CIO May 15 2008 Issue by Sreekanth Sastry

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From The Editor-in-Chief

“A wild and foolish piece of imagination, rewrite so it is just about breeding pigeons.” Advice to the publisher of Charles Darwin’s Origin of the Species by Whitwell Elwin

The Maverick Mantra To foster innovation, let misfits and rebels into your team.

CIOs tell me that their biggest problem isn’t business-IT alignment or managing change. It’s people — the recruiting, rousing, retaining bit. And, then there’s the need to do more — a whole lot more; a whole lot different, with a whole lot less. So, who are the kind of people you hire? Let me guess, you like fast learners; people you can vibe with; those who will blend in with the rest of the team and get along with colleagues; who are in sync with the organization’s culture; people whom you can trust to do the right thing. These people will conform to the norm, but in doing so will they dare to think and act differently? Practices that support Prof. Robert Sutton of Stanford innovative work are nearly University puts forward an interesting the exact opposite of what thought on how to foster innovation in most managers believe is your team. good management. In his book, Weird Ideas That Work, the good professor observes that practices that support innovative work are nearly the exact opposite of what most managers believe is good management. He suggests that the way out is to hire people you dislike, who make you uncomfortable, who’re rude, defy authority and undermine the prevailing culture. He states unequivocally that more innovation occurs when more people don’t know the ‘organizational code’. And why is that? Because he feels that when people don’t know the code, they draw on past individual experience or invent new methods. Thus, hiring more people who are slow to learn the ‘code’ will increase the range of ideas. If that wasn’t disruptive enough, Prof. Sutton believes that employees generate more ideas when team leaders devote less attention to them and allow them to act without getting permission first. He, in fact, recommends a reward for creative insubordination. For instance, in the Sixties, many HP managers, including David Packard, told Charles House to stop working on the oscilloscope project. He didn’t. The product became such a big success that House was awarded a medal by Packard for ‘extraordinary contempt and defiance beyond the normal call of engineering’. Do you think such a strategy will work for you? Write in and let me know.

Vijay Ramachandran Editor-in-Chief vijay_r@cio.in

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content may 15 2008‑ | ‑Vol/3‑ | ‑issue/13

Jyoti Bandopadhyay, VP–IT, Torrent Power, created a project management structure that ensured buy-in from users — and saved an ERP project.

Project Management

COVER stORY | BAnK fROm thE BRInK | 24 CoVEr: dESI gn by bI nESh SrEEdharan, IMagIn g by an Il T P hoT ho T o by a l PES PESh h d hol ak I a

Torrent Power spent almost a crore on an ERP project that seemed to be going nowhere. Here’s how they got it back on track. feature by Balaji narasimhan f

2 4

Executive Expectations VIEW fROm thE tOp | 34 Sanjeev Bikhchandani, CEO and cofounder of InfoEdge, talks about entrepreneurship, new ideas, and says that IT can help with product innovation. Interview by Kanika Goswami

Think Tank thE ROI Of tRust | 22 Treat security not as something you have to do but as something you want to do. Column By John C. Reece

Staffing hOW tO RECRuIt tALEnt If YOu ARE fROm thE It BACK WAtERs | 46 Luring good recruits is hard if you’re located outside technology hot spots. Check out these winning strategies. feature By C.G. Lynch f

more » 4

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content

Wanderlust Internet | All in Your Hands Software Hacking | An Oracle Database Security | For Safety’s Sake

Essential Technology | 50 Collaboration | SharePoint 2007’s Collaboration Tools

By Galen Gruman Software | The Future of Enterprise Software By Bernard Golden

From the Editor-in-Chief | 2 The Maverick Mantra

By Vijay Ramachandran

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

Case Study Sheltering the Customer | 30 Third-party service centers left LG India’s clients exposed to the glare of poor support. HQ urgently needed to supervise service staff in remote locations — before brand loyalty dried up. Feature by Kanika Goswami

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Benchmarking No Comparisons | 40 Benchmarking your outsourcer’s prices is the best lever you have to save money. Too bad your outsourcer may be trying to stop you. Here’s how to fight back. Feature By Stephanie Overby

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AdvisorY BoArd

AdverTiser index

ABnAsh sIngh PuBlIshER louis d’Mello AssoCIATE PuBlIshER alok anand EdIToR IA l EdIToR-In-ChIEf Vijay ramachandran REsIdEnT T EdIToR rahul neel Mani AssIsTAnT EdIToRs balaji narasimhan gunjan Trivedi kanika goswami

President, IT operations Center of Excellence, UCb Pharma

Cisco

35, 36 & 37

AlAgAnAndAn BAlARAmAn Vice President, britannia Industries Alok kumAR

Dell

global head-Internal IT, Tata Consultancy Services AnwER BAgdAdI

Emerson

Fujitsu

HID

IBM

IBC

Intel

Senior VP & CTo, CFC International India Services

ChIEf CoPY EdIToR Sunil Shah CoPY PY EdIToR Shardha Subramanian

ARun guPTA Customer Care associate & CTo, Shopper’s Stop

d EsIgn & PRoduCTIon CREATIVE dIRECToR Jayan k narayanan lEAd VIsuAlIzER binesh Sreedharan lEAd dEsIgnERs Vikas kapoor, anil V k Vinoj k n, Suresh nair girish a V (Multimedia) sEnIoR dEsIgnERs Jinan k Vijayan, Jithesh C C Unnikrishnan a V Sani Mani (Multimedia) dEsIgnERs M M Shanith, anil T, Siju P

ARVInd nd T TAwdE VP & CIo, Mahindra & Mahindra AshIsh k. ChAuhAn President & CIo — IT applications, reliance Industries C.n. RAm head–IT, hdFC bank ChInAR s. dEshPAndE CEo, Creative IT India

P C anoop, Prasanth T r PhoTogRAPhY Srivatsa Shandilya PRoduCTIon mAnAgER T k karunakaran dY. PRoduCTIon mAnAgER T k Jayadeep mARk ETIng And sA lEs VP sAlEs (PRInT) naveen Chand Singh VP sAlEs (EVEnTs) Sudhir kamath gEnERAl mAnAgER nitin Walia AssITAnT mAnAgER Sukanya Saikia mARkETIng Siddharth Singh, Priyanka Patrao, disha gaur BAngAloRE Mahantesh godi Santosh Malleswara ashish kumar kumarjeet bhattacharjee b.n raghavendra dElhI Pranav Saran, Saurabh Jain, rajesh kandari gagandeep kaiser mumBAI Parul Singh, rishi kapoor, hafeez Shaikh JAPAn Tomoko Fujikawa usA larry arthur; Jo ben-atar

dR. JAI mEnon group CIo bharti Enterprise & director (Customer Service & IT), bharti airtel

Chief-Corporate Strategy & CIo, asian Paints

RAJEEV shIRodkAR

Xerox

CIo, Future generali India life Insurance RAJEsh uPPAl Chief gM IT & distribution, Maruti Udyog PRof. R.T. kRIshnAn Jamuna raghavan Chair Professor of Entrepreneurship,

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

IIM-bangalore s. goPAlAkRIshnAn CEo & Managing director, Infosys Technologies

director, IIIT-bangalore s.R. BAlAsuBRAmnIAn Exec. VP (IT & Corp. development), godfrey Phillips sATIsh dAs

sIVARAmA kRIshnAn

Printed and Published by Louis D’Mello on behalf of IDG Media Private Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027. Editor: Louis D’Mello Printed at Manipal Press Ltd., Press Corner, Tile Factory Road, Manipal, Udupi, Karnataka - 576 104.

Procurve

Chief Manager (IT), bPCl

CSo, Cognizant Technology Solutions

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.

IFC & 11

m.d. AgRAwAl

PRof. s. sAdAgoPAn EVEnTs VP rupesh Sreedharan mAnAgERs ajay adhikari, Chetan acharya Pooja Chhabra

Microsoft

mAnIsh ChoksI

Corrigendum In our april 1, 2008 issue, the name of rajeev Seoni, CTo, Ernst &young, young, was y misspelt as rajiv Seoni. also, in our april 15, 2008 issue, Srl ranbaxy was inadvertently referred to as ranbaxy. The errors are regretted.

Executive director, PricewaterhouseCoopers dR. sRIdhAR mITTA Md & CTo, e4e s.s. mAThuR gM–IT, Centre for railway Information Systems sunIl mEhTA Sr. VP & area Systems director (Central asia), JWT V.V.R. BABu group CIo, ITC

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new

hot

unexpected

Thro Th r wing in Another Role? ro the organization, so a universitywide planning role was a natural extension." Are my objectives clear? Make sure you understand how your success in the new role will be measured. You and key stakeholders should agree about what you're expected to achieve, says Sam Gordon, CIO practice director with Harvey Nash Executive Search. Is my IT organization functioning well? If you're midway through a project on the brink of disaster, it's probably not a good time to ask for more duties. Do I need to be the smartest guy?In a non-IT role, a CIO may suddenly find he's got a lot to learn. Not being the expert may put you on the defensive, says Drouin. "You need to have the confidence necessary to cope with this." (6) Am I happiest as the IT guy? "If you bleed IT and truly love technology, don't take another role," says Hites. "Your bias will be clear and it will keep you from succeeding." —By Stephanie Overby

IllustratIon by MM shanIth

R O l e CIOs eager for a challenge are quick to take on more responsibilities outside IT. But that's not always smart. Here's what to ask before signing up for double duty. Will it change my position in the company? Find out if the job comes with more money, or with access to the board of directors. If the additional position does not enhance your standing, "it may be an indication that they're dumping something on you," says Bobby Cameron, VP and principal analyst with Forrester Research. Michael Hites, an associate VP of IT services with the University of Illinois, says if you don't know why you're taking on the role you should probably turn it down. Do I want to move out of IT or just supplement my CIO role? Hites, in his previous job as CIO at New Mexico State University, was in charge of the university's strategic planning process. "I had experience working with people throughout cIO

Quick take

Yogesh Zope on User Feedback M a n a g e M e n t Getting feedback is easier said than done. Should CIOs introduce a specialized feedback mechanism? Gunjan Trivedi spoke to Yogesh Zope, VP-IT, Bharat Forge, to find out what he thought.

Feedback

How much emphasis do you give to user feedback? At Bharat Forge, our IT department is viewed as a service provider. We acquired ISO certifications for our IT services about three years ago and user feedback is vital since the ISO processes are based on feedback. User feedback decides the form and the way services are supposed to be provided. We put a lot of emphasis on feedback. How do you collect feedback? We have a periodic feedback mechanism. We offer two kinds of services: infrastructure support and application support. Our method for gathering feedback for each is different. We use an online call logging solution for infrastructure support. This captures data like the competency of a support engineer, time to response, problem resolution speed,

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etcetera. The same applies for application support services, though we use a SharePoint-based app to collect feedback. We also want to know if an application support engineer can think from a customer’s shoes and measure in how many calls a problem was solved. We have a customer satisfaction index, which we calculate on a quarterly basis. This is published on a portal, substantiated with documented user comments and feedback. How do you check if suggestions have been implemented? As an ISO requirement, there’s a column in the feedback form for proposed action, its ownership and deadline. This is maintained as a separate worksheet for regular tracking. The records are also subject to periodic audits.

Yogesh Zope

What’s the challenge in gathering feedback? Typically, users in India don’t say anything, but cry hoarse when an issue crops up. And, we’ve seen that its harder to collect feedback from the application side than it is from the infrastructure side. REAL CIO WORLD | M A Y 1 5 , 2 0 0 8

What Do We Need Business Analysts For? V O I c e s The 21st century business analyst, some think, bridges the gap between IT resources and business demands. Forrester research shows that the most successful business analysts were those who could communicate, facilitate and analyze. Rahul Neel Mani asked your peers what they thought business analysts brought to the table.

“The business analyst works with the CIO as a business problem solver while acting as a liaison between the technical and business worlds. But they don’t jump in to design a solution.” tRendlInes

V.SriniVa V S Va CIo, nagarjuna Fertilizers & Chemicals

“Business analysts, like the sages who penned the Ramayana, not only collect and present business facts but also offer running commentary and analytical perspectives critical to CXOs — especially CIOs and IT leaders.” d chandraSekhar additional Manager It, t, Midhani t

“The key role of a business analyst is to translate stakeholder requirement into

something that IT can understand. And then translate IT questions into something stakeholders can understand.”

rajeSh Munjal head It, hertz India

lend Your

Voice

Write to editor@cio.in 10

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Unified What? s t u d y Unified communications (UC) might be a fashionable term, but many organizations still struggle to understand the benefits of a connected, IP-based communications infrastructure, a Butler Group study has reported. Researchers found that many organizations think of UC mainly as a way to cut costs, when the real advantages are all about improving the way the business operates. Many communication overhauls are designed mainly to consolidate infrastructure, reduce operational costs and improve levels of service quality, said Mark Blowers, Butler Group's enterprise architectures practice director, but these notions miss the point. "Although these are useful goals, the real value afforded by UC and collaboration solutions ultimately arises from improvements to business processes, enhancement of stakeholder interactions, the optimization of workflow, and driving innovation in the business," Blowers said in the study, Unified Communications and Collaboration Report: Laying the Foundations for Business Process Flexibility and Innovation. The research found that a sea-change is taking place in business, and that hierarchically-organized communications are no longer able to cope with an organizations' needs. Enterprises now require a common IP-based infrastructure to allow information to be more mobile and to deal with needs like staff location independence, Butler Group said. The move to IP-based infrastructure also allows for badlyneeded technical innovation, said Blowers. "Moving away from proprietary solutions for voice and data to a horizontal communications architecture will enable the communications environment to be broken down into separate layers, making use of industry standards to integrate the hardware, common services, and administration elements," he said in the report. "This compensation and services-based approach increases flexibility, enabling services to be developed independent of the equipment." The cost of implementation remains the main inhibitor, even for large enterprises, Butler Group said, citing a 2007 Datamonitor survey. Security is also an issue, but UC doesn't introduce any new layer of vulnerability, the report said. Recently, Lotus Software's general manager Mike Rhodin predicted the 'virtual office' would soon become the rule, based on social networking and instant messaging tools. IBM was investing up to US$1 billion (Rs 4,000 crore) in UC technology, the company.

—By Matthew Broersma

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don't Skip Vista: Forrester

Staffing Hurdles

Big IT may be laying off staff by the thousands but the war for talent rages on, according to a Robert Half Technology survey. CIOs say that landing experienced staff remains challenging. IT leaders at the largest firms (1,000+ employees) are having the greatest difficulty: 24 per cent named this their top staffing issue.

"of the following staffing issues within the it department, which do you consider to be your greatest challenge?"

Finding skilled technology professionals:

24%

surveyed. the firm says these early adopters also reported on their overall migration experience, confirming that compatibility issues are still their no. 1 headache. nevertheless, they reported they found workarounds for most of their issues, according to the survey. Forrester recommends that users tie upgrades to PC refresh cycles, make sure desktops have 2Gb of memory and limit upgrades to PCs that are less than 18 months old. Companies also should use the Windows Vista hardware assessment tools, which are free from Microsoft, and use stopgap measures, such as client and application virtualization, in the short term. they also should press their IsVs for Vista compatibility. the report noted that early adopters relied heavily on Microsoft's free application Compatibility t toolkit and their existing client-management suites to discover Vista compatibility issues. Forrester also recommended reworking software developed in-house to align with Vista and to carefully configure Vista's user account Control feature to avoid user issues. â&#x20AC;&#x201D;by John Fontana

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Providing staff with adequate skills training:

23%

Keeping employees productive:

17%

Dealing with personality conflicts among employees:

11%

Developing defined career paths for IT staff members:

10%

None/don't know:

10%

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InFoGraPhICs by P C anooP

tRendlInes

are enjoying renewed visibility, switching thousands of users from Windows to another platform is not a workable solution for the majority of companies. In addition, users need to stay current on Microsoft and independent-software-vendor (IsV) support of Windows operating systems, he says. Forrester notes the expiration milestones for extended support and security patches on Windows 2000 and XP, and the fact that Windows 7 isn't expected to ship until 2010 at the earliest, as reasons users should keep their desktop operating system fresh. two other reasons for a prompt t migration to Vista are the probable unavailability of Windows XP after June 30, 2008, and uncertainty around Windows 7. Microsoft has extended the deadline once for XP already, and Forrester predicts it will not happen again. In addition, the report says uncertainty around the availability and feature set of Windows 7 is a red flag for those looking to skip Vista. Finally, the report says that Vista has valuable features and functions, such as security and user enhancements, citing the opinions of early adopters Forrester

Source: Robert Half Technology

Companies should think twice about skipping Windows Vista and should get started sooner rather than later on updating their client desktops to the latest Microsoft operating system, according to an independent report issued by Forrester research. the report, building the business Case for Windows Vista, says there are a number of reasons to upgrade now, even if avoiding Vista to wait for Windows 7 may seem like a viable option. the company has issued a second report, lessons learned from Early adopters of Windows Vista, to show how some users have handled migrations. Forrester lays out five reasons companies should begin upgrading soon, including the fact that there are few viable alternatives, given the depth of Windows penetration in the enterprise. the research firm says its hardware surveys show Windows is the operating system found on 99 percent of PCs in north america and Europe. In addition, Windows is the operating system on 97 percent of PCs in small businesses, Forrester says. benjamin Gray, author of the report, notes that while apple's Mac os and linux s O F t wa R e

Reducing IT Emplo EE Employ WandERlusT A majority of high-tech executives will increase compensation, establish professional training programs and offer flexible schedules to keep skilled IT workers on staff. IT staffing consultancy Robert Half Technology surveyed some 1,400 CIOs to learn how they retain high-tech talent during this era of an imminent skills shortage, and a majority agree that money talks. Twenty-seven percent said they find increased compensation the most effective strategy to improving IT staff retention. More than 20 percent cited professional training or development as a useful tool, and 18 percent said they offer their IT staffs flexible schedules. "Attractive pay is always a key selling point for IT professionals, but it's only one element of an effective retention program," said Katherine Spencer Lee, executive director of Robert Half Technology. More cash is always an incentive to stay, but Robert Half Technology reports that training opportunities help IT professionals in particular keep their skills current and tackle emerging technologies. "Offering employees options for building their skills enhances their effectiveness on the job and demonstrates an investment in their long-term career growth," Lee said. CIOs resorted to other methods to keep staff happy. For instance, 7 percent said they offer employees the chance to telecommute. Six percent said they provide workers with extra vacation time, and 2 percent offer staff company stock or other options as compensation. "Creating an attractive corporate culture, which includes everything from training to work/ life balance programs, is crucial for keeping valued employees, especially when the hiring environment for highly skilled professionals is competitive," Lee said.

All in Your HAnds birmingham-based digital design agency Clusta has developed a groundbreaking Web site which is navigated through hand gestures alone. the technology, which is being unveiled in a new site for leading us advertising agency Publicis & hal riney, allows users — with the aid of a webcam — to move through the site with only movements of the hand. the 'virtual navigation' technique has been made possible by incorporating a webcam video in the bottom right-hand corner of the homepage, which contains a superimposed body outline enveloping the live image of the site visitor. Movement 'hotspots' (which detect changes in color values or pixel movements) in the top, bottom, left and right of the video act as navigation points, allowing the user to virtually 'touch' or 'swipe' with their hands to navigate to various areas of the site. the application is the first time such technology has been used on a commercial website. Matthew Clugston, creative director at Clusta, explains: "Enabling the site to be navigable by webcam created fantastic challenges for us. It was essential that the webcam version worked as well as the mouse version and we have managed to harness the technology in such a way that it is now possible to incorporate it into a commercial website." Clugston says that such technology even has the potential to eradicate the mouse and even the keyboard in the not-too-distant future. typists suffering from rsI (repetitive strain injury) as well as disabled t computer users with severe coordination difficulties could also benefit from the motion-activated technology, he suggests, with the Publicis & hal riney site providing the initial template for a wholly motion or gesture-based computer interface. Clusta is already working on the next phase of the technology, which will recognize gesturing and the speed of movements. "Very soon we'll be able to virtually grab and move stuff around the screen," says Clugston. "From there we're moving into the realms of virtual shopping where consumers will conceivably be able to virtually walk around a fully functioning digitally created music store to pick up their latest 3D movies. such technology is closer than many people think and we're working hard to make that day a not-too-distant reality."

InteRnet

—By Denise Dubie

—by Digital arts staff 14

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IllustratIon by unnI krIshnan aV

tRendlInes

s ta F F M a na g e M e n t

New Way Wa to t Ha Hack An Oracle le Databas Database Security researcher David Litchfield released technical details of a new type of attack that could give a hacker access to an Oracle database. Called a lateral SQL injection, the attack could be used to gain database administrator privileges on an Oracle server to change or delete data or even install software, Litchfield said recently. In a SQL injection, attackers create specially crafted search terms that trick the database into running SQL commands. Previously, security experts thought that SQL injections would only work if the attacker was inputting character strings into the database, but

s O F t wa R e

Litchfield has shown that the attack can work using new types of data, known as date and number data types. Litchfield's attack targets the Procedural Language/SQL programming language used by Oracle developers. A well-known database hacker, Litchfield is best known as the researcher who published details on the bug used in the 2003 SQL Slammer worm, which targeted Microsoft's SQL Server database. Litchfield wasn't sure how widespread lateral SQL injection vulnerabilities are, but he thinks the attack could cause real damage in some scenarios.

"If you happen to be using Oracle and you write your own applications on it, then yes, you could be writing vulnerable code," he said. "The sky is not falling ... but it's certainly something that people should be made aware of." Database programmers should review their code to be sure it is checking to make sure that all of the data it is processing is legitimate, and not injected SQL commands, he said. Oracle did not return a call seeking comment and clarification.

—By Robert McMillan

Do your hoMEWork. boni hesitated to join linkedIn until he had enough time to research the site because despite invites from trusted people, he wanted to pass his own judgment first. "before you join, talk to people you trust about their experiences with social networking," he says. "their views may help choose which site (or sites) you join. review each site and ask yourself which site you would benefit from and what type of information you are comfortable sharing." schmidt notes that research also helps quell your anxieties about social networking. sECurE your sEttInGs. the benefit of social networking is directly related to the openness of it, schmidt says, so privacy and security can be tricky. but each site has various options, and you can decide how much you want to lock down your information. Facebook, for instance, allows you to control who can contact you, who can find you in a search and what data they will find. y you can also set up a limited profile for when you want to connect with someone but not share everything. on linkedIn you can decide whether people whose profile you visit will know that you were there. bE CarEFul Who you lInk to. the implicit risk in a sharing site is that it's open to anyone who follows the terms of use, says

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boni. "that hat means there could be members of organized crime lurking on there." that's why it's crucial to control who you allow in. If you receive a link request from someone on claiming to know you through a connection check with that friend to ensure the request is legitimate. "t this is a tool that can make people more productive and effective," boni b says, but only "if it's balanced with healthy skepticism about unsolicited communication." aVoID thE tMI traP. P both boni and schmidt say that you P. are your own worst enemy online. "some people aren't fully cognizant of the fact that what they put up there is going to be exposed to all kinds of people," says schmidt. boni says he sees his account on linkedIn strictly as a way to help him do his job better — and as a result, he only provides information related to his professional self. but schmidt sees an advantages in blurring the personal and professional lines. because of Myspace, he realized that one of his CEo colleagues was an avid fisherman, as is he. "It helps you build trust and a better understand of who they are, which enhances your business relationship," he says. and that's the whole idea. —by katherine Walsh REAL CIO WORLD | M A Y 1 5 , 2 0 0 8

Illust ratIon by anI l t

Despite the security and privacy risks of social networking, howard schmidt, the one-time cybersecurity adviser to President bush and bill boni, long-time corporate VP of Is and protection at Motorola say it's possible to benefit from social networking and still stay safe. here's their advice.

secuRIty

tRendlInes

FoR saFETy’s sakE

alternate views

B Y G u n j a n Triv e d i

On-the-Job vs Classroom? Should training be structured or by example?

I would prefer that my team has more practical on-thejob training — in addition to conventional classroom training for their fundamentals. Vijay Prasad CIO, Satyam Computer Services

trendlines

If it comes to choosing between the two forms of training, I would prefer my team to have the more practical on-the-job training — in addition to conventional classroom training for their fundamentals. That said, I believe both forms of training are good. Additionally, I would stress on not having a team full of freshers. I would rather have a few experts on my team to take care of the operational needs of the enterprise — and handhold and train freshers on the job. I strongly believe that CIOs should always have a mix of freshers and some subject matter experts. You need to have certain people tutored in specific technologies who can guide the rest and play mentor to the freshers. I believe that one needs to move team members through the cycle of: directing them while working to supporting them, then seeking and encouraging their active participation and finally delegating them assignments without micromanagement The form of training depends on two factors: organization requirements and self-aspirations. With freshers, I assess their aspirations and abilities vis-à-vis the overall requirements of the enterprise. Accordingly, I handhold freshers to understand and appreciate the technologies we might want them to work on, providing them with the basics and fundamentals before assigning them to assignments. At the same time, I need to keep a tab on what the enterprise needs. To fill this, I bring in tutored expertise on specific technologies, while mentoring freshers with on-the-job training.

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On-the-job training may teach people only 20 percent of a product's functionalities — those used regularly. What about the rest that could have created value? Vikas Gadre CIO, Tata Chemicals

Though obviously both forms of training are essential, I strongly believe that classroom training is critical for employees to upgrade their knowledgebase. It also helps create a framework in which they can appreciate the full scope of the subject being taught to them. Classroom training will teach them all the functionalities that are given as a part of a product. On the other hand, on-the-job training may teach people to use only about 20 percent of a product's functionalities that are typically used on a daily basis. This will leave out a large percentage of knowhow of the product — knowhow that could have created additional value for the organization. I have a view that freshers also need to be given equal opportunity. If you only look for people who are already trained — or who can take on work without too much training — we will soon run into a shortage of these skill sets. I agree that there is a risk involved with encouraging the inclusions of freshers. The risk is that the organization might turn into a training ground for competitors. However, this is a risk, which I believe, we need to take. Otherwise, over a period of time, we will not have the necessary number of fresh ideas in the organization and an enterprise’s freshness index will go down. I believe that bringing in freshers with some generic tech know-how, training them and taking a risk with them will definitely be necessary for a corporate to grow.

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15/05/2008 4:38:59 PM

John C. Reece

Think Tank

The ROI of Trust Treat security and privacy spending not as something you have to do but as something you want to do.

ecurity and privacy are bad words with bad histories, evoking bad connotations with most enterprise stakeholders. For companies to succeed at safeguarding their data, these words must go away. Here's why: information security and privacy protections as we know them today are a response to the ills that have befallen enterprises over time. Enterprises experience a problem or incident and don't want it to happen again, so they find the most practical way to eliminate it or mitigate against it. As a result, security and privacy practices tend to be restrictive. Furthermore, there seems to be no natural home for security or privacy in the corporate hierarchy. Every organization uniquely figures out where best to place them— so long as the chief executive doesn't have to be too bothered. As a consequence, neither security nor privacy has been associated with the positives of most institutions or with their strategically important initiatives. They are clearly not viewed as activities that will help enterprises gain market position, enhance their reputations or provide competitive advantage. Money and investments focused on security and privacy are most often viewed as insurance premiums — to be kept to a minimum consistent with the negative risk experience of each institution. Such spending is certainly not perceived as an investment for winning stakeholders, sustaining excellence or achieving market leadership. But in today's world, where an increasing majority of institutions do business online using telecommunications networks that span the globe, security and privacy protections expressed in negative terms don't make the grade. Enterprises need a positive approach that positions avoidance and mitigation of information security and privacy risks as built-in

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John C. Reece

Think Tank

elements of their business model. They must adopt an approach based on winning the trust of all stakeholders — customers, employees, channel partners, contractors, vendors and shareholders. Trust means stakeholders feel safe with these enterprises and are confident in the secure delivery of their products along with protection of their private data. In fact, trust is good business and is a good business practice.

How Companies Secure Trust Given the status of security and privacy today, the CIO is most often anointed as enterprise information security and privacy champion. Therefore, CIOs should lead the enterprise to a trust-based business model. The first step is to rethink how the business can engage all stakeholders in a secure and private manner through its technology-supported business processes. Trust must be earned every day through consistent operational excellence, which includes leading-edge information protection. When stakeholders' experiences with an institution consistently meet or exceed their expectations, these experiences build awareness, then breed familiarity and finally, earn trust — which inevitably translates into profit. In this way, trust undergirds enduring success. Take as an example, American Express. As an employee there in the late 1960s and early '70s, I participated as Amex established one of the earliest global financial networks. Amex provided its card members and service establishments with, at the time, a revolutionary new way to do business: they could execute secure and private financial transactions anytime anywhere in the world. To make this so, Amex created an operational approach to ensure that transactions would be absolutely accurate, fully consistent with the individual's ability to pay —protected to the fullest degree —practical against fraud and disclosure. The linchpin of this model was and is the magnetic-striped card that identifies and validates individual card members and other authorized stakeholders to use the integrated global network. Driven by Amex's then CEO, the offering from its outset focused on using technology and innovative business processes (many of which had to be invented) to capture the frequent traveler market. The model also had to assure service establishments accepting the card, as well as corporate management and financial institutions that fraud would be strictly controlled. Amex's approach has endured for nearly 40 years and continues to earn the company trusted status around the world.

How Trust Works The Amex example offers several insights for enterprises operating in a networked world: Being ‘networked’ is a communal choice, one in which the degree to which operations are secure and sensitive data is protected is defined by the capability of the least secure player. Trust among interdependent partners is as important to the providers of products and services as it is to the recipients.

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Use trust to forge new alliances with stakeholders. By doing so you will define competitive success in a global online real-time marketplace. Access to the network must be as near to instantaneous as practical or users will find alternatives. They may wait patiently for a few milliseconds, but certainly not for a minute or more. Human assistance is vital. There will always be the need to deal with exceptions. Therefore, a company must ensure that a human being, armed with as much supporting data as possible, is available to deal with non-standard transactions. Securing the network and the data it transports requires an end-to-end design that encompasses all elements of the transaction process, not a collection of bolted-on technologies and techniques added periodically in response to isolated incidents. A final lesson from Amex is that the CEO and board of directors must be proactive, fully engaged participants in the strategy to build and sustain trust. Amex's most senior executives view card member trust as essential elements of their business model and stakeholder value proposition.

Redefining Security and Privacy Given pressure from stakeholders and the demands of regulators, the key to enterprise growth and the CIO's long-term job security is the CIO's ability to reshape his company's thinking about security and privacy. They need to create incentives for their executive management to create an operating model that earns stakeholders' trust. If they are successful, security and privacy will change dramatically. With direct CEO — and board-driven leadership, security and privacy will become embedded in investments in new ways of doing business as opposed to being add-on insurance premiums. They will provide new pathways for engaging stakeholders and winning their loyalty. The payoffs from moving to a trust-based business model are high — perhaps even a matter of survival for some enterprises and some industries such as financial services, media and health care. Thus, trust will emerge as the new basis for securing enterprise operations and protecting stakeholder information from all risks — strategic, operational and tactical. Companies will use trust to forge new alliances with stakeholders by guaranteeing secure and private interoperability. And in doing so, companies will define competitive success in a global online real-time marketplace. CIO John C. Reece, chairman and CEO of John C. Reece & Associates, is the former CIO of the Internal Revenue Service and of Time Warner. Send feedback on this column to editor@cio.in

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Martha Heller

Career Strategist

When You’re Onstage CIOs — and the bosses who hired them — on what it takes to ace the interview.

y now, one might assume that all of you senior IT execs out there know how to conduct a job interview. After all, you had to succeed on some interview, somewhere. You wouldn't qualify for this magazine if you hadn't. Yet, every once in a while, after touching base with a candidate I've sent in for an interview, I find myself incredulous and asking, "You did what?! You said what?!" It's at moments like this when I remind myself that interviewing — like cooking or speaking French — is a skill that gets rusty when you don't use it. For that reason, we can all use a refresher course once in a while to help tune up our interviewing skills. With the help of some CIOs who recently landed new jobs — and the bosses they impressed in their interviews — I'd like to offer some guidelines for doing an interview right. Be prepared. Obviously, you want to know everything you possibly can about the company and the people who will be interviewing you. For a public company, you can find a bevy of documents online. For a private company, you have to work harder but you can usually find its core values on its website. Armed with this information, you can prepare for your interview by thinking about the connection you want to draw between those values and your own experiences. Herbalife CFO Rich Goudis recently hired a new CIO for his company. He says he is sometimes surprised that candidates don't do more than read the company's annual report. "Some people are just not prepared," says Goudis. "They don't take the time to find out who our key technology vendors are and then use their own connections with that vendor to learn about our approach to technology. Candidates who do good investigative research are impressive to me." 22

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Martha Heller

Career Strategist

Interviewing — like cooking or speaking French — is a skill that gets rusty when you don't use it. That’s why, we can all use a refresher course to help tune up our interviewing skills. But not too prepared. Jonathan Rider, the new CIO of building company Gilbane, agrees that it is critical to be well-prepared, but he cautions against too much of a good thing. "If you walk in and start giving them five years' worth of stats on their sales and market value, they will look at you cross-eyed and think, 'This guy can read an annual report,'" he says. "You should have all of that knowledge, but you want to apply it in a sparing, as-needed way." In other words, don't spew a bunch of facts and figures related to the business. Instead, choose a few choice stats and then bring them up in a context that showcases your understanding of the business and the challenges it faces. Candidates also frequently ask me if they should bring any documentation of their work to their interviews — PowerPoints of great IT strategies, a set of best practices they developed. My suggestion is to bring it with you — but don't pull it out and discuss it unless the situation warrants. Some interviewers love to look at documents, some don't. Just because it is in your briefcase doesn't mean you need to use it. Feel out the situation first. Treat the interview like your first 100 days. "I have this trick I use in interviews," says Gilbane's Rider. "There are all these articles about what a CIO should do in the first 100 days on the job: what questions to ask, what relationships to build. I conduct the interview like I have the job and am conducting my first set of meetings." Rider finds that his questions work as an ice-breaker that puts the hiring manager at ease. The interview becomes more of a consulting session and allows the interviewer to imagine Rider in the role. But don't start solving their problems. For John Ruggieri, CFO and Rider's new boss at Gilbane, Rider struck the right tone between asking questions and providing answers. "I am not impressed with candidates who claim that they can change our world before they even understand our business," he says. "They do all of their homework and start talking about what kinds of systems they're going to put in before they even know our industry. That always blows me away. Jon was not like that. He made it clear that he would take his time in understanding our business before acting." Prepare success stories. One thing I advise all of my candidates to do is to prepare five success stories with three bullet points each. This tactic gives them a premeditated, clear and structured way to articulate their accomplishments. Chuck Sperazza, the winning candidate for the CIO role at Herbalife, takes this approach a step further. "Take the major aspects of the job, like leadership, strategy, execution, performance management and risk aversion, and build a brief

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story from your experiences around each issue," he says. "Most of the executives who are interviewing you are not IT people, but they understand the major elements of executive leadership. You can use your stories as a way to relate to them." Dig for the detail. One piece of negative feedback I often hear from a hiring manager after an interview is, "I had a hard time getting him to give me specific details on a project," or, "She stayed at a very high level when I asked for specifics." When your interviewer asks you to "Tell me about a time when you had to deal with a performance problem," resist the urge to slip into an ‘advisory mode’ that has you answering, "When you have a performance problem, what you should do is A, B and C." If you are asked to recount your own experience, stick with the first person and provide granular detail to support your response. CIOs are so often called upon to be advisers or consultants that they often have trouble sticking with their own experiences. Have a great answer to, "Why are you interested?" If I had asked my husband, after he proposed to me, "Why me?" and he had responded, "Because you're a girl and you live close," I might have given him a different answer. Interviewers want to hear that a particular job is extremely attractive to you for some very concrete reasons. "Sometimes I'll get these lame answers about why a candidate is here," says Herbalife's Goudis. "'It's close to home,' or, 'I want to make more money.' That kind of indecisiveness will not get you the job." And when the interviewer asks why you would leave your current job — or why you're currently unemployed — just keep it short and sweet. One or two sentences that are matter-of-fact will do, not a soliloquy on the injustices of the evil corporation that wronged you. Don't go for the close. At the end of an interview, should you go for the jugular and try to close the deal? Some recruiters recommend that you do a ‘soft close’ and use some probing questions to learn the status of your candidacy. I strongly disagree, and Goudis backs me up. "I would rather have someone show self-confidence that they did well on the interview than have to ask me about it," he says. "If you've set a world record, the crowd will cheer." CIO

Martha Heller is managing director of the IT Leadership Practice at ZRG, an executive recruiting firm based in Boston. Send feedback on this column to editor@cio.in

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Cover Story | Project Management

“An ERP implementation should be . Our challenge was to show management that

owned by functional users

an internal team could do what a

consultant could not.” —Jyoti Bandopadhyay VP–IT, Torrent Power

Reader ROI:

Why consultants don’t always get it right The importance of winning users over How to build a project management structure that creates ground support

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Torrent Power spent almost a crore on an ERP project that seemed to be going nowhere. Here’s how they got it back on track. By Balaji NarasimhaN

A SEASOn Of fAiluRE

he inability of Torrent Power’s ERP to take launch and it’s subsequent impact on business was not unique — it was reflective of a time when ERP projects failed. The end of the century was strewn with examples of bad ERPs causing business damage. Among the most notorious examples included big brands like Hershey’s. In November 1999, Hershey’s reported a 19 percent drop in third quarter net earnings, and placed part of the blame on ‘computer problems’. The chocolate maker was having issues with its new order-taking and distribution system, a $112 million (about Rs 448 crore at today’s conversion) combination of ERP, CRM and SCM software.

PHoTo by AlPes H DHolAki A iMAG iNG by ANi l T

yoti Bandopadhyay, VP–IT for Torrent Power, was a worried man. He was in charge of an ERP implementation for the company, and had spent Rs 55 lakh on software licensing and Rs 35 lakh on hardware — but the project was going nowhere. And it stayed like that for 18 months. In the meanwhile, users fumed. “There was much frustration among users,” says Bandopadhyay recalling those dark days. They were not the only ones seeing red. Eager to take the business to the next level, the management of the power utility company was not pleased with being shackled down.

Cover Story | Project Management In the same year and month, Whirlpool blamed a shipment delay in part to its ERP implementation: apparently, orders for quantities smaller than one truckload faced snags in areas of order processing, tracking and invoicing. But, by far, one of the biggest ERP failures of the time was at pharmaceutical company FoxMeyer. In a study The FoxMeyer Drugs' Bankruptcy: Was it a Failure of ERP? Judy E. Scott from the University of Texas lists project management problems similar to what Torrent faced. One of the problems, according to Scott, was that FoxMeyer did not have the necessary skills in-house and relied on an external consultant to implement their ERP. At the height of the project there were over 50 consultants at FoxMeyer playing puppeteer— many of who were inexperienced — and consultant turnover was high. The result of the badly put-together project was a disaster of nightmarish proportions. In a case in which the left

“Most of the issues we had were related to the fact that functional users were not involved at the design and development stage by the consultant.” —Jyoti Bandopadhyay VP–IT, Torrent Power

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hand did not know what Powering Up Growth the right hand was doing, FoxMeyer’s systems began New Total Year doubling all its shipments Substations Substations — to the same customers, 1993 53 598 causing huge losses for 1994 56 654 the company. Thanks to glitches in the ERP system, 1995 86 740 customers who complained 1996 88 828 that they had received only a partial order, were sent new consignments. What the folks at management decided to seek the FoxMeyer could not know was that the help of a consultant to implement an rest of the order had already been shipped ERP solution.” — only, it was going in another truck. Soon And in that choice lay a seed unrecoverable shipping errors amounted for disaster. to the tens of millions. FoxMeyer was forced to file for bankruptcy and the main operating division of the $5 billion he reasons behind any project’s company (Rs 20,000-crore at today’s failure are hard to pin down to a conversion) was sold for a mere $80 single factor. According to Bandopadhyay, million (Rs 320 crore). Torrent Power’s inability to get its ERP off the ground comes down to three factors: a lack of organizational readiness, a lack of consultant experience, and that big project killer: a lack of user adoption. he botched up project at Torrent Power These challenges overwhelmed the wasn’t going to take the then Rs 600consultants. “The consultants were crore power company to the cleaners, but awarded the project in January 1998,” it was definitely proving to be a bug bear to recalls Bandopadhyay. In July of 2000 — the management. 30 months later — the consultants were In the latter end of the 1990’s, putting still rolling out modules and running the together an ERP was critical to Torrent operational modules in parallel. Power. At that time, the company was The problem, says Bandopadhyay, in high-growth mode. It had acquired was that the consultant team was not management control of Surat Electricity accustomed to the power utility segment, Company in 1996-97. The company had and because of this, they kept asking also bought up The Ahmedabad Electricity for more time to get the project off the Company in 1998-99. ground. They could not close the gap A look at the four years leading up to between themselves and their deadline. the beginning of the ERP in 1998 shows And as they got more desperate to reach a how fast the company was adding on horizon that never got nearer, they moved substations and business (see Powering away from the safety of the shore. With Up Growth). the pressure to meet finish mounting, This fast growth needed reliable the consultants isolated themselves and scalable IT systems to back it up. from their users, driving the project on But, in 1998, Torrent Power was using their own. a spreadsheet-based reporting system, It was this lack of user involvement which was not adequate for its functioning that Bandopadhyay says finally brought or for its future growth plans. “There was the project down. “Data entry was being no software for accounting, hence accounts done in parallel for the ERP. Users were were maintained purely on spreadsheets frustrated with the dual recording of or manually,” recalls Bandopadhyay. data and reporting because they had to “ Th e r e we r e i sl a n d s of maintain both systems in sync,” he says. departmental information, and the

Free fall

Scaling a Mountain

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Today, user involvement and change management are project management basics. But a decade ago, it was not such a focal point. Yet, today, it’s still hard to bring change into an organization smoothly, which is why the lessons from a decade ago are relevant. By not taking users into the fold, the consultants had seeded failure into the project. “Most of the issues we had were related to the fact that functional users were not involved at the design and development stage by the consultant. They directly showed the software at the time of roll-out and implementation,” says Bandopadhyay ruefully. By the end of 2000, it was beginning to look like a dead-end for the IT team. But they had invested Rs 90 lakh and almost three years of their emotion and time and they were going to make a last-ditch attempt to save the project. However, the odds were stacked against them. User resistance, which could have been fixed earlier, had hardened and IT’s credibility with the user community of Torrent was low. Still, they were determined to fix the problem, even if it meant pulling out every last project management stop.

light A At thE tunnEl’S End

he first thing Bandopadhyay did was to get rid of the consultants. “The users were greatly dissatisfied with the approach of the consultant,” Bandopadhyay says. The move would serve twin purposes: it would hopefully remove an easy target to blame the failure on and more importantly, it would thrust ownership of the project back to the users. “Any ERP implementation should be owned by the functional users and not by a consultant or the IT department,” he says. Getting users to believe in them was not easy, not with an almost-failed project on their hands. But it was equally hard to ignore that the users were their only hope. Hence, says Bandopadhyay, the main objective was to involve user departments including business heads and their teams down the line. “The in-house IT department worked hard to build user confidence,” says Bandopadhyay.

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you too can conquer your project management Everest. you just have to follow the rules. thOu ShAlt nARROw PROjECt SCOPE Never-ending projects can exhaust even the most resilient teams. To keep projects tight and focused, carve larger efforts into smaller projects that can meet deadlines. In the long run, a series of small wins has more impact on the organization than a big bang that never sounds. thOu ShAlt nOt SuffER A fAt tEAM There is no optimum team size, though a good rule of thumb is a role for every person and a person for every role. But if team members need to play more than one role, that’s OK. If you err, err on the side of a smaller team. thOu ShAlt REquiRE full-tiME buSinESS PARtiCiPAtiOn To ensure that desired results are delivered, the business perspective must be represented on a fulltime basis. If business leaders want the best and brightest from IT, they need to provide the same. thOu ShAlt EStAbliSh PROjECt REviEw PAnElS A project review panel addresses issues of business policy and strategic direction while helping remove project roadblocks. Problems identified at bi-weekly project status meetings should be assigned to project-review panelists, who fix them while project teams carry on with their work. thOu ShAlt nOt PROvOkE buRnOut It’s not unusual for project staff to become both mentally and physically exhausted by the stress and struggle of the work. A common contributor to burnout is serial project assignments. If you find that people come off one project only to be assigned to another, you may want to consider creating some policies that limit or monitor such staff use. thOu ShAlt SEEk OutSidE ASSiStAnCE AS nEEdEd Besides augmenting project teams, outsiders can provide valuable new ideas, perspective and energy. It’s essential to bring the right consulting support into a project at the right time. Consider where a given project team is in both its project plan and overall experience curve before deciding on a specific type of external resource. thOu ShAlt EMPOwER PROjECt tEAMS Project teams struggling to meet deadlines should not be expected to perform activities like filing time sheets. They should be empowered to do whatever it takes to get a superior job completed on time and within budget. thOu ShAlt uSE PROjECt MAnAgEMEnt tOOlS Mundane project management work can be automated. Look for tools that offer project tracking, task management, workflow administration and resource-analysis support on an intranet-based platform that promotes information-sharing and communication. thOu ShAlt REwARd SuCCESS All participants should be recognized for their toil and personal sacrifice. Most times, a sincere letter of commendation from a corporate officer is enough. More significant forms of gratitude such as tickets to theater evenings, extra vacation time and financial bonuses should also be considered. thOu ShAlt nOt tOlERAtE quiCk-And-diRtY wORk EffORtS Solid project management policies should obviate the temptation to indulge in quick-and-dirty project work, which only leads to error, rework and frustration. —By James M. Kerr

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Cover Story | Project Management To do that, the IT team had a series of meetings with functional users, including people who were doing day-to-day dataentry for each module. “All users were called together in a big conference room and their issues were discussed in detail. The concern among users was increase in data entry. Finally, with their agreement, a rollout plan was chalked out,” says Bandopadhyay. The series of meetings he says, “solved 70 percent of our issues.” Before he could get there, though, Bandopadhyay and his team set the stage by having meetings in smaller sectional groups. The aim, he says, was to “bring in confidence and a sense of responsibility within each group. And then have a higherlevel, cross-functional meeting with each business function head.” Once he had the users on his side, Bandopadhyay set his sights on his next target: top management. “It was discussed with management that, in addition to the huge investments made, a lot of man-hours have already been invested. We also told them that the reason for the project failure was not the ERP software, but the lack of user involvement.” His approach is radically different from the method other CIOs have taken to save projects. Desperate CIOs have been known to leverage top management to whip users into obeying new mandates. But Bandopadhyay was not going to take that road again. It was a lack of user ownership that had stalled the project the first time and he had learnt a lesson. “Always involve users in the complete

lifecycle of a project. The users should own the responsibility of an implementation,” he says. Once this confidence was built, users were ready to take ownership and agreed to a roll-out plan. It was only then that the new plan was presented to management. It was easy to get the formal approval of management once the users were onboard, says Bandopadhyay. With a groundswell under them, management agreed to Bandopadhyay’s plan. “Top management commitment and proper empowerment at each level helped the relevant people drive the project as per schedule,” Bandopadhyay points out.

Pyramid of Control

he next step before Torrent was to come up with a structure that would ensure successful turnaround. This process would play a significant role in ensuring the successful completion of the project. But before this process was initiated, the newfound buy-in from the staff had to be channelized. The structure involved a committed, full-time core team — and since the focus was on the user, this team was to involve all functional users. In order to ensure balance, the team was carefully selected to get a mix of functional and technical resources with complementary skills. This team was to involve itself with business processes since the user-focus mandated the involvement of business process owners. Then they sought support from data owners to clean the data, converting it as

required, and then migrate it. End users were active participants in acceptance testing, training and owning the system. With this framework of buy-in, Torrent moved ahead. To begin with, the structure added an executive sponsor, who represented the commitment of the top management to the project. The executive sponsor’s duty was to define the overall vision of the implementation, ensure support and commitment from individual functional heads, and to participate in — and authorize — important communication and change management initiatives across the organization. Aiding the executive sponsor was a steering committee, which was responsible for the successful completion of the implementation. The committee comprised senior management from Torrent Power and the systems integrator. This committee met regularly to review the status of the project and authorize necessary action for critical project activities. Special care was also taken to ensure that the steering committee was properly staffed with relevant people. Members of the steering committee had to be nominated by the executive sponsor. To ensure active user participation, the heads of various departments were selected. To perform the actual implementation, Torrent created a project management team that included a project manager from Torrent and a project manager from the system integrator. Both these project managers had to interact closely with each other — and with the steering committee — in order to complete the project.

Bandopadhyay's Bottoms up Approach — rather than getting management to whip users in line — is radically different from what other CIOs have done. A lack of user ownership had stalled the project the first time and he was not going to take that road again.

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Below the project managers were the process leaders, whose responsibility was to ensure the successful design and configuration of various modules of the solution in line with business needs. To avoid the problem faced with the consultants — namely, a lack of core domain expertise in power utility — these process leaders were specifically chosen after ensuring that they had knowledge of how the organization worked. This was critical because the process leader was responsible for all the divisions and areas that were impacted by a specific set of processes. Aiding the process leaders were the core team members, who were drawn from all functions where a process was to be implemented. The main aim was to ensure that, between the process team leader and the process team members from Torrent Power, the group must possess adequate knowledge of business processes and issues. In addition, there was also a data management team from Torrent Power, which was responsible for coordinating all data collection activities pertaining to the implementation. “IT teams involved all functional people including senior and junior staff. They were requested to work as a team and to treat the project as their own. The challenge was to show management that an internal team could do what a consultant could not,” says Bandopadhyay

SOft lAnding

his structure helped Torrent break up the implementation into phases. This started with an evaluation phase to provide a business and technical foundation to the ERP system. A preparation phase defined the scope of the project, and the blueprint phase described the business process requirements of the company. This was followed by a realization phase that helped conceptualize the business process requirements of the company, a preparation phase that included user training, and finally, a go-live phase would see the transition from the old system to the new.

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OnE: Identify current project success rates and publish those metrics to your IT staff so they’re aware of shortfalls. twO: Set and communicate your new expectations for good project management. This may include redefining project success. thREE: Provide leadership training to all managers to boost their confidence, improve their credibility with the business and prepare them for the challenges that come up over the course of projects. fOuR: Train staff in any new project management methodologies you’re implementing. fivE: Communicate new methodologies to business users, and make sure they’re on board with new processes and procedures. If they don’t adopt them, you won’t be successful. SiX: Foster joint accountability between project managers and functional managers by getting them to work together more closely on a daily basis. SEvEn: Monitor and report on the progress of projects to hold people accountable for completing projects successfully. Eight: Encourage project managers to communicate better and more frequently with project sponsors and stakeholders by evaluating them on the business value their projects provide rather than solely on whether their projects are completed on time and within budget. —By Meredith Levinson

The turnaround took a mere four months. “The project was taken over by the IT department in December 2000 and went live in April 2001,” says Bandopadhyay with pride. The recovery, however, did not cover all of the original modules. Bandopadhyay says that initially, the consultant had planned the ERP with six modules: purchase order, inventory, accounts payable, general ledger, fixed assets, and job cost. The finance modules including general ledger, accounts payable and fixed assets were discontinued. “The integration of purchase with accounts payable and general ledger was creating a lot of illogical variance entries,” Bandopadhyay says. “These were not acceptable to the accounts department. Reporting was also a major issue with the accounts department, and the financial modules were discontinued.” The success of the project also outweighed other IT priorities. While Bandopadhyay would have preferred zero customization, he was forced to do some tinkering for the purchase module. This was required because the ERP module did not have any provision for taxes and other charges like excise, freight, loading and unloading charges, which are required by Indian regulations. It was painful, but a compromise was made. Despite this, Bandopadhyay is pleased with the way things have panned out. “When the in-house IT team took charge of the implementation after discontinuing the consultant, they proved themselves by rolling out the implementation in a very short period,” he says, his eye clearly on the big picture. He adds that the organization also benefited from the ERP and “the users’ demand for qualitative reports increased to a great extent,” he says. In the end, the project not only made an about-turn, it also marched ahead and raised the bar. And that's hard to top. CIO

balaji Narasimhan is assistant editor. send feedback on this feature to balaji_n@cio.in

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Case File

g n i r e t l e h s e h t r e m o t cus

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Case File

Third-party service centers left LG India’s clients exposed to the glare of poor support. HQ urgently needed to supervise service staff in remote locations — before brand loyalty dried up. By Kanika Goswami

Illust ration by MM Shanith

“The single most important thing to remember about any enterprise is that there are no results inside its walls. The result of a business is a satisfied customer,” said management guru Peter Drucker. A satisfied customer who will come back for more, is what he left unsaid. Customer service is the building block of brand loyalty and when LG Electronics India (LGEIL) zeroed in on this, it knew something had to be done. LGEIL, a wholly-owned subsidiary of LG Electronics, South Korea, set up base 12 years ago. Since then it has grown exponentially, and today, it has two manufacturing plants, 38 branch offices, and 140 area offices. Between 1997-2005, LGEIL’s compounded annual growth rate was 62 percent. It quickly became one of the market leaders in consumer durables with over a quarter of the color TV market, over a third of both the washing machine and air-conditioner markets, and a 41 percent market share in microwaves. However, in 2004, the Rs 9,500-crore company realized that their customers’ only point of contact with the company was through 5,000-odd customer service engineers — the people who fixed their appliances. These brand ambassadors, however, had no loyalty to LGEIL but to their bosses — 1,100 franchised service centers across the country. The result? In a 2004 Businessworld ‘After Sales and Service’ survey, LGEIL came in a poor last for the service of its refrigerators. “The service center’s attitude towards the customer was what LG’s market depended on,” says Daya Prakash, CIO, LGEIL. LGEIL’s management were frightened by the realization that they had no control over the service levels the 5,000 service engineers offered. And customers drew lasting impressions of the manufacturer from them. What was needed was a control mechanism that lay down the guidelines for behavior, service efficiency and communication skills of service engineers. After all, service is among the most important factors in a decision to buy again from LG India. “It is our duty to ensure that customer satisfaction is maintained. We knew that this was one area in which we absolutely had to be at the top if we wanted to be successful,” says Prakash. It was a thought that had nagged the company’s management for sometime. In 2001, the company set up LGSCNET (LG Customer Support Online). The B2B portal was meant to help LGEIL’s service franchisees (also called Area Service Centers or ASCs) maintain spare part stock, even if they were located in the backwaters. The lack of spare parts was a major impediment in closing a customer complaint. LGSCNET also helped track the delivery of stock and spares. From 2004, as connectivity in the country took off, LGSCNET was expanded and today it covers 90 percent of LGEIL’s branches. By this time, LGEIL had invested Rs 3 crore initially and about Rs 1.5 crore on maintenance in its attempt to ensure better service.

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Reader ROI:

How IT can improve service in remote location Why it’s important for a manufacturer to invest in service

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Case File But despite the real time information available online, LG India’s managemnt realized that it still had little control over service engineers — and consequently its brand.

In fo graph ics BY pc anoop

Life’s Not So Good In 2005, the solution, it seemed, was to somehow get LGCSNET to go at full throttle. But the lack of broadband, the costs involved and fixed mindsets were in the way. If information is power, then LGCSNET ensured that power was concentrated in the corporate office. Since data on inventory, stock and ordering was available with HQ, there was resistance from some service centers. “Growing awareness that we needed to do this to improve manpower quality was one of our biggest challenges,” recalls Prakash. In the meanwhile, LGEIL’s customers were not being serviced as well as they wanted to be. “We had cases where problems were escalated only because service was not up to the customer’s satisfaction,” says Prakash. Even when service engineers attended calls punctually, they couldn’t tell customers how soon their problems could be fixed. Mainly because an engineer had no way of knowing if a crucial part could be sourced from the local service center or if it needed to be ordered from a regional depot or higher up the supply chain. When an appliance could be fixed depended heavily on where parts could be sourced. Engineers could not give customers a time-frame and the lack of transparency left customers feeling helpless and cheated. “One of LG’s objectives was to promote the brand. Servicing one product well ensures that customers keep coming back,” says Prakash, pointing out how LGEIL could

be losing business because of customers who have been dissatisfied customers. given dedicated numbers. Another objective of Their calls for service are enhancing LGCSNET was instantly SMSed to a branch to create a call center for office and an engineer, to SNAPSHOT customers. The call center ensure stricter follow up of LG was vital if service requests a complaint. Segments: Consumer were going to get real time The SMS service initiative Electronics attention. But with the call worked well, and has several Home Appliances center being a customer’s first benefits. It provided an auto Computer Products point of contact, it was clear confirmation of complaint Mobile Phones that servicing would have to number to customers and Employees: start from there. ensured that all calls were +2,800 So, LGEIL decided to tracked till closure. It also Revenue leverage LGCSNET with a reduced errors caused by Rs 9,500 crore campaign called ‘Customer transferring calls manually. CIO: Delight’. The program was From the SMS service Daya Prakash meant to increase service stemmed another initiative quality with three initiatives. that made it possible to have “We started the campaign basing it on greater control over service engineers — LGCSNET. What we were looking for was a thereby increasing LGEIL’s ability to keep continuous enhancement of the basic service their customers happy. This came in the form offerings. Each of these initiatives (SMS of the 211 program. service, 211 and Voice of Customer) were Under 211, service engineers have to targeted at bringing about customer delight, return a customer’s call within 2 hours of a service efficiency and employee efficiency,” complaint being lodged. They have to ensure says Prakash that they can give their customer 1 hour of their time in the next 1 day. “211 was implemented not only to better turnaround time. After McKenzie did a The SMS service, or the SMS-based call customer satisfaction survey for us, we intimation system, ensured that service came to the conclusion that we were not engineers were intimated of service calls by interacting enough with our buyers. We the call centers via SMS. were not asking about their feedback — after The system ensures that whenever a job or before it. This was what prompted the call center recieves a call, an SMS the 211 program. When we implemented is sent to the customer with a job code. it, we realized that it also bettered the Simultaneously, an SMS is sent to a delivery function. 211 has helped LG with its service engineer assigning him that job. customer relationships,’ says Santosh Das, In addition, there are other SMS-driven head of customer service, LGEIL. applications for institution or corporate

Customer Delight

Dial 211 Using SMS, LG can ensure that customers get service appointments faster.

Customers call the LG helpline and are given a complaint code.

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Simultaneously, the call center messages the nearest service engineer with the customer’s contact information.

The service engineer has to call the customer within 2 hours. He also has to give the customer a 1-hour slot in the next 1 day.

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Case File

Making Service Flatter With these initiatives in place, Prakash’s team is looking forward to more applications to add to the LG customer experience. “We want to expand the SMS base further,” says Prakash.

Taking the SMS application forward, there are plans for newer applications in which an engineer can interact directly with LGSCNET, via SMS, to check for part availability. Currently engineers have to call a local service center for this data because it is only online. “Then it will be possible to tell a customer, with greater accuracy, how long a service will take.” LGEIL is also developing tools to forecast part availability. “It means coming up with a business intelligence application. For instance, some models of ACs in NOIDA have problems with gas leaks. So, service staff can be ready with spares and service for these models, because I can forecast problems. The idea is to have a pro-active service structure.” The company’s proactiveness is contagious. IT is cutting through the reluctance of service centers to be more transparent. “When the SMS started, it was a little difficult initially, but the LG team helped us through,” says R.G. Swaminathan, a service center owner in South Chennai. “Thanks to this, we can service more customers. In 2004, I took about 2,000 calls a month. Today I deal with about 3,500 calls

“We knew that we had to absolutely be at the top of customer satisfaction if we wanted to be successful.” — Daya Prakash, CIO, LG Electronics India

a month. In addition, now there is much more transparency.” In the additional 1,500 calls, LG may perhaps find a way to increase its revenue. “I have asked and talked to my customers. They are much happier, there’s less time wasted, and their glad someone is asking if they are satisfied with our service. What we’re doing now — that’s making a difference,” says Prakash. CIO

Photo by Srivatsa Shandilya

The company backed 211 up with 120 telecallers. Their job was to provide LGEIL with feedback on how the 211 program worked for them. It meant about 1.5 lakhs calls a month and was a substantial investment for the manufacturer. But LGEIL’s management ensures that customer feedback is passed on to engineers and going forward, engineers will be evaluated on its basis. The result? In another Businessworld survey on consumer satisfaction — this time in 2007 — LGEIL scored first place for its ability to resolve customer problems on a first call and for the skill of its helpline personnel. Another initiative is the ‘Voice of the Customer (VOC)’, which gives LGEIL all the interaction that is needed to keep customer relationships healthy. “For VOC our motivation was getting good customer interaction and in the process, getting a good customer feel,” says Das. “It will affect the business in the long term.” VOC helps figure out which regions in LGEIL’s empire are facing problems. “We try to track customer calls, note their location and frequency, find out common problems, and how service centers respond,” says Prakash. “We wanted customer information, complaint details, resolution details. We even wanted to see how service engineers react and whether customers were satisfied with their behavior.”

Kanika Goswami is assistant editor. Send feedback on this feature to kanika_g@cio.in

Quick Fix Online inventory enables engineers to source parts — and fix problems — faster.

At the customer’s house, the engineer realizes a part needs replacing. He calls his service center and thanks to LGSCNET he can find out how long it will take to source the part.

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Once the problem is resolved, the engineer calls the call center.

Armed with this informatin, the call center calls the customer for service feedback. This is also a cross-selling opportunity.

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Sanjeev Bikhchandani, CEO and co-founder of InfoEdge, says that IT can help his company with product innovation.

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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Right for

The Job By Kanika Goswami

In boxing as in business, footwork is everything. And a back step means something big’s coming. When his entire industry came crashing down around him, Sanjeev Bikhchandani, took a step back, focused on the business and pulled Naukri through the dotcom bust. In the years that followed, he made Naukri a household name. Now again, Bikhchandani is taking a step back. With the imminent launch of Shiksha (an education portal), he’s taking the fight away from the frenzy of the online job space and is focusing upstream — on tomorrow's job hunters. Bikhchandani has proved that he can pull an idea out of the future and nurture it. And he's made his move. Watch out for the back step.

CIO: Why did you give up your day job to start something of your own?

Is entrepreneurship a growing trend among young technocrats?

Sanjeev Bikhchandani: I worked for GlaxoSmithKline before. I always wanted to be an entrepreneur, even when I was in business school. It was something I wanted to be, I did not know when exactly, but I knew I would be an entrepreneur. I made all my plans accordingly, including my career choices, my studies, my three-year job, and so on. It was very important for me to be my own man, doing my own thing.

Absolutely. I was a speaker at the TAAI (Travel Agents Association of India) summit last December. There were 1,600 attendees. It was one of the largest gatherings of entrepreneurs and of people interested in being entrepreneurs. The numbers are just growing. I think entrepreneurship is becoming a movement. Another recent trend is the emergence of Indian investors. Until now VC firms

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View from the Top

raised money overseas and invested in Indian companies. Now wealthy Indians are investing both as angels and VCs. I expect this trend to gather momentum in 2008. As a consequence of these changes, a new class of entrepreneurs has emerged in India: well-educated, first-generation and with experience in best-in-class companies. It is these entrepreneurs, and the companies they build, that will be one of the major engines of growth for the Indian economy in the decades to come. Today, almost every business school in India has an entrepreneurship cell and actively promotes it as a viable career option. Twenty years ago, entrepreneurship was a fringe movement at business schools. It is now mainstream. However, even as more business school graduates are likely to become entrepreneurs in 2008, it will be tough for most to get funding since investors value experience, domain expertise and a proven track record.

P hoto by DR lohIA IMAGING by UN NIkRIS hNAN AV

How did you envisage an online business even before the Internet came to India? On a visit to IT Asia in 1996, I saw a stall with the letters WWW written on it. I wondered what it meant, and found out that it stood for Worldwide Web. Thatâ&#x20AC;&#x2122;s how I came to know about the Internet. Although itâ&#x20AC;&#x2122;s hard to imagine today, in those days there was no TCP/IP access. An agent gave me a demonstration on a black and white monitor, and I had my first peek at the Internet. I saw how e-mail worked. I looked at Yahoo.com. I

Sanjeev Bikhchandani expectS i.t. to: Lead innovation open new areas of business

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realized that I finally had a medium on which my business could run. I decided I wanted a website — especially after I came to know that there were 14,000 users in India. But I could not do this sitting in India, because all the servers were in the US. My brother, who lived there, helped me register my website and get a domain name. In March 1997, Naukri.com — a division of InfoEdge — was set up.

Where did the idea of a job site come from? It was an old idea. While I was with GlaxoSmithKline in 1989-90, there were about eight of us in the marketing department and we all sat in an open hall. I noticed two things. First, that when the office copy of Business India came in, everybody turned to the back where there were about 40 pages of job ads. People discussed jobs a lot. Now, everybody was happy in their current jobs and no one was really applying, but jobs were still something they discussed. It dawned on me that it isn’t always when you need a job that you look for one. Second, I noticed that every week, headhunters offered a few of my colleagues jobs. Every time it was a different head hunter, with a different job. And these jobs were never advertised in newspapers and magazines. I figured that what appeared in print was the tip of the iceberg. With thousands of recruiters, each with four or five clients and armed with 10 or 15 jobs, there must be a massive but fragmented database of jobs out there. By 1990, I figured that if somebody were to build a database of ‘live’ jobs and keep it

How did you ensure that the dotcom bust did not affect Naukri's business?

“Our investment in product and tech innovation is what keeps Naukri ahead. In the future, as in the past, IT is going to be important. ” — Sanjeev Bikhchandani

updated, they would have a very powerful product. It could become a business and money could be made — although I was hazy how it would work. The Internet was not around at that time. In the meantime, we started InfoEdge. We did salary surveys, we made some databases, and in ’96, I saw the Internet for the first time. I kind of joined the dots. I told myself that this was the way to do it: put a job database out on the Internet and sell it.

We launched in 1997, before the boom, but we already knew that all would not be well when the boom started. When the boom came, we could see that it would be corrected soon. But it happened about six months sooner than we thought. In fact just a month before the correction happened, in April 2000, we opted for some venture capital — Rs 7.3 crores from ICICI Ventures — 14.7 percent of the company (it was worth about Rs 50 crore-plus, then). Instead of wasting this on advertising, we took on new offices and hired new sales staff. We began to invest in servers, technology, people, products, sales offices. We began to focus on growing the business — not just by spending — but through better products and an on feeton-the-street approach. Around this time, the IT meltdown began. This was in November 2000. Since we had invested our money into setting up new business opportunities, developing new markets and developing new and more exciting products to keep our sales team busy, when the bust took place, we were already on an upward curve.

Today, where is Naukri placed vis-à-vis other job sites? How did you become a household name? We are the market leader in the online job space with a 50 percent market share. We have held this position for about two or three years.

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Our next competitor has about 30 percent and the third place has about 15 percent. When we started, we were the first site that targeted Indians in India. All other job sites and search engines, including Rediff, Khoj and Samachar, targeted Indians in the US. Around that time, the Indian media began to write about Internet businesses and Indian examples were held up as examples. As a result, we began to get massive coverage. In our first year, we had two fat files of press coverage, which really helped us. It got us traffic. Our contact strategy was good: we allowed people to log on for free. With only about 14,000 people on the Internet in India, we had to get people to keep coming back.

How comfortable are you with IT? What has IT done for Naukri? I am not a technology person. I have an advertising and marketing background and I studied economics in college. However, I have always been an avid user of technology. IT has always enabled business. In the last three years, we have realized that we need to keep abreast of the competition — at least in product and tech innovations. Our investments in innovation is what keeps Naukri ahead. Going forward, too, IT’s going to be one of the most important factors.

You started a matrimonial site. Why diversify? InfoEdge has started and has plans to start a number of diverse portals. We’ve got

Jeevansathi, a matrimonial website, we’ve got 99acres, a real estate exchange, and this quarter we are launching Shiksha, an educational site. The most important reason for these diverse areas of interest is that we are chasing large markets. The strategy is to launch in unchartered areas and take on unsolved problems. We are trying to enter markets where we believe there is a great possibility to utilize the Internet’s efficiency. We know that we have the leadership and the bandwidth to service these opportunities.

SNAPSHOT

Info Edge Revenue:

Rs 239 crore Employees:

1,500+

Offices:

64 in 41 cities across India Registered Users:

3.5 million*

Page Views Per Month:

100 million*

*Only Naukri.com

Downtime is a nightmare in your business. How do you tackle this? You build redundancies, backups, mirrors and replicated servers. That’s the only way to minimize downtime. IT has a lot to do with our daily functions because it's the base of our businesses. Our product runs because of IT. Our entire backend is all IT-enabled, and all processes depend on IT. We also have different product and technology heads for different businesses.

What does e-commerce need to take off in India?

Do they play a role in business development?

There are many things required for the development of e-commerce in India. Basically, there’s an issue of Internet penetration itself. Second is the willingness of people to use credit cards on the Net. The third is question is: do we really have great e-commerce sites with great products at the right prices, with dispatches being delivered on time? Why should consumers buy online? Are we giving consumers something cheaper or better? Or we giving a product to the user faster, or making it more convenient? Are we offering something that is not available in a consumer’s neighborhood? Unless these conditions are fulfilled, e-commerce will not take off.

Our technology heads play a significant role. For example, we are implementing ERP — it is a key project moving forward. We are starting with Naukri. Here, Vibhor Sharma is playing a very big role and the entire IT infrastructure reports to him.

What's next at Naukri? We are planning to launch Shiksha and are investing in a few startups. We will make a few big announcements in the next quarter. We are also planning to expand our Naukri franchise in the Middle East. CIO Kanika Goswami is assistant editor. Send feedback on this feature to kanika_g@cio.in

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Comparisons Benchmarking your outsourcer's prices against the market is the best lever you have to save money. Too bad your outsourcer may be trying to stop you. Hereâ&#x20AC;&#x2122;s how to fight back. 40

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Benchmarking

By Stephanie OverBy Over

When Darius Jackson became ING’s head of IT infrastructure support and service delivery in January 2005, his job was to clean up a mess. Two years earlier, the financial services company had outsourced its IT infrastructure (hardware, software, help desk and so on) to a major service provider in a seven-year, Rs 2,400-crore deal. But now the business leaders of the company are worried that they aren’t getting the value they want out of the relationship. Jackson has a crowbar for leveraging more value out of the deal, though he hasn’t used it. Yet. It’s called the benchmarking clause, a small paragraph hidden in a complex outsourcing contract that gives him the right to assess the outsourcer’s prices using an independent benchmarking firm. If those prices turn out to be above the going rate, he could bring his outsourcer back to the negotiating table. The outsourcer probably wouldn’t be too pleased with Jackson should he choose to exercise that right. "They like to look at the relationship as a partnership," says Jackson. "Their preference is that you come and talk to them about issues and concerns and try to work through them as opposed to looking under the covers." Still, Jackson admits, "having [the benchmarking] option is invaluable." But what Jackson and other IT leaders may not know is that the power of the benchmarking clause, which is hidden inside most outsourcing agreements today, has diminished and the practice of price benchmarking is in danger of disappearing altogether. "Suppliers have scant enthusiasm for benchmarking, which shaves their margins and tends to be invoked just as their contracts start to become profitable," says George Kimball, a partner with law firm Baker & McKenzie who represents outsourcing customers. Not surprisingly, benchmarking clauses are among the most contentious and negotiated terms in an outsourcing contract, says Kimball. In fact, the major IT service providers have launched an all-out assault on benchmarking, fighting to turn it to their advantage. "[They are restricting] what you can benchmark, how often you can benchmark and the amount the benchmark can reduce the price of services," says Mark Robinson, executive director of advisory services sourcing consultancy EquaTerra. Other experts say the big outsourcers are looking to avoid the process altogether. "They want to stonewall it," says Howard Rubin, a senior adviser to research company Gartner. All of the major providers we spoke to for this story — EDS, Hewlett-Packard and IBM — deny that they are out to kill benchmarking. However, all express frustration with the current state of the practice and all are trying to change it — to their benefit. "Benchmarking isn’t ever going to go away, but I think it will change," says Jon Stewart, VP of market management for Electronic Data Systems (EDS). "I think we need, first and foremost, more credible [benchmarking firms]. There’s not a lot of players in that space. Second, there needs to be some recognition of what you can realistically expect from a benchmark. The old mind-set is, ‘Ah, I’ll go to a benchmarker and they will have a robust view of the market.’ They don’t." If the power of the benchmarking clause diminishes, CIOs will concede one of the only tools for controlling the cost of outsourced services. The risk with any outsourcing contract is that you end up

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Reader ROI:

How price benchmarking saves you money Ways that outsourcers are trying to limit benchmarking How to negotiate a good benchmarking clause

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Benchmarking paying through the nose for services that should be getting cheaper, particularly in the infrastructure area, where prices for hardware are dropping constantly. "If you leave it up to the vendor, there won’t be any benchmarking. Your next shot to adjust prices is when the deal’s up," says Robert Finkel, partner with law firm Milbank, Tweed, Hadley & McCloy.

The Birth of the Benchmarking Clause The benchmarking clause dates back to the mid-’90s, when the number of megaoutsourcing deals began to explode, along with the lengths of the agreements. Signing a 10-year deal with a multibillion-dollar price tag was a big risk — one that customers wanted to mitigate. In the beginning, says Kimball, benchmarking clauses were kinder — designed only to bring outsourcer and customer together to confer diplomatically if prices seemed higher than market averages. But as the decade ended, CIOs and their business colleagues got nervous. They wanted some assurance that increasing competition among the outsourcers and constantly dropping costs of computing power would be reflected in what they were paying. Outsourcing

consultants and external counsel were only too happy to oblige. Midwifed by such advisers, new benchmarking clauses emerged. With teeth. The clauses not only enabled periodic benchmarking, they forced a remedy. Should charges fail to fall within the bottom 10 percent of the market, the supplier had to lower its prices. Some more aggressive clauses even required retro¿active reductions. "They were planned to be punitive to the providers," says Rubin. In the vendor feeding frenzy of the time, outsourcers signed these customer-centric provisions left and right. "Back then, it was all green pastures and room enough for everyone. Outsourcers just chased deals," says Stewart. "There wasn’t a lot of thinking about how the market might change." A few years later, however, when some large customers began to flex their benchmarking muscles, outsourcers felt the pain. In one of the most extreme cases in 2002, Britain’s Cable & Wireless sued IBM for more than Rs 800 crore for price gouging after a disputed benchmark. IBM counter¿sued and brought Cable and Wireless’s benchmarking company, Compass, into the lawsuit. They ultimately settled out of court. The outsourcers suddenly woke up, as if from a nightmare.

Doreen Wright, CIO of Campbell Soup, benchmarks annually and says that benchmarking improves her relationship with her outsourcer.

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"They started to say, What the hell have we agreed to?" says Geraldine Fox, global sourcing practice lead for Compass. "The price standard they were being held to — the lowest decile — was ridiculously strict."

Why Vendors Hate It Attribute the sharpness of the bite to the emergence of benchmarking companies around 1998. Benchmarkers had been evaluating IT shops’ internal operations since the late ’80s, but when the outsourcing boom hit they came up with an enticing pitch for CIOs: let us invoke the benchmarking clause, and we guarantee to cut your prices. With benchmarks costing anywhere from Rs 40 lakh to a Rs 4 crore, depending upon scope, it was hard for benchmarking firms to seal the deal without pledging to get at least some of that money back. But that promise poisoned their objectivity, some say. "When you say we guarantee to save you 20 percent, you’re not really being objective," says Adam Strichman, senior partner at research and benchmarking company Nautilus Advisors and former director of outsourcing strategies at Meta Group. The outsourcers screamed foul. The whole benchmarking process, they contended, was a crock: service provider cost models are complicated; there are financial and operational dependencies among different services; outsourced services are rarely commodities but rather are sold in varying combinations upon a wide array of terms. For example, the price for mainframe services can vary by plus or minus 40 percent, says Stewart of EDS, depending on what software is running on the machines. "You have to understand the client environment, service levels and the financial assumptions that went into the deal to come up with an accurate benchmark," he says. "And benchmarkers don’t know the deal specifics." Furthermore, say the outsourcers, the benchmarkers’ attempts to account for the variations among companies — what is euphemistically known as 'normalization' in the industry — isn’t an adequate substitute for real numbers and knowledge. "The vendors complain benchmarking is more art than science," says Robinson of EquaTerra. "And a black art at that."

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The Benchmarking Business Benchmarkers, whose overall market now exceeds Rs 800 crore per year, according to one industry analyst who asked not to be named, concede some of these points. "There is an art to it," admits Strichman. "Benchmarking is far more than statistical analysis and number-crunching." Benchmarkers say that over the years they have refined their processes to reconcile unlike data and adjust for differences such as the client environment and service levels. But while benchmarking may require some apples-to-oranges comparisons and fact-finding to adjust for different environments, it’s the only method currently available for CIOs to ensure the competitiveness of the prices they’re paying. "There’s value in the benchmarking clause. It gives a customer security when signing a long-term contract with a single provider," says Neil Barton, Hewlett-Packard Services’ benchmarking manager for Europe. And while outsourcers complain that the benchmarkers’ numbers don’t add up, they are loath to admit that their own numbers don’t add up either. Service providers typically grant customers a great price on IT services on day one but backload their costs to recover initial investments later on. Compass reports seeing year-one savings of as much as 18 percent (usually 10 percent to 15 percent) turn into costs in excess of 23 percent above market rate by year three and more than 35 percent in longer deals. Outsourcers aren’t likely to open up their books and show you how they’ve arrived at your charges, so benchmarking is an important tool. "Whatever its limitations," says Kimball, "benchmarking can be an effective catalyst for renegotiations that raise service levels and reduce charges."

The Vendors Strike Back A few years ago, major outsourcers began taking active steps to restrict benchmarking. They created dedicated teams to analyze costs and negotiate benchmarking clauses to their advantage. "What was once just grumbling turned into organized grumbling," says Strichman. "Now every major service provider has a group that manages the process." These

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The Sanity Clause Benchmarking works best when it's used to ensure competitive pricing over the term of a contract, not as a device to wring every last cent out of an outsourcer. "Outsourcing is a constant barter," says Daniel Masur, who represents outsourcing customers at Mayer, Brown, Rowe & Maw. That applies to the benchmarking of outsourcing too. Expect a lot of back and forth with the vendor on everything from the language of the benchmarking clause to the benchmarking process and what you do with the results. Here are some best practices. Negotiating the Clause Costs: Customers may prefer to pay for benchmarking, giving them greater control over the process. Suppliers may propose sharing expenses, which could ensure more cooperation from the outsourcer and greater perceived objectivity on the part of the benchmarker. Keep in mind, however, that outsourcers will probably find a way to recover their part of the benchmarking costs in the contract agreement — there are no bargains in benchmarking. Timing: Ideally, you should conduct benchmarking every year. Reject language that limits it to less than that or pushes benchmarking out beyond the first year. Sample size: Vendors may try to make the process more difficult or expensive either by demanding that you benchmark against a larger-than-normal number of peers or by stipulating an overly complicated process for peer selection. Benchmarkers say you usually need only a handful of peer companies for a successful result. Results: Suppliers are usually reluctant to agree to automatically match market rates determined by a benchmarker — especially if there are stringent service quality requirements elsewhere in the contract. They’re unlikely to agree to match the bottom 10 percent of pricing, but may agree to the lowest quartile or third — though they may ask to cap the total cost reduction amount.

Managing the Process Budget and plan: Include the estimated cost of a benchmark in your outsourcing business case. And start planning the benchmarking process at least four months ahead of time. Do it early and often: Most customers never invoke their benchmarking clause until year two or three of the contract, and then only when the outsourcing relationship is already on the rocks. That’s a mistake. "The process is most likely to be successful — and least likely to bruise working relationships — when conducted as part of a periodic review or recalibration of the entire relationship," says George Kimball, partner with Baker & McKenzie. Focus: Campbell Soup CIO Doreen Wright sees little value in benchmarking every service IBM provides in her huge outsourcing deal. Rather, each year she and her team identify areas of growth or change where it’s likely that prices or service levels will need adjusting. For example, last year Campbell benchmarked server hosting after moving to a new virtual server environment with IBM. — S.O.

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Benchmarking groups are charged with analyzing internal intelligence; benchmarking to calibrate their pricing models (the outsourcers use the benchmarkers’ services too); and managing the process when a customer decides to invoke its benchmarking right. Alan Yamamoto set up such a group at IBM five years ago. True to Big Blue form, the company has filed a patent in this area. Meanwhile, IBM’s arch rival, HP, has created a team, as has EDS. "[Vendors] definitely have gotten more vigorous in protecting their interests," says Stuart Harris, a partner with outsourcing consultancy TPI. "I can’t say they’re systematically obstructive, but some of their clients might." One of the tactics these teams use is to make a benchmarking clause so specific in its requirements that it becomes too difficult or expensive to invoke — for example, requiring too many peers in the benchmarking group (five is plenty, say

benchmarkers need to pool data from many different outsourcing customers. Since the beginning of the benchmarking era, outsourcers have allowed benchmarkers to reuse the data they gather during their benchmarking engagements as long as they agree not to reveal customer names. Yet within the past year-and-a-half, vendors have begun asking benchmarkers to sign a legally binding document promising that they will not reuse the data they gather from the outsourcer’s customers, thereby preventing the benchmarkers from making comparisons across companies — the very essence of what they do and the foundation for the service they provide their customers. Indeed, some providers, such as IBM and EDS, have banned data reuse — with rare exceptions for particularly large and determined customers. This is despite the fact that most service providers use thirdparty benchmarkers themselves to construct

Outsourcers are trying to stymie benchmarkers from gathering data by asking them to sign a legally binding document promising they will not reuse data they gather.

benchmarking companies). Other terms the outsourcers may seek include negotiating a detailed limit on how soon or how often the customer can benchmark, the opportunity to review and negotiate draft findings, and caps on mandatory reductions in charges, among others.

Shutting Off the Data But perhaps the most obstructive effort by outsourcers so far is their attempt to stymie benchmarker data gathering. In order to build their market cost estimates, 44

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and maintain competitive deals. "If one believes in the reuse of pricing data, you have some obligation to permit that to happen," says HP’s Barton, noting that HP employs the services of benchmarking companies Compass, Gartner and Germany-based Maturity Consulting. HP is in the process of 'reviewing' its data reuse policy, he says. EDS’s Stewart sees the contradiction: he complains that the benchmarkers lack sufficient data to make good pricing estimates, and now he’s exacerbating the problem. He doesn’t much care. "The reality

is I have better data than the benchmarkers do," Stewart says. "We participated in 9,000 deals last year. We have much more robust information. We don’t need [benchmarkers] to define our view of the market." But CIOs do. And the trouble is, many of them buy the outsourcers’ pitch that by preventing reuse of data, they are simply trying to protect customers’ privacy. "The client will say, ‘That sounds scary. Thanks for bringing it up,’" says Nautilus Advisors’ Strichman. "They don’t see the agenda underneath." If every customer agreed to such restrictions, price benchmarking would cease to exist. Meanwhile, consolidation has left just a handful of big, full-service outsourcers — all with tremendous power in the marketplace. IBM, for example, has the biggest market share of any outsourcing company, more than double that of its nearest rival, EDS. The two companies’ combined market share is more than their four next nearest rivals combined, according to Gartner. Other major providers may ban the reuse of data now that the two biggest players have started moving in that direction. If CIOs don’t want the benchmarking clause to go away, they will need to take a more active role in negotiations.

Don’t Mess with Us Keeping benchmarking alive was top of mind for leaders at the Texas Department of Information Resources (DIR) before they signed a seven-year, Rs 3,452-crore data center services contract with IBM in November 2006. "Benchmarking was a hot issue for us. Our belief was that it would allow us to have the best insight into how our deal compares to market pricing," explains Kim Weatherford, director of statewide technology operations. "Over time, technology [improvements are] going to drive down rates for various [services], and we want those rate reductions," he adds. During the state-mandated bidding process, Weatherford noticed that all the vendors seemed allergic to the concept. Indeed, while most issues were resolved before final negotiations with the winner, IBM, benchmarking was not resolved until the final days of negotiations. "IBM had experienced problems with

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Benchmarking [benchmarking]," says Weatherford, "but we worked hard to get language in there that allows us to do it regularly." Initially, Texas went old school on the clause, seeking automatic rate reductions for charges that did not fall in the lowest 10 percent of market pricing. IBM pushed back and raised it to the lowest quartile. IBM also demanded a cap on annual pricing adjustments: no more than 5 percent in discounts in years two through four and no more than 7 percent in years five through seven. The clause allows the state to benchmark annually and even includes language that compels IBM to waive its ban on data reuse. Weatherford admits that the dollar value of the state’s contract went a long way toward getting a more balanced benchmarking clause. But any determined customer can and should secure similar benchmarking rights, he insists. "You really have to know what you want and what outcomes you’re willing to live with, and put that on the table," says Weatherford. "The outsourcer will figure out a way to give it to you; it’s just a matter of money."

Kim Weatherford, an IT director for Texas, says that any CIO can – and must – negotiate strong price benchmarking clause with outsourcers.

An Annual Affirmation Campbell Soup Senior VP and CIO Doreen Wright brings in benchmarkers once a year to benchmark specific services and technologies that have been outsourced in her 10-year deal with IBM. "In some cases, we find we’re paying too much and in others too little," she says. The important thing, Wright says, is that Campbell spent a full year on the latest contract renegotiations with IBM (the original deal dates back to 1995) to get initial pricing right, determine which services should remain with IBM rather than return in-house, and ensure benchmarking rights for the length of the deal. Ironically, Wright says she insists on benchmarking because she has a good relationship with IBM. "They’re an extension of our own team, and we can lose objectivity," she explains. "So we need to bring in an objective third party who bases their assessment on facts." The issue of data reuse is trickier. There’s certain data IBM will not allow the customer to share with the benchmarker, says Andy Croft, Campbell’s vice president

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of global services. "We’re not crazy about sharing corporate data either," says Croft. "But we realize the whole industry needs to benchmark." And the process itself is arduous. In fact, Wright had to skip benchmarking one year because Campbell was rolling out a new SAP system in Canada. Still, "just having [the benchmarking clause] in there is healthy for the relationship," says Croft. "It makes a lot of implicit things explicit. And it eliminates the vendor’s entitlement mentality."

The Forecast: Uncertain But in the battle to preserve benchmarking, Campbell Soup and the state of Texas are likely exceptions rather than the rule. Benchmarking is on the ropes. "Benchmarking is an arena in which both buyers and vendors have an opportunity to

play games," says Cynthia Beath, professor emeritus at the University of Texas-Austin. "If I were to bet on the outcome of any outsourcing game, I’d put my money on the vendor, who plays more frequently." Benchmarking may be imperfect, but pricing in outsourcing contracts is opaque to CIOs, who may negotiate only one or two of these deals in a lifetime. "No one can make heads or tails of outsourcers’ pricing. CIOs have no idea — is this a good price or a bad price?" says Strichman. Just as benchmarking is becoming less of a sure thing, he adds, there’s "even more need for it." CIO

Send feedback on this feature to editor@cio.in

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Staffing

Luring good recruits is hard for midmarket CIOs, harder still if you're located outside technology hot spots. Check out these winning strategies. By C.G. LynCh

RecR Rec Ruit R uit taleNt if youR fRom the it back wateRS wate Nine years ago, Denise Stephens worked for aviation behemoth Boeing, at one of its divisions in St. Louis, a city that consistently tops the list for having one of the highest crime rates in the country. She often wondered if there was a better spot to raise her family. Then the Washington Savannah River Company, a Rs 1,200-crore firm that manages a nuclear materials site for the US Department of Energy, convinced her that Aiken, S.C., beat St. Louis by a country mile. “I got recruited to come down here, and they toured me around,” says Stephens, now the company’s CIO. “I love horses, so they showed me all the farms and hooked me up with a real estate agent who specializes in equestrian properties. There wasn’t any traffic, and it was a better place to raise my kids. That’s how they got me here, and now, when I’m trying to recruit others, I do so in turn.” But for Stephens and her mid-market peers who are located outside traditional IT talent hotbeds, luring recruits takes creative work and planning — especially for lower-level jobs where companies can’t roll out the red carpet like they do for potential C-level candidates. Just ask Jeff Roggensack, VP of IS and technology for Alere Medical, a Rs 260-crore company that implements remote patient monitoring systems, based in Reno, Nevada — a town known more for its gambling and legalized prostitution than for cultivating hotshot programmers. When he served as CIO for United HealthCare of Illinois (based in Chicago) and later RehabCare Group in St. Louis, he never had to search high 46

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Reader ROI:

How to fight candidates’ career path fears Strategies to emphasize the strengths of your locale Ways to retain talent once you find it Vol/3 | ISSUE/13

Staffing

and low for talent. “There were people to be had,” he says. But once he joined Alere in late 2004, he had to prioritize recruiting work with local area colleges and reach out to people who had tired of the nearby San Francisco area. Despite the hurdles, Stephens and Roggensack have built strong IT departments. Better still, they’ve implemented measures to ensure that once they have the people they want, they can prevent them from being seduced by the sexiness of cities like Boston and San Francisco and the big-money firms found there. Here’s a look at what’s working now for CIOs in small, out-of-the-way cities.

they’d hinder their career more than help it.” He recruits heavily from Oklahoma State University. Still, he says, don’t put all your eggs in the local college basket, because college counseling offices and academic departments have a fair amount of churn. “We’ve seen enough turnover in the departments [at the colleges] that it’s hard to keep a relationship going with them,” he says. “As we find good candidates, we ask them for their friends and acquaintances. We usually find a sharp software engineer usually hangs out with other sharp software engineers. So if we get one, we can play into their network and get some others.”

make SmaRt R Rt college coNNectioNS

tout gRowth oppoRtu R Rtu NitieS

Though it’s tempting to try to pluck talent away from the big guys, mid-market IT departments find it more effective to keep a steady dialogue with local universities, and encourage new grads to stay in the area. This takes more than just the proverbial job posting or phone call to the college counseling office. United Heritage Life Insurance has made its home in Meridian, Idaho, since 1934 and likes the talent it finds there. The Rs 304-crore company happens to be surrounded by colleges that contribute to the pool of some 60,000 IT professionals who live in the area, says Mick Ware, VP and CTO of United Heritage Financial Group and Life Insurance. As you might expect, Ware works with his HR department to get jobs posted at colleges like nearby Boise State and Albertson’s College. But he suggests going a step further and visiting the schools personally, as he does, giving presentations to business and IT classes. While a campus visit from a senior-level exec like Ware can have a positive impact on recruiting, many CIOs believe it’s even more effective to send employees who have recently graduated to visit their alma maters and encourage their former classmates to apply for work. At Washington Savannah River, for instance, Stephens says she’s been able to draw upon the talent she’s already hired to find reliable candidates. “We’ve got three new college hires this past year and they were all friends up at Clemson [University],” she says. At Amcat, a call center software maker based in Oklahoma City, CTO Jim Texter puts a premium on local talent for a simple reason. “We have not had a lot of success at trying to draw people from outside of the area to Oklahoma,” he says. “Unfortunately, we’re not known as a high-tech area. A lot of people fear by moving here

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Nobody wants to work at an organization where he feels as though he can’t move up the ranks — an impression some candidates might have after visiting a mid-market company. Before a company can even sell its relaxed culture and all the other niche benefits that go along with it, candidates (especially those coming out of the college ranks) want to feel as though they aren’t hitting a dead end if they take a job with you. Amcat’s Texter hears this concern from some recruits as well as from some staffers hitting about the two-year mark with the firm. “They say, OK, I’m hired on here, but I might want to grow into management, but I can’t because the team isn’t big enough.” United Heritage’s Ware says that he tries to argue the opposite to potential hires — at larger organizations, you’ll have more difficulty moving up because you’ll be lost in the crowd. “Some people are looking for a large organization where they think they can move up quickly,” he says. “But it’s probably the reverse; they find it’s difficult to move up because there is a lot of competition. I think at a smaller organization you can move up quickly when you have the talent.” Also, in addition to offering the usual promotions, bonuses and incentives, it’s important to make candidates feel they can have a specialty at the organization, rather than having to wear too many hats to compensate for a smaller IT staff, says Alere’s Roggensack. “In some cases, when you get to the real small company, you become a jack of all trades,” he says. “At the mid-market, we have more specialists.” Even so, many mid-market employees will have to juggle multiple functions — and you can tell recruits that’s not necessarily a bad thing, since IT workers who get trained in multiple areas tend to have better job security, says Washington Savannah River’s Stephens. “There is more opportunity to get involved with different types of things than

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Staffing there is with a larger company,” she says. “There, they know they can get more pigeonholed into a certain function within IT.”

Sell the Simple pleaSuReS If your mid-market company’s CEO doesn’t keep a petty-cash box under his desk, odds are you’re going to be outbid on salary. Suzanne Fairlie, president of IT search firm Prosearch, says mid-market companies in more remote locations should not fear this disadvantage but rather, research the stunning differences in cost of living. When you crunch the numbers, she argues, you might be able to show that whatever the giant company is offering isn’t so great after all. Plus, remind candidates that big-city jobs mean big-city hours. “When you’re in New York or Boston, it’s not at all unusual to be working 60-to-70-hour weeks,” she says. “So, you can equate it to people, Yes, you’re making more money in New York, but you’re really working two jobs.” In North Dakota, Mark Molesworth, enterprise project manager for the state of North Dakota IT department, says IT workers in his hometown of Bismarck (the state capital) want a better quality of life — including a lower crime rate, stronger schools for their children and more access to outdoor activities — things you just can’t find in many cites. “I live on the northwest edge of town, but I have three stop lights between me and work and it takes six minutes to get here,” he says. “And if I go in the other direction for less than five minutes, I’m on the shore of the Missouri river.” After work, he’s already fishing while the guys in Chicago sit on the expressway. Money magazine rated Boise, Idaho, as the eighth best place to live in 2006, a factor that Ware knows plays in his favor. Access to outdoor activities — including downhill and cross-country skiing, snowmobiling, water skiing, fishing, bird and big game hunting, kayaking, white-water rafting, hiking, camping and mountain biking — is nearby. “These activities can all be done within a 30-minute drive from downtown Boise,” he says. “And there are so many other things that make this a community that people want to stay in, such as the low crime rate, excellent education system, four distinct seasons and progressive cultural events.” Even in Reno, which might be known more for its vices than anything else, a close proximity to Lake Tahoe has enabled Roggensack to attract a few candidates from the San Francisco area. “When

we advertise, there are people from the Bay Area that are tired of traffic and the cost of living,” he says. “Reno is close to Tahoe, and there’s no state income tax. That kind of expands the talent pool. We don’t pay as much as the Bay Area, but it doesn’t cost as much.” You might also want to convince new recruits that your team likes to play together as well as work together. In the more remote areas especially, Stephens says, it’s important to set up times for your younger employees to network. “There isn’t exactly a huge night life here in Aiken,” she says, chuckling.

DemoNStRate uSe of New techNologieS People coming out of college or switching from a big company to the mid-market want to feel as though they aren’t missing out on up-andcoming technologies. While your budget might not allow you to roll out the newest piece of software or equip everyone with the newest handheld gadget, it’s critical that a candidate feels as though you’re not too far behind. “We try to stay on the leading edge of technology and give them some excitement and motivation for staying with the company,” says Ware. “I think that’s better for those types of individuals that are new to the workforce.” You need to stay reasonably current, says Amcat’s Texter. “I believe smaller development shops can move faster than large companies in adopting new technologies. In fact this is one advantage I believe smaller companies have over larger ones. Small development companies can take on new technologies, evaluate them and determine their feasibility before larger companies even decide to evaluate them,” Texter says. “We try to stay on the leading edge of technology without falling over to the bleeding edge,” he says. “We evaluate technologies constantly. We look at what we think will stick.” As an example, Texter recently let his engineers start using Ajax programming techniques to help in their software development. In addition, he says, he always welcomes an employee’s input when someone comes forward with a new technology that could help the business. You can tout this as an advantage to potential hires, he notes. Being more nimble, he says, his company can respond better to technology suggestions from the ranks. “I can move a lot quicker than the big organizations,” he says. “We don’t have the red tape and hierarchy.”

If you're a mid-market company, odds are you’re going to be outbid on salary. But mid-market companies in remote locations should not fear this disadvantage but rather research the stunning differences in cost of living.

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Staffing oNce you’ve y got ’em, keep ’em

ImpreSS Impre SS OutOut-O Of-tO f-tOwn tOwn CandIIdate Cand dateS S So, you can’t wow talented IT recruits with a fancy corporate campus, never mind a fancy salary? Neither can the other midmarket CIos — but you must make the most of what you’ve got. Since you can’t count exclusively on local talent, prepare to treat folks from across the country well, says Suzanne Fairlie, president of Prosearch, an IT staffing firm who has helped place candidates at mid-market companies. Here are five tips: 1. Work the phone. Do at least one, maybe two, in-depth phone interviews before you fly a candidate to your location. This way, you won’t waste time. “Don’t just do one short interview; you need to give them time to get to know you,” Fairlie says. 2. Roll out as warm a welcome as possible. “You don’t need to have a limo waiting at the airport,” Fairlie says. “But you need to make sure you arrange transportation and lodging. Make sure a person meets them at the airport. I’ve heard of [recruits] getting stuck and wheeling their suitcases down the street.” 3. Enlist your staff as recruiters. During the visit, have your staff sell the job too. If a candidate is middle-aged, talking to him about good healthcare benefits and the school system will likely resonate. But CIos say that fresh-out-of-college kids might relate better to their peers who recently took jobs at your organization. “We’ve had new hires recruit their friends,” says Denise Stephens, CIo of the Washington Savannah River, who gathers recruits from schools outside the state. 4. Emphasize upsides. For example, tout the ability to work from home, if available. Allowing an employee to put in some occasional time at home might just be an added perk, says Fairlie, and serve as a stark contrast to a big firm where only the big shots can utilize such an advantage. At oklahomabased Amcat, a call center software maker, CTo Jim Texter will tell recruits that he has even gone so far as to let some employees work remotely permanently when, say, that employee’s spouse wants to relocate. “If that person is the right candidate, we try to allow them to go work in other areas and still work for us,” he says. 5. Keep it real. While it’s tempting to tell recruits that you’re working with the same technologies as the big guys, don’t embellish your company’s résumé. “You can’t say what you’re not,” Fairlie says. If you don’t have the cutting-edge technologies, put your best foot forward but be honest, she advises. — C.G.l.

In some cases, if a candidate is happy with the location and the work environment is low-pressure yet prosperous, retention will take care of itself. But people get restless and mid-market companies are acutely aware of that fact. With a little more meat on their bones than small boutiques or startups, mid-market IT departments can ensure promotions and raises from time to time. But you can do much more than that to retain your staff. When business conditions cripple your ability to promote staffers, move people around occasionally, even if a true promotion isn’t immediately available, Prosearch’s Fairlie suggests. “It’s a great way to keep people, because they don’t get bored,” she says. Alere’s Roggensack has employed this strategy by encouraging some employees to move to other areas of the business. When this occurs, however, ensure a healthy give-and-take of talent, Roggensack advises. “As we have lost good people to other areas of the company, our positions have been filled by people from other areas,” he says. “For example, a key user in one of the [business side] operational areas was promoted to IT as a junior business analyst since they knew both the operation and the system.” At Amcat, regardless of whether times are good or bad, Texter also employs this strategy because he wants to be cautious that his employees don’t burn out. “If you leave them on the same thing, day in and day out, year after year, they are going to get tired and they are going to get bored,” he says. Also, work with your HR team to regularly evaluate employee benefits. Strong healthcare benefits, for example, can compensate for sluggish growth in salaries, especially for older workers, says Washington Savannah River’s Stephens. Don’t forget the value of your travel budget. While people may bask in the small-town life, most value the chance to have new experiences, says Texter. Have your team members travel on the company dollar occasionally, and you can not only quell the restlessness of living in a more remote area but also improve their professional growth, he says. Amcat frequently sends its software engineers on business trips to interact with end users of the company’s software products in both the United States and Europe. The engineers get to see new cities and meet new people while learning new ways they might better serve customers. “As you develop a system, you’re putting your heart and soul into it and there’s nothing more satisfying than to go out and have the users praise what’s going on or find out what’s not working quite as right,” says Stephens. For others on your team, your out-of-the-way locale’s calm environment and sense of community may be just the factor that keeps them around. As Molesworth says, “In New York, when you walk down the street, nobody makes eye contact,” he says. “In North Dakota, you walk down the street and people smile and wonder how you’re doing. I think that carries over in the business environment.” CIO

C.G. Lynch is associate staff writer. Send feedback on this feature to editor@cio.in

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Essential

technology Previous versions of Microsoft's collaboration tools lacked management prowess. SharePoint 2007 fixes that. Smart IT leaders are making this oftenmisunderstood product work for them.

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From Inception to Implementation â&#x20AC;&#x201D; I.T. That Matters

SharePoint 2007â&#x20AC;&#x2122;s Collaboration Tools By Galen Gruman Collaboration | As the technology partner (head of IT) at global law firm Bryan Cave, John Alber saw increasing resources devoted to keeping multiple information systems integrated and the data flowing among them. Over time, the law firm brought in what it considered the best tools to handle tasks such as document repositories, e-mail management, conflict-of-interest databases and calendar management, to help attorneys and support staff research, collaborate and stay abreast of case developments. And keeping those tools working together was a necessary price to be paid. But now, Alber is implementing a different approach: he's using the new Microsoft SharePoint 2007 platform as the common system for many of these tasks. Until the new version's release, Alber wouldn't have considered SharePoint, since its previous incarnation didn't have the management chops he needed. Windows SharePoint Services and SharePoint Portal Server 2003 was widely considered a departmental tool good just for noncritical intranet sites and project-based file sharing, says Rob Koplowitz, a principal analyst at Forrester Research. But the new version brings in much of what an enterprise needs to manage documents, create project workspaces, manage information repositories and tie into content

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essential technology

management, analytics and search tools — all with IT-based control over security, access management and data structures. "We're all used to Microsoft getting it wrong, wrong, wrong and then getting it right," notes Alber, "but SharePoint 2007 is a much better advance than you would expect even in that usual Microsoft pattern." Bryan Cave is not a Microsoft shop, so Alber was open to options from a variety of providers. But he found that SharePoint 2007 was much less expensive — and often more capable — than legal-information management offerings from SAP and Oracle, and he judged it much more capable and user-friendly than IBM's Lotus Notes-based collaborative tools such as Domino and Quickr (a Notes wiki tool.) But there's also a lot of confusion about SharePoint 2007, notes Karen Hobert, an analyst at Burton Group. Part of that is confusion over the SharePoint name, which used to refer to the Windows SharePoint Services that come with Windows Server 2003 and let people set up intranet sites, document-sharing workspaces and project schedules for individual projects. These services remain part of SharePoint, but new under the SharePoint umbrella is Microsoft Office SharePoint

consultants say. Kelley's IT staff had deployed the previous version of SharePoint to create departmental intranet sites and workspaces — and within a couple years, about 100 separate sites had arisen. People no longer knew where to look for information or where to place it, recalls CIO Justin Yaros. But SharePoint 2003 didn't allow for cross-site search or access management, so IT had no way to assert control over the proliferation. MOSS now brings that control, he notes, which is why he plans to adopt it. But now there's also confusion among IT professionals regarding what SharePoint actually does, since Microsoft has stuffed in analytics, search, Office-based forms and workflow automation, and content management capabilities into the previous file sharing, calendar management and site management features. "You can work it into almost anything," says Trent Parkhill, director of IT services for consultancy Haley & Aldrich, which makes it hard to know where to start. In examining SharePoint's fit, CIOs also need to consider a few downsides to the product. The new SharePoint search, enterprise content management (ECM) and business intelligence (BI) functions may not

Analysts agree that core SharePoint capabilities — file sharing,site management and other collaboration aspects — are where most companies should focus their SharePoint efforts. Server (MOSS), which handles the central management of sites, data repositories, access and security policies, workflows, search and other functions. MOSS is what shifts SharePoint 2007 into the enterprise class, Hobert says. "Together, these provide an information-management middleware for enterprises to use across departments," she says. Auto pricing publisher Kelley Blue Book is a typical example of why the management functionality is important, analysts and 52

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be robust enough for large enterprises. Also, using SharePoint most effectively requires much other Microsoft baggage, including Office, Exchange and Active Directory.

Strategy Should Be Incremental CIOs should resist Microsoft's pitch for SharePoint as a solution for everything and instead match specific issues they have to specific SharePoint capabilities, then start with the most pressing of those, says Paul

63% of

organizations plan to use MOSS for document management and 41% for records management. But only 34% have an actual implementation plan platform. Source: The ECM Association

Hernacki, CTO of consultancy Definition6. "You quickly get overwhelmed if you try to build a strategy around all its capabilities," says Joe Mildenhall, CIO of Apollo Group, an education provider best known for the University of Phoenix. "It should be a phased approach," advises Forester's Koplowitz. In practical terms, that means starting small with SharePoint, using it first to corral any existing SharePoint sites and workspaces and take advantage of cross-site search, then integrate it with Active Directory for security and access controls, says Andy Lin, ECM senior director at consultancy Primitive Logic. Then consider building out new sites and workspaces with SharePoint, perhaps replacing existing sites over time to provide a common user interface and reduce IT's support burden, suggests Haley & Aldrich's Parkhill. Analysts and consultants agree that the core SharePoint capabilities — file sharing, site management and other collaboration aspects — are where most companies will and should focus their SharePoint efforts. After that, companies' deployment strategies will likely diverge, based on the tools they have in place. Many will take advantage of SharePoint's workflow automation capabilities to reduce labor

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essential technology

across forms-oriented processes like expense reporting. You can also use its Excel 2007driven analytics capabilities to offer basic BI, says Burton Group's Hobert. Apollo Group is following just such a strategy, notes CIO Mildenhall, using SharePoint first for its intranet sites and workspaces, and then exploring the workflow and content management tools' capabilities. So is Kelley Blue Book, notes CIO Yaros. Bryan Cave's Alber calls this an

Logic consultant Lin. Similarly, Bryan Cave's Alber has decided to not replace his ECM tools with SharePoint's, "though I can see eventually displacing them." Even if you use third-party tools for such functions, you may find value in adopting SharePoint as a front end, since its familiar Office interface can make ECM, search and BI tools more accessible to users, says Burton Group's Hobert. Kelley Blue Book's Yaros isn't sure if he'll ultimately adopt SharePoint's BI

Using SharePoint fundamentally requires a strong Microsoft core in place. Ultimately,CIOs must ask themselves whether they want to bring Microsoft to the core of their collaboration strategy. incremental approach: "We reveal a little SharePoint at a time," he says. He expects his SharePoint strategy to span several years and fully expects Microsoft to have a new version shipping before he is done.

Where SharePoint Falls Short Note this, however: despite the enthusiasm for SharePoint from CIOs such as Alber, Mildenhall and Yaros, none see themselves adopting all of its pieces. "It's not an end-all, be-all even though it can do a lot of things," says Yaros. "It gets you 70 percent of the way there really fast, but for the remaining 30 percent, you should look at purpose-built [third-party] tools," he adds. Analysts and consultants agree that Microsoft's search, ECM and BI capabilities are not likely to meet enterprise needs, at least not as the main tool in use. Smaller companies may find them to be good enough. Alber came to this conclusion for Bryan Cave's search technologies, so he uses Recommind instead. Likewise, Haley & Aldrich's Parkhill uses Coveo's search engine instead of SharePoint's across the consultancy's 21 offices, even within the SharePoint intranet sites and workspaces. "It's even better to use Google Desktop to find e-mails and so on rather than use SharePoint's search tools," says Primitive

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technology, but he's fairly certain he'll have SharePoint be the front end to whatever he does choose. Likewise, Primitive Logic's Lin says many companies will find that SharePoint 2007's Office-like interface makes a good front end to sophisticated but hard-to-use ECM tools such as EMC Documentum and IBM FileNet.

Beware Microsoft Baggage Although SharePoint 2007 supports Web services and has hooks to data sources such as SAP R3 to pull data into central repositories, using SharePoint fundamentally requires a strong Microsoft core in place, notes Apollo Group's Mildenhall. "Even if you're not a Microsoft shop, you still need to use Office and Exchange," he notes, and not using Active Directory will limit your security and access management controls as well. The upside to buying into Microsoft's goal of becoming a strategic component of your enterprise infrastructure is that "nothing else leverages Office and Active Directory as SharePoint does," he says. And SharePoint also ties in well to Microsoft's .Net and Visual Studio development tools to let IT make enhancements, says Definition6's Hernacki. As you connect non-Microsoft technologies to SharePoint, you can expect a bumpier ride.

For example, at Bryan Cave, it "took a lot of work" to get SharePoint to integrate with the Recommind search system, notes Alber. Primitive Logic's Lin says his consultancy struggled to get EMC Documentum working with SharePoint because the SharePoint interfaces are not so good. But Lin notes that IBM's FileNet integrates more easily with SharePoint. Christopher Martini, Primitive Logic's Microsoft practice head, adds that SharePoint alternatives such as SAP's MySAP portal also require reliance on a proprietary core or lots of custom code. Ultimately, CIOs must ask themselves whether they want to bring Microsoft to the core of their collaboration and perhaps content management, BI, and search strategies, says Forrester's Koplowitz. It's clear that the advances in SharePoint 2007 have caused many CIOs to look at that question again. "Any CIO should be cautious. There's a lot to MOSS that we don't know yet — for starters, how well it will scale in the real world. We'll know in the next year what its real quality is as people put it through its paces," says Koplowitz, Forrester analyst. At Bryan Cave, Alber is not waiting. Impressed with the ‘robustness’ of Microsoft SQL Server's recent release, he says, "Office 2007 is coming off the bus really quite advanced — there's no need to wait until Service Pack 2, as is usually the case with Microsoft." Despite having misgivings about Windows Vista, he sees these recent enterprise apps as proof that Microsoft is ready to play in the big time, and his early experiences with MOSS reinforce that belief. "I'm not seeing the same hiccups as with Microsoft in the past," he says. Despite that enthusiasm, Alber doesn't just swallow the Microsoft Kool-Aid. "I've really tried to cherry-pick; I really try not to buy Microsoft's promises wholesale." The promise of SharePoint 2007 is strong, but the strategy of ‘trust but verify’ remains essential, he says. CIO

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REAL CIO WORLD | MAY 1 5 , 2 0 0 8

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Pundit

essential technology

The Future of Enterprise Software There’s a fork in the road,which path will you take? By Bernard Golden Software | I attended what was billed as a smackdown between SAP and Salesforce recently called ‘Great Debate: The Future of Enterprise Software’. The two belligerents were Hasso Plattner, co-founder of SAP, and Mark Benioff, founder of Salesforce.com. The session was enlightening, and held some interesting lessons for CIOs. Benioff pushed the notion of multi-tenancy hosted apps, and how getting critical updates immediately applied to every organization. According to him, the Salesforce.com offering, which has been extended to be a general purpose platform, should be the basis for everyones' apps going forward —

functionalities. I don't understand how an end user can customize the product for their own purposes and still realize the benefits of multi-tenancy, including transparent upgrades. And whenever I hear someone maintain that I should build my infrastructure on their proprietary platform, I hear the phrase ‘lock-in’ somewhere in the back of my mind. Just because I don't have to install the software on my own servers doesn't mean that lock-in doesn't limit my freedom all the same. Regarding Plattner's on-demand discussion, it's hard to not see Clayton Chrisensen's Innovator's Dilemma infusing

and concluded that, while the payments are spread over a longer period of time, its total cost is equivalent to packaged alternatives. Interestingly, someone from the audience (from McKinsey!) queried Benioff about competitive threats from open source, citing SugarCRM. Benioff breezily dismissed SugarCRM, stating that it's an on-premise product, and the choice between it and Salesforce is a religious one — in other words, are you stuck with the old world view of hosting software yourself, or have you seen the light and are ready to move to SaaS? This despite the fact that SugarCRM offers its product on-demand, and many service

When someone says I should build my infrastructure on their proprietary platform, I hear the phrase ‘lock-in’. including SAP. This is because Salesforce has such experience and insight about building highly-reliable, scalable infrastructure. Plattner, however, noted that SAP is hard at work creating an on-demand offering for those customers that choose to use SAP in that fashion. SAP has 2,500 developers building the offering, and is planning to offer 2,100 APIs to enable companies to customize the product. This is necessary because their customers insist that an on-demand product be capable of offering the same level of functionality as the on-premise version. I felt that Benioff's statements seemed to have a lot of fluff. While he implied that they are building out a full set of enterprise 56

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their efforts. SAP has built an incredible business, providing the largest companies the ability to automate their operations with individually tweaked installations. As it creates its on-demand offering, the expectations of those customers molds the offering, forcing it to enable the same level of complexity and customization, no matter how poorly suited for an on-demand architecture. I mean, 2,500 developers? 2,100 interfaces? Overall, however, I was struck by the underlying assumption that enterprise software will continue to be expensive, complex, and sold by high-margin companies to locked-in lower margin companies. I did a study for a client once on Salesforce TCO

providers offer hosted versions of the open source version of SugarCRM. His haughty dismissal of SugarCRM reminded of the way Detroit used to respond to the Asian car manufacturers: "they're fine for people who want to drive cheap cars, but the market is looking for big American vehicles." Until they woke up one day and found that Asian manufacturers were eating their lunch. To my mind, the most relevant image of the smackdown wasn't Frazier vs. Ali. It brought to mind the scene from Jurassic park where the Raptor and T. Rex go at it: a fight to the finish between two killers of the past. CIO Send feedback on this column to editor@cio.in

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