CIOs will have to shatter stigmas associated with IT and forge stronger relationships with the top decisionmakers in their organizations. — Laurie Orlov

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Later on in his career, the environment of the industry exposed him to another important lesson that CEOs learn early in their careers: dealing with high attrition. “It’s the biggest challenge CIOs face today,” he says. “Working with this is what gives the CIO a definitive peek into the function of a business head. The CEO position is merely a larger version,” Pai elaborates. Another thing he believes is essential for “CIOs to become better CIOs and then maybe a CEO” is the right exposure and a supportive environment. Quintiles, a Rs. 16,000-strong healthcare company which has helped develop or commercialize every one of the world’s top 30 bestselling drugs, gives him both. “The management has been very supportive about this transition. And in many ways, on-the-job learning has been very useful,” says Pai. “It’s about being part of a global team where mentoring and exposure helps much more than theoretical information. Being a part of guided decisionmaking helps us understand what will work, what will not work, and really provides good training,” he adds. In Pai’s opinion, CIOs almost always need to improve communication skills to advance in their careers. Many a time, CIOs — and their entire technology team — speak a different language from other business groups, he says. This, in the long run, affects the functioning of the IT department and may even have an impact on the CIO’s career path, Pai adds. “IT, like any other unit of the organization, has to deliver a certain impact on a business process. So, if two parts of the company are talking of change and future, they will have to be specific, and preferably talk the same dialect,” he adds. CIOs also have a good appreciation of budgets and working with constraints, says Pai. Justifying IT expenditure is in-built into the KRAs. “At Quintiles, we have a significant IT budget which comes in a capital constraint scenario. If you ask for an increase, you have to convince someone as to why you should get that allocation,” Pai says. This, he feels, provides a complete view of financial planning, something that is advantageous to Pai, now an executive director.

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Cover Story | Leadership

The SELF-MOT IVAT OR

Value Visibility Ambitious IT leaders should learn to speak the language of business and get out of their comfort zones.

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Leaders-in-waiting sometimes lament that they weren’t at the right place at the right time. But they tend to overlook an important detail: the homework required to take advantage of a situation’s potential. When Varun Jha, VP of Tata Steel's Chhattisgarh project, started his career in 1972, he was armed with a degree in electrical engineering from IIT Kharagpur, and a management diploma from the Xavier’s Labor Relations Institute in Jamshedpur. Crucially, in his first few years, he involved himself in a project to build an IT system to manage projects — and succeeded. “My move to IT was triggered by a sudden vacancy in the CIO’s position,” he recollects. Right place. Right time. And, thanks to his exposure, the right man. For over a decade, starting in 1994, Jha headed IT at Tata Steel. Some of the work he led included SAP R/3 for a number of modules, data warehousing and data mining projects, e-procurement, e-auction and other e-enablement initiatives. Jha believes that his willingness to move outside his comfort zone — exemplified by his participation in an IT project beyond his ken — has been the most important factor in his rise to a management position. Today, the Tata Steel veteran is VP of a greenfield project in Chhattisgarh, and also sits on the board of a group company, Tata Yodogawa. “In retrospect, REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

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Business Acumen

Leadership

Strategic Thinking

Communication

Integrity and Values

Varun Jha believes a CIO can benefit most by choosing the CEO as his mentor.

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Cover Story | Leadership the major transitions in my career have been a result of three factors: skills and competencies I acquired from experience, a willingness to move outside my comfort zone, and opportunity,” says Jha. But does he believe that a CIO can step into the shoes of a CEO? Jha is a bit skeptical. “The question is whether a CIO qualifies. My short answer is no,” he says. The CEO’s primary responsibility, he feels, is to create shareholder value and CIOs, he adds, do not typically have any experience in running a profit center or value-chain activities like production or marketing. “The move to my current role is not a natural progression from a CIO’s role, unless you count my earlier experience in engineering,” Jha says. Still, Jha believes he learnt a lot by being the CIO. “Being a CIO was a great advantage,” he says, “as I was able to appreciate every part of the business and how they came together to create business value.” Jha says the position also allowed him the opportunity to interact with “business leaders and in knowing and shaping their agenda. This helicopter view has been a great takeaway,” he says. Jha also thinks that there is scope for technocrats with big ambitions to aspire for positions short of the CEO’s. To simulate the hands-on experience of running a business, CIOs should run IT as a business. This involves several steps like positioning IT as a shared services, signing SLAs, introducing charge-back and outsourcing commodity services, to allow a focus on strategic areas. But first, Jha thinks IT leaders need to gain credibility by addressing current issues, objectives and priorities. CIOs who don't demonstrate IT’s potential have not done their duty and will be left on the periphery, he says. “CIOs needs to work with the CEO and the senior management team to define a new agenda for IT,” something integral to the company's growth, says Jha. It's also important to speak the language of business, he says. “Many CIOs feel more comfortable speaking of technology, little realizing that business users see technology only as a means to an end,” says Jha. “Users are more interested in information than

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Double-duty CIOs Al-Noor Ramji is a triple threat. When Ramji was hired as CIO at BT Group in August 2004, he was simultaneously named CEO of BT Exact, the London-based telecommunications giant’s IT and operations business, which serves both internal and external customers. Last October, Ramji was also made responsible for overseeing the enterprise’s end-to-end customer experience. Unusual? Not given Ramji’s track record. As part of a companywide IT-business alignment effort that he launched in January 2005, Ramji and his IT team have been tracking measurements such as how quickly internal and external customers receive technology and how satisfied they are with it. When CEO Ben Verwaayen saw how customer-centric Ramji’s areas had become, he tapped Ramji to oversee BT’s customer-facing activities as well. The number of IT chiefs who wear two or more hats seems to be on the rise. “It’s being driven by a perception that they’re doing a good job and they’re trusted,” says Cathy Hotka, a former CIO who is now the principal at consultancy Retail Insiders. “If the CIO is viewed as the go-to guy because of his broad background, the CIO is often asked to do a job until they can fill it with [another] executive,” says Stephen Pickett, CIO at Penske in Michigan. Those temporary fill-in jobs have a tendency to become permanent. It can be a stiff challenge for CIOs to oversee different functional areas, particularly when those activities don’t dovetail with one another. At Interstate Batteries, CIO Merv Tarde picked up oversight of both facilities and real estate about three years ago. “Property management doesn’t really integrate with IT, but facilities do,” says Tarde, noting that IT recently led a rearrangement of corporate space, partly because computer cables and telecommunications lines had to be rerouted. Double-duty CIOs often rely on key staffers to help them juggle two or more jobs. “I don’t find [the workload] horrendous because of the way I’ve organized my direct reports,”says Dennis L’Heureux, CIO at Rockford Health System. L’Heureux was tapped to oversee the healthcare provider’s major construction projects and architectural services division four years ago. And two years ago, he was put in charge of planning, because his CEO wanted “someone who could get things done,” he says. To help him, L’Heureux has assigned vice presidents who report to him to manage planning, architectural services and strategic information. That enables him to stay on top of almost everything. “It’s very difficult to keep up with all of the IT stuff, including new trends in technology,” says L’Heureux. “There’s more new information thrown at me from the IT side than anything else.” —Thomas Hoffman

in information technology,” he adds. An approach Jha finds useful is communicating key business performance indicators to management. An example, he says, is the way ERP teaches IT managers that technology is not an end in itself — but a means to support business. “For me, [ERP] brought out a greater focus on business processes and also involved business users in configuring the system,” he says. Ambitious IT heads need to take up a wider, more visible role — “more outside-in than inside-out, more into shaping demand

than an order taker, more marketing than delivery,” as he puts it. Finally, Jha believes the CIO must align closely with his chief executive in order to rise to prominent management positions. A CEO can assist a CIO's growth more than other business leaders, he says. “The CEO can be the best mentor for a CIO.” CIO

Special correspondent Kanika Goswami can be reached at kanika_g@cio.in

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

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Feeding An Acquisition Frenzy

BY Kunal N. Talgeri United Spirits, the flagship company of the UB Group, recently acquired the Scottish spirits maker Whyte & Mackay in what was the biggest global buyout for the Rs 2,712-crore liquor company. The acquisition reflected its renewed desire for growth and came two years after it bought out its nearest Indian competitor, Shaw Wallace. But if United Spirits is going to realize potential synergies in its quest to become the world’s leading maker of alcoholic beverages, it needs to meet integration challenges head on. In this interview, United Spirits president Vijay K. Rekhi, a 30-year veteran in the industry and a long-time UB Group executive, explains the company’s vision as it has evolved, and talks about the opportunities that inorganic growth offers.

CIO: Over the past two years, United Spirits seems to have realized a great part of its vision, thanks to acquisitions. What next? Vijay K. Rekhi: United Spirits aspires to be the world’s largest player in the alcoholic beverages domain. The liquor industry is at the point of vertical take off.

Different parts of the world are at various levels of the experimentation curve in their search for new flavors, forms, etcetera. India, particularly, is experiencing a new high in the premium spirits segment — browns, with whites not too far behind. United Spirits has always been a leader. It will continue with this spirit of leadership by introducing new products to meet novel and emerging market needs. It will also innovate

Imagin g by Bines h Sreedharan

Vijay K. Rekhi, president of United Spirits, sees the company’s buyout binge as yet another leap to reach out to new consumers with compelling brand propositions.

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View from the Top

VIJAY K. REKHI expects I.T. to: Be the backbone of future initiatives Facilitate a common organizational culture Maximize opportunity and minimize risk

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View from the Top

What is the role of the CIO in management decisions at United Spirits?

further to engage consumers, and introduce a wider and deeper global portfolio.

Is it a challenge to integrate the new entities? Our history of acquisitions dates back to the 1960s. This has been accompanied by an intense evaluation of corporate and brand values, and perceptions to ensure a harmonious partnership. Acquiring new entities — brands that are leaders in their own space — has catapulted us into further positions of strength. The personalities of the acquired entities are distinct and yet complement ours. Hence, we view this chance to take yet another leap in reaching out to new consumers with compelling brand propositions as an opportunity — not a challenge.

Can you describe how United Spirits approached its periodic restructuring that has typified its growth story in the 21st century? The integration process has been gradual. Our team leaders go through extensive discussions with employees to cascade organizational values and vision. Reflections of this integration can be found in our advertising campaigns, design templates, internal communication, thematic campaigns, etcetera. Considering the role of acquisitions in our business strategy, integration is an ongoing process.

The choice of an inorganic growth path must have brought up challenges, especially in HR and government regulations… Government regulations for the spirits industry have largely remained unchanged for the last few years. We abide completely with the rules laid down for communication, packaging, taxes, tariffs, etcetera. Like any 50

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“IT is the backbone of our future initiatives. Acquiring new entities has catapulted us into further positions of strength.” — Vijay Rekhi other business, we have factored in the constraints of the market and have evolved our business strategy with a fine balance between market needs and market regulations. We are an employer of choice in the spirits domain. Our employees go through a constant process of learning and receive multifaceted exposure. As the Indian economy has evolved with the opening up of several new sectors including retail and IT, we, like most other companies, are not insulated from this phenomenon. However, there are as many people outside United Spirits who are looking for a career break in this landmark company. So, it isn’t really a major challenge for us

What difference has the SAP implementation made? IT is the backbone of our future initiatives. Our experience with the SAP implementation is nothing short of their promise: minimizing risk and maximizing opportunity.

The CIO's role is critical. It is the only way in which United Spirits can define IT teams and systems. From an internal perspective, it is important to manage the growth of manpower, on the one hand, and still ensure connectivity as well as the cascading internal communication campaigns. The IT role also meets the needs of our external partners, investors and consumers to understand the direction of our future growth.

What are your expectations of IT as a force to drive business at United Spirits? The greatest story of an FMCG leveraging the e-space is the e-choupal initiative. United Spirits is not far behind in leveraging the e-space to bring our employees to a common platform, cascade our vision, mission and values and facilitate the evolution of a common culture, a common language. Externally, today the consumer is more e-savvy than ever. Hence, at the brand level, we have several initiatives underway.

Is United Spirits ready for the global market? As we stand today, we export to 59 countries. We have established operations in China, Russia and now in Scotland. We are already a global player.

As a global player, United Spirits needs to comply with global regulations. How are you meeting this challenge? We work with the laws of the land. In whichever country we take our drive for expansion, we will ensure that we comply with local regulations. CIO Chief copy editor Kunal N. Talgeri can be reached at kunal_t@cio.in

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From Here to o

By Thomas Wailgum

Study after study indicates that agile methodologies produce better results in software development and project management.

So why have so few CIOs adopted them?

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Project Management

arm Credit Services of America doesn’t sound like an organization that courts controversy. The cooperative association makes loans to more than 66,000 Midwest farmers and cattle ranchers so that they can buy cows and pigs and tractors and backhoes. Its main reason for existence — providing Rs 44,000 crore of operating capital and real estate financing to those who feed America — is as homey as the images of corn fields, gently rolling green pastures and rugged, resolute farmers that adorn its marketing materials. It’s also based in Omaha, known more for steaks than as an avant-garde laboratory for one of IT’s most hotly debated development methodologies: agile programming. But agile is exactly what Farm Credit Services has embraced, whole hog.

The Agile Advantage

many others. “We got requirements and would build [the applications], and nobody was happy at the end,” says Farm Credit Services CIO Dave Martin. One particular project, which was a migration from a mainframe-based customer application-processing system to a Web-based version called PinPoint, involved more than 200 pages of requirements and, by the end of 2004, had taken nearly three years to complete. In the interim, the requirements and business needs had changed, and most of the members of the original business team were gone. The resulting bugfilled system was shelved not long after its shaky debut. And that’s not unusual. According to the 2006 State of Agile Development survey by The Agile Alliance and VersionOne, respondents said only 29 percent of traditional projects were 'somewhat successful' or 'very successful'. (Conversely, respondents said 81 percent of their agile projects achieved that level of success.) The Standish Group, which famously compiles its Chaos data on software project failures, reported in its 2006 research that just 16 percent of waterfall projects succeeded as opposed to 41 percent of agile projects. Standish Group Chairman Jim Johnson, who has been studying project failures for years, says it “boggles” his mind why companies still resist agile development. “To say that CIOs are reluctant to embrace agile is like saying they wouldn’t take aspirin for a headache,” he says. “And they’re not only not taking the aspirin. They’re also banging their heads against the wall and wondering why it hurts.”

Agile programming means different things to different people, but at the core of all agile development methodologies are these principles: business stakeholders are colocated with small, autonomous development teams; the teams rely less on up-front requirements and documentation than on face-to-face conversations; those conversations provide a continuous dialogue for software design, testing and refocusing. The constant refocusing, its advocates say, leads to more timely and useful business tools. Agile’s ascendancy is in direct response to IT’s dolorous history of software project failure, cost overruns and the concomitant business dissatisfaction with traditional IT Going Agile design and development — the waterfall methodology — in which development cascades through a series of steps Martin decided to “shake things up” two years ago. After including requirements analysis, design, implementation, some gentle nudging from Lou Thomas and Beth Schmidt, testing, integration and maintenance. But for a variety of his directors of applications development, the team adopted reasons, not everyone has warmed to agile. Scrum, which has two-week iterations In fact, just 17 percent of North American and (called sprints), daily meetings, and frequent Reader ROI: European enterprises use agile development iteration reviews and testing. “Our premise How to change the processes, according to Forrester Research’s is to have potentially shippable product culture of development Enterprise Agile Adoption in 2006 survey. every two weeks,” says Thomas. How agile can lead to Farm Credit Services welcomed agile At Farm Credit, there are six development IT-business alignment programming because the waterfall method teams composed of a business analyst, Tips for managing the had been failing the organization, as it has project leader, lead developer, two or three agile way

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Project Management developers, a database engineer, one to three business owner participants and a QA engineer. In place of reams of requirements, development teams write 'user stories' as the project progresses, detailing business functionality enhancements and technology, successes and challenges. “User stories are the main mechanism to convey the business needs,” Martin says. Farm Credit’s waterfall projects used to average 100 or so defects per rollout; agile ones now average zero to two. “We’ve rolled out five key products with phenomenal results,” Martin says. “In each case our business owners are ecstatic with the end result.”

Agile, Agile Everywhere? Well, No CIOs say they have either abandoned waterfall methodologies or are gradually phasing them out. “I don’t

The Trouble With Agile

Are You Agile? lots of companies claim to be agile. But are they really? Figure out if you are. You might not be agile if. . .

The 'Send/Receive' and 'Save As' buttons initiate most team communication.

Your whiteboards are mostly white.

'Test-driven' still refers to your car.

4 5 6 7 8 9

You don’t yet know what PHB stands for. (It’s the pointy haired boss in the Dilbert comic strip.) You know that CPM stands for critical path method of project management, and continue to rely upon it. You spend more time trying to manage project dependencies than remove them. Someone still believes in the 'Can’t Chart'. (oops, that’s the Gantt chart.) Developers only develop, testers only test, and managers just manage. Simplicity is presumed to be simple.

A change control board meets . . . ever. Source: Versionone

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do the ‘I’ll deliver everything to you in 18 months',” says Raymond Dury, CIO of Fifth Third Bancorp in Cincinnati, who has adopted an agile method called Extreme Programming. “That’s long gone.” But waterfall processes are not, in fact, long gone. In addition to the aforementioned Forrester survey (just 17 percent using agile), a March 2006 survey that polled readers of Software Development magazine and Dr. Dobb’s Journal found that 60 percent were not using any agile methodologies in their organizations at all. Perhaps not coincidentally, CIOs are actively looking for project management assistance. Almost three-quarters of CIO readers are either 'extremely interested' or 'very interested' in finding out how to improve their project management discipline, according to our latest survey. All this leads to one obvious question: if agile development is so darn good, then why hasn’t it been universally adopted?

The ceremonies of software development are deeply ingrained in IT. With traditional waterfall processes, the business throws its requirements over the wall to developers who hole up and start coding as they see fit. An 18-month target date can seem like decades away. Lost afternoons are no big deal. Who cares what the 'lusers' (coders’ derogatory term for users) really want? “A lot of people on the IT side thought [agile] was the flavor of the month,” Martin recalls. “Some just said, ‘I’m not going to do it’.” (Those programmers, Martin says, have been churned in agile’s wake.) Opposition to agile methods also can come from enterprise architects, project managers and quality assurance staffers, says Carey Schwaber, a senior analyst for application development at Forrester Research. Enterprise architects worry there’s not enough up-front design with agile, and the consequence is spaghetti code. Agile teams are self-managing, and the project leader’s role shifts dramatically — from ordering around to facilitating. Since QA testing happens during the process, and not just at the end, there’s usually resistance from the testing folk. Misapprehensions about agile still run rampant in IT organizations. Eugene Nizker, a former financial services CIO and current consultant, ticks off the most infamous ones: agile teams do not plan. Agile teams skip design. Agile teams do not test. Agile means no documentation. In addition, executives can feel left out of the daily scrums and sprints of agile life, engendering insecurity at top levels. All this has hindered agile’s acceptance, says John Scumniotales, one of the creators of Scrum. “It’s easy to talk about the value of building software this way, but if I’m betting my enterprise on this project, senior management

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Project Management needs some controls and visibility into the process,” he says, citing the need for an agile-specific tool that functions like a Gantt chart, which visually illustrates project progress. “That’s where we need to get to,” he says. But given the epic floods of waterfall failures, CIOs owe it to themselves and their organizations to get agile. “The world just doesn’t hold still and wait for 18 months anymore,” Fifth Third Bancorp’s Dury says.

Case Study: Quick to Market Dury hasn’t abandoned traditional development processes at his company, which has almost Rs 400,000 crore in assets. Some development projects, he says, such as those that affect base infrastructure or intensive SOA projects, just “can’t handle the type of intense change” that comes with agile methodologies. But he’s excited about his team’s adoption of Extreme Programming. The head of the bank’s retail product line told Dury about a new product the bank wanted to sell, an investment tool (which would later be called Stock Power CD) that would offer customers stock market-based earnings potential on their certificates of deposit. In truth, the bank was playing catchup. “We were probably missing the market [for this type of product],” Dury says, “and we wanted to be in the market.” So speed was key. Using Extreme Programming tactics, his team talked through solutions that would meet the business needs quickly and be technically feasible. More conversations ensued with retail banking (lots of face-toface time, little up-front documentation). Two development teams, working in concert with each other and the consumer banking and retail line departments, formed within IT: the investment adviser team and the CD development team. The teams worked closely with the bank’s affiliates (which would eventually sell Stock Power CD) and investment advisers to satisfy legal and financial requirements. Extreme Programming — daily huddles and continuous business input, as well as recurrent testing — “created the urgency to provide this service to the customers ASAP,” Dury says. Just four weeks after the initial conversation, several of Fifth Third’s affiliates started offering the Stock Power CD product. “Normally, a new deposit product introduction would take about 90 to 120 days,” Dury notes, adding that the new product created “significant additional deposits.” Dury says he couldn’t imagine doing this project any other way. Along with the faster time to market, it also

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enabled “a closer working relationship with the business side” and enhanced the business’s confidence “in our ability to deliver and meet expectations.”

The Alignment Add As Martin’s and Dury’s stories show, agile demands constant dialogue between the business and IT. Co-locating the business and IT team members engenders a kinship that’s usually absent in traditional software development. “They’re on the ride with you,” says Ajay Waghray, Verizon Wireless’s CIO of the Midwest US area. “If something is not going right, they’re partnering with you right there.” CIOs who have adopted agile methods say that changing their relationships with business stakeholders can have surprising results. Waghray recalls conversations with key operations and marketing executives in which he used a more agile approach. “I would tell them on the call, ‘I don’t want any requirements. What do you want? Just tell me, and we’ll talk about it,’” he says. The executives asked if they should write down what they wanted. “And I would say, ‘No, no, no. Don’t give me requirements’.” The approach, he says, “was foreign to people.” Verizon Wireless’s VZ Navigator product, which provides users with turn-by-turn, voice-supported directions on their mobile devices and has become one of the company’s most popular mobile services, was heavily agile-influenced. Waghray’s team consisted of stakeholders from IT, sales, customer care, marketing, training and finance. The team’s main focus, Waghray says, was to develop the 'simplest complete' solution right away, and then build upon that to make better solutions. “The reason it was successful was that the [agile] methodology encouraged constant communication and alignment across all stakeholders, leading to parallel development of not only the IT solution but also of training documentation, test cases, external and internal interface validation and development, and user communication to get them ready for launch,” he says. To many of the businesspeople on the team, the results were shocking. They told Waghray that this project should have taken three times as long as it did, which was roughly eight weeks from start to finish. According to Waghray, the VZ Navigator project “made a significant and immediate impact on the bottom line and it has now enabled an organizational capability to do this with similar REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

Who (and What) Is the

Scrum Master?

The best way to implement agile processes is your own way.

his year, researchers from Massey University in New Zealand set out to determine whether agile development truly was better than traditional development. It truly was. But they also discovered that companies that used more than one agile method had more success. The most effective combination was Extreme Programming (XP) coupled with Scrum. “It appears that successful adoption of an agile approach does not necessarily just mean selecting an individual method,” they wrote. “Rather, it may be better to consider blending multiple complementary methods.”

You can read an online version of the paper at http://www.cio.in/resource/ w h i te Pa p e rs /v i ew W h i te Pa p e rs / WPID=180. CIos, analysts and experts advise on starting with a blended, customized agile approach. “I find people saying that they’re taking a little of each and creating their own agile process. You don’t have to be religious on these things,” says Jim Johnson, chairman of The Standish Group. “In turn, they were able to bring success rates up and deliver better products and services to stakeholders.” Scott Spencer, VP of engineering at First American Corelogic (FAC), has been using agile processes at his

company for almost three years. FAC is the largest provider of property and real estate data in the US, and Spencer’s 12 development teams span the globe — on the West and East coasts and in India. His teams all employ Scrum, but he’s done his bit of customizing. “I don’t know anybody doing pure Scrum or pure XP,” he says. “It’s hard to do.” In Scrum there’s no concept of a project manager. But Spencer uses a staffer in a project manager-type role (called the Scrum master), which works more effectively with his development teams. “You have to map agile to your existing organizational needs,” he says.

— T.W. products.” It is “a culture and timing change,” Waghray says of the process, “but I have never gotten more accolades from a business project.”

Managing the Agile Change Since agile teams are designed to be autonomous bands of rapid change agents making critical business decisions on the fly, the once-immutable laws of project management shift dramatically. Because waterfall’s typical 18-to-24-month development times are reduced to two-week windows, every day of development and every conversation become critical. In Dury’s IT shop, mornings start with a team huddle and a breakdown of what everyone is responsible for completing that day. “We don’t need to talk about what gets done three weeks later — this is what we want to do today,” Dury says. “We don’t want to lose days.” It’s incumbent on CIOs to set the new expectations — teamwork, openness, collaboration — for everyone in their agile group. “There’s an expectation of collaboration. You can’t just go work in your own little world,” says Farm Credit Services’ Martin. “There’s also a new visibility into the work and, in some cases, the non-work.” Those team members who resist, however, will more than likely find themselves out of a job. (An old Persian saying seems appropriate for CIOs to remember: the dogs bark, the caravan passes on.) Scott Ambler, an agile expert who works as practice leader for agile development at IBM, suspects that many developers, requirements analysts, and data and testing staffers are worried about agile’s careerchanging consequences. “They have likely worked on a slew 58

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of failures, and they often feel powerless to change things. Worse yet, they have the threat of outsourcing hanging over their heads,” Ambler says. The CIO’s job is to manage the anxiety and ensure that his team focuses on producing high-grade software in a timely and cost-efficient manner.

A Long Look in the Mirror Skepticism is the word most often used when CIOs and analysts are asked why so many CIOs have been cool toward agile software development. Without the CIO’s backing, and support from influential business stakeholders, agile’s software development and project management time and cost efficiencies cannot be realized. “When companies don’t have a VP-level or CIO-type executive driving adoption of agile, they will run into obstacles,” says Forrester’s Schwaber. At Farm Credit Services, Martin’s agile move has grabbed the attention and support of his CEO. There are no obstacles, he says. The agile mentality has proliferated throughout the organization. Martin knew he’d made the right move when he’d heard that business teams were holding daily standup meetings — mirroring IT’s practices. “We’ve even got business units asking, How can we be more agile?” he says. Martin’s agile journey has come full circle. He’s gone from being a CIO who didn’t know anything about it or anyone doing agile, to an agile evangelist, spreading gospel at conferences, trade shows and CIO breakfast meetings. CIO Send your feedback on this feature to editor@cio.in

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Urban Cha o Taming

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Interview | Swathi & Ramesh Ramanathan

Swati and Ramesh Ramanathan, co-founders of Janaagraha, are using IT to ensure that urban planning and governance are better integrated.

By Kanika goswami

P hoto by Sri vatsa Shandilya

Imaging by U NNIKRI SHNAN AV

That India faces

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an almost complete lack of urban planning is wellknown. As India tries to telescope 50 years of economic lethargy into a decade of furious growth, its infrastructure is steadily falling further behind. Signs of it are everywhere â&#x20AC;&#x201D; in poorly made roads to financial hubs that often run on generators. What has made this situation worse are inaccurate urban maps that government departments use to plan civic amenities. So, new suburbs are built without water or electricity, and proposed roads end up uprooting water supply pipes. Applications using GIS (geographic information system) technology can help urban planners avoid such expensive mistakes and do a better job overall. GIS allows urban areas to be mapped out on a number of levels. Layered maps for water pipes, roads, property, electoral areas, etcetera, give planners easy-to-access information, a better idea of what needs to be done and the fastest, least-damaging way to do it. GIS data can also benefit urban processes by easing co-operation between various civic agencies. Janaagraha, a Bangalore-based NGO, is a consultant to the Karnataka government on implementations of GIS for urban planning. Its co-founders, Swati and Ramesh Ramanathan, talk to CIO about GIS, their ideas on governance, and how they made the Bangalore Municipal Corporation more accountable to citizens.

CIO: For years, Janaagraha has campaigned for better governance and the introduction of e-governance. How exactly does IT establish better governance standards? Swati: To put this conversation in perspective, GIS is relevant to us. GIS for governance is about using the power of maps to allow different agencies to start integrating their efforts. Using this, one can not only manage current infrastructure better, but also plan for the infrastructure of the future. It is a management tool that can provide intelligent integration between the GIS and the IT, with govern projects.

Ramesh : However, every agency today wants to implement its own GIS, which is exactly the wrong way to go about it. What they need is an integrated spatial planning center. The focus should be on managing this in a coordinated way. The question should be: how to put together all the pieces that will allow intelligent data to be introduced in layers? That is the critical part.

Urban planning rarely gets attention, despite the fact that 40 percent of India could be living in cities by 2025. Swati and Ramesh Ramanathan, co-founders of Janaagraha, a Bangalore-based NGO, seek to recalibrate a dysfunctional system with a healthy dose of IT and governance. REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

7/13/2007 4:10:24 PM

Interview | Swathi & Ramesh Ramanathan Janaagraha aims to start a spatial data center. What are its benefits? Swati: For the longest time, the only source

agencies use isolated systems, but with GIS, they have an integrated information bank.

of GIS and spatial data was the government of India, via the Survey of India. This monopoly could not be broken, since the data was defense-related. This stifles cuttingedge technology apart from the fact that a monopoly is never interested in the best.

Is e-governance doing enough? Has it affected the way we look at our lives? Ramesh: Where e-governance is

Beyond GIS, what other urban planning initiatives has Janaagraha taken? Ramesh: Fundamentally, one of our

objectives at Janaagraha is to improve the quality of governance by improving the quality of democracy. We say, in the alphabet of democracy, don’t go from E to F — for elect and forget. Stay with the letter E, which stands for both elect and engage. Today, technology enables each person to be involved on an ongoing process, like deciding who will be the next Indian idol. The same technology can be used to decide what we want for the future of our cities. Swati: There are many advantages that GIS offers to urban planning. It is a great idea for making transport choices, for instance. And, with a unified map, you can have a single agency that is looking at procurement for an entire world. Anyone can access all the data on their city and of other cities. Today, all

concerned, we are never doing enough as a society. And that’s the way it ought to be, since our expectations — unknown to us — are constantly raised. Ten years ago, for example, getting a phone connection in a year was a dream, today, if it takes a week, we’re irritated. Today, government officials are always turning to technology for solutions. Swati: One example is the National Urban Information Systems, which has funded a very large initiative to map 147 cities. Can citizens use IT to campaign for better governance? Ramesh: I’ll give you an example of citizen

participation. The Bangalore Municipal Corporation (BMC) has a Rs 1,000-crore budget from which every ward gets Rs 50 lakh a year to fix roads, street lights, etcetera. With 100 wards, this amounts to Rs 5 crore. We thought it would be great if citizens could have a say in where that money was spent — before it was actually spent. We ran something like a campaign with a few illustrious citizens. It was supported by a

2.5 lakh signature campaign. We received great response. We told about 6,000 people how they could get involved with their neighborhoods. At the end, jobs worth Rs 10.7 crore (about 22 percent of Rs 50 crore), were identified directly by citizens. You essentially made the BMC more accountable. What’s your methodology? Ramesh: We have a framework for how

cities should be run. Janagraaha’s point is: urban planning issues cannot be seen in isolation. You need a system’s view, and a system’s study on these issues. Our framework, called REED, has four pieces: R, which stands for regional, is the first leg of the framework. It states that a city’s problems cannot be solved in isolation. E, which stands for empowered, calls for more power to be given to local governance bodies — both rural and urban — inside each regional area. A city’s government needs to be responsible. E, which stands for enable, appeals for the need to give governance bodies access to relevant technology, like spatial data centers, MIS systems, accounting systems and quality human resources. D, which stands for decentralize, is possible only if the first three have been accomplished. This piece of the framework

We hear of individual champions, but they don’t rise to the national scene. They don’t because the government isn’t playing its role as a innovation accelerator. 62

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Interview | Swathi & Ramesh Ramanathan isn’t interested in money answers the need to make but in the scalability of the government accountable. government projects to use Accountability has to be their applications on. How outward, to the people — not do you build these kinds of to the government. relationships? Typically, the In order to apply REED, SNAPSHOT government doesn’t know how Janaagraha employes ABC: GIS to manage these relationships. We Advocate. We go Organization Do these initiatives survive to governments — state or coordinating the government official who national — and tell them to national spatial starts them? use systems and technology data infrastructure: to solve governance problems. Swati: And it’s not enough Survey of India There have been successes, just to outsource technology GIS Institutions in including the J.N. National to an expert. The government India / Geography Urban Initiative. (The Rs also needs to know if experts Departments: 1,00,000-crore initiative is run are delivering. The government 25 in the top 60 Indian cities.) cannot outsource that capacity, Digital mapping At the state level, we have that has to be in-house, and it centers: 3 been catalysts for an initiative requires training. This spins called SURAJ (State Urban off HR implications. Once GIS Uses In india: Public health, Agenda for Rajasthan), that has someone is trained, why re-forestry, salt 20 projects. One of them is the would he work for Rs 30,000 pan monitoring, spatial data center. There are 19 a month? The government redefining districts, atlases, planning for others, all driven by our REED needs to figure how to attract water supply, roads, framework. We also advocate and retain talent. schools, etcetera to industry, business forums, communities, etcetera. Do you believe the central We Build. It is not enough to merely government has been pro-active in eadvocate, so we need to build tools to ensure governance? practical solutions. One example is a spatial Ramesh: We know of sporadic initiatives data system so that you can have an integrated and believe there is very interesting work transport system. being done in the government. For example, We help create Capacity in personnel to the electoral roll system that the current CEO take this effort forward, since 99 percent of of the Election Commission in Karnataka is people in Indian cities don’t know anything undertaking is an incredibly ambitious eabout their city’s governance. This capacitygovernance process. building is largely on the part of citizens, but There’s no doubt that there are solutions also with the government. emerging throughout the country. And to be honest, the quality of life in India today is substantially better than 10 years ago. How do you think citizens-government Swati: Then again, look at the IAS academy partnerships or public-private partnerships curriculum, its all about rural development, help governance? where is there anything on urban planning? Ramesh: From experiences we’ve had in That’s a vacuum. Now, fortunately, we have Bangalore, we’ve seen that only the skills and the tools and we really need to power ahead. the technical expertise of the private sector can be harnessed. The government has to take the initiative and figure out how they can partner How would you rate the government’s IT with these guys. quotient? There are two kinds of PPPs. First, there Ramesh: There is lots more happening is the commercial outlook, like what a TCS inside the government than we give it credit has with the Andhra Pradesh government. for. Incredible champions exist; we have met Here the challenge is only money. But there people who are truly outstanding, in terms of is also a different kind of framework where their intellectual capacity, their integrity, and the private sector wants to be involved. It the amount of work they do. They actually

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create change. In the midst of messy systems, they are like lilies in a swamp. But a country, ultimately, is a set of institutions, which are scattered across the country. They have to deal with each other and still deliver. What role can governments play to encourage e-governance? Ramesh: We know what national initiative

can do, if they are done correctly. But, at the same time, we also know the union government can no longer impress decisions on anyone. The responsibility base in our country is so scattered — states and city governments and villages have different roles — that these groups will not accept it. The government can only act as an innovation accelerator. If there is something great happening, it should be spread throughout the country. We keep hearing of these individual champions, but they never rise to the national scene. They don’t scale up because the government of India doesn’t play its role. Are there changes you think the government should make to its approach to IT? Ramesh: They need to be a bit cautious. We

see a lot of technophiles, who put everything on a Web site and think everything else will take care of itself. For instance, there are more things needed to make BTRAC (Bangalore Traffic Improvement Project) successful, and the recent launch of BTIS (Bangalore Traffic Information System) is merely one of them. We can’t and should not romanticize the role of e-governance in a larger governance perspective. It certainly plays a very significant role but there are a whole lot of other issues. Technophiles see the world only through technology glasses. Swati: Technology is an enabler; it can only be a tool. For example, a lot of traffic solutions is about enforcement, and an application or a Web site cannot solve all problems. There has to be integration between technology and enforcement and that needs all the agencies involved. All of them have to come together and create common visions. Planning is the key, at every level. CIO

Special correspondent Kanika Goswami can be reached at kanika_g@cio.in

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Essential

technology Illustration by PC An oop

From Inception to Implementation — I.T. That Matters

Don’t blame the tools when your business process management efforts fall short. It’s the CIO who emphasizes the big picture that gets the big wins.

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Nail Down BPM Success By Galen Gruman

| The problem: you need to simplify people-intensive business processes such as managing approvals for loans or ensuring proper billing for insurance claims. The answer? Most commonly, companies look for an automation solution, based on workflow management, document management or business process management (BPM) tools. But this technology-first approach doesn’t work — and could even increase your costs. Too often, says Ron Wince, CEO of the business process consultancy Guidon Performance Solutions, companies that implement a BPM tool are left wondering why their ROI was so small or why their headcounts increased after jobs were supposed to be automated away. They didn’t choose the wrong tool, he says: they forgot that BPM is first and foremost about processes. However, other companies are demonstrating how to succeed with BPM — and proving that if you’re thinking of BPM narrowly, you need to regroup. Motorola, for one, offers a model for how an enterprise should approach BPM. The communications equipment manufacturer has long been process-driven, using techniques such as Six Sigma to understand and continually improve its processes. Three years ago, CIO

BPM

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essential technology

Patty Morrison saw that BPM technology was becoming mature enough to give her group a process-oriented tool in addition to the Web services and enterprise application integration tools widely used within Motorola at the time to help achieve three major goals: improve integration within the company, link departmental processes more closely and standardize processes across units where possible.

More on BPM The Savvion BPM tools Motorola ultimately chose were not a silver bullet, but a way to do what the company has always done: think through the processes, test out different process approaches and then implement them. “Looking at processes is important before you can do BPM. [Not doing so] is why a lot of organizations haven’t got much value from it,” Morrison says.

but also, most companies applied BPM in niches. That’s starting to change.

BPM Choices

Workflow Automation Trap

The category of business process management (BPM) software covers a lot of ground: as you choose tools, beware of the jargon, and focus on the business problem you’re trying to solve. Analysis and modeling tools help enterprises map out their existing processes and optimize them. Modeling and management tools, often used in concert with a business rules engine, help enterprises test and deploy software that implements processes — either within a BPM application that manages an entire process (such as document management) or as an automation tool that interacts with other applications and data sources to run a set of processes (like a very sophisticated scripting tool). The major BPM vendors — Appian, BEA Systems, Cordys, EMC (ProActivity), Global360, HandySoft, IBM, IDS Scheer, Lombardi Software, Metastorm, Pegasystems, Savvion, Tibco Software and Ultimus — offer suites that include modelers, asset managers, business rules engines, and process management and deployment tools. Vendor like Casewise offer dedicated modeling tools. Several vendors, such as Siemens Medical Solutions, provide BPM-based management tools for niches like health care. Enterprise application integration (EAI) tools and enterprise service bus (ESB) tools, such as those from BEA, Tibco and WebMethods, increasingly deliver some BPM functionality. Another class of related tools focuses more narrowly on automating document and workflow processes. Major vendors in this class include Adobe Systems, EMC (Documentum), IBM (FileNet) and Interwoven. — G. G.

While BPM leaders such as Motorola and AmerisourceBergen conceive of BPM as a way to orchestrate processes, most companies view BPM more narrowly, says Bill Swanton, a research VP at AMR Research — typically as document routing and approval tools for what is more accurately called workflow automation. Workflow automation certainly delivers benefits, including reduced labor costs and greater consistency in how processes are executed. “Automation is attractive because it is cheaper in the early stages,” notes Robert Sheesley, a director at the consultancy Alvarez & Marsal. For example, First American Property & Casualty Insurance started with a focus on

Efforts to build a new process often stop at the model stage and ITgets a requirement list,providing it no insight into process context and business logic. “You get in trouble when you start coding things, rather than modeling for the business processes,” concurs Judith Hurwitz, president of the Hurwitz & Associates consultancy. Drug distributor AmerisourceBergen takes a similar approach of assessing, modeling, testing and finally deploying. It too adopted BPM technology three years ago on a pilot project, and then in January 2006 acquired an enterprise license so it could use Metastorm’s BPM tools as it needed anywhere it needed, notes VP of Application Architecture and Strategy Peter Ruggerello. To date, few companies have taken BPM to the level long promised by vendors, in which BPM tools orchestrate end-toend processes across a wide swath of the business. Not only were the tools missing some important attributes until recently

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document workflow, mostly to automate repetitive processes. But it also wanted to handle rapid growth without growing its labor force as rapidly, says CIO Jim Court. “We wanted to manage processes based on business events, not just documents,” he says. The company’s desire required integration with external data sources and applications, but more importantly, required an analysis of the current process and of proposed improvements. Business unit experts and the IT group’s business analysts worked as teams on that analysis. Using Handysoft’s BPM tools, Court chose a pilot project involving policy endorsement requests; since the process flow is not linear, and there are several points involving human decisions, the project was truly about business process management rather than work flow.

Chester County Hospital, in West Chester, Pennsylvania, has also implemented BPM in a mid-level way. Although most medical management systems handle processes REAL CIO WORLD | j u LY 1 5 , 2 0 0 7

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within them, they rarely handle process flow across application boundaries, notes Ray Hess, vice president of information management. These systems typically rely on staff to know all the possible steps to take based on, for example, a patient’s infectiousness or treatment plan. “That’s asking for trouble,” Hess says. So he’s deployed Siemens BPM tools to tie medical systems to databases, housekeeping systems, e-mail and so forth: appropriate processes are triggered automatically based on entries in the medical records or results from lab tests. For example, if a patient has been treated previously for an infectious disease, the new system ensures that certain steps relating to tests and isolation beds begin. The system also tracks the results of triggered processes. “We ‘listen’ for the actions, and in some cases if we don’t see them occur, we issue an alert,” Hess says. “The difference with BPM is that I can define the process to run based on our criteria, not necessarily on the application’s defined work flow.” As was the case at First American, accomplishing this process orchestration at Chester Hospital meant integrating various systems and their data. And it also meant identifying, optimizing, modeling, testing and finally deploying the desired business processes.

Secrets to BPM Success Fewer companies take BPM to the next level. “The real value is realized when you go beyond cost reduction and look at how human-to-human interaction can be systematized and lead to innovation,” says consultant Sheesley. But there’s a problem with how business usually defines its processes, says consultant Hurwitz. “Even if people on the business side use business process modeling tools to come up with a new process, what they build is not related to the execution. The effort stops at the model, and the business people go to IT and say, ‘We need X, Y and Z,’” she says. IT has no insight into the metadata — the process 66

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context and business logic — and gets essentially requirements-based requests. Fortunately, modeling tools from vendors such as IDS Scheer and Tibco Software are increasingly able to store a metadata layer, which IT can use to understand the process, what it’s actually meant to do and how it’s actually meant to work, she says. Some tools can also prototype a process without requiring coding, so business staff can show IT what they mean by their requirements. Another issue is technological maturity. A few years ago, BPM tools couldn’t hope to address such a wide scope, notes Hurwitz. “But they have changed dramatically, with APIs for common applications, more use of standards and new architectures.” It’s time to look at them again, she says. (In some areas, BPM standards are still lacking — especially around handling the complexity of human-system interactions — but vendors and standards organizations are working to fill these holes. CIOs should not use such holes as an excuse not to apply BPM where it is capable, says AMR’s Swanson.) Motorola and AmerisourceBergen have taken it to the next level — by focusing on the business processes themselves, rather than merely automating specific functions. Motorola emphasizes the work done by business managers and analysts involving process definition and optimization that happens before IT gets involved. Then business and IT staff spend much time together modeling the processes as they are developed, to test them out, says CIO Morrison. For example, after Motorola acquired Symbol Technologies, “we found BPM to be incredibly powerful to do scenarios of integration,” she says. Some modeling tools can generate executable code that lets business staff essentially reprogram their processes without IT involvement. But this doesn’t mean IT is out of a job, says Charles Soto, Motorola’s senior director for enterprise platforms and integrated solutions. Motorola does generate code from its business process modeling tool, but not for

17% of enterprises will

begin or expand deployment of BPM to execute and optimize interconnected business processes in 2007. Source: Forrester Research

production. This code serves as a reference for the business analysts. One reason that IT doesn’t use this code to execute the actual processes: the applications being orchestrated and the data sources being manipulated are more complex than a model represents — requiring IT expertise to program. And IT can have the entire system picture in mind. “You need to create a BPM hierarchy that matches to that of the company; otherwise you create a spaghetti of integration from project to project,” says Soto. This is especially true as your BPM efforts cross process domains, notes Motorola’s Morrison: “It’s across processes where you have different semantics, syntaxes and application idiosyncrasies.” While industry analysts all recommend starting small, so IT can build the skills needed to effectively understand and develop processes as well as implement them, Morrison urges other CIOs to aim high once they’ve got their feet wet. “You could use BPM just within a specific domain, but that’s not where the challenges are.” CIO Galen Gruman is a frequent contributor to CIO. Send your feedback on this feature to editor@cio.in

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The Internet Endangered: Enter atYour Own Risk In the coal mine of the Internet, the canaries have stopped singing. By Scott Berinato internet | No official announcement yet, but the Internet is broken and it can’t be repaired. Oh, it’s still there. You can still use it. Then again, if you went hiking and came across an old, broken-down mine shaft, you could still use that, too. Sometimes reporters come to this kind of broad, presumptuous conclusion when a collection of otherwise unrelated reporting starts to form its own narrative. That is precisely what happened here. The idea that the Internet now suffers an incurable malignancy started its mitosis during my reporting on a feature on Internet vulnerability disclosure (The Chilling Effect, CSO, January, 2007). The picture that emerged from the interviews I conducted was one of an impossible-to-secure Internet overrun by vulnerabilities and legal quagmires. At a conference a few months later, a security executive in the financial industry was reliving some phishing scams, conveying how hard they are to contain and how hopeless they are to prosecute. With a wave of his drink and a grin he said, “It’s not going to get better. The Internet wasn’t built for this, was it? It was built for a bunch of academics to share data, not online banking.” The same week, a forensics expert was asked what the good guys can do to counter the growing technical and legal threat of antiforensics. “There’s not a hell of a lot they can do,” he said. Meanwhile, on an online forum, a botnet expert analyzed the state of security for critical DNS infrastructure. “There are operational issues of the highest importance Vol/2 | ISSUE/17

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that are not being addressed,” he wrote. “The current situation can not go on.” All the while, stories accumulated, thick and steady like a wet spring snow. And this is just what’s publicly known. Sources tell reporters you-didn’t-hear-itfrom-me stories all the time, like the one an investigator told me about the credit card processing service that exposed 130 merchants’ card transactions. The sheer volume of serious security events doesn’t blow your mind, it numbs it. And then comes something like Gozi. Gozi is a bot that steals sensitive data off PCs. It can install itself without user intervention — all you do is visit a website. It’s a significant bot, but not because it’s a technical marvel. Gozi is significant because despite the fact that it has mostly disappeared from public consciousness, it still severely threatens the public. Despite the fact that banks have barely acknowledged it, their customers are the primary targets. Despite the fact that online banking uses SSL, Gozi gets around it. Multi-factor authentication? Some variants are working out ways to defeat it. Despite the fact that researchers and law enforcement know precisely how Gozi works, it still works. It has not been contained. As this is being written, personal data culled with Gozi variants is being peddled on the black market, and despite an ongoing investigation, no one is stopping it. Few are even talking about it. They are numb to it. Don Jackson, the researcher who discovered Gozi, is not numb, he’s alarmed. He wants to

Who are the visionaries that can devise a stable, secure public network? talk about Gozi and its implications. He works for a company that provides security services and he says, “I have a very pessimistic outlook on the question of what are we going to do. I think it’s inevitable. Anything you do online, there will be a run on that information. Gozi uses reasonably simple exploits. If someone knows what they’re after and can target their attack, there’s really no defense against it.” There it was. No defense at all. A strand that entwined itself with all of the other strands of reporting that had been piling up over the past six months. No hope. Not a hell of a lot they can do. No choice. The current situation can not go on. It’s not going to get better. They wove and they wound until the thread thickened into this solid idea: the Internet is broken. And it can’t be fixed. How long before the toxic environment collapses like the veins of an old mine shaft? How long will consumers tolerate the unstable, ungovernable place the Internet is becoming? At what point do the risks that they’ve borne to date in order to explore the mine become too dangerous to dare? Where are the big thinkers, the big idea for a public works project that will rebuild the mine shaft into something useful, or seal it up for good and start over? Who are the visionaries that can devise a stable, secure public network? The canary has stopped singing. What do you see coming next? CIO

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