CIO June 15 2008 Issue by Sreekanth Sastry

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From The ediTor

About two years ago, an IT infrastructure manager at a leading mobile phone firm told

Back to the Basics Infrastructure might be the stuff of 101 lessons, but it’s also the key to agility.

me that his colleagues on the software application side always came across as folks who were involved with doing really path-breaking and exciting stuff. “Nobody thinks managing servers and desktops is any fun,” he said. As we present the Enterprise Infrastructure Special to you, I am getting restless to ask the same friend if he still feels the same way about enterprise IT infrastructure. With CIOs focusing their plans on gaining more flexibility and agility in their IT and business systems, the entire focus has shifted back to core infrastructure. According to McKinsey, two technologies that promise to bring agility to enterprise infrastructure are SOA and virtualization. While SOA promises to make IT more open and flexible by enabling communication between disparate systems, virtualization has the potential to make enterprise data centers leaner and more efficient. Enterprises such as Bharti Airtel, As CIOs focus on gaining which started designing its IT systems more flexibility and agility, based on SOA around a year ago, have the focus has shifted back to defined common IT tasks or services that core infrastructure. work without any friction, irrespective of the underlying platform, thereby reducing complexity. In this issue, you will read how Air Canada’s Aeroplan went about architecting, implementing and leveraging its SOA strategy. Virtualization on the other hand, helps organizations run more applications on fewer severs by partitioning, resulting in much higher utilization rates for servers. Earlier this year, research firm Gartner said that virtualization will be the most important trend for servers through 2012. In the following pages, you can read how Alcatel CIO Elizabeth Hackenson plans to consolidate 25 data centers to just six in the next three years. However, Gartner also advised that from a cost, management and cultural point of view, starting small is the right way to go with virtualization. Clearly, the benefits of virtualization can also be scaled beyond reducing the number of servers, and even cover desktops, which is more about provisioning applications to different desktop users. Meanwhile, experts feel that both SOA and virtualization could bring newer challenges. While SOA deployment can become painful and complex in absence of a clear roadmap, there are concerns about security in a virtualized environment. Despite these worries, the business case for building a simple services infrastructure and enhance server utilization remain very compelling. But are they worth the risk? How are you coping with them at your organization? Do write in and let’s keep the dialogue alive.

Pankaj Mishra Executive Editor pankaj_m@cio.in 2

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FEaturEs

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24 I GeTTinG LiFT From SoA

Building SOA naturally entails a few challenges, but it will pay dividends. Feature by Gerry Blackwell

32 I BiG ChAnGe, BiG ChALLenGeS

Alcatel-Lucent CIO Elizabeth Hackenson just finished the first leg of a massive data center consolidation. What she learnt can help your next big project succeed. Feature by Laurianne McLaughlin

40 I mAke WAy: USer CominG ThroUGh

Large companies such as BP and Google are rethinking the idea of IT controlling users’ computers and sharing their lessons from the frontlines. Feature by Tom Sullivan

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46 I roLLinG WiTh ChAnGe

New projects provide multiple system integration problems — a challenge to any business. Here’s how one technology leader is making tracks in cost-effective manufacturing and logistics. By Miya Knights

50 I reAL VirTUAL GAin

Virtualization can help an enterprise become more flexible, balanced and agile. The experience of Asian enterprises shows that its benefits go beyond just saving costs — improving the mobility of employees and even playing a vital role in disaster recovery. By Feature by Jack Loo

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content

(cont.) departments Trendlines | 11 Server | Wanted: Specialized Skills Quick Take | On Remote Infrastructure

Management Voices | Are Your Ready for 10G Ethernet Infrastructure | Think ITIL will Reduce Cost? You’re Wrong Networking | Letting Networks Breathe Easy Opinion Poll | Where are the Virtualization Gurus? Alternate Views | General Purpose Networks Versus Dedicated Ones

Essential Technology | 67 Communications | Constant Contact

Feature by John Edwards Utility Computing| You Need a Response to

the Utility Analog Feature by Christopher Koch

From the Editor | 2 Back to the Basics

By Pankaj Mishra

NOW ONLINE Amit Burman, Vice Chairman of Dabur India, on expansion and outsourcing.

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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

Cove r: design by b ines h sreedharan Illustration by un nikrishnan AV

Executive Expectations View from the top | 56 Amit Burman, Vice Chairman of Dabur India, talks about the company’s decision to outsource its IT to keep the business agile and continue expanding into the territory of nimbler players.

2 0

Interview by Kanika Goswami

Leadership An Architecture for the Future | 16 You can’t build a robust, agile enterprise architecture on the fly. You gotta make plans. Column by James M. Kerr

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new

hot

unexpected

W te Wan t d:Specialized Skills and pilot it. "If VMware had made that difficult to do, they would not have been successful," said Robert Whiteley, an analyst at Forrester Research. Virtualization is also being used in more sophisticated ways, such as in disaster recovery. These uses require more monitoring, attention and planning. And if desktop virtualization takes off in the way that vendors expect, demand for virtualization expertise will only increase, he said. Some of the virtualization jobs advertised on Dice and other job boards are seeking three-to-five years of experience for a technology that was relatively rare five years ago. Many job listings cite VMware skills as one of a long list of skills needed for a system and server administration post, but there are also job postings specific to the technology, where technical specialists,

administrators and architects are sought. For those ads that list pay, salaries as high as six figures for senior-level experience can be found. Some users involved in virtualization said they were relying on outsourcers to handle any skill needs or turning to contractors, as well training internally. â&#x20AC;&#x201D;By Patrick Thibodeau

IllUStratIon by MM Shan Ith

Career Moving into server virtualization is like playing a video game: the first few rounds are easy, but as many companies advance in deployment, they are increasingly seeking more specialized help. Consider this data point: technology job board Dice has some 1,500 job listings for people with VMware experience alone. A year ago, there were just a few hundred. Tom Silver, senior vice president of marketing and customer support at Dice Holdings in New York, said virtualization is one of the fastest growing areas he has seen on the job board, and "it's just beginning to take off." He said he wouldn't be surprised if the number of VMware-specific job postings rises by 30 percent or 40 percent in a year. Virtualization found its way into data centers, thanks to the effort of system administrators willing to learn about it

Quick take

Rajeev Jorapur on Remote Infrastructure Management I n f r a s t r u C t u r e One of the things that prevents CIOs from being truly strategic is the fact that they are tied down by operational details and infrastructure management is one of the biggest items on their list. Is remote infrastructure management the key? Balaji Narasimhan spoke to Rajeev Jorapur, Head-IT, MercedesBenz, and this is what he had to say:

Are there any special SLA considerations in RIM? These would be driven by business needs. However, for global operations, factors like culture, language and time-zones can significantly influence requirements. The nature of the business will determine acceptable key performance indicators like first response, resolution and turnaround times.

Considering that remote infrastructure management (RIM) is a mission-critical service, do you think that it can be safely outsourced? It is mission critical, but in most cases, it is not a differentiator to the business. Therefore, I think it can be safely outsourced. What issues should CIOs look at in the context of RIM? Apart from the technical competency of the partner, it is important that the partner shares the same value system. Outsourcing RIM cannot be a short-term affair, and it is important to have trust in a lasting partnership.

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Should CIOs outsource short term or long term (over 5 years), given the swift changes in IT? I believe in long-term relationships, especially in infrastructure, which is a long-term asset. The advantages are many, but the sharing of values and trust go a long way in ensuring smooth operations, which is the primary goal that IT infrastructure has to deliver. Pitfalls are inevitable when either of the partners change their value system, or the dynamics of the market make the business model redundant or obsolete. Divorce is always messy and painful. One can, of course, minimize the pain by having suitable exit clauses, but one cannot totally avoid it. Rajeev Jorapur REAL CIO WORLD | j u n e 1 5 , 2 0 0 8

Are You Ready For 10G Ethernet? Though IEEE published the 10 Gigabit Ethernet standard way back in 2002, not all companies have adopted it in spite of its apparent advantages. What is holding companies back? Balaji Narasimhan spoke to some of your peers and this is what they feel: InfrastruCture

“We have not implemented it because there is no demand. But since we are poised for growth, we may look at it — specifically for DR.”

trendlInes

anantharam V.k. Dy. GM-It ops, Collabera

“We are not on 10G Ethernet as we don't need it. But, over the next two to three years, as the business grows, we may need it.”

meheriar patel p GM & head-It, t, Globus Stores t

“We have already implemented it in our campus in Pune for scalability. Now our network has the

ability to scale up to 40 Gbps.” r. muralidharan CIo, Syntel

lend Your

Voice

Write to editor@cio.in 12

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Think ITIL will Reduce Cost?

You're Wrong I t s t r a t e g y The IT Infrastructure Library (ITIL) framework cannot cut costs, free resources, or speed up processes. Instead, it will do the opposite, claims an analyst from IDC. IDC's Chris Murray said IT struggles to get business to sign off on ITIL because they lack the skills of persuasion and discourse. "There is no monetary benefit in ITIL. It actually costs more, requires more staff and a lot of long hours," Murray said. "CEOs look at a project and want ROI, they want to use less labor and they want things done more quickly. "ITIL and its counterparts [such as PRINCE2 and COBIT] dont offer these things, so you can see how a CEO wouldn't like it." ITIL and IT Service Management (ITSM) frameworks will significantly improve structure and quality across areas including application development and testing, Murray said. The ITIL framework is a series of 10 stripped-down, best practice IT frameworks which apply to all organizations, regardless of size, scale or business. Version 3 was released in May last year by the ITIL Certification Management Board and has refocused the structure on maintenance and creation of IT and business processes. Businesses with ingrained legacy environments can have a hard time with ITIL, but Murray said the process is well worth the pain because it will eradicate blockades to innovation and complexity in the sourcing landscape. "The IT imperative is always to keep it up, safe and cheap, but now everything needs to be effective," he said. "Focus on managing business processes rather than assets." Russel McCarren, IT service manager for Perth-based St John of God Health Care, was one of the first people in Australia to roll-out ITIL v3. "You need to find your own methodologies that are relevant to your business," McCarren said. "You will throw your money out of the window if you don't outline what changes you need and how you are going to measure them, because there is a lot of misuse of ITIL." McCarren said the attraction of ITIL v3 is its detail in integrating existing ITIL processes, noting that other ITSM frameworks would also suffice.

—By Darren Pauli

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Letting Networks Breathe Easy Virtual servers may make the utilization of physical servers more efficient, but that efficiency comes with a price. The physical servers that support virtual machines (VMs) have to be more powerful. Less obviously, they also need better input/output (I/O) capability than standalone machines. "Virtualization is about consolidation and concentration," says Bernd Herzog, an analyst at research firm Application Performance Management Experts. According to Gartner, four million virtual machines will exist by 2009. IDC predicts that by 2010, 14.6 percent of servers shipped will host VMs. A number of companies are addressing the impact of server virtualization on the IP and storage networks. Each has taken a different approach to virtualizing I/O between servers and the network. As server speeds increase and as more virtual machines are placed on physical servers, applications become I/O bound. "Pre-virtualization, IT shops had one physical server with one I/O channel,"

trendlInes

networkIng

says Gary Orenstein, VP of marketing for Gear6. "There was complete synchronization between the app, the OS, the motherboard, the I/O driver and the I/O link. As soon as they put multiple VMs on that link, none of them is coordinated with the other. All the VMs were grasping for that link simultaneously without coordination." Xsigo takes a different approach: its I/O director lets IT control I/O between servers and the network by creating virtual I/O channels that can be used by applications and other processes. The virtualization of I/O with the use of the I/O director, according to the company estimates, allows IT departments to reduce cabling between servers and the network by as much as 70 percent and reduce their connectivity costs to network and storage switches by up to 50 percent. Dr. James Zhu, CIO of Alcatel Shanghai Bell, is planning to deploy a Xsigo I/O director center. "The value we recognize is that the I/O director can reduce our cabling

Where are the Virtualization Gurus?

and network interface card cost," Zhu says. "More importantly, we can change our server's I/O configuration without changing the network configuration and reduce our operating and capital expense costs." Upcoming 10GB Ethernet adapters set to debut in servers in the second half of 2008, should also help improve the I/O situation on servers running many virtual machines. These new Neterion X3100 Series products provide 17 independent I/O paths right in the adapter's silicon. This means the various VMs and applications won't have to fight for one swath of I/O bandwidth as they do today. Additional I/O bandwidth can be routed to applications when needed, with IT groups able to set quality of service levels for different applications and borrow bandwidth when necessary, Neterion President Dave Zabrowski told CIO. "The marketing lingo will be that the server has a 'virtualized' NIC (network interface card) or 'VNIC,'" he says. â&#x20AC;&#x201D;By Deni Connor

17%

23%

Most CIOs prefer in-house virtualization expertise rather than turning to consultants, according to research conducted by CIO.

8% 4%

73% 23% Planning to hire or develop in-house talent 17% Planning to hire consultants 8% None of the above/Not applicable 4% Hire or develop in-house talent

(Respondents chose all that applied)

73% SOURCE: CIO Research

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In fo Grap hICS by bIn ES h SrEEDharan

Hire consultants

alternate views

BY Rahul Neelmani

General or Dedicated? General Purpose Vs Dedicated Networks

“General purpose

networks are like highways where not only the lane that you’re driving on is maintained but so is the rest of the highway.”

over a million subscribers everyday, so it is in the best

interest of our business to have a dedicated network for all business operations.” Tamal Chakravorty CIO, Ericsson India

I feel strongly that general purpose networks, by nature, are more

Today, networks are like the arteries and veins of an organization. My organization

robust. They service a lot more clients in comparison to dedicated networks. Therefore pressure on service providers maintaining general purpose networks to ensure the highest level of resiliency is very intense. Dedicated networks are not as simple as just laying down lines. You have to buy the capacity from others. Having bought capacity, you have to invest to build the network. Then maintenance takes away a lot of resources. The total cost of ownership skyrockets if you choose dedicated networks. General purpose networks are like highways where not only the lane that you’re driving on is maintained but so is the rest of the highway. These networks allow the facility of dedicated timeshare and low-cost maintenance. This is what makes them an attractive option. Going forward, these networks are going to evolve further. They will provide better bandwidth and resiliency to users. Today, corporate India needs dedicated and on-demand bandwidth. The new generation general purpose networks will have the flexibility to provide bandwidth to users according to their needs — and with utmost reliability. With dedicated networks, on the contrary, it will always remain a challenge to build capacity according to the dynamic needs of enterprises. For those who are keen on investing in dedicated networks, it is essential to do capacity planning from inception otherwise the whole effort can go waste.

has various activities ranging from R&D, multimedia services, network operations for customers, manufacturing, and back-office. Given this complexity and criticality — since our services directly touch a few million subscribers everyday — it is in the best interest of our business to have a dedicated network for business operations. Nowadays, bandwidth, including international bandwidth, is cheap. Therefore dedicated networks are no more an additional overhead on the budget. I don't see any rationale in having general purpose, shared or on-demand networks. However, the topology could differ and that should not be construed as dedicated network. We could have connections to a cloud or operator backbone, but still have our own dedicated network. And, most certainly, there isn't any rationale for both to co-exist. If you have both, chances are that you may need to spend more or have two different business processes to handle operations. You may not be able to get the scale when you need it, nor would you be able to bring synergy. Finally, dedicated networks guarantee agreed-on services, including bandwidth and availability. It is not appropriate to say that general purpose networks lack bandwidth, but it is always more secure with a dedicated network, since they can be controlled.

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trendlines

Ph otos by Srivatsa Sh an dilya

Sumit Dutta Chowdhury CIO, Reliance Communications

“Our services directly touch

6/13/2008 8:35:06 PM

By James M. Kerr

Leadership

An Architecture for the Future You can’t build a robust, agile enterprise architecture on the fly. You gotta make plans.

oday, organizations need to learn to make workflow changes on the fly. Otherwise, consumers and trading partners alike are ready to move on. This puts tremendous pressure on organizations to fully automate business operations wherever possible and adjust them dynamically without any disruption. Obviously, if this were easy, everyone would be doing it. Good architectural design isn't enough. You also need flexibility and resilience. Businesses seeking to compete on a global scale should consider the following approach:

Il lustration by un n ik rishn an AV

Step 1: Architecture Framework. The first step is to establish a framework that presents a set of architectural principles that support the organization's business goals and strategic drivers. For example, Fifth Third Bancorp, a Rs 423,200 crore diversified financial services company headquartered in Cincinnati, adopted these architectural principles: A multi-tiered processing environment is necessary to enable the distribution of processing capabilities. Applications should be independent of the underlying technology on which they are implemented. Interchangeable hardware components must be used on all platforms and tiers. Step 2: Baseline Environment. It's important to get a baseline of the current environment — both business operations and IT systems — to define what works well and what must be improved in order to meet the future needs of the organization. 16

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By James M. Kerr

Leadership

Clearly, robust and easily modifiable automation is fundamental to achieving an enterprise's vision for the future. But hard work and management commitment — both from IT and from the highest levels of the business — are needed to build the kind of integrated IT architecture plans. What's striking about baseline assessment work is that it usually reveals issues that the organization already is aware of intuitively — such as a need to speed process redesign. However, what were once only hunches about the environment can now be supported by hard data. Step 3: Target Definition. The target definition phase is designed to identify new IT projects that must be staffed and funded down the road. Start by asking the management team (either in a workshop or an interview setting) to paint its vision for the future deployment of IT within the enterprise. For example, the Metro Group, one of the largest trading and retail groups in the world with more than 2300 stores across 28 countries, envisioned what it calls a "store of the future". Making that happen called for exploiting RFID technology to track products through their entire lifecycle — from production to the shelves to the sale. RFID-tagged items would be placed on pallets and scanned upon leaving the warehouse; shipping data would be sent to the store manager for review; upon receipt at the store the pallets would be scanned again, and any discrepancies would immediately generate a report. Anything missing or damaged could be replaced through a follow-up order. RFID-equipped shopping carts would be used to monitor customer length of stay and average purchase. Item replenishment would be triggered by the system when low volume is indicated. Misplaced items would be flagged for restocking. Clearly, this vision will require many IT initiatives: from RFID vendor selection to new order processing and inventory control applications. But this exercise helps ensure that all those IT initiatives are targeted to strategic business goals. Step 4: Gap Analysis. A gap analysis is required to compare the baseline with the target and identify what's missing. For example, besides the RFID selection and new inventory applications, the Metro Group also needed to identify projects to address skill gaps, and to process redesign needs and a whole host of standards and best-practicebased initiatives needed to help it bridge the gap between its current and future IT environments. It's not unusual for this work to spawn 20 to 30 new IT initiatives. 18

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Step 5: Implementation Planning. Implementation planning is performed in two parts. The first part takes the project opportunities, documents them fully and organizes them into three tiers or implementation plateaus. The second part produces first-cut project plans for each of the initiatives on the implementation agenda. The first-cut plans include details about the initiative such as project name, description, critical success factors, task lists, key deliverables, essential skills required and project interdependencies — all the information that an organization needs to drive execution. These plans are a handy way for the architecture development team to pass its insights on to the project managers who will follow them. Step 6: Architecture Administration. Once an architecture has been developed, it's important to create a governance mechanism to ensure that it remains synchronized with the strategic direction of the organization — an important continuous process improvement step that is often overlooked. It's not unusual for an enterprise to establish a project management office (PMO) to oversee the execution of the architecture plan. Myriad communication vehicles — newsletters, intranet sites, sponsor-review meetings and post-project assessment documents — emerge from the PMO as a means of improving cross-project and crosscompany knowledge sharing and transfer. Clearly, robust and easily modifiable automation is fundamental to achieving an enterprise's vision for the future. However, such benefits don't come without their price. Hard work and management commitment, both from IT and from the highest levels of the business — including the CEO — are needed to build the kind of integrated IT architecture plans that will make the difference between success and failure in today's highly competitive business climate. Your customers and trading partners are waiting. CIO

James Kerr is the former CIO of Mitsui Sumitomo Insurance Group and is adjunct professor at the Lally School of Management at Rensselaer Polytechnic Institute. His latest book, The Best Practices Enterprise, contains a chapter on the Resilient IT Architecture (RITA), on which this article is based. Send feeback on this column to editor@cio.in

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Laurie M. Orlov â&#x20AC;&#x201A;

IT Management

Maturity Is a Two-way Street It just isn't enough for your IT organization to have mature management and software development processes if the business organizations don't do their part. Companies also need an IT maturity model for the enterprise.

Il lustratio n by MM Shan ith

IOs care a lot about their IT organization's maturity. CMMI, COBIT and ISO are wellestablished frameworks that IT organizations use to assess their evolutionary development, whether in project and software processes, service delivery, security and risk management or IT controls. Research and consulting firms have large and established revenue streams helping IT organizations to assess themselves and advance from one level of maturity to the next. But to my knowledge, the consultants have yet to establish a direct correlation between these levels of maturity and the degree of business-IT alignment, or how successful the IT organization is at delivering what the business wants and expects. Researchers Jerry Luftman and Rajkumar Kempaiah annually surveyed IT executives between 2000 and 2006 about how evolved their organizations were for six components of alignment: communications, value, governance, partnership, scope and architecture, and skills. A score of 1 indicated responders had an initial, ad-hoc process for that component, and a score of 5 was equated to an optimized process. The respondents' average score (across all components) during the period between 2000 and 2003 was 2.99, and the average between 2004 and 2007 was 3.18. That's not a big jump for a seven-year period. Something is preventing IT organizations from moving alignment along.

Do Mature IT Practices Matter? Maybe CIOs and consultants have their eye on the wrong ball â&#x20AC;&#x201D; they are too focused on the best practices of the IT organization. Perhaps the degree of rigor in software 20

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Laurie M. Orlov

IT Management

development processes (CMMI) or looking at the control and audit processes (CoBit), are necessary for running a tight, internal IT ship, but insufficient to bring IT closer to the business. Let's think of all the ways an enterprise can derail a well-intentioned IT organization trying to move along in its practices, but failing to achieve a high level of alignment. Perhaps the primary metric for IT is the cost of IT itself, and not the impact of technology use in the business. Perhaps business participation in strategic projects is sporadic, but the project is expected to proceed anyway. Perhaps senior executives are naive about ways technology could help their business units, or they quash efforts by IT staffers who try to make recommendations. Perhaps the CEO has not set any specific expectations with the CIO and is only monitoring the role by the absence of complaints about IT. I could go on, but you get the idea. Perhaps the best framework for IT won't be about the department or the CIO at all. Instead, let's see consultants

C-level involvement. This includes executive expectation and oversight of the C-level exec to whom the CIO reports. Range of maturity could span a hire-anddelegate immaturity, where the CEO establishes no or low expectations of the CIO, to a level of evolution, where the CEO has well-articulated expectations of the CIO, IT is expected to contribute revenue-generating ideas and C-level executives are actively engaged with the CIO in sponsoring and tracking progress. Strategic capability. At one end of the maturity curve for this metric, some firms would have great difficulty clarifying a long-term strategic direction for their business and a tough time sustaining attention for long-term technology projects. And at the most mature firms, the opposite would be true: not only would they have long-term strategic goals, but there would be sustained attention to IT as a way to achieve those goals. Business department engagement. Experienced IT professionals will attest that a business department's role in IT projects can vary widely. At the lowest level of maturity, firms would have junior business users (or none at all) participate in requirements definition and implementation of IT projects. And they would wait until a project is done to announce that it didn't meet their needs. At the most evolved, senior business execs would place a top priority on working on IT projects themselves to ensure that they reach completion and match the requirement and expectation. Change management skills. Technology initiatives are all about change. Immature firms would have little understanding of how to manage change in their organizations, whether the task is communicating, measuring, or completing initiatives that at one point seemed like a good idea. And at the other end of the maturity spectrum, firms would see change management as a core competence, and have staff trained in change management processes seeded in their business units.

Maybe CIOs have their eye on the wrong ball â&#x20AC;&#x201D; they are too focused on the best practices of the IT organization. Perhaps the processes needed to run a tight IT ship are insufficient to bring IT closer to the business. sink their teeth into measuring the enterprise's level of maturity in its view and use of technology. Perhaps consultants should turn their attention to CEOs, CFOs and COOs, and help them figure out how to evolve their approach to IT. These new maturity metrics could include the criteria they use to hire and evaluate the performance of the CIO, how they set expectations for IT and the extent to which they provide appropriate business resources to mission-critical technology projects. Let's stuff those ideas into a framework and look critically at the IT maturity of today's enterprises.

An Enterprise IT Maturity Model Here are five elements to jump-start the work of consultants and standards organizations: Technology appetite. Organizations vary in their curiosity about and tolerance for new tools depending on their industry, the firm's culture, prior experience and the interest level of management. The maturity of a company on this metric could range from a resistance to new technologies of any type all the way to a must-have-it for competitive advantage level of engagement. 22

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Coloumn - Why IT Management Frameworks Don't Guarantee IT Success.indd 22

Mature Enterprises Beget E ffective IT An enterprise that is mature in its use and oversight of technology will have an IT organization that is well-aligned and successful. I'll bet on that. Now, are there any consultants out there willing to solidify the criteria and start benchmarking companies in their enterprise IT maturity? Can they deliver consulting to help C-level execs move up the maturity curve? CIO Laurie M. Orlov does research and consulting on business and technology strategy. She is a former vice president and principal analyst at Forrester Research. Send feedback on this column to editor@cio.in

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6/13/2008 7:46:29 PM

By Gerry Blackwell

Building an SOA naturally entails a few challenges, but it will pay dividends. 24

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Reader ROI:

What to watch out for in a SOA deployment The benefits of SOA in a partnershipbased business How to bridge legacy integration gaps

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SOA

IllUSt ratIon By p c an oop

When Air Canada spun off Aeroplan, its frequent flyer rewards program, as a separate entity in 2001, the new company faced some tough challenges. Not the least of them was building an IT infrastructure, including e-commerce capabilities, almost from scratch. Virtually from day one, though, the Aeroplan IT brains trust agreed that the best way to achieve their goals was by implementing a service oriented architecture (SOA). Building an SOA naturally entailed a few challenges of its own, as Remi Lafrance, general manager of technology operations and head of the company's IT architecture group (ITAG), discovered. But five years on, the challenges have for the most part been met and the e-commerce capabilities are in place. The SOA isn't complete but it's 70 percent there, Lafrance says, and it's already paying dividends. Aeroplan has enjoyed significant success. It raised Rs 1,100 crore in an IPO in 2005. In fiscal 2007, the company reported income of Rs 758 crore â&#x20AC;&#x201D; a 35.1 percent increase over 2006, its second consecutive year of doubledigit growth. "If you look at the number of partners we've signed up, where we are now versus where

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we were back then, and the impact Aeroplan has had overall in Canada as a loyalty company â&#x20AC;&#x201D; those are the results, in good part, of the work we've done in expanding our IT capabilities," Lafrance says. Aeroplan started as a cost centre. It was a program offering Air Canada customers one way, and one way only, to accumulate reward miles and redeem them: fly Air Canada, then fly again. In 2001, the new entity was faced with remaking itself as a for-profit enterprise, which would mean transforming its simple business model and finding new sources of revenue. In the 'loyalty' business, the way to do this was by adding new partners â&#x20AC;&#x201D; merchants and brands anxious for access to the airline's choice customer base and willing to pay for the privilege. Aeroplan has been singularly successful in this, adding more than 90 partners since 2001. Some are partners whose products members can buy to accumulate points; others have products Aeroplan can offer as rewards. This in turn leads to expansion of the member base; nonflyers now have a way to accumulate miles, which attracts more partners, and so on.

Working With neW PArtners

ut the company had to somehow keep a lid on the costs of setting up and working with new partners. In 2002, there were no automated systems for communicating with partners. The whole reward-redemption process itself was largely unautomated, and Aeroplan's e-commerce presence amounted to a few static pages at the Air Canada site. So one of the first priorities was creating a modern e-commerce-based Web site and infrastructure that would allow partners to interact directly with Aeroplan systems. The initial breakthrough came when the company implemented an SOA-based e-commerce firewall from Reactivity, now owned by Cisco Systems. Among other things, the Reactivity technology allows partners to securely exchange XML messages with Aeroplan over the Net. "This opened up all sorts of possibilities in terms of direct connect between Aeroplan's infrastructure and external infrastructures to allow the flow of e-commerce," Lafrance says. "And we saw that we could start leveraging that and using service oriented architecture to a far greater extent." REAL CIO WORLD | j u n e 1 5 , 2 0 0 8

SOA The next major undertaking, begun in 2004, was to build an enterprise software bus (ESB). It would handle co-ordination between front-ends — of various partners as well as Aeroplan — and Aeroplan's legacy back-end transactional systems. The company had cobbled together the architecture to this point from open source components such as Linux, Apache, and J2EE (Java 2 Platform, Enterprise Edition), and it remained committed to standardsbased and open source technology. "But when it came to the ESB," Lafrance says, "we didn't want to take any risks around performance or capabilities. So we made a decision to do it the standard way, with commercial-grade, tier-one type software." After issuing an RFP and reviewing a small handful of solutions, Aeroplan chose BEA Systems and its WebLogic and AquaLogic products, the latter developed in partnership with Vancouverbased Elastic Path Software. According to Lafrance, the vendor was the only respondent that could demonstrate how it would tackle the project while ensuring Aeroplan was able to continue doing business through the development and transition processes. "Continuity of business was critical, and they demonstrated with a pilot, at no cost to us, their ability to take on that responsibility and make it work in relatively short order," he says. The result is a framework that now makes it relatively easy to add new partnerships and build new applications around them. One simple example is a recent project with Pepsi. Aeroplan members can accumulate 10 miles with the purchase of a Quaker orange juice product. (Pepsi owns Quaker.) They go to a Pepsi-branded Web site and type in their name and Aeroplan number. The Pepsi server communicates with the Aeroplan ESB, which authenticates the name and member number in the member profile database, reports back to Pepsi, then updates the member's plan to add the 10 miles when the transaction is completed. "Now in the majority of cases we're building on stuff we already have," Lafrance says. "This is cutting down on the time to implement because we're reusing a bit of this, a bit of that. Maybe we're adding a new service we didn't have before, but when we do, now we do it in such a way that we can reuse it next time." Thanks to this reusability Aeroplan can implement new automated partner relationships 15 to 20 percent faster than it could before. That will increase to 30 to 40 percent faster as the company phases in more use of the WebLogic technology, and save an estimated Rs 12 lakh to Rs 32 lakh per partner, he says. While the ESB project alone cost over Rs 12 crore, Lafrance declined to put figures on either the total cost of the SOA undertaking or the potential return on investment. SOA, he says, is simply the company's "new modus operandi." Time to implement and related cost savings were not the only benefits, though. The demonstrable speed to implement also helps Aeroplan sell its brand when it enters into negotiations with a prospective new partner. "The SOA framework is not only allowing us to develop more, but also to showcase more," Lafrance says. And SOA delivers a "whole slew of benefits from an IT development life cycle perspective." The framework makes it easier for his team to measure results and manage application quality assurance, for example. 28

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Feature -01 - Getting a Lift from SOA.indd 28

Choose an SOA vendor carefully. The idea is to look for someone who can push an SOA project within the enterprise without asking business to take a vacation.

Study at your legacy systems. If you don’t, you could be in for more surprises than you counted on. The IT team at Aeroplan, for example, learnt that SOA itself was not a problem — but a lack of documentation of the legacy environment proved to be.

Integrate the data layer from the start. A delay in embedding data in the SOA layer at the beginning could mean redesigning services and applications later – a painful process.

Laying Out the SOA Roadmap

ll of this has not come without some adversity, though Aeroplan's IT architecture group made a good decision at the outset, Lafrance believes. From the beginning, the team's strategy was to break down the task into small manageable components and plot their completion on a continually updated three-year roadmap. The component pieces would be completed by incorporating them into businessdriven IT projects. A project, such as an early one to implement the first non-air rewards program, wasn't just a development project; it was also an opportunity to enhance the e-commerce framework while allowing the project to get delivered at the same time. This approach had multiple benefits. "It meant I never had to go to anyone and say, 'I need $10 million to build SOA over a five-year time frame,'" Lafrance points out. And that made it much easier to get buy-in for the whole idea of SOA and his team's approach. Senior management, including the president, was onboard from day one.

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SOA Lafrance admits he may not have hit on this strategy by thinking the problem through in linear fashion. It may even have been "a fluke," he says, chuckling. "But if there's one thing we've learned from the whole experience it's that this worked very well for us. I think it could work well for others too."

This was somewhat mitigated by Aeroplan's strategy of breaking the SOA implementation into logical pieces and tackling them one at a time. Once the team understood the potential for the legacy systems to trip them up, it could build in time between implementation projects to Partnership Challenges scope out the next step and plan ot all the lessons were learned so painlessly. how to solve whatever issues When asked for the single biggest challenge presented themselves. of implementing the SOA framework at That is indeed the only way to Aeroplan, Lafrance doesn't hesitate. "I would say Source Gartner overcome any of the challenges overall, it had nothing to do with the technology," the company faced, Lafrance he says. "It's been primarily about establishing believes. "If you know ahead of partnerships with new vendors." time and brace yourself for something, you can One salient feature of Aeroplan's IT environment: almost plan accordingly and work at trying to mitigate everything is outsourced. The IT department has fewer than 30 the impact," he says. "But if you're not ready for it, employees, most of them analysts and architects. Principal partners it's going to take you by surprise and then you're include BEA (software licenses and application development), IBM always backpedaling trying to get out of it." (software maintenance and management and system development) and Telus (hosting and network services). The project was knocked for a wobble when it took an A Different unexpected year-and-a-half to "stabilize" the first important longApproach to Data term relationship, with Telus. "It's all about communicating in the f there was one thing he could do differently, it same language, in the same manner, understanding each other," would be to "embed the data layer into our SOA Lafrance explains. "And the kinds of checks and balances you a lot sooner," Lafrance says. Aeroplan initially saw do on a monthly basis to reconcile expectations versus delivery." SOA as a transactional solution, but data, he now According to Lafrance, SOA magnifies everything because it's so believes, is just as important. Fully integrating complex. And perhaps more importantly, the fact that it opens so the company's vital customer data into the many possibilities tends to crank up expectations and demands framework has not yet been done. It still resides â&#x20AC;&#x201D; and strains â&#x20AC;&#x201D; on the relationship. on an Air Canada mainframe, though a project is He initially believed at least some of the problems had to do now underway to "repatriate" and establish SOAwith the specific players involved on both sides, but changed integrated data systems on resident servers. his mind when the company later started working with IBM, Failing to do that earlier in the process, he and the same thing happened. It was "a full year of very painful admits, may mean partially redesigning services transitions", despite his team being forewarned and forearmed and applications. It would have been better to have after the Telus experience. hired a data modeler early on and use technology "Anyone who thinks they can implement a technology like this such as the AquaLogic Data Services Platform to using a new partner that they've never done business with before integrate the data layer from the start. and do this in couple of months is dreaming," he says. "There are two ways to go at SOA," Lafrance says. "With transactions at the centre, or data. I think if data is in the middle, that would result in Legacy Challenges better designs of services, more effective transport he second biggest challenge: making the transition from legacy of services and less processing time." systems, most of them originally resident on Air Canada Not that he has any deep regrets. The Aeroplan mainframes, as some still are. Again, it wasn't the SOA technology, SOA has already delivered tangible benefits or even the fact that the destination was an SOA environment, and they will only increase. That's the nature Lafrance says. The legacy environment in this case was not well of the beast: once established it pays dividends enough understood or documented and its original architects had every time you build a new application or, as in long since departed. Aeroplan's case, add a new partner. CIO "So there were many surprises and many cans of worms that we opened," he says. "We had some budget overruns and we did take longer than we would have hoped â&#x20AC;&#x201D; but only because the point of Reprinted with permission. Copyright 2008. CIO Australia. Send origin was a lot messier than what we had thought." feedback on this feature to editor@cio.in

60%

of SOA implementations meet most of their goals and nearly four out of ten meet all their goals.

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Feature -01 - Getting a Lift from SOA.indd 30

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6/13/2008 8:37:06 PM

Data Center

By Laurianne McLaughLin

Alcatel-Lucent CIO Elizabeth Hackenson just finished the first leg of a massive data center consolidation. What she learnt can help your next big project succeed. After the Alcatel-Lucent merger in late 2006, CIO Elizabeth Hackenson found she had 25 data centers and 125 server rooms spread across the globe. If all goes well with the company's massive data center consolidation project now under way, that complexity will soon be history. "The goal is to get to six primary data centers and zero server rooms," Hackenson says. The project, which started in June, 2006, is slated for completion in late 2009. Hackenson's team has just finished the first year of work; they're down to 19 data centers and 88 server rooms so far, she says. Beyond IT cost considerations, what business goals shaped the decision to consolidate so much, now? "We had two very important business goals," Hackenson says. "First, reliability. 32

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Reader ROI:

The benefits of using a framework to ensure data center consistency How virtualization can aid consolidation efforts The importance of an effective relationship with your consulting partner

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Data Center We need an environment that can support our mission-critical applications worldwide." Second, she says, the environment had to become more robust and flexible to business demands. "There's tremendous growth in video and messaging across the enterprise," she says. That appetite for video is one reason that the company's new tier-four data center that opened recently in Marcoussis, France, near Paris. It hosts the company's most missioncritical applications and makes heavy use of multiprotocol label switching technology out to the company's backbone, which allows for efficient handling of video streams, as well as caching and compression techniques on the networks. (This unique new center, which uses Alcatel-Lucent networking equipment and HP servers, will also be the primary network operating center to support Alcatel-Lucent's application businesses and its services business group.) The consolidation, for which Alcatel-Lucent hired HP Services as a consulting partner on everything from initial assessments to disaster planning, is expected to make a large cost difference as well: Alcatel predicts that the data center consolidation project will reduce the total cost of data center operations by 25 percent before the end of 2008. The company declines to share a figure for its total data center spending or IT budget. The massive project comes at a tough business time for telecom equipment maker Alcatel â&#x20AC;&#x201D; and its peers. In early February, the company reported a fourth-quarter net loss of about Rs 15,200 crore, including a Rs 14,600 crore write-down on its CDMA technology, a mobile standard that has fallen out of favor with wireless giants such as Verizon. Alcatel's market value, roughly Rs 54,000 crore, is now less than before the merger with Lucent.

The need for reliability and a more robust and flexible environment sparked Alcatel-lucent's massive data center consolidation, says, CIo Elizabeth Hackenson

How do you get from here to there when you're doing a data center consolidation on this kind of scale, in this kind of environment? Hackenson and her consolidation project leader, Cliff Tozier, VP of global infrastructure, talk about the project and share seven lessons that she and her team have learned so far:

ConsoLidAting AppLiCAtions is hArder thAn CLosing server rooms

ackenson and her team are still c o n s o l i d at i n g the c o m p a ny ' s approximately 1,300 applications; she'd like to trim the portfolio to 500 to 600 applications. "The applications are almost more of a challenge than the data center," she says. Explaining to the business the logic of closing small server rooms isn't tough, but he business-side users feel application changes more closely, she says. How is Alcatel-Lucent's application strategy changing? "Instead of having many applications to support, we want to get to a centralized environment," Hackenson says. "That's a strategy change." Previously, Alcatel let IT groups and employees in the various regions select their own applications, so the application set in Asia didn't necessarily match the one in Europe. She notes, "This creates a little more pressure on the network folks," who now have to ensure that response times for applications in HR and finance, for example, are similar around the world, despite the varying distances from the new main data center in France.

virtuALizAtion hAs beCome key to it fLexibiLity

hat role is virtualization playing in Alcatel-Lucent's new data centers? "We can dynamically increase [capacity] in hours or days, whereas in the past, it would have been weeks or months," Hackenson says. "When applications people need hardware, we can turn on services on demand," she says, noting that developers now get quicker access to computing power for projects such as portals. "Our strategy is to push virtualization as wide and deep as we can." "Virtualization is absolutely critical," Hackenson says. "We no longer can afford for every application to have its own environment.

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Data Center With that situation, we were 10, 20, 30 percent utilized," she says, with the new goal being 60 to 70 percent utilized on servers. What's been tough about the virtualization effort? "You have to get over the emotion of developers wanting to control the server that their application lives on," Hackenson says.

Frameworks help ensure consistency

ow did the way Hackenson and her team manage IT change as a result of the consolidation project? "We had decided to move to a centralized model for the whole IT organization," Hackenson says. For the global team that Cliff [Tozier] manages, there's a consistent set of processes and tools. This gives his team the ability to manage data centers remotely, which is what we're doing in France. We don't have to have large numbers of people physically in the data centers anymore." Further, Alcatel's IT team uses the ITIL framework to apply one management model, for everything from change management to help-desk procedures. "Our goal is consistency," says Tozier, "to leverage resources, drive down costs, improve service levels."

You will wait for text messages as never before.

n a human level, overseeing a consolidation on this scale will cause anyone a few nervous moments. "As it was missioncritical applications [being moved to the new data center in Marcoussis], we were always concerned," Hackenson says. "What we tried to do in the planning was have backup plans to minimize all of the risks. There were tremendous 'what if' scenarios," she says. "I would anxiously await the text messages from Cliff during these moves." For Tozier, some of the most stressful moments were during the move of the company's fully clustered SAP application environments, in which he broke and rejoined the clusters. "We did it in test but it's always different in production," he says. "It worked very well but was nerve-wracking." Also stressful: IT's time line had to flex frequently to be responsive to the business team's changing needs. "We stayed away from month ends, quarter ends," and so on, Tozier says, but business plans would change and IT had to be responsive to new timing concerns and change its plan accordingly. "The schedule was a huge challenge." If you are planning a similar consolidation, don't underestimate this hurdle, he advises.

There's a middle ground between outsourcing and owning it all

ne unique aspect to Alcatel's new data center in Marcoussis: the company arranged a revenue-producing joint venture with Colony Capital that will rent the data center's multiple buildings to multiple tenants. This way, Alcatel gets the state-ofthe-art data center that it wants in Europe, without taking on all the costs. "It's really the economics," Hackenson says.

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Feature -02 - Big Change, Big Challenges.indd 36

Be prepared to face challenges with applications. The problem isn’t making server rooms disappear say CIOs who have attempted large consolidations. That because employees don’t care about how many server rooms there are, but they will be annoyed if an app they’ve used forever is replaced.

Virtualization is absolutely critical. If you want IT flexibility, then there isn’t a way of avoiding virtualization. Begin by letting IT know that the every-app-to-a-server regime is over. The benefit is that server utilization goes up and IT costs go down.

Gear up for IT change management. To do this CIOs move to a centralized model for the whole IT organization. They also use ITIL to apply one management model, for everything from change management to help-desk procedures.

"The problem we all have in data centers is the ecosystem — power, heating, cooling — you're paying for utilities and facilities you're not using," she says. "This is an alternative to outsourcing. You can share your environment. It's a nice middle ground between outsourcing it and owning it." The arrangement also gives Alcatel, which is starting with about 22,000 square feet of space, the option to add space later if needed.

You can find ways to keep cool

ot surprisingly, power and cooling efficiency were key concerns as Alcatel planned the new data center in Marcoussis. The company worked with data center engineers, who suggested cement floors

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6/13/2008 8:39:11 PM

IT departments embarking on a massive data center consolidation project must beware of four common pitfalls, says Forrester Research Principal Analyst James Staten. 1. underestimating what you don't know. "The number-one pitfall is what you don't know," says Staten. "When you have this many servers and server rooms, you don't know a lot of times which applications are in use and which are not." It's not easy to sort out the dead wood, he notes. For instance, some financial apps may only kick in at certain times in a quarter, so IT tends to leave all the financial apps in place, Staten says. "This means people don't get the efficiency that they could," he adds. Two approaches make sense, depending on your situation: e-mail users a list of apps you're about to close out and ask them to speak up or forever hold their peace. or just turn off the apps and see if anyone complains. 2. bungling the politics. This can be the most wrenching of the pitfalls, Staten says. What typical political mistakes do IT groups doing consolidations make? "Either you don't get the right people at the table early enough, or you think they're on board and then they block you," he says. A centralized IT budget can help you avoid the blocking problem, he says, because it eliminates a situation where business heads with their own IT budgets stymie your plans in the middle of the consolidation when those plans affect 'their' servers. Don't underestimate the need to get HR involved early, either, he warns. "often, consolidation means firing people or taking IT resources out of buildings where they've been for a long time," he says. "This can really stir people up." Solution: HR needs to over-communicate regarding IT consolidations and why they're being done. 3. failing to manage expectations. As a CIo, you will have to set and meet expectations about the consolidation project, both financial and timerelated. If you promise 30 percent savings in three years and you can't hit the marks, you're going to have a problem, Staten notes. What's the main way to avoid problems in this arena? "Bring a third party to the table," he says, as Hackenson did by using HP Services as a consulting partner to help execute her consolidation project. "That way you have an objective third party with an objective framework for financial and time methodology," Staten says. The third party also may help distribute some blame if the project goes south, he notes. 4. not being holistic. For your consolidation project, you must think far outside the number of boxes, Staten warns. "You can't do it all with server consolidation or closing data centers," he says. Too many companies fail to closely examine related issues like the client PC environment, apps and infrastructure (such as power and cooling systems) in the site where machines will be consolidated, he says. You don't want to run out of rack space or power when you're only partially done filling your consolidated data center site â&#x20AC;&#x201D; but this happens all too often in real life, he says. â&#x20AC;&#x201D;l.M. 38

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instead of the traditional raised floors, and advocated skipping the traditional "hot aisle/ cool aisle" arrangement for data centers. "I was skeptical," Tozier says, "which is why we went to the modeling. With the help of HP, we did 3-D modeling of the building to prove the design would actually work." That 3-D assessment was favorable, and plans moved forward. "We have air coming in from the sides, all the cabling is overhead," and so far, so good, Tozier says.

LeAd from the top with your serviCes pArtner

n a project of this scope, it's critical to maintain an effective relationship with the consulting partner you've chosen. How does Hackenson ensure that the relationship with HP Services works well, and what's her advice to other CIOs? No matter how good your own working team on the ground with the consulting partner, don't underestimate the need for the CIO to work the phones, she says. "I was in routine contact with Ann Livermore of HP [executive vice president of HP's Technology Solutions Group]. I gave her a heads-up before critical milestones," Hackenson says. Hackenson would make quick calls to remind Livermore that it was a big weekend for the Alcatel IT team; she believes this helped everyone stay on the same page regarding current top priorities and schedule. Another cultural decision that helped: blurring the distinction of who was HP staff and who was Alcatel-Lucent. "It really was set up as one team, not an Alcatel team and an HP team," Tozier says. "There wasn't fingerpointing. It was a joint team." "That's our style," Hackenson says. "That's the way we try to manage projects in the organization." CIO

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Large companies such as BP and Google are rethinking the idea of IT controlling users' computers and sharing their lessons from the frontlines. By Tom Sullivan 40

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Reader ROI:

The benefits of letting users decide Why IT cannot ignore this movement What CIOs still have to take care of

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IT Management

Users should choose and manage their own PCs.

The benefits of user-managed PCs

oday's standard, one-size-fits-almost-every-employee approach ultimately pulls down PC-competent knowledge At first blush, that's a radical notion any workers to the same level as the tech-leery. Meanwhile, IT shops right-thinking CTO would dismiss out of are overburdened with supporting PCs, help desk budgets hand. But not so fast: IT shouldn't dictate what consume significant chunks of corporate resources, and with a computers and handhelds users get â&#x20AC;&#x201D; and slowing economy, many IT shops are under pressure to reduce perhaps IT shouldn't manage them, either. operational expenses. Not to mention that in the eyes of many IT That's the conclusion some IT organizations pros, holding down the help desk is low-level grunt work. are reaching, or at least investigating. To IT, the glaringly obvious advantages of user-managed PCs Search giant Google practices what it calls are reduced support costs and far fewer pesky help desk calls. "choice, not control," a policy under which users Tech departments, quite naturally, would no longer have to train select their own hardware and applications based users for PCs either, a process that often leaves both bitter, thanks on options presented via an internal Google tool. in large part to common training mistakes. The UK oil giant BP is testing out a similar notion What's more, many remote employees have become plenty and giving users technology budgets with which adept at supporting themselves â&#x20AC;&#x201D; by and large because they have they pick and buy their own PCs and handhelds. to. For problems beyond their abilities, there's not all that much In this Web 2.0 self-service approach, IT difference from their perspective between calling a hardware knights employees with the responsibility for or software vendor and ringing the corporate help desk. Many their own PC's life cycle. That's right: Workers office workers have the basics down as well for getting online, select, configure, manage, and ultimately support installing applications, and setting up wireless networks and their own systems, choosing the hardware and shared printers. software they need to best perform their jobs. Resnick argued that empowering workers will not only make BP and Google are not the only IT shops to see them more productive but help them contribute to the organization value in this model, either. in other ways. "It sends a clear message that management views "I've felt this was the answer for a long time," its knowledge workers as partners, not as adversaries or, at says Glenn Angell, a systems team leader with the best, necessary evils," he said. "I believe that this would go far in state of Maine's Office of Information Technology, motivating employees to work harder and to align their goals with though he noted the state hasn't ruled one way or those of their organizations. I think this would be huge." the other on the idea. "I really don't care what an Google CIO Douglas Merrill concurred. "Companies should employee uses for an office suite or to build charts, allow workers to choose their own hardware," Merrill said. graphs, or whatever â&#x20AC;&#x201D; just so long as I get the data "Choice-not-control makes employees feel they're part of the in a format I can view it in." solution, part of what needs to happen." All too often, IT groups write and code And the ability for users to self-manage their policies that restrict users, PCs is only getting easier as hardware vendors largely based on a misbegotten are working toward essentially standardized belief that workers cannot be PCs, no matter whose label is on the box. trusted to handle corporate "Bottom line: The technology exists," Resnick data securely, said Richard said, "[But] IT has no interest in it because their Resnick, vice president of management approach is skewed heavily toward management reporting at mitigation of perceived risks rather than toward a large, regional bank that helping their organizations move forward." he asked not be identified. "It simply doesn't have to be this way," Resnick said. DIY IT in the 21st century "Corporations could save both ew companies have taken the radical step of time and money by making letting users buy and manage their own PCs. their [professional] employees But that may be changing. As noted, Google is responsible for end-user data already practicing it on a company-wide basis, Source: Gartner processing devices." and BP is piloting the idea.

Il lustrat ion by MM Shan ith

50% of all software,

hardware and services acquisitions made by IT will be decided by enduser preferences by 2010.

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ven when companies are willing to let employees manage their PCs, iT still has plenty to manage, including security and data because a company's data belongs to the company.

At Google, workers can choose from about a dozen PCs available in its internal tool dubbed, appropriately enough, Stuff, which includes options running Windows, Mac OS, and Linux. While 90 per cent of hardware acquisitions are conducted through the tool, workers are not necessarily limited to the systems that Stuff presents. "We also have a mechanism for choosing some pretty strange" hardware and software configurations, Merrill said. Although Google probably pays more per machine than if it went with, and leaned heavily on, a single supplier, Merrill noted that "there's no business downside, and there's the productivity upside... we're clearly getting a higher productivity out of employees." Merrill also is "able to run a leaner IT shop." In BP's case, one of its consultants projected that Digital Allowance, the name of the pilot program under which employees choose their own tools and rely on an external help desk service for provisioning support, could save the company up to US$200 million a year in IT support costs, a spokesman said. Still, the Digital Allowance pilot program is skewed to a tech-savvy employee subset. These teams are "at the geekier end" of BP's 100,000-strong workforce, he added. Analyst firm Gartner predicted in a recent report that "by 2010, end-user preferences will decide as much as half of all software, hardware and services acquisitions made by IT." The research firm cited "the ubiquity of the browser interface" as having made computing approachable enough so that "individuals are now making decisions about technology for personal and business use." Point of fact: Users are already more involved than ever before. "I'm seeing it become more about the freedom to choose what device you want â&#x20AC;&#x201D; which laptop, maybe a Mac, what kind of handheld," said Allan Carey, an analyst at the Institute for Applied Network Security, a research firm. "It's part of the consumerization of IT," he added, and requires IT to focus on standards and policies that user choices must meet, rather than worrying about what model of PC is used. 42

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WhaT iT mUsT sTill manage

ven when companies are willing to let employees manage their PCs, IT still has plenty to manage, including security and data. "I would expect most companies to implement basic security protocols for employee PCs, including virus scanning, spam filters, and phishing filters," Maine's Angell said. "They might provide software tools or simply implement a system check to make sure that such items are running whenever the employee's laptop is connected to the company environment." Furthermore, Angell said, "We need to recognize that the company's data belongs to the company. Thus, there are certain data systems that will either need to be controlled as Web applications or that get served up via a platform such as Citrix. Access to both can be controlled by the enterprise without having to touch the worker's PC." In this age of Web apps, that's easy to do, he added. This Web-based application approach to data management and security is Google's approach, Merrill noted. Its employees run Google Apps, no matter what PC they have, and that means that all company data is stored on Google's servers. He also argued that this approach protects Google from the single largest security threat: stolen laptops. "End-point security never really, honestly works. The number of incidents keeps increasing. If it worked, that wouldn't happen," Merrill said. "So I don't happen to find that argument compelling." Still, Google has a lot of monitors in its infrastructure to notice weird occurrences, both related to security and compliance. It has no choice, Merrill said: The company is subject to heavy regulations including HIPAA, on account of doctors that work on its campus. "Security and

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IT Management regulatory controls run in the background," Merrill said, explaining that they are "hidden from the user in a good way." Another technology that helps support the user-managed PC model is desktop virtualization, which lets IT provision a standard OS and application configuration while allowing users to run their own apps in a separate layer, preventing infection and corruption. "In this model, users would have access to nonregulation software, personal e-mail, etc., outside of the virtual environment," Resnick said, which is "a reasonable compromise between security requirements, innovation, and employee convenience."

Start small. not everyone is comfortable enough with It to put together and maintain their own PCs. Create a small group of users, like what bP did. according to the company, even their small group is saving them plenty in It support costs. this approach also shields internal It from doing ‘grunt’ help desk work.

Choice, not control. Set up an internal tool where employees can cook up their own PCs. Google’s tool resembles a salad bar: it’s employees can choose from a range of operating systems, hardware and software. you y could end up paying more per machine but Google thinks the tradeoff in productivity is fair.

Control data. Giving users choice should stop at data and security. Google uses Web-based application approach to maintain control of data. So, no matter what PC employees choose, all company data is stored on Google's servers. this approach also helps get around endpoint security issues like stolen laptops.

For companies considering empowering their employees with hardware and software choices, Merrill has some advice. "There are three things to do: automate everything you can automate, push toward automation in the cloud, and put together a highly skilled support staff. My support function spends time on fun things, which means I can hire more talented people, so I can automate even more things."

There are, of CoUrse, skePTiCs

ot all corporate settings are suited for user-managed PCs. The environments that do try them tend to involve white-collar workers who own PCs at home and have some tech experience. By contrast, call-center PCs are not good candidates. Neither is any production area in which work is programmed, such as policy administration in an insurance company, a manufacturing environment, or a hospital. "Clearly, situations where security, regulatory requirements, and high availability are necessities, self-provisioned tools aren't a fit," says Matt Brown, a principal analyst at Forrester Research. As one might imagine, the concept has detractors who point to additional practical matters. "In the long run, I suspect it would cost more and cause more problems than it solves. Notably, interoperability issues with network, printers, software, documents, viruses, and corporate intellectual property remaining on personal computers," says John Quillen, CTO of YouChoose.net, a campaign-promotion site.

a CreePing forCe iT Can'T ignore

et Quillen is practicing the user-managed PC scheme himself. "Ironically, I'm in a startup using my own [Apple] MacBook Pro while the rest of management uses Windows." And Forrester's Brown said that he has anecdotally found an increasing number of executives doing the same as Quillen and carrying non-company-standard computers, namely Apple notebooks, and asserting that the only corporate application they consistently use is e-mail. More often than many people in IT care to admit, small factions of rebel users are supporting their own PCs, sanctioned or not. And the people now entering the workforce and those who will follow in their footsteps are already accustomed to supporting their own PCs, so the argument that users don't know enough to choose and manage their own PCs will be harder to make over time. "The generation entering the workforce, namely the millennial generation, is much better equipped to evaluate, purchase, and manage the technology they use than previous generations," Brown said. "I am always amazed to see how quickly workers in this generation are able to assess, download, install, and get productive on the tools that are available on the Web." CIO

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Integration

By Miya Knights

New projects provide multiple system integration problems â&#x20AC;&#x201D; a challenge to any business. Here's how one technology leader is making tracks in cost-effective manufacturing and logistics. Dario Scagliotti believes that growth through mergers and acquisitions (M&As), joint ventures and investment in new markets mean that the business process and model must be 100 percent centralized and standardized. And Scagliotti, CIO of worldwide automotive manufacturer Pirelli, should know. Trucks, buses, sports cars, motorcycles and tractors from all the major automobile manufacturers use Pirelli tires, which are manufactured in 12 countries and sold in 120. Most of the tire divisionâ&#x20AC;&#x2122;s annual revenue comes from a worldwide network of 6,000 distributors and dealers. 46

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Reader ROI:

How integrating supply chain management can cut operating costs How automation increases efficiency

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Integration Pirelli has experienced phenomenal expansion and growth into new markets, some due to M&As. Keeping his tires on the ground, Scagliotti says: “At the end of the day, a tire is a tire. It doesn’t vary from country to country. So it’s extremely crucial, as a commodity, for production to have extremely cost-effective manufacturing and logistics. Especially when you have an operational group spread out all over the world, but with a need to manage it centrally.” He explains: “At a time when the Web was exploding, service companies and manufacturers of industrial products, like ours, were faced with a new opportunity. Tires are a consumer product, but usually sold via a distribution network that also install, maintain and fit the tires. Dating back to 2000, there was speculation that online could offer a sales and marketing arm that may well lead to getting rid of distributors.” But Pirelli soon realized that, in a competitively crowded market, the Internet could offer additional value to dealers in its distribution network and offer the company the best of both worlds. “We realized that, by improving service levels, dealers would not feel they were going to be cut out, so improving service levels to the consumer,” says Scagliotti.

All on the Same Road

irelli’s systems include supply chain management, production planning, and finance applications shared with Pirelli’s thousands of distributors around the world. To streamline supply chain management and cut operating costs, Pirelli needed to link these disparate applications and invest in integrating key aspects of its connections with distributors. “This integration became the most important aspect of our dealings with our distribution network, where over 2,000 dealer networks worldwide now serve the brand,” he adds. Among the challenges faced, the Pirelli integration team needed to establish compatibility among several different distributor systems, while many small, local dealers were still paper-based. The large, national, and regional distributors using sophisticated combinations of ERP and custom applications needed a common infrastructure for linking all of these systems and streamlining shared processes, eliminating the need for custom-developed interfaces. TIBCO’s business integration systems joined Pirelli’s internal business applications — including multiple instances of SAP software and home-grown applications — and provided a common conduit for sharing information. Using TIBCO’s business-to-business (B2B) portal, Pirelli now quickly integrates distributors with an online order entry and tracking system. On an average, Pirelli can connect large distributors to the Pirelli system in two weeks and can bring small dealers online in as little as one hour by giving them access to a personalised web-based portal for self-service. In less than one year, Pirelli connected 2,500 distributors — an accomplishment that has accelerated the payback on its integration investment. The convenience of Pirelli’s online order system results in distributors transacting more business with Pirelli — an 48

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important competitive edge. The system provides easy access to the latest pricing information, fast and simple online order entry, and immediate confirmation. Best of all, distributors know exactly when shipments will arrive and can track orders online themselves. With real-time information about order status, distributors can serve their own customers better. “This solution has enabled us to create a more complete, richer way of working together with our distribution partners,” says Scagliotti. As a result, every time Pirelli has integrated a distributor into the system, the company’s sales have increased. Not only has the B2B dealership portal paid dividends in Pirelli’s early adoption of integration strategies and technologies, Scagliotti also says it has enabled the company to become more aggressive in using the Web, extending its use to fleet management, car rental companies and truck fleet managers. For example, as Pirelli finances inventory at distributor locations, excess inventory could be financially devastating. However, if

Use the Net Wisely: In a competitive and niche market, the Internet can offer additional value. But that depends on how you use it. Pirelli used the Net to connect with its distributors. It now quickly integrates distributors with an online order entry and tracking system.

Maintain Inventory Balance: While excess inventory can be financially devastating, not enough inventory can also lead to loss of sales to your competitors — which is why, it is important to maintain a balance. Automation can take care of that. Pirelli’s integrated supply chain management system has reduced distributor inventories by 20 percent.

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Integration

Snapshot Manufacturing Units: 12 Customer base: 120 countries No. of Distributors: 6,000 Reduction in distributor Inventories: 20 percent Project Description: Pirelli, with a string of mergers and acquisitions needed to centralize and standardize its business process. By using a B2B portal, the company integrated all its systems throughout its offices all over the world. (Pirelli connected 2,500 distributors, in less than a year). Their online order system provides easy access to the latest pricing information and fast and simple online order entry — helping the distributors know the exact time of shipments and enabling them to track orders online themselves.

inventory is too low, Pirelli risks losing sales to its competitors. The integrated system makes Pirelli more competitive by enabling the company to ensure that the right tires are in stock when a consumer walks into a store. Pirelli can now match inventory to sales by automating order entry and processing. The system alerts distributors when their inventory of high-volume products is low and automatically generates replenishment orders. This capability reduces the time required to deliver replacement tires into the distributor’s inventory, maintaining the distributor’s stock levels without carrying excessive inventory.

Closer to the Destination

ince implementing its integrated supply chain management system, Pirelli has reduced distributor inventories by 20 per cent

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and cut its own costs accordingly. Pirelli rarely loses a sale because a tire is out of stock or back ordered. As a result, sales have already climbed, increasing Pirelli’s market share. Scagliotti also says the integration work Pirelli has carried out and expertise it has developed as a result, has become the basis for a more standardized approach to ERP. “Integration was moving forward when we were capitalizing on SAP in the supply chain for an adaptive environment of automated realtime interfaces between the two systems, while continuously improving the B2B platform on the sales side,” he says. Pirelli’s integrated supply chain management system has improved forecasting and production planning, giving Pirelli the agility to respond and adapt faster to market dynamics. Pirelli once required 70 days to poll its thousands of distributors for sales forecasts, collect the information that trickled in on paper, aggregate the information, and manually generate production plans. Now, with up-to-the-minute information on orders and inventory levels, the entire process is completed in just 30 minutes. In addition to this, Pirelli no longer depends on quarterly forecasts. Using real-time sales data, the supply chain can adjust production rapidly to match sales. The solution taps the system for instantaneous key performance indicators (KPIs) about Pirelli, its business units and the individual products. With real-time information available throughout the enterprise, Scagliotti adds that decision makers can now take more informed action more quickly, leading to a cultural shift towards embracing adaptation and change. “We have been able to spread an integration culture and the opportunity it offers to deliver within the overall IT function,” says Scagliotti. “I had the opportunity to discuss my vision with the chief executive of the group and found it very interesting that all the values he had in mind were exactly the same as we’re adopting in response to the group IT function’s needs today: to become faster in response to market cycles that also grow faster year-on-year. “We have to be able to turn in another direction as fast as we can and not have to completely re-engineer something to do so. As such, most IT projects must be delivered faster than three to six months.” But Scagliotti doubts the commonly held perception that CIOs must continue to do more with less, instead suggesting that IT working in support of the business goals and vision will actually earn the confidence, along with fiscal support, of the board. “On the other side of using integration to run cheaper, we’re not only reducing the IT overhead, but increasing the IT budget both in opex and capex [operational and capital expenditure] terms, as an investment for strengthening IT services,” he says. “Despite the fact we’re bigger, we’re cheaper because we’re doing more with less.” CIO

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Reader ROI:

How virtualization can aid in reducing power cost How shifting to virtual servers can make it easier to manage your resources

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Server Virtualization

Il lustratio n by un n ik rishn an AV

By Jack Loo

With its eight-year-old data centre hardware reaching end-of-life and failing regularly, Malaysia-based ING Insurance wanted a new architecture with strong, dependable availability and scalability. By adopting server virtualization, Patrick Wong, assistant vice president, head-service delivery group, ING Insurance, not only replaced the ageing and inadequate servers, but has managed to save about Rs 376 lakhs in hardware costs, because virtualization meant that he needed to buy less servers. “Instead of buying 16 physical servers to replace our old desktop servers, we just bought four and virtualized them,” says Wong. In Malaysia, ING Insurance provides life insurance, general insurance and employee benefits to more than 1.5 million customers. Cost savings is one of the most obvious benefits from virtualization. “So instead of using 50 servers, you can often use fewer servers to do the same thing. And what this does is it immediately reduces your demand for power. And the cost of power across the world is going up,” comments Andrew Milroy, ICT research director (Australia and New Zealand), Frost & Sullivan. There is also the backdrop of increasing volumes of IT data. “There is a lot more data floating around now, so the demand for processing technology is going up,” adds Milroy. “Another benefit is the ease of management; it becomes easier to manage your resources as well,” says Milroy. According to research from Gartner, the total number of virtual machines deployed Vol/3 | ISSUE/15

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worldwide is expected to increase from 540,000 at the end of 2006, to more than 4 million by 2009. “Several things will make virtualization critical to most enterprises in the next few years: the need to consolidate space, power, installation and integration, and provide server resources which are capable of responding to unpredictable workloads,” says Gartner vice president and analyst, Thomas Bittman. The old setup that ING Insurance had was simply unable to handle the firm’s systems. “We just had a desktop running our proxy server and anti-virus software,” says Wong. Desktops were used as application servers, because it was thought that the usage for them would be low. “Over the years, a lot of people adopted the applications. Then things began to break down because PCs are not meant for this kind of work, so at the end we have 20 to 30 of them all in all. Can you imagine running on a Pentium 2 with a 128 to 256 MB worth of RAM?” says Wong. In fact, the desktops took turns to break down. “Maybe at a rate of one per month,” he says, “and we have at least 16 running critical applications.” Looking back, Wong felt that the implementation of the previous systems was done at a time when “people don’t think about SLA, don’t think about high availability.” The turning point came when a desktop failed and it took Wong’s team a full day to restore application availability to its 100 users. It was time to act. Wong and his team wanted to migrate the PCs to actual servers but felt that it was not feasible as the desktops were running lower end resources like proxy servers and anti-virus servers. “You don’t need a high-end server to replace one to one. That’s why we looked at virtualization.”

Addition by subtraction

eaturing four physical servers running 16 virtual machines, ING Inusrance renewed its hardware with REAL CIO WORLD | j u n e 1 5 , 2 0 0 8

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Server Virtualization

4 million

a virtualized environment in early 2007. access applications remotely The new framework, based on VMware from a central server using technologies, provides business applications thin clients. and infrastructure services to about 1,200 “Historically users have users. Tools running in virtual machines had to acquire physical include the organization’s leave application servers for an application, systems, proxy and antivirus servers, loans install the operating system systems, debtors’ and creditors’ systems and and necessary management investment systems. tools. All this takes time,” says the number of virtual “We wanted a more robust architecture so Phil Sargent, managing vice machines that will be we looked at high availability as one of them, president & team manager, deployed worldwide scalability and stability is there,” said Wong. technology & service provider by 2009. During the proof of concept stage, Wong storage research, Gartner. Source Gartner was impressed by what he saw. “We got in With virtualization, the two physical HP blade servers. We loaded deployment time taken by them in four virtual machines (VMs) just to applications has been drastically see whether it runs well on the infrastructure and found that reduced, he says. This helps provide a competitive it was quite stable,” he says. advantage for companies when they can get new “Later on, by adding on another two physical servers, we applications up and running quickly. actually virtualized around eight VMs. So now we have gone One of the biggest benefits for his users, up to 16 VMs. So the scalability is there. We just need to add in according to Macmahon’s CIO Jason Cowie, additional RAM or put in more hard disk space, then we can is that they can quickly start up and easily put in more VMs.” work anywhere. “When users go on site they can immediately save maybe one to two hours by not having to wait for IT to reconfigure World in VMotion their computer. They don’t have to wait for ith the new infrastructure, life for the IT teams has their data to be transferred,” he says. The new become easier. Previously, setting up the applications system also means people do not have to come servers entailed three to five working days, with installation back to a pile of work and e-mail at the office. of new drivers and patching to the latest versions. Now, Wong estimates the total time taken for loading up the VMs would be less than a day. Remote offices “With different hardware and different models, you can not acmahon’s business takes its employees just create the image and dump it in. Now you can create the to very inaccessible locations. Their image, pack it in and dump it in as and when you want it,” work includes providing services such as says Wong. management of mines and infrastructure The new virtualized environment has also given Wong projects like roads, bridges and dams, across high availability. Every month Wong’s team would shut more than 50 locations and offices spanning down its servers to conduct patching. A component called Australia, New Zealand and Malaysia. VMotion enables the team to move an entire running VM The complaint from users was that IT was instantaneously from one server to another. unable to properly support their work as they The live migrations are mostly undetectable to the user. move thousands of miles around the region, "One actually does not feel the downtime but there will be a hindering their productivity. slight slowdown in the system,” says Wong. But it enables the “Because we’re a contractor, we move from team to carry out maintenance with zero downtime. site to site at the management and working “Because we have four physical servers and the other three levels. The issues that we had, from an IT will take the load so we just need to replace the necessary systems viewpoint, were that our people just couldn’t and everything goes back within a few hours,” says Wong. be truly mobile,” says Cowie. Equipment like notebooks and servers needed to be reconfigured at each new location, costing the Beyond saving costs workers downtime and inactivity. he benefits of virtualization are not limited to saving server The initial launch of the project in July costs and reducing energy spending. Australian mining last year saw applications such as e-mail and civil construction firm Macmahon enabled more than 1,500 and Internet browser available to users on users to be fully mobile through a combination of desktop and their virtual desktops. Other features include server virtualization. The setup from Citrix enables users to

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Server Virtualization network security, application management and single-sign-on functions. Cowie is also looking to include tools like graphics CAD and 3D modeling for the users.

A simpler life

owie’s team managed to cut down the time taken to set up IT infrastructure at the remote work sites, to just a day. Previously, the IT division had to purchase a server, configure and run tests, all taking up to a month. The department has now eliminated the need for a server, only needing to set up a client terminal and router. “We do not have to configure hardware like PCs, laptops and servers. All we’ve got to do is maintain the virtual environment,” adds Cowie. Virtual desktops mean having fewer items for Cowie’s engineers to diagnose. “If a user is unable to log on, it’s a hardware fault. Otherwise, it’s just a matter of trouble shooting the user account,” he says. It has become easier for the IT department to manage its software licenses. Previously, a user would just use a software application once. Now, the IT team is able to track programs that have been idle for months, and slot them into a stockpile of licenses. When a user indicates his request for a program, the division would then forward the tool to the user’s virtual desktop account. “If we want to dabble in other countries, we can start out relatively quickly with low overheads and determine viability there,” says Cowie. “If there’s not, we can pull out. If there is, then we can just expand as we go.”

Disaster recovery

part from saving costs and improving user productivity, virtualization can be an important component of an organization’s disaster recovery strategy. “Virtual servers are not tied to physical servers; this means that an application running in a virtual machine is not tied to a specific physical server,” says Gartner’s Sargeant. “It offers users greater flexibility when it comes to disaster recovery, applications can be restarted very quickly on a virtual machine,” he adds. ING Insurance’s Wong saw his virtualization project as a good opportunity to replace his 27 aging disaster recovery servers. “The vendor is no longer supporting the servers because they are more than eight years old. What we did was instead of replacing 27 physical servers, we are going to get about seven blade servers and bunk in at least 36 VMs,” says Wong. As his disaster recovery servers are placed on a rented facility, server virtualization makes sense, as he is now able to save on rental space because fewer servers meant less area taken up. However, utilizing virtualization has to be a well thought out and managed process or else it ends up chewing more resources than it should. The IT manager had to understand the limits of his or her own virtualization resources. For Wong, his available setup was not enough to accommodate high-end systems like databases 54

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Know your limits. Utilizing virtualization has to be a wellthought out process or else it ends up chewing more resources than it should. When an available set-up is not enough to accommodate highend systems, consolidate smaller applications such as proxy servers and anti-virus servers.

Focus your virtualization efforts. Figuring out what you want out of your virtualized environment is important for its long-term success. According to some CIOs, it is important to get a fix on the benefits of a system before you plunge in.

Do not stop at cost saving. There’s more to virtualization than cost-cutting, ease of management and increased availability. Virtualization can also provide enterprises with disaster recovery benefits. According to Gartner, virtualization gives disaster recovery greater flexibility since applications can be restarted quickly on a virtual machine.

before taking up too many resources. Instead, he focused on consolidating his organization’s smaller applications such as proxy servers and anti-virus servers. “Virtualization without good management is more dangerous than not using virtualization in the first place,” says Bittman. “Automation is the critical next step to help organizations stop ‘virtualization sprawl’, which is not much better than server sprawl.” CIO

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Amit Burman, Vice Chairman of Dabur India, talks about the company’s decision to outsource its IT to keep the business agile and continue expanding into the territory of nimbler players.

Outsourcing Tackle

By Kanika Goswami Remember the scene from the Bond movie Never Say Never Again when a middle-aged Sean Connery vaults over a banister and tackles the bad guy? Reviewers could not stop raving how an obviously well-past-his-prime Connery could be so nimble. When the old have the agility to take on the young: it’s a formula that people love. So when the 114-year-old Dabur outsourced its IT in order to stay quick-footed, plenty of industry watchers held their breath. After all, only a handful of large Indian companies had attempted something similar — and none of them had a century-worth of baggage. The suspense didn’t last long. Everyone quickly saw the sense of outsourcing IT, especially at a time when attracting IT talent was very hard, notes Amit Burman. And it’s worked for Dabur. It’s given them plenty of flexibility, if the way the company is expanding and taking one smaller and more nimble brands is any commentary. If imitation is the highest form of flattery, then Dabur should be flattered: plenty have followed its footsteps. When a titan of the old economy opens a new road, it leaves behind a large swath for others to follow.

CIO: After 114 years, Dabur handed the business over to professionals. How has that worked out?

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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Amit Burman: In 1998, the Burman family passed the management of the company over to a professional CEO and limited their role to strategic inputs at a board level. We have reduced our strength on the 10-member board of directors to four members and only provide broad policy guidelines for growth and diversification.

The family provides strategic direction to the company and the group and evaluates newer avenues for growth. The decision was taken in response to the changing dynamics of our business and to inculcate a spirit of corporate governance within Dabur. We felt the need to look at management succession more seriously. We felt it was time for us to sit back and look at the big picture and let able and talented managers to run the show. However, we also believe that the family has a trusteeship role to follow both in

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terms of perpetuating the family business and in preserving and growing the business. For Dabur, the family and the business are institutions to preserve. The move has been a success. Dabur has grown under professional management. Some of its brands — particularly in the highly competitive oral care and shampoo markets — have emerged as the fastest growing brands in the market — ahead of established multinationals. For example, Vatika has, for two years running, been the fastest growing shampoo in India. Three of our toothpaste brands — Dabur Red, Babool and Meswak — are the fastest growing toothpaste brands in India for three years now and have taken away market share from our competition.

You took ayurvedic medicine corporate. But now with over 50 brands, how do you maintain brand sanctity? Today, Dabur is the world’s largest natural healthcare company and while it is true that Dabur’s brand portfolio has grown, the fact also remains that a common thread binds them all together: the company’s herbal and ayurvedic heritage. All the products in Dabur’s portfolio are based on herbal and ayurvedic ingredients and this herbal heritage helps it maintain brand sanctity, whether in the personal care space, or in health supplements. All new product developments are also based on a herbal platform. This heritage helps Dabur’s brands outpace MNCs — both in the oral care space and in

Amit Burman expects I.T. to: Help the company expand Continue to be flexible Keep their food products fresh

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the hair care space — and become the fastest growing brands in their categories.

But doesn't the Balsara (homecare) acquisition seem like a move outside the herbal space? The homecare portfolio is the only product line that operates outside the herbal space; it is an acquired line-up. In our core FMCG portfolio, which includes personal care and health care products, Dabur India continues to operate in the herbal and ayurvedic space. All new product developments in our core categories also continue to operate in the herbal and ayurvedic arena. Dabur has a huge herbal heritage and we intend to continue operating on the herbal platform in the future.

Why did Dabur exit the pharma business? IT was a strategic decision by the Burman family. The family is happy to have created significant shareholder value through this business in a short span of time. The proceeds from the divestment of Dabur Pharma will go into family investments. There are several options we could look at — insurance being one. Going forward, we need to re-evaluate our entire portfolio before we invest elsewhere.

You have forayed into health and beauty products. Why? Dabur recognized a gap in the health and beauty retail space in India. There’s a

“Dabur India outsourced its IT to ensure a constant flow of IT talent — even during phases of expansion. ” — Amit Burman growing need for quality service and store environment in that space. With no major player, moving in now would give us an early mover advantage. The Indian consumer has come of age. But the shopping experience here has not kept pace with this change. Even though retail outlets have mushroomed across the country, most of them still do not offer consumers the kind of shopping experience that people in the rest of the world are used to. Dabur intends to tap the growth prospects in both the retail market and the health and beauty segments. Our USP will be an unique store environment and a diversity of products

that will be on offer at the stores. Dabur has set up a wholly owned subsidiary, H&B Stores, which is in the process of establishing a panIndia chain of specialty retail stores in the beauty, health and wellness sphere. The first of these retail outlets, branded new u, opened its doors to customers in Delhi in March 2008. With new u, we are committed to bring a world-class shopping experience to India. We have already established six new u outlets and are expanding its presence to more cities. While these stores are targeted at women, they seek to create a fun and fashionably colorful environment that is not alienating to non-core customers — particularly men. The stores will be affordable and classy and will provide all the top mass-market brands. The product mix at the stores will cover pharmacy and OTC (over the counter), personal care, baby care, cosmetics, general merchandise and confectionery. Beauty and wellness products are key parts of the stores, with sizeable shelf space allocated to both leading Indian and international brands operating in this space. The new u stores offer the entire range of beauty, health and wellness products under one roof. In the future, we also intend to have a private label presence. Dabur India is investing Rs 140 crore into this venture, and is confident that the venture will report profits in its fourth year.

Why did Dabur outsource its entire IT infrastructure? To ensure a constant flow of IT talent — even during phases of expansion. Since we planned for rapid expansion, IT had a critical

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role to play. If we want to continue being on the leading edge of technology, the people we need will always be in high demand. Attrition could be a huge problem and we would not be able to maintain bench strength. But, an outsourcing partner can.

One of your strategic intents is to provide consumers with innovative products within easy reach. How? Dabur has initiated a program to improve distribution effectiveness. Under it, we have organized sales teams on the lines of channel expertise (separate teams for modern trade, grocers and chemists) in urban markets and exclusive rural teams in six focus states. Today, the servicing needs of the industry are vastly different from what the traditional stores can provide. The exciting new formats also open up opportunities for brand activation at the point of purchase. The system uses vastly different and superior selling skills. A team with appropriate skill sets has been put in place to respond to the needs of modern trade and the results are most encouraging. The channel strategy has been devised to focus on key segments based on strategic attractiveness and total-cost-to-serve principles. To address the complexities posed by the rapid ramp up of modern trade, our traditional distribution system — stockists servicing all outlets irrespective of format — was overhauled. Since the servicing needs of these outlets are different, Dabur configured exclusive modern trade stockists in large towns to service these stores. Direct

supplies are also available to distribution centers with formats like Cash & Carry and large national chains. And with a company sales team, Dabur is geared to meet the servicing needs of emerging formats. The challenges posed by the expectation of higher levels of efficiencies on shelf availability and inventory are also being addressed by our supply-chain system. More efficient supplychain practices like electronic order and data processing and changing processes to facilitate e-payments, etcetera have been put into place.

SNAPSHOT

a local flavor and even roping in local celebrities as brand ambassadors, Dabur India is Dabur using every possible route to Domain: drive deeper into the south FMCG, Foods, Juices Indian market. Often, people Revenue: treat India as one big market, Rs 2,396 crore but the reality is that India is Staff: more like the European Union: 3,500 a mix of different cultures, IT staff: languages and markets. With IT is outsourced to Accenture; Internal these initiatives, Dabur India staff restricted to is taking advantage of this around 10-odd diversity by creating and Distributors: adapting brand mixes for the 5,000 south Indian market. GM-IT: Here are some examples: Anil Garg we have rechristened Dabur Lal Dant Manjan as Dabur Sivappu Pal Podi in Tamil Nadu. Similar You are also in the food local brands are planned for a host of other business. How does IT help products. The idea is to give brands a local manage products with sixflavor to make them easily understandable to month shelf lives? a Tamil speaking populace. The key is to get brands more recognition and acceptability IT played a key role in the foods business down south. rollout. To start with, we upgraded our We are also tailoring products to suit a south IT systems to ensure a First-In-First-Out Indian audience. Recognizing a south Indian (FIFO) policy — for both raw materials and consumer's want for natural products, Dabur finished foods. Then, training programs were Herbal toothpaste was launched only in Kerala introduced at the stockists’ level to ensure the and Tamil Nadu, where it has established smooth movement of stocks. itself as a niche player. An ayurvedic product called Dabur Shwaasamrit was also launched You aim to increase in Karnataka and Kerala, and is successful, penetration in south India. mainly because Shwaasamrit provides relief What is your strategy? from breathlessness, chronic cough, cold and bronchitis, which are common in Karnataka From rechristening brands in local and Kerala. languages to creating special products with

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What about via m&As? Dabur India is actively looking at acquisitions, both in India and in the overseas markets. But, it is too early to talk about that.

In the future, do you think ‘natural’ will drive the health products industry in India? We are already seeing this happening. A growing number of consumers, particularly in urban markets, are increasingly taking to healthy foods. Though it is still a largely urban phenomenon, the consumer base for such products in on the rise. Dabur has been at the forefront of healthy and natural products, which is one of the prime reasons for our continued growth. In fact, we are now witnessing many MNCs trying to follow this path by introducing natural variants of their products. Dabur — with its portfolio of juices under the Réal and Activ brands — is already a dominant player in the health food and drinks market. Today, Réal is India's leading packaged, preservative-free fruit juice brand. From its launch in 1997 as India’s first juice brand, today Réal offers the largest range fruit juices. It is also first brand to create variants suited to the Indian palate, like Litchi, Guava and Mausambi. That said, we continue to look at adding greater value to the product by offering an 60

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Tailor-made television ads are also being created for south India. These campaigns were put together after intense research revealed that the messaging to the southern consumer needs to be more rational and needs to portray a south Indian ambience. So, Dabur is signing on south Indian celebrities to endorse various brands in these markets. We have already signed on south Indian film star Khushbu to endorse our Dazzl range of hard-surface cleaners and Genelia D'Souza as the brand ambassador for the Vatika hair care range. With these initiatives, we are on track to expand our presence in south India.

unshackled: Dabur has added new brands and continued to grow. It outsourced its IT in 2004.

even healthier version. A step in this direction was the introduction of the Activ range a few years back. This range does not have any added sugar. Activ also offers a range of healthy fruit variants like fruit and vegetable blends including orange-carrot, mixed fruitcucumber-spinach, etcetera. We have also introduced vegetable juices and a fruit soya range. This last combines the taste of fruits and the goodness of soya, which is known to be one of the best sources of vegetable proteins. Fruit soya is targeted at health conscious consumers.

Can you tell us more about Lite Bite, the new brand you are promoting? Let me first clarify that Lite Bite Foods is not part of Dabur India. It’s a distinctly separate entity. Lite Bite is a recently established highgrowth venture focused on the food and beverage service sector, with formats ranging from quick service restaurants (QSR), casual dining restaurants (CDR), express outlets, to entire food-courts, with a brand portfolio of leading international and local concepts. Lite Bite is promoted jointly by me and two others. We recently finalized a strategic

alliance with PVR Cinemas where Lite Bite will manage their food courts, and PVR Cinemas will come on board as a Lite Bite shareholder. Lite Bite will run outlets of many formats in a wide range of locations, not only malls, but also office complexes, high streets, highway locations, hospitals, metros and airports. Lite Bite has also established a joint venture with the Eat Out Group, part of Spain’s leading business house Agrolimen. The Eat Out Group is one of Europe’s leading restaurant groups with over 600 restaurants. They own brands such as FrescCo, Pans&Company, Bocatta, and Fresh&Ready. Our venture will invest about Rs 50 crore to establish a chain of specialty restaurants in India and mark Eat Out’s entry here. The joint venture will initially focus on launching the ‘FrescCo’ concept in India. FrescCo is a restaurant chain with a distinct Mediterranean Europe heritage. It specializes in food like salads, pastas, pizzas and soups, in a casual-dining setting. What FrescCo offers is excellent value-for-money, thanks to its ‘All You Can Eat’ formula. The venture plans are to open at least 50 restaurants in 10 years, both in commercial malls, office complexes, high street and highways. In addition, we also plan to expand the brand portfolio of the Indian JV and establish additional international Eat Out concepts in India. In addition to these strategic alliances, we are in the advanced stages of finalizing tie-ups with a number of leading local and international brands, which we will announce shortly shortly. CIO

Kanika Goswami is assistant editor. send feedback on this interview to editor@cio.in

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IT Complexity Tax C Complexity is taking its toll on IT and the value it provides. Is there a way CIOs can evade it? CIO asked three dozen CIOs what they thought.

omplexity â&#x20AC;&#x201D; is the word becoming the bane of CIOs? This is a very real world situation, the outcome of years of high expectations that has brought IT to a point where every business operation has its own application â&#x20AC;&#x201D; with another killer application to manage them all. Complexity is fast becoming the chief enemy of effective IT management, because it inhibits cost management, transparency and adaptability. Today, heads of IT grapple with complexity that erodes value addition and drains resources much like an unwelcome tax would. The comparison goes further since just as increasing income attracts increasing tax, as legacy systems grow they mop up far than what they were intended to do, and consequently have their own problems. These can hold IT organizations back,

From left: N. Nataraj, VP & CIO, Aztec Software & Technology Services, Atul Kumar, CM-IT, Syndicate Bank, N. Gajapathy, Sr.VP-Technology & CIO-Asia, Transworks Information Services, Shankar Rao, CIO, Sasken Communications.

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Atul Kumar, CM-IT, Syndicate Bank pointed to the way solutions are built. “Core banking, rural aspect of business, c re d i t , re cove r y, etcetera…everything is integrated in core banking.” But he said there are almost no complete solutions available in India. “Today, we have great quality in manufacturing, Anil Misquith, but I do not see the GM-Enetrprise Group, Intel same level in the IT solutions industry.” Standardizing applications to ensure complete integration of solutions, could also Today, only those businesses that manage help. But as Shankar Rao, CIO of Sasken, complexity can reap value for IT expense, pointed out, there is no dearth of standards and they will be more agile because their in India. “But CIOs have to learn to say no to systems do not get in the way of business solutions that are not a perfect fit.” process change. But what is the origin of Another solution that was suggested this complexity? was outsourcing. But it comes with its own Nataraj N, CTO, Aztecsoft, attributed baggage including vendor management and this to the business’ need for mobility. a lack of business understanding. Though With falling and rising salaries, every cent vendors may have learnings to share, they spent has to be utilized, which means may not always be in tune with a company’s people have to work from wherever vision. Besides, core business solutions they are. This introduces a host of cannot be outsourced, so complexity security and connectivity issues and cannot be wished away entirely. real time application integration, unified The solution really seemed to be communication, which, put together, leads strategizing, said CIOs, and being prepared to upgrading the entire IT environment. with a roadmap. As Nataraj said: “If you “All those things come at some cost to have a strategy in place, specially in the simplicity,” he said, “Virtualization could software industry, given the way things simplify it, but that itself adds complexity,” change, you can manage processes and he said. even re-engineering them much better.” The question really then becomes: Complexity can be managed — as long as how far can CIOs extricate themselves you have a holistic vision, and a strategy. from this mess? N. Gajapathy, CIO, Transworks, suggested breaking up a complex solution into simpler solutions and applications. This, he said, would Satish Das, CSO of Cognizant, did not ensure that complexity is not carried believe that complexity is a tax to be down to the end users. paid for the spread of IT. He felt it that or worse, work against the very reason for their existence. Can complexity tax be avoided? If not, are there ways of reducing the burden through outsourcing, or the use of technology like virtualization. CIO magazine asked this question to CIOs in six Indian cities, here’s what they said.

Strategy Fights Complexity

Limit Your Wants

From top: C.N. Ram, Head–IT, HDFC Bank, Arun Gupta, Customer Care Associate & CTO, Shoppers Stop, S.S.Mathur, GM-IT Infrastructure, Centre for Railway Information Systems, Daya Prakash, Head-IT, LG Electronics and Sunil Sirohi, VP, NIIT.

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Events it's the cost of doing business today. The complexities, he said, have been built into systems, over a period, due to the growing needs of internal and external customers. Anantha Krishnan, CTO, TCS, also felt that complexity is not an external phenomenon: “Twenty years ago, while we did work From left: K.Anantha Krishnan, CTO, Tata Consultancy Services, Satish Das, CSO, very long hours and Cognizant Technology Solutions and R. Jairam Iyer, CIO, EDS. managed a centralized data computing facility, things were fairly well-managed. We knew exactly S.S. Mathur, GM-IT Infrastructure Centre Krishnan did not think outsourcing was what we had in terms of software and for Railway Information Systems (CRIS), a feasible solution — not until vendors hardware. If we have a problem, it is selfsaid he faced maximum complexity are able to provide a complete and created in many ways by technologists, from geographical spread as well as his trustworthy service. And CIOs said that by all of us in the profession.” gigantic customer base — from the worlds though outsourcing is an option many Jairam Iyer, CIO, EDS, agreed, “Over a largest railways network. But as complex are forced to take, it has its own costs period of time, we kept pushing ourselves as his customer-facing applications are, especially if the basket becomes too big. to want to be quick and as inexpensive he said that the demands on internal IT What may help, CIOs agreed, is the as possible. But it was not a concerted infrastructure is no less complex. way technology is adopted, the way it is effort. We used point solutions, so we Then, said Sunil Sirohi, VP, NIIT, “There's planned, and ensuring that it is in alignment started to build complexities. We deserve the CEO who says agility is important and with business processes, every step of the what we have, it’s our fault.” the CFO who has budget demands, the sales way. The place to start is at the mindset, The challenges that complexity poses head who wants flexibility. Yet, it cannot be they said, of both the internal and external are all about growth pangs. Das felt that complex. That’s complex,” he said. customers of the CIO. This alone can help better-integrated systems and processes, So how do they deal with it? The best reduce the spread of the complexity. mobility and maintaining data centers are way to deal with internal some of the challenges that CIOs face, IT complexity is to be a due to this self-imposed complexity. part of the business These challenges eat into the value process, and learn what For other CIOs, provided by IT, and Krishnan said, is the need of the hour, b u s i n ess c r i t i ca l “Complexity robs you of the bandwidth said Dayaprakash. “We applications and required to do many other critical things.” should know how well their indiscriminate Reducing complexity will also help reduce IT applications are addition are to be TCO, since, as Das said, “You need to integrated with the IT blamed for complexity. identify how to simplify their cost. If you can infrastructure. CIOs But Dayaprakash, strategize simple provisioning, should we need to know what CIO, LG Electronics, take on more? Technology is not complex, kind of impact area will felt that talking our processes make it so.” Optimizing have on infrastructure. about applications processes may help reduce complexity. This can come with a that a re m o re But everyone agreed that complexity better understanding related to customer Sathya Venkatraman, is here to stay. Most CIOs agreed that of business.” responsiveness, Head-IT, Architecture and when higher management realizes that Another way of complexity is an Strategy Services, IBMcomplexity was eroding IT value, that could handling the havoc invariable outcome of Global Technolgy Solutions. be the beginning of a solution of sorts. that an uncontrollably business pressures.

Make it Your Business

CIO

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From left: S.K. Anapu, Head - Internal IS, Satyam Computer Services, V. Srinivas, CIO & CTO, Nagarjuna Fertilizers & Chemicals and B.L.V. Rao VP-Network & Systems/CISO, Infotech Enterprises.

complex situation creates is by shifting the incidence of complexity, from post implementation, to sometime before the application is actually implemented. “It is really important to plan ahead, that can reduce complexity,” said Mathur. Many organizations have introduced intermediary designations to handle the complexity in the IT organization, but Daya felt at the very best this is an indication to the higher management that the CIO is submerged. However, Mathur felt differently. “If you have a properly trained and empowered team, it’s a great complexity buster, because a team aligned in the right direction really helps,” he said.

Draw a Road Map There are other CIOs, however, whi did not agree that complexity erodes the value IT provides. Complexity as a part of the game, felt Shirish Patwardhan, CTO, KPIT Cummins Infosystems. And, as Rajendra P. Erande, Corporate Advisor-IT, Thermax said, “we have got used to managing the IT show, most organizations are ready to face the challenge.” That said, the ability to absorb complexity and not allow it to erode IT value, depends on the nature of the organization. The better way to deal with it, Erande felt, is to build a roadmap and figure out where CIOs want their IT organization to get to and work towards that. But it is important said Patwardhan 64

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to keep in mind the ‘top-down’ approach: where IT architecture is derived using inputs from business. “Watch out for the goals for the next few years and which areas need flexibility.” This makes it easier to build flexibility into your roadmap. Using standards to point out the direction of your roadmap is a good idea, the CIOs agreed. Anupam Saraph, CIO, Pune City, said that appropriate benchmarks need to be adopted, as well as suitable policies, frameworks and best practices. All this could help in containing complexity to some extent, he said.

Yet the CIOs agreed that IT must make an effort. Business processes have to be understood in the context of infrastructure in order to standardize and avoid multiple applications. “In planning, you need to look at technologies that will stand for today as tomorrow,” said Rao. B.L.V. Rao, VP (Networks & Systems), Infotech Enterprises, felt that in his environment, managing security is the biggest challenge and consolidation added to it. That complexity erodes IT value is always an issue, as Rao said, governance regulations can sometimes add to the complexity. “Assuming you have a pre-defined set of rules, you would be actually able to overcome this complexity but the moment the border is porous, there could be issues,” he said. For managing complexity, the CIOs agreed, the key seems to be finding what is most complex, what it impacts, and work on an acceptable level of complexity. That is the only way, they agreed, since CIOs can only minimize complexity, never wish it away.

Old Isn’t Always Gold

Legacy systems, and expectations that CIOs have from them, seem to be the major cause for complexity in IT infrastructure, said CIOs. “You start with a certain assumption about what can be done and the wish list never seems to end. No business is static, complexity starts to build in terms of new products, changing logos etcetera. Besides, organizations don’t want to spend on IT hardware, so while at the one end you are managing your cost very effectively by not replacing PCs, the cost of viruses etcetera has gone up significantly," said C. N. Ram, HeadIT,HDFC. Unfortunately, l e ga cy h a rd wa re doesn’t come with neat expiry, and when the old and the new meet Rajesh Nayak, Solution it adds to complexity. Specialist, HP Software The question, however,

Live With the Chaos Some CIOs agreed that complexity is a tax that CIOs must pay. V. Srinivas Rao, CIO, Nagarjuna Fertilizer & Chemicals went a step further. He said that CIOs must be willing to pay more in the coming days, given today’s IT investments. S.K. Anapu, Head-Internal IS, Satyam Computer Services added that even a great strategy may not help the situation going forward, given how dynamic business is.

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Events is: does bigger and better help to reduce complexity? Arun Gupta, CCA & CTO, Shoppers Stop, did not agree. “It makes it more complex. What you need to do is plan, then move ahead. You need to first see what created complexity, then move ahead,” he said. And, of course, there are always businesses making From Left: Rajendra Erande, Corporate Advisor–IT, Thermax, Shirish Patwardhan, CTO, money out of KPIT Cummins Infosystems and Dr. Anupam Saraph, CIO, City of Pune. selling you newer applications, and that one killer application that will manage all complexity when we try to be leading edge building an ecosystem that nurtures of them. without being functional.” it and with it builds complexity. Gupta said “what really needs to be He did not think that outsourcing is "Complexity resides in the processes," said is ‘No, I really do not need any more a good solution to complexity. Gupta said Ram, "so it can be safely said that applications to optimize my business.’” felt that complexity has an impact on we have ourselves to blame for making IT Ram said he saw optimization as a TCO, and gave an example of a solution so complex." But Ram felt complexity is solution, given the kind of volume of his team developed on the payment a boon. If it is looked at as a stimulus, it is data that some organizations process, counters of Shopper’s Stop, where only an opportunity to de-complicate lives. especially banks. “Fourteen years ago, one credit card machine takes payments So what should be the way out? when we set up 25 branches, we did on all cards. The solution helped save Virtualization? Standardization? not envision that we would be running the company the percentages to be Gupta doubted virtualization would so many applications. Complexity is paid separately for every bank card. So make anything simpler although he inevitable. Besides, complexity is about reduction in complexity can not only bring conceded that “it has created some the mindset, it’s a philosophy, its not just about physical savings but also reduction simplicity and has helped manage about hardware. There is an ecosystem in total TCOs. To change the way things resources better.” Standardization around it meant to sustain it, and keep it are being done — to reduce complexity — essentially allows people to at least talk complex, because it gives them certain change management is required. the same language. Outsourcing could level of proprietary. I think there are But, as Gupta pointed out, “the also be an option to many vested interests biggest challenge is that people do not fight complexity but in keeping it complex. I like to change. What you have to do is Ram added that it think, we all like to deal seed an idea which makes everyone feel would require vendor-IT with complex stuff,” it’s their change, not your change.” alignment. “ We will have Ram said. So the best way to fight complexity to be clear. We need to And Gupta admitted is optimization, and knowing where to find out: is he trying to candidly, “Complexity stop. Gupta pointed out, “Boys and their sell his own stuff or does keeps CIOs employed.” gizmos, not many can resist a new toy, he really understand my Inherently, every likewise for a new application. But we needs?” he said. “So if business believes have to learn to resist, stopping before it you go with a fad and they are different becomes too complex to handle.” say I want to implement and looks for nonsomething because standard solutions to everyone is doing it, manage their unique Aneesh Dhawan, Partner we create trouble for requirements, and at Manager, VMware ourselves. We create that point CIOs start 66

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Essential

technology Make no mistake: rolling out one system for voice, IM and video conferencing is a big project. Still, more CIOs are now using unified communications systems to keep colleagues and customers in constant touch.

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

Constant Contact By John Edwards Communications | Robert Fort, CIO of music retailer Virgin Entertainment Group, would have liked to wave a magic wand to give key employees the ability to easily transition between voice, instant messaging and video conferencing technologies. His practical answer: a unified communications environment. By providing an integrated version of all those services, unified communications gives selected Virgin executives, store managers, administrative employees and IT staffers the ability to reach colleagues wherever they may be, with whatever communications mode is most appropriate. "There are major cultural differences between employees, so it's critical to have good, strong communications across the corporation," Fort says. Like Fort, a growing number of CIOs are seeking to merge disparate communications modes into one universally accessible service. As communications options proliferate, employees increasingly face the choice of juggling multiple communications devices or potentially missing critical calls and messages. But using IP technology, vendors such as Microsoft, Cisco Systems and Mitel promise to keep enterprise employees and customers better connected. "Unified communications solutions allow enterprises to leverage the vertical communications applications they're already using, such as desktop phones, mobile REAL CIO WORLD | j u n e 1 5 , 2 0 0 8

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phones and messaging systems, but which can't talk to each other," says Nora Freedman, a senior research analyst at IDC (a sister company to CIO's publisher.) "Unified communications is designed to bring all of these disparate technologies into an environment that reduces time and effort." While the unified communications concept has been batted about for more than a decade, it's finally becoming practical thanks to the growing adoption of IP telephony, says Mark Cortner, a senior analyst at Burton Group. Companies that have adopted IP telephony are already in the on-ramp to unified communications, he notes. "Now that your voice communications is in IP, it joins messaging, e-mail and other forms of IP-based communications, all of which can be directed and managed in unison over data networks," he says. "This is what's at the heart of the growing interest in unified communications." But as Fort and his peers have found, deploying unified communications and making all the pieces work together is a time- and testing-intensive job for IT.

Fewer Misses,Better Meetings Based in Los Angeles, Virgin Entertainment Group, under the Virgin Megastores USA brand, operates 11

organization that keeps sales high and prices down. Unified communications supports those goals, Fort says, while helping employees in several different ways. Presence technology, for example, shows whether a person is available to receive a call. "If it's urgent, you might decide to send the individual an IM instead," Fort says. During live meetings or conference calls, participants can get fast answers to questions from colleagues in the same building, or in a store on the opposite coast, by contacting them via IM or voice. Employees can also tap into their computers to share spreadsheets, charts or other relevant data with conference participants. "You've got the capability of making the best choice on who to contact and how to contact them," Fort says. "After a while, it just becomes a very seamless, natural way of exchanging information." Virgin began exploring the possibility of adding unified communications shortly after deploying a Cisco Systems' based IP phone system on its network in 2005. The company initially considered utilizing the Cisco Unified Communications environment but ultimately changed course and adopted rival Microsoft technology. "The thing that gave me more comfort with the Microsoft approach is

While the unified communications concept has been batted about for more than a decade, it's finally becoming practical thanks to the growing adoption of IP telephony. outlets in New York, California, Florida, Colorado and Texas. Facing business challenges posed by big-box music retailers, such as Best Buy and WalMart, as well as the popularity of online music downloading services, like iTunes, Virgin needs to run a tight and efficient 68

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that I looked at it from the desktop use [angle] and I found that the Microsoft solution is so deeply embedded and integrated with all the rest of our enterprise software," Fort says. "There were also cost factors in our case â&#x20AC;&#x201D; the Microsoft solution was cheaper for us."

The unified communications market was worth

Rs 90,400 crore in 2007.

By 2012, it will hit Rs 194,800 crore. Source: Gartner

MaximizingTime With Customers For the 140-plus lawyers at Bowman and Brooke, a Minneapolis-based law firm with offices in Minneapolis, Los Angeles, Phoenix, Detroit and San Jose, unified communications boils down to customer service. Clients such as General Motors, Toyota and Ecolab demand fast answers to crucial questions, says Michael Cammack, Bowman and Brooke's CIO. Besides giving clients access to key attorneys at any time, on any device and in any place, the firm's unified communications system provides key support information that helps attorneys be prepared as they accept an incoming call or message. In the second quarter of 2008, Cammack plans to enable a feature that will mean when an attorney is using a computer, for example, a screen pop will tell him who is calling and to what case the call relates. Using desktop sharing technology,, attorneys and clients already jointly view, edit and annotate documents in real time. "It used to take three to five minutes just to get moving," Cammack says. "I send you an e-mail, you download the documents, then you write back to me and so on." With unified communications, information is exchanged in real time, interactively, without wasting time on

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procedural matters. "The whole system saves time and, ultimately, allows us to provide better service," Cammack says.

PiecingTogether the Puzzle While most CIOs agree that unified communications can streamline and expedite employee and customer interaction, most adopters also say that the technology can create a big ball of confusion for IT departments. Since unified communications involves so many different communication modes, as well as multiple hardware and

which supports features such as namebased dialing, conference call setup and presence status capabilities. The service can also be accessed through laptop computers, Cisco and BlackBerry handsets and other devices. Like Virgin, Bowman and Brooke also uses Office Communications Server 2007 linked into Office Communicator 2007 clients. The law firm uses Mitel's Live Business Gateway to allow click-tocall capabilities from Microsoft Offiice Communicator and soon from within Office documents. For multimedia

Given the complexity,deploying a unified communications environment demands patience,diligence and persistence. Careful product selection is key to unified communications success. software platforms and applications, the technology can rapidly snowball into the most complex communications project an enterprise has tackled. "I think the biggest challenge is that there are so many pieces to it," Fort says. Virgin's deployment required a boxcar's worth of technologies, all of which had to be painstakingly tested for interoperability under a variety of scenarios. The system's products include Microsoft Office Communications Server 2007, the Microsoft Office Communicator 2007 unified communications client and Microsoft RoundTable conferencing and collaboration software. Call routing is handled by the Cisco CallManager system, which Virgin installed before adopting unified communications. At Virgin, the service's presence and instant messaging and document sharing functions required links to Office Outlook 2007, Office SharePoint Portal Server and the Microsoft Active Directory Service. The company equipped selected users with the LG Nortel IP Phone 8540,

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conferencing, the firm chose Cisco MeetingPlace. Then there's Mitel's 3300 IP Communications Platform, an IP gateway, to do IP trunking between offices; and Mitel's Teleworker Solution, to extend office phone capabilities to phones located in remote offices, hotel rooms and other locations. Finally, the Mitel Mobile Extension gives key attorneys a single phone number and mailbox for multiple communication devices. "The presence status of the user is updated no matter which device they are using," notes Cammack. Given the complexity involved in that many parts, deploying a unified communications environment demands patience, diligence and persistence. Cammack feels that careful product selection is the key to unified communications success, with the CIO and staff making sure that platforms, devices, applications and everything else interoperate seamlessly. "It's essential that everything can talk to each other," he says. "Otherwise, your employees will be the middleware."

It's possible to build a unified communications infrastructure using just a single vendor, one that creates, selects and tests all the key technology itself. "But if you're creating a best-in-breed approach, you really need to make sure the companies you're looking at are going to actively cooperate with the products from the other companies you've chosen," Cammack warns. Still, Cammack feels that unified communications' case is so compelling that it's worth the effort of juggling and interweaving multiple technologies in order to achieve lasting productivity benefits. "You have to look at the end results," he says. Like many unified communications adopters, Virgin conducted an extended pilot project that involved a staged deployment to IT workers, administrative staffers and, finally, to company executives. "It's certainly not the sort of thing you rush into," Fort says. On the other hand, convincing employees to use the system isn't particularly difficult, Fort observes, since people are rapidly growing accustomed to IP-based communications technologies. "You start to realize that most of your users are probably already using instant messaging, VoIP and other technologies at home," Fort says. "When you take the time to show them that they'll be using the same tools in an integrated fashion for business benefits, they get it." CIO

John Edwards is an Arizona-based writer. Send feedback to this feature to editor@cio.in

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Pundit

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You Need a Response to the UtilityAnalogy The utility analogy has gone mainstream — it's time to spread ideas of IT innovation too. By Christopher Koch utility computing | A vivid analogy sticks in people’s minds. Regardless of what you think about Nicholas Carr’s analogy between IT departments and power utilities and railroads, or IBM’s marketing of on demand or utility computing, it’s clear that CIOs need to have a response to the prospect of IT turning into a utility like electricity. Why? Because the analogy is historical, it’s easy to forget the many years of evolutionary change that occurred in railroads and power and instead squash all that time into an instant imperative: IT is a commodity — so let’s stop focusing on it. What Carr describes

infrastructures as a competitive advantage — think American Airline’s reservation system in the seventies or Google’s infrastructure today — but if the trends toward cheap computing and standards continue, fewer and fewer companies will be able to justify it over time. And that means IT departments will shrink over time, too. This is the most vivid and valid part of the analogy and the part that CIOs have to address with CEOs — constantly. The CIOs I’ve spoken to recently say they tell the CEO about how they have program managers in charge of cutting costs in the infrastructure by at least 10 percent per year and who

will simply be trying to replicate that competency inside their own organization to serve your company. There is no economic benefit from a productivity perspective and there is the potential to hamper innovation inside the company because the outsourcers don’t understand the business as well — or feel as motivated to change it — as internal employees do. And when IT infrastructure does become a utility, that internal IT competency will become more important than ever. IT isn’t just about transporting information; it’s about doing innovative things with it. Companies don’t worry about the transport of electricity

IT isn’t just about transporting data; it’s about beng innovative. You don’t worry about electricity but you want to do innovative stuff with in inside your products. is a natural evolution that's been on since the days of the mainframe and will continue for many more — though the Internet has given it a kick in the pants. Technology improves, economies of scale improve and consolidation and commoditization follow. That’s happened for 40 years in IT infrastructure. It passes through technology gates — client/server, the Internet and now SOA — that enable the consolidation and commoditization to happen at varying speeds. So is Carr right? Yes, he’s right about IT infrastructure. Sure, there may be some companies that continue to view their 72

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look for opportunities to outsource selected pieces of that infrastructure — if they can be more easily and cost effectively managed by someone else. But where the analogy gets dangerous is when you assume that if the IT infrastructure goes the way of the power grid, the internal competency of IT — the understanding of data flows, processes and interactions with technology that are the core wisdom of IT today — will go with it. That should not happen. Could it? Yes, an outsourcer could be doing all that for you today. But for the foreseeable future, that outsourcer

anymore, but they do still worry about having enough engineers to do innovative things with electricity inside their products. In many ways, IT is held back by its ownership of infrastructure today, in terms of money wasted on maintenance and overcapacity. This is the most powerful part of Carr’s argument that IT lacks competitive advantage. Yet when the infrastructure does finally go away, the opportunities to innovate using IT inside companies will improve, making IT more important, not less. CIO Send feedback on this column to editor@cio.in

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