CIO August 15 2008 Issue by Sreekanth Sastry

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From The ediTor

during one of the Cio Focus discussions recently, a CISO friend shared

Are You iPhone Ready? Security and compatibility are at least two issues to watch out for.

how his team was spending sleepless nights figuring out compatibility and portability issues around making business applications work well with the iPhone. “We did an internal survey among 40,000-odd employees and found that almost 25 percent of them were planning to buy an iPhone when it launches in India,” he said. He is now wondering whether he should allow his enterprise’s data to travel over the iPhone because of uncertainties around security. Many IT leaders today are worried over the iPhone phenomenon — more over security concerns than compatibility. “I am not sure if an iPhone is capable of addressing security issues the way a Blackberry does,” admitted another information security manager whose company has around 1,000 Blackberry users. While Apple officials have been quoted saying that there is an API for encryption, there are doubts if data could indeed Some of the experts we’ve be encrypted on the phone itself. been speaking to, suggest Even if the iPhone — or Apple — is that enterprises might want able to partner with major business to go slow with the iPhone. software vendors to ensure some level of encryption or security framework, I am sure the iPhone will pose a much bigger security threat to those running custom applications. IT leaders with in-house developed applications will have to write hundreds of lines of codes to ensure integration with the iPhone. Some of the experts we’ve been speaking to, suggest that enterprises might want to go slow with the iPhone. The smart approach seems to be to observe a few iPhones under a pilot program to understand the real compatibility and security issues. Apart from security, enterprises will also need to understand the data access capabilities of the iPhone, especially from the Web, or when roaming outside a home network. Research firm Gartner, which reviewed the iPhone for few weeks, said earlier this month that enterprises should approach the expanded use of the iPhone slowly and with scrutiny. Their report titled ‘iPhone Ready for the Enterprise, But Caveats Apply’ has already become one of the most referred-to studies on the subject. Let me know how you plan to cope with the iPhone in your enterprise.

Pankaj Mishra Executive Editor pankaj_m@cio.in

A u g u s t 1 5 , 2 0 0 8 | REAL CIO WORLD

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content AUGUST 15 2008‑ | ‑Vol/3‑ | ‑issue/19

I Photo by Srivatsa Shan dilya

2 6 Green IT

Executive Expectations

COVER STORY brimming with Green| 26

View From the top | 54 Shinzo Nakanishi, MD, Maruti Suzuki, is depending on IT to help it maintain its market leadership.

Even as Indian enterprises explore different ways to turn their operations green, Wipro Technologies, shows how IT can help drive an enterprisewide green initiative effectively — backed by top management.

Cove r: d esign by bin es h s reedh aran

Feature by Sneha Jha Plus

A Little Bit Green | 38 Green is good – and good for business. Our exclusive survey shows just how IT leaders are balancing the twin imperatives of running a profitable business and a cleaner one. Feature by Elana Varon

Interview by Rahul Neel Mani

Leadership How to Turn Your Employees Into Leaders | 46 CIOs who want to succeed can’t do it alone. Success requires unshackling the leaders within your IT organization. Feature by Stephanie Overby

Peer-to-Peer Your Business Doppleganger | 18 The CIO of Quest Diagnostics continually tests her business side to develop IT-enabled products and services that customers need. Column by Mary Hall Gregg

more » 4

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Essential Technology | 66 Virtualization | Adventures In

Managing Virtualization Feature by Laurianne McLaughlin project management | Encounters With Complexity

Column by Michael Hugos

From the Editor | 2 Are You iphone Ready?

By Pankaj Mishra

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5 0

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

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Case File AhEAD OF tImE | 50 Getting together a system that controls the movement of about ten lakh watches — from raw material to the velvet cushion — is not easy. Titan used an Advance Planning System to forecast demand, plan production better and increase lead-time. Feature by Kanika goswami

ErP KEEp ’Em tALKINg FOR smOOth sAILINg | 44 Integrating processes across business units throughout the planet — on land and sea — is a huge challenge, which demands a flexible and scalable ERP system. This is how a Hong Kong-based shipping group did it. Feature by Jared heng 6

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CIOs Morph into CIMs But who else in the organization, he asks, has insight into as many departments and groups as the head of IT? Hodges also contends that the tools needed to measure and reduce greenhouse gases will likely be IT-based, making CIOs ideally suited to shoulder the duty of carbon information. You should start with practical measures in IT itself, Hodges advises. First and foremost, remove useless or underused gear. And, yes, turn out lights in rooms without people. Go to double-sided printing. Eliminate personal printers from offices and cubicles. Hodges says all these initiatives sound simple, but they involve corporate cultural issues that can hamper success. Rolling out a new ERP system might be a walk in the park compared with removing a seldom-used printer from a VP's office. —By Mark Hall

IllUStratIon by MM Shan Ith

C I O R O l e CIOs are perfectly positioned to become carbon information managers (CIM), says a new report, apart from being IT leaders. Just what your department needs: more work. CIMs will play ‘an emerging role’ in the modern enterprise, says a report by the UK's Carbon Disclosure Project and IBM. CIMs will lead the push to define how businesses measure their

carbon footprints and oversee the projects that are needed to reduce those prints. And have no doubt that it will be your company's goal to reduce its production of greenhouse gases, the report says. Not just to curb the rate of growth of production, but to make true cuts. "This is a major, long-term issue," says Richard Hodges, CEO of GreenIT, an IT consultancy. "It's not a fad." Hodges says every international agreement he knows of has set greenhouse gas targets that are lower than today's production levels. In the CDP/IBM report, some of the profiled companies lay out specific carbon-emission goals, some of them calling for as much as a 50 percent reduction by 2020. Leading an effort to cut greenhouse gases is fraught with challenges, Hodges says and risk-averse CIOs might be leery.

Quick take

Suresh Kumar on Social Networking I n t e R n e t Social networking seems to be the buzz word among professionals who want to ensure better business networks — despite the fact that it is being perceived as a threat to security. Nonetheless, social networking is being evaluated seriously as a possible business tool by companies — both big and small. Suresh Kumar, regional directorinformation technology, Middle East & South Asia, KPMG International, shared his views with Saurabh Gupta.

How do you think social networking can be utilized as a business tool? Social networking is still a relatively new concept for most organizations. But, that said, social networking can be used for better connectivity among peers who want to stay in touch. Some organizations have started using social networking for business purposes but a majority of them are still evaluating its potential advantages and disadvantages.

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Do you think social networking is a threat to information security? Yes. Social networking is a threat to information security and as I said most organizations are still debating how social networking could be misused by people. This is the reason why it is not being used widely across organizations. Do you think that the CIO stands to benefit if social networking is extensively used in his organization? I don’t fully agree with this. We allow employees to access some social networking sites like LinkedIn but we are still concerned about security.

Suresh Kumar

What role will social networking play in business processes in the future? Once the security issues are addressed, social networking can be extended to all employees to create networks with customers and business contacts. That is certainly possible. REAL CIO WORLD | a u g u s t 1 5 , 2 0 0 8

Have You Upgraded to Vista? s O f t w A R e Almost a year after Microsoft introduced Windows Vista to the world at a grand launch, Snigdha Karjatkar asks CIOs whether they have upgraded their systems to Vista.

“Yes. I have upgraded to Vista simply because it is our corporate policy even if it denies me simple features like using Wi-Fi.”

tRendlInes

Manish choksi CIo & Chief-Corporate Strategy, asian Paints

“No, we haven't upgraded to the Vista as we want to upgrade all our systems simultaneously and avoid the hassles of upgrading in phases.”

t tarun p pandey Cto, InG Investment Management

“We don't see any value-add in upgrading to Vista. We don't think

it's necessary to upgrade when the [new] features are of not much use to us.”

shirish p patwardhan

Cto, KPIt Cummins Infosystems

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A p p l I C A t I O n s Business process management, or BPM, is a hot area. But BPM analysts say some CIOs and businesses are struggling with BPM initiatives. Done right, BPM allows organizations to define, execute and refine processes that involve human interaction and manage dynamic process rules and changes, according to CIO's ABC: An Introduction to Business Process Management." However, a 2007 Aberdeen Group report titled BPM Convergence says getting business integration and workflow software products to work together remains a challenge for companies. "The results have been islands of BPM functionality scattered throughout the organization, each serving a discrete function," states the report. According to the survey of more than 160 IT and business executives and managers, the main obstacles to deploying a BPM system have less to do with technology and more to do with people and processes. "Part of the solution is technical, but another part is organizational, and this is where many companies stumble," says the report. "It takes highly capable BPM products, a willingness to take a hard look at business processes to succeed and organizational maturity." As such, the top challenges are organizational: justifying a BPM investment and getting business buy-in. Aberdeen's report makes several recommendations for improving BPM performance including: Document processes. Understand your organization's business processes and how information flows through the enterprise. Plan for enterprise convergence. If your company is already using standalone BPM applications, explore bringing them together into an integrated system. "New development should be capable of integrating into the enterprise BPM solution," states the report.

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BPM: Hot tecH Hits obstacles

a u g u s t 1 5 , 2 0 0 8 | REAL CIO WORLD

—By Thomas Wailgum

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Discount for the Energy-Friendly IT shops will get new utility rebates for using energy-saving storage technologies because of an initiative that helps storage vendors and utilities measure and validate energy use reductions. Wikibon, a company founded in early 2007 to gather and distribute knowledge about IT in a Wikipedia-like style, designed a service called the Wikibon Energy Labs which lets storage vendors verify the energy savings of certain products, making them eligible for utility rebates. EMC, 3Par, Compellent, DataDirect Networks, Hitachi Data Systems, Nexsan and Xiotech are all getting products certified for energy rebates available through the Pacific Gas & Electric Company. PG&E already offers numerous rebates but barely any of them are for storage technologies, says Dave Vellante, a former senior vice president at IDC who co-founded Wikibon. While it's not that hard to quantify energy savings from servers, particularly with virtualization technology, storage vendors were having

trendlines

S t ora g e

a tough time showing the benefits of their own efficient technologies. "The IT industry didn't speak kilowatts that well, and the utility industry wasn't that well-versed in geek," Vellante says. "They needed some translation to go that last mile, even though there are very smart people in both industries." Software technologies that maximize storage space and thus limit the amount of spinning disk drives enterprises must deploy are numerous, including thin provisioning, intelligent spin down, tiered storage management, flash drives, data deduplication and MAID (massive array of idle disks). Lots of IT vendors are claiming to offer green products, which can make it difficult to separate hype from substance. Wikibon's lab service, which charges fees to the storage vendors, was designed to quantify exactly how much spinning disk a storage-saving technology would allow a customer to get rid of, Vellante says. So far, only MAID and thin provisioning have

qualified for rebates, but more technologies should be eligible soon, says Mark Bramfitt, who manages the PG&E customer energy efficiency program. Individual rebates can vary widely and are hard to estimate, but PG&E has plenty of money to go around. "We have limits on our programs, but they're extremely high," Bramfitt says. "I have a big budget, big goals. I'm not running out of money." Vellante says rebates generally range from US$1,000 (about Rs 40,000) to tens of thousands of dollars, but the energy savings alone are even more valuable, sometimes saving IT shops up to $100,000 (about Rs 40 lakh). While Wikibon is initially focusing on storage, its lab service can validate energy savings of server, networking and other power-saving software products. And though the partnership initially involves just PG&E, Wikibon is in talks with other utilities so that the rebates can be expanded over wider geographical regions later on. â&#x20AC;&#x201D;By Jon Brodkin

Thinking Green About Hardware? Frequently

32%

Occasionally

30%

Do you purchase energy-efficient hardware? Seldom

18%

Never

14% Infograp hics BY pc ano op

Although 55 percent of IT executives say their organizations have green initiatives, they still lag in buying energyefficient hardware or products that are produced sustainably.

Have plans to do so

Source: CIO Research

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Seeking Better

desktop search

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Less Power Equals More Power e n v I R O n m e n t Going green can save greenbacks, which is a welcome notion at Washington Mutual, which suffered heavy losses in the subprime mortgage crash. the bank has cut its PC-related greenhouse gas emissions by 65 percent and is on track to save rs 120 crore in electricity costs this year, says Debora horvath, WaMu's CIo and head of the bank's environmental council. horvath has set the bank on other Green It initiatives, including a bid to get the legal department to use less paper. the savings from this bankwide PC project, though, will come from Verdiem power-management software, which WaMu installed on its 44,000 PCs last year, after a 100machine pilot last spring. the software monitors activity on the computers, powering them down when they aren't in use. less electricity used, more money saved. Cost-cutting drives most green It initiatives, followed by efforts to be more socially responsible, according to our survey of 280 technology executives. at WaMu, horvath's team set up the system so that during business hours of 8 am to 6 pm, PCs and monitors in WaMu's retail branches remain on. at WaMu's back-office locations, monitors turn off after 20 minutes of inactivity and PCs go into standby mode after 30 minutes of inactivity. at 6 pm every night, if there is no activity, PCs go into standby and the monitors turn off. Employees working after hours can delay the software from powering down. laptops were removed from the rollout because roI wasn't as great as on desktops, a spokesman says, adding that that assessment was based on a study performed by the vendor. the entire project, from pilot to enterprise-wide rollout, took a few months.

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IllUSt ratI on by Un nIK rIShnan aV

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s u R v e y The large amount of data being stored on personal computers and hard drives has caused many business users to download consumer search tools, such as Google Desktop, to find the documents they need. In a new report, Leslie Owens, a Forrester analyst, warns this consumer-driven discovery method puts company data at risk and behooves IT departments to adopt enterprise-worthy desktop search tools with administrative capabilities. In a survey of 565 online consumers who use computers at work during the day, 32 percent said they have downloaded desktop search software. The only two pieces of consumer technology to outpace desktop search was instant messaging software (38 percent) and Web browsers (35 percent). According to Forrester's Owens, consumers gravitated towards these desktop search tools because the ones that came installed on their machines proved inadequate. "People are just looking for productivity enhancers because there is just so much information to look through," she says. The dangers of employees downloading consumer search tools? Owens offered the following examples: The first is difficult e-mail discovery. People will 'replicate e-mail on their hard drive' so that their consumer search tool of choice can search it. The problem with this strategy is that it slows down eDiscovery efforts should they be required. "Imagine the logistical nightmare of trying to pull locally stored e-mail caches from every employee's hard drive in response to litigation," Owens writes in the report. Because a tool like Google Desktop can search across computers, people can gain access to their index from a work or home computer, increasing the chances that sensitive corporate data could be leaked, she says. Most consumer search tools hold the ability to search multiple drives, meaning the desktop search might not be limited to that employees desktop at all. In fact, it could troll over company networks and servers. Lastly, 'non-techie' workers who aren't going out and finding the consumer search tools will be at a disadvantage to their colleagues in terms of productivity tools. Owens recommends buying a enterprise desktop search tool, such as Google Desktop Enterprise Edition, Microsoft Windows Search 4.0, Copernic Desktop Search Corporate Edition, ISYS:desktop; and X1 Professional client. Such tools, she says, offer centrally managed consoles that let enterprises control access. â&#x20AC;&#x201D;By C.G. Lynch

Data Escapes Through Loopholes as a technology that manages information, as the industry moves away from protectand-defense, to becoming more aware how data flows around the organization." "Education can help, but employees are using communications tools all day, every day and mistakes will happen, so having checks in place makes sense. Affordability of available technology is also a problem, as most businesses are unable to invest in the high end, on-premise Data Leak Prevention products that large business can." The survey also revealed that a quarter of companies couldn't retrieve an e-mail that had been sent three years ago. A further 29 percent said it would take days, or even weeks — to retrieve the information. "Most leaks occur via e-mail," confirmed James Blake, Mimecast's chief product strategist. "Two thirds of data leaks occur

via e-mail." He highlighted an Infowatch survey, which said that 95 percent of leaks are accidental. "I would go along with that figure," he said. "From what I have seen most leaks are accidental." "It is not that they have not wanted to clamp down on leaks," he added. "They have been aware for some time, but it is more the fact that there wasn't the technology to do so. E-mail protection is a consolidation of several technologies." "Now vendors are selling solutions, most of which focuse on leaks — not the environment in which leaks occur. But a data leak solution needs to fit into wider risk management solution," he cautioned Blake. He advised IT managers to adopt a more holistic approach to securing their e-mail systems. —By Tom Jowitt

tRendlInes

A staggering 94 percent of companies admit that they are powerless to prevent confidential data from leaving their company by e-mail, according to a new study from Mimecast. It found only 6 percent were confident that attempts to send out confidential data by e-mail would be stopped. Worse, 32 percent of companies would not even be aware that confidential data had been leaked, limiting their ability to do damage control or trace the source of the leak. But, 62 percent said they'd be able to retrospectively identify an e-mail leak once the data had been sent, but they did confess to being unable to prevent its disclosure. "The figures show that organizations haven't nailed down the e-mail channel," said Tim Pickard, marketing director at Mimecast. "E-mail protection is catching on

IntellIgenCe

Cybercrime gangs: Don in the Making

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campaign manager, someone who oversees a particular set of attacks. at the top of the hierarchy are the boss and his deputy, who handle the distribution of crimeware kits used for hacking. the boss doesn't engage in hacking and acts as an administrator for all of the activity. Data often comes with a guarantee, with many data sellers offering to replace cards that don't work or are reported as stolen. the company doesn't have much of an idea where the cybercriminals are physically located. the touch-and-go game on instant messenger is one way to gain intelligence: "It's really about knowing your enemy," ben-Itzhak said.

Il lUStrat Io n by an Il t

s e C u R I t y the chain of command of a cybercrime gang is not unlike the Mafia, an evolution that shows how online crime is becoming a broad, well-organized endeavor. the latest research from Web security company finjan, outlines a pyramid of hackers, data sellers, managers and malicious programmers, all working in a fluid management structure in order to profit from cybercrime. finjan researchers joined forums where credit card details and other data is sold, knowns as 'carding sites.' they impersonated interested data buyers while collecting intelligence on the operations' management hierarchy, said yuval ben-Itzhak, finjan's Cto. "We kind of had a feeling that something had changed there," ben-Itzhak said. "there is something even more organized there." When a person's credit card details are stolen, the details are sold on the carding Web sites, where salespeople offer a menu of available information. those salespeople don't exploit the data they possess but rather seek to sell it to someone who does. those salespeople also aren't responsible for the hacking. the data is supplied by affiliate networks, or groups of hackers who get paid to infect machines with malicious software and steal data. those networks often have a

—by Jeremy Kirk REAL CIO WORLD | a u g u s t 1 5 , 2 0 0 8

alternative views B Y S n i g d h a K ar j at kar

What drives your investment? ROI Vs TCO

“ROI determines the IT deployment path that the organization wants to tread.

Keeping ROI in the picture helps gain a competitive edge." S. K. Roy Chaudhari CIO, Tata Tea

trendlines

It is definitely return on investment that drives any IT investment

P hotos by Srivatsa Shan di lya

decision at Tata Tea. Though, the TCO forms quite an intrinsic part of our meticulously calculated business decisions, ROI rules the roost in determining the IT deployment path that the organization wants to tread. I strongly believe that in industries which are moving at a blazing pace, it really pays to know what kind of end results are expected from various IT investments, and define how these results would eventually add value. Keeping ROI in the picture helps an organization gain competitive edge. At Tata Tea, we have certain evaluation formulas that have proved to be fairly successful. These worksheet calculations enable us to evaluate the return that we would generate on an implementation. The parameters of these calculations are based on real values and not on general assumptions. The decision to implement a certain technology is to empower the business. This is where the ROI counts more than the TCO as the final value addition that gives an extra edge over your competitors. The values can only be estimated on ROI that helps you understand and determine what and how much the project is going to add to the business.

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“I believe that TCO

is always based on practical parameters and is more close to the real set-up than ROI." Sudhir Kumar Reddy GM-Corporate Information Systems, Mindtree Consulting

At Mindtree, the total cost of ownership has an upper hand for any decision in infrastructure projects. I believe that TCO is a critical factor that favors the decision for the implementation of technology in infrastructure-related projects. Fundamentally what essentially drives a business decision is the combination of capital and operational investment for any project. Irrespective of presumption, I believe that TCO is always based on practical parameters and is more close to the real set-up than ROI. We have always believed in this approach at Mindtree and it has always worked for us. In case of ROI, one has to wait for the end result to surface and add value to the business, whereas with TCO it’s easy to point out tangible advantages well in advance. All you need to do is to compare two proposals and select the one that suits your needs and business. This definitely saves time, which is crucial for any organization at any given point to effectively address their all-important business requirement: quick time to market.

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Mary Hall Gregg

Peer-to-Peer

Your Business Doppleganger The CIO of Quest Diagnostics continually tests her business side to develop IT-enabled products and services that customers need.

Il lustratio n by MM Shan ith

s CIO for Quest Diagnostics, the diagnostic testing company, I not only have to keep information technology operations running, but I also have the responsibility of using IT to create competitive advantage and delivering value-added services and products for our customers. Developing market knowledge â&#x20AC;&#x201D; that is, gaining a better understanding of the healthcare industry and our customers' needs â&#x20AC;&#x201D; isn't a sideline activity. It's part of my role and it's critical to my company's growth. A broad and deep understanding of your business, your market and your customers enables you to identify the products and services that will create sustained value for your customers and sustained competitive advantage for your company. Such understanding, along with a knowledge of technology trends, is essential to aligning IT and business strategies to drive growth. As a healthcare company, we provide services to multiple customers including physicians, hospitals, health plans, employers, insurers and pharmaceutical companies â&#x20AC;&#x201D; and of course patients, who are at the center of everything we do. Because we work with all of these constituents, we have a 360-degree view of the healthcare market and its trends. Seventy percent of healthcare decisions involve laboratory test information, so laboratories such as Quest Diagnostics are at the center of many healthcare IT initiatives. We spend a lot of time with our business partners and customers understanding their needs and how technology can have the most positive impact.

Creating Value-added Services Here are some examples of how we have used our understanding of customer needs and market drivers to deliver value-added IT 18

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Mary Hall Gregg

Peer-to-Peer

services. We recognized that online services could make it easier for large numbers of our patient and physician customers to do business with us, and so we identified and developed several new Internet-based services. For instance, thousands of patients visit our patient service centers (PSCs) to have blood drawn for tests. We know that a key factor in creating a positive patient experience is to minimize a patient's wait time in the PSC. So we implemented an online appointment scheduling n attr ac tio service. A patient can quickly identify PSC locations that are convenient, schedule an appointment and retrieve driving directions. According to our surveys, patients love the convenience of the online service, which puts them in control of their busy day. Another online service is the Care360 physician portal. The portal is used by more than 100,000 physicians to order tests and receive test reports electronically. Recognizing that electronic prescribing would be a major thrust in the healthcare industry to reduce medication errors, we integrated electronic prescribing into our Care360 product. The integration of labs and meds in the Care360 physician portal gives physicians critical information when they need it â&#x20AC;&#x201D; and helps improve the quality of care. Of course, emerging technology is another market force that determines what we are able to do for our customers. Using technology to drive innovation helps us to differentiate ourselves from our competitors. Point-of-care testing, in which the collection of samples, testing and reporting of results occurs within minutes in the doctor's office or hospital, is growing as a practice in the healthcare industry. Quest Diagnostics has recently acquired several point-of-care product companies and is now working to enhance Care360 to interface with these products. This will provide physicians with an aggregated view of laboratory results, whether performed in their offices or our laboratories. Having all of that information available to physicians electronically provides a more comprehensive view of a patient's health, which otherwise would require manual searches through multiple pieces of paper.

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Be a Market-savvy CIO One way to understand the market is to read about products from a range of industry groups, as well as from trade magazines and journals. On the IT side, we have architects and engineers who are responsible for looking at technology trends through similar methods. It can be hard, because we're inundated with so many different sources of information, but it's important to identify three or four key sources that are particularly

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Itâ&#x20AC;&#x2122;s a fast business world, information is critical. People must know their business, get

down to the facts, and be right. Thereâ&#x20AC;&#x2122;s no second chance and no excuses for not knowing or for being wrong. - Cheryl Currid

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Mary Hall Gregg

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valuable and try to stay on top of them. We also have people assigned to follow what's going on from a regulatory and policy point of view, and to summarize their findings on a routine basis. Also, spend time with your customers and business partners; ask questions, listen and learn. Combine that insight with your expertise in information technology and you are well on your way to being a market-savvy CIO and a generator of growth for your company. I was fortunate to work in marketing for our healthcare IT subsidiary, MedPlus, before I became CIO. There I was focused on growth and the customer. I brought that perspective with me to the CIO role; therefore, I did not make IT operations my singular priority as most IT professionals do. Additionally, having responsibility for marketing a customer product gave me a strong grounding in three important customer bases: health plans, physicians and patients. My experience gave me greater insight into the opportunities to leverage IT as a growth engine.

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Create a New IT Vision No matter how well you understand your market, you will not generate enough ideas for sustained advantage by yourself. But creating the culture and passion to sustain IT as a growth engine is not going to happen overnight. To create lasting change, the IT organization as a whole needs to have passion for its responsibility to drive growth. At Quest Diagnostics, we started by creating a new vision for the IT organization that focused on growth, and on how we wanted to be viewed by customers and business partners. We drafted the vision with a small number of staff and then gave the whole organization an opportunity to participate in the process. Then we launched several teams composed of individuals from all levels of the organization who were tasked with driving changes to our IT processes and metrics that would enable us to achieve our vision: to deliver solutions that enhance Quest Diagnostics' value proposition, to focus on creating competitive advantage in the marketplace, and to be recognized for innovation and performance. As CIOs, we are in a unique position to use our knowledge, insights and technology expertise to drive growth for our companies. IT is more than an enabler of business efficiency; it provides a competitive advantage. But only if we align IT strategies with growth. This is our obligation and responsibility. It is not a choice. CIO

Making technology work is the easy part - getting people to change the challenge. No matter

how well planned or bug free, computer systems will fail if people donâ&#x20AC;&#x2122;t accept the challenge of change.

Mary Hall gregg is CIO and VP, information with Quest Diagnostics and

- Cheryl Currid

a member of the CIO Executive Council. send feedback on this column to editor@cio.in

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Jean-Jacques Van Oosten

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How to Remodel Your IT Shop The CIO of home improvement retailer Kingfisher had to optimize operations and give business leaders a strong voice in governance before he could innovate with technology.

Il lusTraT IOn by un n IKrI shnan aV

ur change journey at Kingfisher, the world's third-largest home improvement retail organization, began three years ago, when we started to transform distributed line-of-business IT functions into a centralized, global organization. Like any journey, there are stages. This one had three. First, we had to optimize operational efficiency and then revamp our IT governance process. Then, finally, we were able to begin using technology to drive business innovation. As with most CIOs coming into a new company, my initial challenge was to optimize operational efficiency. I started by listening to everybody. I heard from business leaders and IT staff, of course, but I also went out to help run stores, sit on the trucks, stand behind the cash register and face the customers at the service desk. The front line is where we need to earn our respect as new CIOs, especially if we're going to instigate major enterprise change. I saw what our IT expenses were across our 11 markets, and made sure our spending became more transparent to company leaders. We had significant diversity in our IT infrastructure and in our applications, which needed to be better leveraged and made ready for changes in how our customers were shopping â&#x20AC;&#x201D; especially regarding their use of multiple channels. It took us a whole year to get all the basics right, earn the hearts and minds of key business leaders and get the right people on the bus. We changed a large part of the existing IT leadership. We gained trust among end users by fixing some basic operational issues, such as the stability of our point-ofsale system. And we saved money: among our cost-cutting initiatives, we delivered a 25 percent savings by getting our

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Van Oosten

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vendors to standardize pricing across geographies based on the lowest price we were being charged. The next part of the journey was to align IT with the business. In retail, alignment means using IT to leverage our capabilities across different channels — increasing sales and providing new opportunities for the Kingfisher store brands — while at the same time using less capital. For six months we built, reviewed, challenged, debated and enhanced our target enterprise architecture. These exercises culminated in the creation of one IT entity — singular in architecture, operating model and staff — to serve Kingfisher's brands in Europe and Asia. We transferred several hundred IT staff members, who were assigned to the local businesses and geographies, into a group-wide function called Kingfisher IT Services (KITS).

The Road to Innovation Of course, business leaders were concerned about losing their dedicated IT teams. But we built a new governance structure, whose members are our internal customers, to ensure that our senior executives would drive IT decision making. Although I facilitate this group, they make the decisions on staff, services and processes. Instead of the CIO pushing and pulling, they own that agenda and they take it further than I could by myself. Our governing body is named the IT Executive Board (ITxB). Under the

Three Faces of Change Management To motivate people to change, you need to play three CIO roles:

The goal of technology today is to make

people smarter. Sure, automation helps make business processes move faster — but the true benefits of technology come when people can absorb the knowledge, blend it with wisdom, and take action. - Cheryl Currid

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Coming into a new company, you must optimize operational efficiency and make IT spending transparent. In this role, you're the Cheap Information Officer, concerned with costs. When it comes to IT-business alignment, you become a traditional Chief Information Officer, positioning yourself and your senior team as business partners. Once you have earned credibility and become a trusted business partner, you are positioned to play the third role, that of Chief Innovation Officer. Only then can you start to innovate and create new sustainable value.

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Strategic ciO

new governance structure, we unified our previously diverse IT strategies. The ITxB members debated and decided on the Kingfisher enterprise architecture — that is, the most relevant business processes and data — which became the KITS operating model. Having become a credible IT officer and a trusted business partner, I was finally able to start exploring the possibilities for creating new value. I began stretching the company into emerging areas such as multi-channel retailing and home installation services. While change can be an aspect of any IT transformation, it's at this innovation stage that major change becomes a possibility. For example, we have refreshed all of the processes and systems in our stores, simplifying each process according to two goals: getting closer to our customers and creating a more dynamic supply chain. Because of our single integrated system and one view of the truth, our staff now has real-time and accurate information about in-store inventory positions. This is available via PDAs, and we can log special orders for customers anywhere in the store using wireless and mobile technology.

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Lessons of change There are a number of lessons that emerge from this change effort and others I've been part of: Be humble. Recognize when you or your team makes a mistake; own up to it and learn from it. Pace yourself. One of the most common errors is trying to change too fast. Sure, some business colleagues will get frustrated and want you to go faster. But you have to set a pace that is achievable. Put the team first. As CIO you have to do the heavy lifting at the beginning, but for change to be achievable and sustainable, the team must own it and make it happen. At times people may say, ‘you are the leader, you tell us where to go.’ But you'll be more effective as a catalyst, defining the challenges and the opportunities for the group. Don't ignore IT operations. Operations is your bread and butter, and you need to keep an eye on it. Make sure you have a strong team to which you can delegate day to day management. IT operations have to run like a Swiss clock or your change efforts will grind to a halt. I'm lucky to be respected and empowered to enable change. CIO Jean-Jacques Van Oosten is group IT director at Kingfisher and a

Computers alone do little more than give an answer to a single person. Communications technology alone merely provides a pipe to spread words. Together they offer a means to share data, information, and knowledge. - Cheryl Currid

member of the CIO Executive Council. Send feedback on this column to editor@cio.in

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Brimming W i Even as Indian enterprises explore different ways to turn their operations green, Wipro Technologies, shows how IT can help drive an enterprise-wide green initiative effectively â&#x20AC;&#x201D; backed by top management. By Sneha Jha Reader ROI:

The financial benefits of going green The critical role IT plays in pushing the eco agenda Why the drive to go green enterprisewide must come from the top

a u g u s T 1 5 , 2 0 0 8 | REAL CIO WORLD

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Cover Story | Green IT

Im aging by AN IL T

W ith Green

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Cover Story | Green IT

Squeezed between a woodworking unit and a grimy garage is a tiny billboard workshop in Bangalore that says: ‘We Use Eco-Freindly [sic] Plastics’. Set in its surroundings, it’s a somewhat incongruous place to find a green advertisement — given that until recently ‘eco-friendly’ was a concept aimed at a more elitist market. If green has found a home in a hole-in-thewall, it’s a testament to the way it’s being marketed. The obvious irony hides another sign of our times: that passersby are so jaded with promises of green products that they ignore the contradiction in ‘eco-friendly plastic’. In the hype around being green, people have learnt, almost anything, will fly. But a little hyperbole isn’t slowing down the green movement — if anything it’s whipping it on. When vendors started tom-tomming green IT about 18 months ago, Indian

CIOs just nodded along. But, today, green conferences are standing room only. Enterprises —and not necessarily just those in the green vanguard — are fast realizing that it makes business sense to endorse green IT solutions. Still, precious few Indian enterprises have actually gotten their feet wet. Fifty-six percent of respondents to a CIO magazine survey on green IT, for example, say they don't monitor IT-related energy spending. Only 16 percent say they plan — at some time — to measure their carbon footprints. In this sea of talk, Bangalore-based Wipro Technologies has adopted an approach to green like few others. It is making the environment a priority by positioning it as an enterprisewide issue — same tack that Wipro used some years ago to make quality its USP. As one of the few successful examples of green IT in India, Wipro has important lessons to share. There are two prominent aspects to Wipro’s green deployment. The first is that it is driven from the top. And second, IT is among the most important drivers of the enterprise-wide push — a fact that could herald a shift in the way CIOs look at themselves.

If there’s one thing that characterizes the Wipro approach to green, it’s that Azim Premji, chairman and CEO, is making it his personal mission to drive the change. He’s making the time and the effort to create the energy and structure needed to propel a green philosophy to every corner of the Rs 18,900crore company. In his bid to create a greener Wipro, one of the richest Indians in the world has involved himself deeply in the mission. He was, for example, personally involved

Photos by Srivatsa Shandi lya

The Green Brigade

“Don't just focus on the investment under question but on the total cost of ownership. The savings in operating costs will pay for the investments.”

— Laxman Badiga

Chief Information Officer, Wipro

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“IT for Green, noT Green IT”

Every one is talking green, but when it comes from the people who matter, like Wipro chairman azim Premji, people sit up and take notice. In an exclusive interview with CIO, he explains why green should take precedence over green IT.

What is your vision for Wipro as a green enterprise? Ecoeye is Wipro’s ecological sustainability initiative. It is the ecological ‘eye’ through which we attempt to see everything — and then act with that view. Ecological sustainability also presents significant opportunities to build businesses. Simply put, Wipro will become greener each day, and will help others become greener. I say ‘become greener’, because I don’t think anybody can claim to have ‘become green’, as there are always other frontiers. How is IT helping Wipro drive its green vision? IIt t is a key driver of resource efficiency and that is vital for ecologically sustainability. For example, we can build embedded It t systems that improve the efficiencies of engines. and this increase in efficiency directly reduces fossil fuel usage, and reduces GhG emissions. Intelligent buildings can be dramatically better on carbon footprint, and a lot of that is driven by It. t t. For some companies green initiatives are a part of their CSR initiative, others want their customers to view them as eco- friendly enterprises. How is Wipro positioned? this is not an issue of ‘positioning’ and if people are viewing it like that, I can only say that they have not understood the seriousness of the issue and the opportunities and risks it creates. If one wants to be successful – not for this quarter and next – but continually for the next 20 years and beyond, they must take this issue as a top priority and act. How should Indian CIOs approach the green journey? Information technology will be a key driver for transforming to a low carbon economy. organizations have to weave ecological sustainability in current businesses. CIos need to attempt to re-look and revamp their organization's ecological foot print and evaluate innovative It t applications for building a sustainable organization. What role should the top management including CEOs play when it comes to green IT? Ecological sustainability is a top management issue, it must be their priority. It It can be a key enabler of this. People keep talking about ‘green It’, while that is important, even more important is ‘It t for green.’ — by t team CIo

in forming a formal charter for ecological sustainability called Ecoeye, which was created eight months ago. Premji has been closely involved with Ecoeye from its inception and still scrutinizes its progress on a regular basis. He's also ensured that three of the six-member governance council report to him directly. “Wipro’s governance council comprises the senior-most echelons of the organization’s leadership,” says Jethin Chandran, GM-IT Planning at Wipro. “This is a concerted, corporationwide initiative to transform the way we do business and engage all our stakeholders. It aims at making Wipro ecologically sustainable in every dimension, responsible, and go beyond compliance.” Leading Ecoeye is Anurag Behar, chief executive, Wipro Infrastructure Engineering & corporate VP, community initiatives. Laxman Badiga, CIO for Wipro, is an active member of the governing council, which consists of the CFO, CTO, head of HR, chief strategy officer and Behar. (Badiga is responsible for IT, facilities, and civil infrastructure). Lower down the pyramid, business units are responsible for driving green initiatives to the 95,000-plus Wipro staffers. A central program office acts as a catalyst and orchestrates the entire program. Each business unit has a champion who represents its interests and is responsible for set goals. All projects, says Chandran, are looked at from an ecological as well as financial perspective and are signed off by the governing council. Though, he adds, funding for some projects are done separate from the standard operating budget. Until being green is a matter of hygiene, it looks like the green agenda has to be driven from the top to ensure widespread success, especially because green’s upfront costs can be a big bite for an organization. The movement’s drivers at Wipro, for example, have never had to slug it out with business to get financial backing because going green is a part of the organization’s corporatewide initiative. But this does not mean that they can hand out blank checks. Organizations should “not just focus on the investment under question but the total cost of ownership considering direct and indirect costs. The savings in operating costs will pay for the investments,’ says Badiga,

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Cover Story | Green IT The ROI justification is necessary because while the impact of green technologies and projects is immediate, the financial rewards may accrue over a longer period — one of the challenges hindering the early adoption of green initiatives. “We've started applying these technologies — in IT or other areas in the new infrastructure — while we work, in parallel, on existing infrastructure. It's better to have measurable benefits quickly to sustain the focus,” says Chandran. And just because green works successfully when it’s driven from the top, it doesn’t mean that CIOs don’t have a critcal role to play.

IT for Green Like many other IT departments at Indian enterprises, the IT team at Wipro started their green journey with the lowhanging fruit. It used consolidation and virtualization to scale down their energy consumption in the datacenter. "This initiative will save space and also optimize power and cooling requirements in datacenters," says M. Bala Giridhar, VP-IT, Wipro. Virtualization enhances a datacenter by saving space and cooling. “Space was never an issue, but cooling was a big

challenge for us,” says Chandran. The exponential growth of Wipro’s server use was becoming a major issue and the IT team decided to tackle the problem with virtualization. “Our business is growing at 30 to 40 percent every year and our servers are growing at the same rate. This created an impact on energy and cooling. We wanted to reduce energy costs and management costs. We found that the best solution was to use blade servers and virtualized capacity. With these, you can host more servers, add to your capacity and reduce your cooling and power requirements,” says Chandran. Both Wipro's datacenters run on a lean-and-green principle, says Chandran. This, he says, can help enhance the efficiency of data storage and overcome the challenges created by unrestrained datacenter growth. By combining technologies such as automated tiered storage, thin provisioning and storage virtualization, Wipro can better utilize capacity and decrease storage costs — and consequently minimize the costs of powering, cooling and housing IT equipment. This, he says, can drastically reduce the total cost of their datacenters while slashing their environmental impact. “Reducing the ecological footprint of the company’s IT assets was our prime concern,” says Chandran. The strategy to green their datacenters covers a number of aspects including space, power, cooling and how they used their computing and storage infrastructure. “In the last quarter of 2007, a decision was taken to look at blade servers and virtualization as a first step. The amount of space we used in the datacenter was optimized by consolidating our servers for different applications. This helped open up space and optimize our cooling needs,” Badiga explains. Already these efforts have begun to bloom. Green IT has transformed Wipro’s power-guzzling IT function into an ecologically-responsible enterprise unit. “We’ve drastically reduced our servers from 400 to 100. Every year, Wipro saves close to 1 million kWh (kilo watt hour) of power,” says Chandran. Enough to run over 34,000 households for a day. And that was just the start. The IT team is simultaneously driving green along four lines of attack. “Wipro is targeting quantum improvements in energy efficiency by server consolidation, improving datacenter energy use, managing desktop power, better printer utilization and the use conference and meeting technologies to reduce travel and our carbon footprint. These are some of the ways in which IT can play a significant role,” says Badiga.

“This is a concerted, enterprisewide effort to transform the way we do business. It aims at making Wipro ecologically sustainable and go beyond compliance.”

— Jethin Chandran GM-IT Planning, Wipro

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Cover Story | Green IT

WhICh SIDe IS The GraSS Greener?

as it becomes more pervasive, green IT evokes strong opinions. Here’s a smattering from your peers.

“we are not about to toss out a working environment just to go green.”

—David Brisman, CIo, ranbaxy laboratories

“Contrary to popular opinion, many

green projects offer payback even in the short term.” —Pravir Vohra, Group Cto, ICICI

“Apart from a drop in TCO, I see a

green iT environment simplifying iT management.”

—M. Visweswaran, CIo, Macmillan India

“The real issue is to make people aware of the possible size

of the iceberg.”

—anwer Bagdadi, Senior VP & Cto, CFC India Services

“Pioneering a green initiative will come with its share

of naysayers.”

—K.B. Singh, CIo, bSES (reliance Energy)

“I do believe that the faster we outsource the better it will be for the world.” —alaganandan Balaraman, VP-hr & Process architect, britannia

“how many iT organizations even think

about power or air-conditioning costs?” —arun Gupta, CCa & Cto, Shoppers Stop

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"A CIO can look at IT and communication in terms of wireless and Wimax to increase energy conservation further. He should look at how he can apply technology to his business environment. Basically it is a CIO’s role to see how technology can be leveraged to drive green IT,” says Giridhar. The move to breathe green into their datacenters, however, was easier said than done. The transition, for one, was a daunting prospect. “There were a lot of financial implications involved with the green push. The initial investment to virtualize infrastructure, for example, was Rs 60 lakh,” says Chandran. But as Wipro adds more virtualization infrastructure to meet business needs, the IT team will need to augment that spending by 5 to 10 percent, says Chandran. The good news? They have downsized their capital expenditure by 50 to 60 percent annually. That said, it is a challenge to convert an existing, non-green datacenter into a green one, cautions Chandran. “Retrofitting can create a lot of impact. Then there are challenges in downtime,” he says. Wipro adopted two approaches to confront these challenges. One was IT-focused and the other energy-focused. “From an IT perspective, we started migrating servers to a virtualized environment with every new procurement and deployment. Then, we slowly took them into production. In parallel, we started re-looking at the power from the rack servers. When you add blade servers, changing power servers has to be done in a planned way and notification is needed because the move requires some downtime,” Chandran says. Like many large projects, support for the upfront costs of introducing greener technology to the enterprise had to come from the business — even within Wipro. This is because organizations view sustainability from various angles, including hard cost savings, which can come from more energy efficiency and increased brand value. The common constant tends to be the business case rather than altruism. But they had other problems that would take a lot more sweat to solve. Wipro held store by its datacenter blueprint, which maintained data like how the organization laid out its racks, how much cooling and power was needed per rack, etcetera. But when they decided to make their datacenters green, the whole blueprint needed to undergo a review. “We decided that apart from one exception, all our servers would be based on blades to cater to the density within a rack. This meant that we had to re-architect the power within the racks," says Chandran. But to address those high-density power structures within the racks, they had to re-architect the power and cooling in their upcoming datacenter. "We have also tightened our process of datacenter hosting. Earlier, anybody could come and host anything they wanted. Now, we have ensured that a proper datacenter inventory is kept,” Chandran says. But if there is one piece of advice that Chandran wants to give other CIOs it’s this: “IT must be an enabler of the organization’s larger sustainability strategies and goals.

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Cover Story | Green IT Therefore, a CIO must work closely with the ‘sustainability office’ and other key stakeholders like the CFO, the facilities and infrastructure group, etcetera. IT should look beyond hardware-centric green initiatives like datacenter efficiency and see how apps can accelerate sustainability goals with software solutions to help carbon accounting and abide by GRI guidelines,” he states. Despite the learning curve, Chandran says that they emerged richer from the experience. The lessons they have learnt have equipped them with the expertise to build other green datacenters.

Green Gets Wings By exploiting these untapped opportunities, Wipro is now reaping rich financial dividends. “So far, we have achieved savings of around 2.8 million kWh. We’ve started registering a reduction in areas like desktop power where there has been 20 to 30 percent reduction and a 15 percent reduction in our building power costs,” says Chandran. “The initial cost of deploying the initiative was high. But, it resulted in a significant reduction in the operating expenses,” he adds. “By rolling out power management tools, for instance, we have reduced power consumption by 26 percent.” And there’s more. He says that virtual collaboration technologies like Live Meeting and Live Communication Server integrated with desktop video phones have helped reduce travel and communication costs and increase productivity. He estimates that these technologies have saved Wipro travel costs worth $250,000 (about Rs 1 crore). At Wipro, says Chandran, energy efficiency has been identified as a key parameter for any technology rollout. With every location, the company saves approximately Rs 40 lakh a year in electricity costs alone. With virtualization and consolidation, the company is targeting a reduction in its server footprint by 3 percent, Chandran adds. Buoyed by these results, Wipro has gone all out to endorse green IT, extending the initiative to its building infrastructure as well. “When we build new buildings, we focus on making them green buildings. In fact, we have received a US Green Building Council Certification for a building at Gurgaon and one at Kochi. All new buildings will meet US Green Building Council Certification norms,” says Chandran. This momentum is beginning to create new energies that are spawning their own initiatives. “We've reduced our energy consumption per capita by 13 percent over a six-year period starting from 2002. In the current year, while we already have targets for energy efficiency, we are recalibrating our plans in the light of our recently completed carbon base-lining exercise and our defined goals for carbon neutrality,” says Badiga. “We are continually seeking new areas to drive green IT. We look at innovating technologies that are coming up and see how we can use it in terms of having more integrated applications,” says Giridhar.

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“A CIO should look at how he can apply technology to his business environment. It is his role to use technology to drive green IT.” — M. Bala Giridhar VP-IT, Wipro

Wipro believes that they have just commenced the journey towards ecological sustainability. “The scope and ambition of our charter is truly big. The Ecoeye charter goes beyond Wipro. It is a collaborative effort between our customers, suppliers and employees. We are also working on establishing a supply chain social environmental responsibility guidelines and work with suppliers to identify materials that will reduce the environmental impact of their products,” says Chandran. If green is to be truly sustainable, it’s going to need that kind of environment-changing commitment. Fortunately, that’s also the same kind of long-haul determination that cuts through hype. CIO

With contributions from assistant editor Balaji Narasimhan. Send feedback on this feature to balaji_n@cio.in and sneha_jha@idgindia.com

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Green IT

Green is good â&#x20AC;&#x201C; and good for business. Our exclusive survey shows just how IT leaders are balancing the twin imperatives of running a profitable business and a cleaner one. By Elana Varon

IT is turning greenish.

That's right. Many technology leaders shrug their shoulders at the mention of climate change in conversation, or they pass on conference panels that use the green terminology. But in fact, according to exclusive CIO research, they are beginning to think green. Stricter government regulations, rising energy costs and the growing awareness that sustainability is a real business concern are pushing companies to strategize about how they will meet future energy demands and calls for carbon emissions data. Green IT is making inroads in the data center and CIOs are also starting to realize that's only the beginning. Fifty-four percent of IT leaders responding to a CIO magazine survey about Green IT report that their organizations have environmental sustainability goals for information 38

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Reader ROI:

How IT departments are responding actively to climate change Examples of green IT initiatives Challenges to meeting sustainability goals

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Green IT

investors, environmental advocates and public interest technology. In other words, they are trying to reduce IT's organizations. She envisions that once companies begin impact on the planet. grappling with their overall climate impact, there will They are motivated almost equally by social be a role for IT beyond simply greening the data center. responsibility and business benefits. Thirty-eight Exactly what it will be depends on the company and its percent say they're going green because it's the right industry. Some business operations will be harder to thing to do; 37 percent say doing the right thing for make green than others. the planet also helps them reduce operational costs Citi, the global financial service company, developed by, for example, cutting energy consumption. A a business intelligence application to manage energy handful — only 5 percent — see sustainable IT as a usage in its office buildings; greening a supply chain competitive advantage. isn't so straightforward (see Where Does Your Carbon For IT departments, a focus on costs — and energy Footprint End?). And many companies, Moffat says, still costs in particular — is a logical place to start. If you pay need to get a good handle on how much energy they use attention to the news, you know that addressing climate — an important step if organizations are to choose the change depends on rethinking energy use. Electricity environmental projects with the greatest benefit to both is "more and more part of my overall bill that I pay as the Earth and the bottom line. a CIO," says Patricia Lawicki, senior VP and CIO with Whether they've been required to or have chosen to, Pacific Gas & Electric. Reducing the electric bill cuts both PG&E and Citi are working to do business in a more costs and frees up funds for additional IT investments. environmentally friendly way. In the process, they're Few IT organizations have gone much further. Though learning how to use IT to balance the twin imperatives of there's plenty of media attention on calculating carbon running a profitable business and a greener one. footprints (and a few high profile companies, like Dell and British retailer Marks & Spencer, have declared their intentions to become carbon neutral), IT leaders as a rule Beyond Greener data Centers are not grappling with the question of their — or their Thanks to the explosion in demand for processing companies' — carbon emissions. Among 280 IT leaders power, most CIOs have noticed by now that they need surveyed, 61 percent said they were not measuring more energy-efficient servers. There are limits to how their corporate carbon footprints right now, though 16 much electric power a given facility can sustain. percent said they were preparing to do it. Only 11 percent Although 56 percent of respondents to our survey of respondents said that their companies are not only said they don't monitor IT-related energy spending, 64 conscious of their carbon output, but that IT is part of percent are reducing, or have plans to reduce, the energy the calculation. consumption of their servers. Almost as many say that That is likely to change. Nations are negotiating at least occasionally they will purchase IT products a follow-up agreement to the Kyoto Protocol, which that are energy-efficient or that are manufactured and establishes global emissions limits. (The process began distributed in a sustainable way. last December in Bali). "Unless the science behind climate change develops a more optimistic view of the problem, or progress in technology development and adoption, along with behavioral changes, unfolds While most IT leaders have green goals for their departments, few are able to more quickly than expected, enterprises measure progress towards those goals. should anticipate that they will be motivated and forced to make significant 54% CIo who have environmental sustainability goals for IT improvements to energy and material efficiency," warns Gartner analyst Simon Mingay in a recent report. 20% CIos who have metrics to measure their progress Andrea Moffat is director of corporate Source: CIo Research programs with Ceres, a network of

Goals But no MetriCs

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Green IT For PG&E's Lawicki, the push to reduce data center energy consumption is motivated not only by cost — her electricity bill is growing with her data center processing capacity — but also by emissions regulations. The largest utility in California, PG&E has a mixed environmental record. A decade ago, its $333 million (about Rs 1,332 crore) settlement with residents of Hinkley, California, who accused the company of contaminating local groundwater was the basis for the movie Erin Brockovich. Today, though the company still has critics, PG&E has worked hard to position itself as a leader in low-emissions power distribution (over 50 percent of its power comes from non-CO2 emitting sources, including nuclear and hydroelectric). PG&E also set a goal to make its offices, service centers, and other buildings 'climate neutral' by 2009. The company has also launched several programs designed to help customers reduce their energy consumption, including a rebate for businesses that install energy efficient equipment in their data centers and a smart meter program to measure patterns of residential power consumption. Prior to a recent server consolidation project Lawicki had her team measure the power consumption for each class server to

How are y you GoinG Green? Here’s a snapshot of the activities CIos say they are taking to reduce IT’s energy use.

64%

Reduce server power consumption

obtain a benchmark. They measured their data center power consumption with a robotic dynamic thermal monitoring system that detects hot spots in the data center at different times of day. "This is how detailed you need to get in order to ensure you're doing it the right way," she says. Lawicki also sees untapped potential for IT to reduce emissions by revamping PG&E's business operations, but she's still waiting for a groundswell of demand. "We're just waiting for these lines of business to come running in and say I want to be more green," she says. PG&E's business units can use IT to optimize anything from truck routes to the wire they buy for its environmental impact. It's not necessarily easy. "We're going to have to do a lot of work," Lawicki adds. She anticipates, for instance, that PG&E's supply chain group will ask for IT tools that will help them analyze supply decisions "based on the carbon footprint we're leaving." That means going to software providers such as TKand asking for new features that support the additional data collection and analysis. Analysts point to supply chain management, enterprise asset management and manufacturing systems controls as the top software categories that must evolve to meet the emerging demand for energy management and carbon emissions data. Meanwhile, according to Gartner, eight technologies are going to become critical to companies' sustainability efforts. These include applications for optimizing service and repair calls, as well as telecommunication and collaboration technologies that allow employees to work at home or reduce their travel.

57%

tools to Cut CarBon

Educate PC users to turn off desktops and monitors overnight

49%

Configure desktops to enter sleep mode when not in use

Upgrade or reconfigure data center cooling infrastructure for improved efficiency

44%

37%

Install more efficient data center power supplies

28%

Install PC power management software

22%

Build a new data center that is energy efficient

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Source: CIo Research

Some companies have developed their own tools to track and manage their carbon output. When Citi Realty Services established goals for reducing its greenhouse gas emissions, it decided to look at how it could manage energy consumption more efficiently in its buildings. The initiative started as a way to go green, but it ends up saving money, too. Citi is part of the Climate Leaders Initiative, whose members volunteer to disclose their greenhouse gas emission. When the initiative began more than six years ago, there wasn't any software that could collect and analyze energy consumption data on a

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Green IT global basis. So Citi built its own business intelligence tool. Today, the company collects energy data from its suppliers (including electric utilities, gas, steam and fuel oil) for more than 16,000 properties it owns or leases worldwide. It also gathers information on water consumption, recycling and waste production. The

numbers are crunched to create a report on Citi's carbon emissions using conversion formulas from the World Resources Institute. But they're also analyzed according to such metrics as kilowatts per square foot and building occupancy; the company's real estate managers then look for ways to reduce their energy use.

Where does your Carbon Footprint end? Determining a supply chainâ&#x20AC;&#x2122;s carbon footprint is a complicated, costly and uncertain endeavor.

There's no shortage of green initiatives growing from companies' marketing departments. Yet while CEOs and marketing chiefs may be demanding greener operations, most supply chain execs don't know where to begin. In a recent Forrester Research report, analyst Patrick Connaughton notes that "tightening regulatory pressure and pervasive media attention are moving supply chain sustainability issues up the corporate agenda." But, he continues, "surprisingly, very few companies are measuring the environmental impact of their supply chains today." Then there's the nagging question of just how much consumers care. "Consumers have expressed in surveys that they are interested in this," says Edgar Blanco, a research associate at MIT's Center for Transportation and Logistics. "But at purchase time, it's unclear how much more they are willing to pay. And companies are struggling with that." The problem, say researchers, lies in the intricate nature of supply chains. These webs of suppliers interact with multiple partners (and their partners, and their partners). How does a company figure out which emissions are its responsibility? And how much will it cost to reduce them? Blanco says companies have a long way to go in order to fully comprehend the size and scope of their carbon footprints. For the supply chain, Blanco says, there are no reliable benchmarks that can offer

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a ballpark figure of how much companies have to spend to green their supply chains. Here's why. According to Blanco, a representative from an electronics manufacturer described to him the complexity relative to the carbon footprint of its printer products: 10,000 parts from 5,000 suppliers who in turn have 3,000 partners. "Companies have information on their immediate suppliers, but beyond that they don't really know," Blanco says. Supply chains are also dynamic. Changing routes and modes of transportation affect the overall carbon emitted to deliver a product. A banana picked in Costa Rica will take many different routes (by ship, truck or automobile) and use various sources of energy (diesel for transportation, electricity for refrigeration and warehousing) before it winds up in the supermarket. Blanco says it isn't clear how companies should account for such variation in the lifecycle of a product. Many companies release data about their internal carbon emissions. "That's a good step," Blanco says. But adds that companies need to go beyond their four walls. He says four forces that will push companies to make supply chains more carbon-efficient: regulation, societal pressure, market forces and a lack of natural resources. "These are aligning to make companies aware of the problem" and a need for a solution, Blanco says. But "not all corporations want to do this."

The question in front companies is: if we take the time to determine our supply chain's carbon footprint, reduce it and share that data, will consumers pay a premium to offset all this expense? Blanco says companies are aggressively reaching out to customers to find out what they want. Customers, he says, want the green bits free. "So companies are in the 'chicken and the egg' stage right now." Research suggests that customers will pay more for green goods. According to Forrester, 12 percent of US adults say that they will pay a 10 percent premium for environmentally-responsible consumer electronics products. Blanco says technology will facilitate the green revolution in consumer goods. Companies will need IT tools to record and analyze environmental measurements and to trace the path of a product from factory to market.He describes a 'dynamic label' that will be able to update carbon emissions and add more data about a product as it moves through the supply chain. He predicts that better data about a product's carbon-efficiency should have a positive effect on how companies make their products and which products consumers buy. "If I provide the consumer the incentive, and the company has the incentive to gain market share, then the market will start working to create the right behavior in corporations," he says. â&#x20AC;&#x201D;Thomas Wailgum REAL CIO WORLD | a u g u s t 1 5 , 2 0 0 8

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Green IT "If we have a region that operates at a very low consumption rate, we'll want to find out what they're doing, how they're doing it and share across other regions so we can begin to find best practices," says Chris Magliano, senior vice president of the Global Sustainability Group, within Citi Realty Services. For instance, "We're looking at a specific lighting retrofit project that was completed in a building and the impact of that on the facility's energy consumption." Other Citi facilities are preparing to pilot alternate energy sources. The data also suggests smaller fixes, most of which don't cost anything, says Magliano. At one point, Citi cut several hundred kilowatts of electricity usage by getting staff in a Manhattan facility to give up space heaters under their desks. The office thermostat was set to keep computer equipment on one of its trading floors

energy use — declined less than 1 percent, while carbon emissions per occupant remained the same. Grobert says Citi has made progress, but that different numbers tell different stories. For instance, she explains, energy consumption rose during the year because the company opened more offices. "We cut this data many different ways to see where our progress and where are challenges are," she says.

Green Hurdle

As the initiatives at both PG&E and Citigroup suggest, it makes a difference whether sustainability goals have corporate backing. Too often, CIOs who think green get neither credit for saving money when they cut energy costs, nor points for meeting environmental goals. "It's definitely a big dilemma," says Ceres' Moffat. In fact, 80 percent of survey respondents say they have no metrics to measure progress toward greening IT. Moffat notes disconnects between IT and facilities managers, travel managers and other business leaders that make Few IT leaders are calculating carbon footprints despite the buzz it challenging to assess the results of around doing it. any environment-related technology investment. "You need to gather the 61% folks that are procuring the technology Not measuring their footprint with the folks that are paying for the energy bill." 16% Serious change also depends on more Preparing to do it Source: CIo Research energy efficient hardware and software, along with metrics to judge whether they are worth the investment. Though major hardware vendors continue to introduce products from cool, but workers' feet were freezing. Property managers servers to power supplies that they say are more efficient, adjusted the building's climate control systems so the the metrics to measure their impact are immature. machines wouldn't heat up, but employees could be Larry Vertal is senior strategist with chip-maker AMD comfortable — a counterintuitive choice that wouldn't and a director of The Green Grid, a global consortium have made sense without the data to back it up. "The dedicated to advancing energy efficiency in data centers tool let us go back and verify the effect of changes that and business computing ecosystems. Vertal observes we made," says Magliano. that many CIOs are doing "basic housekeeping." But Citi does not report how much money it saves from its he thinks they're holding back on new investments to energy-efficiency initiatives. Lois Grobert, Sustainable avoid becoming locked-in to any one vendor's solution. Real Estate Operations Manager, Citi Realty Services, "There is a bit of wait and see and it's largely dependent says there's no business reason to convert local savings on metrics CIOs feel they can be confident in." to dollars. Energy expenses are also hard to define "There's a trend to put a green label on something," because they're often embedded in building rental says Lawicki. "What we're trying to get to is where we charges, says Magliano. Nevertheless, says Grobert, can actually measure the stuff. What did you really save? "there's no downside to saving energy." And what does it really mean?" CIO Citi has promised to cut its greenhouse gas emissions 10 percent from 2005 levels by 2011. But interpreting its progress isn't completely straightforward. In the first two years Citi reported its emissions — 2005 and 2006 — the company's total energy consumption and its carbon emissions increased. Energy consumed per building occupant — a way to measure the rate of Elana Varon is executive editor. send feedback to this feature to editor@cio

lots oFtalk talk But little aCtion t

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ERP

Keep ‘Em Talking–

For Smooth Sailing Integrating processes across business units throughout the planet — on land and sea — is a huge challenge, which demands a flexible and scalable ERP system. This is how a Hong Kongbased shipping group did it. By Jared Heng

Reader ROI:

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How to bring your business together

Rewriting Everything

The financial benefits of a tighter business

Deploying AX was a feat in itself, requiring the rewriting of all operational system interfaces and in most cases, the systems themselves. Wallem has worked closely with Microsoft to ensure any Microsoft

a u g u s t 1 5 , 2 0 0 8 | REAL CIO WORLD

Illustratio n by p c an oo p

In an already complex and complicated IT world,

shipping group Wallem brings new meaning to diversity and mobility. Headquartered in Hong Kong, the Wallem Group provides shipping agent and shipbroker services through more than 8,500 employees across 21 countries and at sea. With such extensive operations, the Group needed a flexible and scalable ERP system.“There’s enough problems controlling and managing IT infrastructure when you know precisely where it is,” says director and CIO Patrick Slesinger, “let alone when it is constantly moving at sea.” Microsoft’s Dynamics AX ERP software (AX) met Wallem’s needs, according to Slesinger. “While the former Infor System 21 provided Wallem significant business value for over a decade, it was AS/400-based and written in RPG programming language, requiring vendor involvement every time there was integration.”

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ERP technology rolled out is customized according to business requirements. Another deployment challenge was aligning employees’ personal expectations of the project with business needs. “We resolved this issue through open communication and a clear steering committee and project structure,” Slesinger says. Since 2000, Wallem has deployed an e-procurement system called total procurement solution (TPS), which enables ships at sea to be part of shorebased procurement processes for stores and spares. “TPS was the first vessel-based e-procurement system in the maritime industry, and continues to be the only system offering full process cycle support,” says Slesinger.

Better Decisions He added that the system contains more than 2,000,000 line items of procurement history, improving procurement officers’ decision making. With TPS integrated into AX, Wallem’s ship management customers have full on-line access to their ships’ procurement, accounting and personnel records. BI systems were rolled out together with the AX project to improve transparency in financial reporting. “Customers and suppliers are provided with OLAP cubes to aid in their decision making,” Slesinger says. An OLAP cube is a cubical arrangement of data to allow quick data analysis. The organization also provides full imaging support online for documents such as invoices, and on a monthly CD ROM for physical archiving purposes. “We’ve integrated a RSS feed server with Dynamics AX to ensure all stakeholders are updated on data or event changes, allowing them to take appropriate action,” says Slesinger. He claims that the initiative is a first of its kind in the maritime industry. “By making the explicit tacit knowledge, AX facilitates our move towards a learning organization,” Slesinger says. Specifically, accurate reporting and trend analysis help Wallem better understand customer behavior and needs, improving customer service and satisfaction. Better knowledge management has also led to cost optimization

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80%

and new business stream identification. From a strategic perspective, the new system provides real-time information with metadata to allow timely decision making and avoid exposure to legal liabilities. “It also improves synchronization and alignment of business units towards a common corporate direction,” says Slesinger.

fallen 60 percent, and procurement process time has been reduced by 80 percent.” The new platform has strengthened analytical capability and expedited extraction of performance measurement data and reports. The company also states that AX’s openended architecture allows a wide range of internally-developed and external applications to be integrated to support procurement processes.

Reduction

in procurement process time post-ERP

Reducing Business Processes Wallem has reduced processes across all business units to enable process re-engineering, identification of best practices and re-composition of service offerings. “These new or re-composed services require high levels of integration into the ERP system, and AX enables that,” Slesinger says. The organization has leveraged K2’s Blackpearl business process management system, which is integrated into the AX, BI and RSS environments. According to K2, Blackpearl is a platform on which users can easily assemble and execute Microsoftbased workflow applications. K2 claims that Blackpearl allows easy modification of these applications when business needs change.

Raising Operational Efficiency Slesinger notes that besides improving knowledge management, the AX project tightened integration of different business processes. “The deployment of AX and related systems has allowed us to make processes geographically independent.” “By integrating TPS and Microsoft BizTalk platform with AX, Wallem can seamlessly connect to vessel companies, and provide them with an efficient procurement service and reporting system,” he says. The integration also allows the organization to build a solid foundation to support further business initiatives. “We have cut error rates and unnecessary re-entry of data,” says Slesinger. “The need for accounting support for the vessels has

Measuring Performance Slesinger cautions that when measuring performance, it is impossible to attribute any individual business value from the project to particular tools used. “For example, improved workflow puts greater structure into a process, while also making tacit knowledge explicit and enabling geographically distributed processing.” However, he revealed some quantifiable improvements from the project. Wallem’s staff headcount grew by less than five percent year-on-year in 2007, leading to a 40 percent rise in productivity. Slesinger stresses that the primary driver behind deployment was to increase flexibility and facilitate re-configuring and augmenting of existing offerings to create new services. “Consequently, we had 30 percent more customers in 2007 compared with 2006.” He has some advice for CIOs seeking to do an IT revamp of similar nature and scale to Wallem’s. “Top management commitment to the end-goal and a fundamental understanding of challenges to be faced during the project is crucial.” A clear business strategy is required to ensure investments are aligned with organizational objectives and protected against potential risks, he says. CIO

Send feedback on this feature to editor@cio.in

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Leadership

CIOs who want to succeed as business partners and strategists can’t do it alone. Success requires unshackling the leaders within your IT organization and letting them run. By Stephanie OverBy

Turn YOur EMPlOYEEs InTO lEadErs Motorola CIO Patty Morrison sleeps

well at night. She takes real vacations. She has time to think. It doesn’t sound like the typical description of life as a CIO, particularly an IT leader at a $42 billion (about Rs 168,000 crore) company in the midst of a major re-organization in the acutely competitive communications equipment market. Truth be told, there may be a little hyperbole in Morrison’s self portrayal. Her plate is full. She determines long-term IT strategy, works closely with executive peers to decide the right direction for the company, and travels the world to communicate the corporate mission to the enterprise and its customers. But when it comes to the day-to-day operation and success of her 2,200-person technology department, Morrison’s concerns are few. She doesn’t get middle-of-the-night calls about network outages. She’s not putting out IT fires instead of eating lunch. When Motorola created a new integrated supply chain division that IT had to support, Morrison barely broke a sweat. She sought out Cathie Kozik, corporate VP of IT, supplied her with the necessary resources and watched her create an effective IT group from scratch. Morrison’s not lucky. Like most successful CIOs today, the 25-year IT veteran makes a concerted effort to foster leadership at all levels of her IT organization. She knows that the benefits of pushing accountability for IT success further down the organizational chart, go beyond personal perks like getting a good eight hours of sleep. CIOs who want to succeed as business partners and strategists can’t do it alone. 46

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Reader ROI:

Why building leadership in your department is important Different ways to find and build leaders How you can prepare

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Leadership step up and see leadership as their role.” As a CIO herself, Cramm once inherited an IT organization with an excess of ‘institutional whining’ and a seeming scarcity of leadership. “I told them that if they were going to bring a problem up, they had to be willing to take a leadership role in fixing it,” she says. “If they could offer some solutions, I would write checks and arrange for resources.” What emerged were employees at every level willing to lead. BT CIO Al-Noor Ramji values employees who aren’t buried in their own work and have a broader view, like his director of customer experience Ian Rosarius. Ramji himself juggles two roles: CIO for BT Global and CEO of BT Exact, the company’s research and technology arm. “I sometimes hire people without 100 percent clarity of what role they will do,” admits the CIO of the $34 billion (about Rs 136,000 crore) telecom company. “But I know they will bring value.” “Leadership has very little to do with job title,” seconds Cramm, “and everything to do with orientation.” So are good leaders sitting in your own IT organization in full bloom just waiting to perform? That’s a matter of debate. Kumud Kalia, CIO of the $7.6 billion (about Rs 30,400 crore) Direct Energy, gets great satisfaction from watching his IT leaders outperform expectations but acknowledges other motives are at work. “I have two jobs. I lead the IT function of the company. But as a member of the executive committee, I have a say in how the company is managed,” says Kalia. “So I need my employees to step up and do more.” Cultivate leadership “CIO roles are more and more about delivering business CIOs who hope to cultivate leaders throughout their value,” agrees Andy Walker, research director for Gartner organizations must first clearly define the characteristics Executive Programs. “CIOs are assessed by the credibility they’re looking for. For Morrison, it’s pretty simple. “One of their department. They want that breadth of perspective of my favorite characteristics of leadership is courage,” she at the level below them and the next level says. “It means being able to take the and all the way down.” right risks.” One way to encourage a wider view is What she seeks in her staff is the through job rotation programs. To that opposite of what she encountered when end, Kalia encourages diverse tours of duty. she joined Motorola as CIO in 2005. IT “Developers spend time in the architecture employees in the European division were group, project managers rotate through struggling with an underperforming the business transformation group,” he vendor, and Morrison flew across the says. “It puts them in a context they haven’t pond to assess the situation. “I found operated in before and exposes them to they were waiting for someone else to of CIOs-in-waiting who new lines of business.” come in and fix it for them,” she recalls. say that one-on-one Sometimes cultivating leadership “There should be opportunities for coaching is effective in can be as simple as inducing a stretch in people everywhere in IT to create a leadership development. thinking. “I’ll say, ‘Hey, that’s what you’re difference,” says Cramm. “But you have source: CIO Research doing in terms of your IT job. But what to create a culture that enables people to “A CIO has a lot of priorities. As a general rule, they should spend at least half their time outside the four walls of their own organization,” says Susan Cramm, IT leadership expert and founder of Valuedance. “You start thinking about how that can happen and you realize, ‘Hey, wait a minute. CIOs need to think about how to drive accountability down.’ It’s a key issue.” Otherwise talented CIOs who don’t cultivate, empower and reward leadership in their departments, risk creating a rocky relationship between IT and the business and dooming themselves. “A CIO who is not able to empower other leaders will have a difficult time fulfilling his role,” says Steven Agnoli, CIO of law firm Kirkpatrick & Lockhart. “The CIO is never the successful one. Your success is almost entirely related to the success of the people within your group.” Indeed, an employee’s leadership failure becomes yours as well. “There are some IT organizations where the business feels quite comfortable with the CIO and maybe even his or her immediate reports,” says Forrester VP Laurie Orlov. “But a level down, they’re not. That leads to concerns about the long-term direction of IT.” For Morrison, IT leadership development is just as important as other strategic priorities such as determining long-term IT plans and collaborating with peers on corporate strategy. Maybe more so. “Spending a lot of time on developing talent is the only way to be sure I can execute well,” she says.

73%

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Leadership about what we’re doing as a company?' That’s a stretch if all they think they have to do is develop an application.” He pushes his employees to follow through to the logical business end. “Are people using the system? If not, why not? I want them to go that last mile. Then they start to own the business outcomes.” Kalia stretched VP of IT Hugh Scott's role, charging him with establishing a new form of IT governance for the company’s Texas subsidiary. Scott started his career as a developer, taking on progressively more senior roles and earning a PhD. But he’d expressed an interest in expanding his business-IT understanding. Scott ultimately created a decision-making forum called the Business Advisory Committee (BAC). It was such a success that the BAC model has been adopted enterprisewide and Kalia credits Scott with strengthening IT’s overall credibility. Kalia was involved throughout, but only as Scott’s mentor. “I talked to him for 30 minutes every week. Sometimes he’d ask for advice and I’d offer it. Other times, I let him make his own mistakes,” says Kalia. “I do that with all IT leaders, not just those in management.” But, says Kalia, it’s critical to leave space for those ‘breakthrough moments’ burgeoning leaders have to experience firsthand. “They’re rites of passage — those transcendental moments when you realize you can stretch yourself,” he says. “You just have to keep presenting them with opportunities to get it.”

empower Your leaders Cultivating leadership and empowering leadership may sound the same. But the former involves eliciting the leadership qualities that exist in employees. Empowerment means giving them the tools they need to succeed. Chief among those is a clear picture of IT’s mission and their role in it. “This requires far more specificity in defining the behaviors that lead to success than is typically given in the IT department,” says Emmett C. Murphy, author of Talent IQ. “Ironically, to these IT professionals — often very systematic thinkers — we typically say, ‘Go do your thing.’ That’s not empowerment, that’s irresponsible leadership.”

The CIO’s job is to make certain all employees have an almost visceral understanding of IT objectives. For BT’s Ramji, it’s right there in his own job description: “My role is to provide the vision, empower employees to understand the vision and how to apply the vision to their daily decisions.” Currently, BT is focused on transforming customer service across all products and customer segments. The corporate mantra? Do things right the first time and in as little time as possible. “It makes it easy for all of our people to know if they’re doing the right thing,” says Ramji. “They only have to ask, ‘Will this increase our right-first-time percentage or reduce cycle time?’”. “I try to create an environment where the communication is so tight that people not only know what to do in any given situation but how what they’re doing links to the bigger picture,” says Motorola’s Morrison. Each year, she brings the company’s top 100 IT leaders together to discuss strategy and goals. “It allows people to think creatively about what they can personally do to make a difference,” she says. Motorola's IT team currently has three goals: creating business value, reducing complexity and increasing IT value. “The CIO can push decision making down if you have some kind of measure of what’s going on in business and how IT aligns with that,” says Gartner’s Walker. “People can make decisions to achieve without having to refer everything up the chain of command and back down again.” Empowering leaders also means giving them tools for success, from equipment to people. “If I ask [my employees] what they need, I have to deliver it,” says Morrison. When Morrison gave Kozik the chance to set up a new IT group, she had to give her more than a new title and a raise. “I had to force organizational change to give her people to do the work and make sure she had access to the finance andHR resources she needed to build a strong team,” says Morrison. Fully armed, Kozik built not only a new IT group but good standing with a new line-of-business. Her team improved supplier integration times, reduced downtime by more than 40 percent and delivered a digital supply chain dashboard for mobile devices. “She’s working for the business,” says Morrison. “And I’m working for her.” But sanctioning leaders at all levels also means allowing for

CIos who are skilled at cultivating, empowering and rewarding IT leaders will see their efforts come full circle. The Leaders They’ve encouraged wiLL ThemseLves encourage new Leaders. 48

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Leadership less than stellar results too. It’s all part of creating an open environment that encourages people to take leadership risks. “I tell my people, ‘I’ll forgive you for anything except not trying,’” says BT’s Ramji. But for it to work, Ramji has to walk the talk. “If I tell my people, ‘Be bold. It’s OK to fail,’ then I need to be honest when things haven’t worked the way I had hoped.” To that end, he makes all scorecards for IT available to everyone in real-time and uncensored.

“Coaching is the most powerful and underused capability. CIOs need to develop it in themselves and their own leaders,” says Cramm. “A good CIO will say, ‘Let’s figure out what your capabilities are and understand how we can bring your unique gifts and talents to the organization.'” CIOs who can do that get to the leadership development sweet spot, says Cramm, where the goals and values of the enterprise and individual meet. At Direct Energy, disciplined talent review processes have always been in place. But that hasn’t stopped the CIO from The Rewards taking the process even further. “We ask All that openness can be a little anyone who’s been in a role for two years, frightening, even for the steeliest new 'What do you want to do now?'” says leader. But courage has its rewards. Kalia. “We make sure there are paths for For example, every IT project team each person based on their needs.” at BT commits to a 90-day review of Kalia has created half a dozen their work. At the end of that period, an new leadership roles on his senior independent team consults with the linemanagement team to accommodate of-business customer to find out if the of the talents and interests of his best and work met the new business imperative: CIOs-in-waiting who say brightest. “You don’t always have to was it delivered right the first time? If so, that stretch assignments manage through tasks and milestones,” the team receives a quarter of the annual have been very or says Cramm. “With promising leaders, bonus right away instead of at year end. extremely effective in their you can just create space in front of “That links rewards to leadership and leadership development. them. If it plays into their interests, they delivery,” says Ramji. Source: CIO Research will fill up that space.” Cold hard cash isn’t the only motivator Kalia also recognizes that he has of leadership. In addition to the ‘money strong leaders on his team who don’t and equity’ rewards system in place at want to be in senior management. “People can lead in Motorola, Morrison also recognizes good change management different ways,” says Kalia, who’s divided his management throughout her organization, not just schedule and budget organization into two streams — technical specialists and metrics. She also measures performance against IT’s leaders of people — that are parallel right up to the senior other objectives — business value realization and reduced level. “You can take a promising technical person and complexity — and highlights those accomplishments. really screw up their career by promoting them into senior “The tendency in IT is to want to reward heroism. management. Instead, we let them be technical leaders. Something broke and we worked 24/7 to fix it,” says They know a certain part of the business inside and out. Morrison, who makes sure to call attention in Motorola’s And they’re still setting directions for the company the way town halls and other meetings to those projects whose senior management leaders do.” outcome is the less-than-sexy ‘no disruption’. She says, CIOs who are skilled at cultivating, empowering and “My goal is to reward preventive heroism.” Morrison rewarding IT leaders will see their efforts come full circle. also knows that outside recognition is important and isn’t The leaders they’ve encouraged will themselves encourage shy about prodding IT users — from a customer service new leaders. employee to the CEO himself — to make their gratitude Back at Motorola, Morrison has seen 16 of her IT leaders plain. “I tell them it would mean an enormous amount go on to become CIOs at other companies. Then there’s to this person for you to acknowledge what they have Kozik. Her role now even encroaches on Morrison’s core accomplished,” she says. responsibilities, with Kozik developing a two- to three-year Top of mind for leaders at any level of the IT organization strategic vision for the integrated supply chain group. is career growth. Unfortunately, that’s the area where CIOs “I have strong leaders,” says Morrison. “I tell people, I are most likely to under-deliver. And it’s not always for a can sleep at night now. I do have times when I am bored lack of trying. Morrison spends a lot of time talking to her and my team will tell me to go take a vacation. But those employees about what they want from their careers and are good problems to have.” CIO why. “If they’re passionate about something, they’re likely to be courageous and thus influential leaders,” she says. “But it’s hard if they can’t articulate that.” Coaxing that information out of employees is the most difficult part of the CIO-as-leadership-developer job. Send feedback on this feature to editor@cio.in

95%

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Case File

Time Ahead of

Getting together a system that will control the movement of about ten lakh watches â&#x20AC;&#x201D; from raw material to the velvet cushion â&#x20AC;&#x201D; is not easy. Titan used an Advance Planning System to forecast demand, plan production better and increase lead-time.

Case File

t is known as the second largest moon in the solar system. Closer home, Titan is a company that manufactures over nine million watches. But the similarity doesn’t end with the name. With its trademark signature tune and a brand name Titan has ruled the consumer durables industry for over two decades — much like the race of powerful deities by the same name that ruled during the Golden Age in Greek Mythology. Established in 1984 as a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation, the company today has a customer base of over 80 million. Its watches are sold through six different market channels including — an international market, 240 World of Titan showrooms, over a hundred Time Zone outlets and more than 12,000 retail outlets. On the other side of the supply chain, out of its 800 vendors, 70 percent are key and are responsible for over 80 percent of Titan’s inventory. These include stainless steel, tool steel, leaded brass, engineering plastics, components, etcetera to make the specialty movement and finished watches. All its market channels are serviced by 32 CFAs (clearing and forwarding agents). The network up to the CFA level is the integrated supply chain group, which is responsible for making right products available at the right time, at the right locations, within constraints of costs, location and capital. But what exactly is ‘right’? How does the company know which market demands for which specific type of watch, which manufacturing unit should cater to which retailer? And exactly how many watches will he need? The answer, rather feebly, lay in an inaccurate demand forecasting system. The system was not dependable as it hinged on the opinions of the field sales force — opinions that were not backed by numbers for the most part.

A Little Too Late Ironically, the company that sells time to the world, found itself lagging behind. The way out was an effective ERP system. And that is why Titan implemented SAP R/3 in 1999, to replace its legacy system. This took care of basic issues like integrating all transactions on one platform and

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ensuring better market alignment. It also checked rising inventory and corresponding costs. But, there were still some issues this system overlooked. Accuracy was virtually non-existent. Titan also needed a decision support system to support the company’s supply chain. Titan’s OLTP (On Line Transaction Processing) system was unable to handle the 2,200 variants (variation in terms of presentation style of the same product) of finished goods. They needed a system that would — even with expansion — produce a forecast that would be instrumental in directing the company through a minefield of capacity constraints, multiple sales geographies and a multi-tier distribution channel. “Co-ordinating between the supply chain and distribution has been one of the biggest challenges of Titan. So, in 2003-2004, we implemented almost every possible module of ERP. What we still needed was a good forecasting system, which could predict sales across the country, given the complexity of new models, promotions, and other constraints,” says N. Kailasanathan, VP and CIO, Titan. On the supply side, staff would work out a supply forecast based on current stock, and likely sales over the next two months, and then plan for production. “All of this was done on manual worksheets, which were sent to the factory where weekly feeds were given for production plan. There was no scientific basis for any of this. Plus, the entire forecast process took 15 days,” says J. Murali, group manager, supply chain and logistics at Titan. This paved the way for another tight spot: mismatched inventory. The production alignment ratio hovered around 70 percent — which meant that on an average 30 percent of Titan’s inventory was not being used. Reader ROI: How ground inputs “We asked our regional co-ordinators for can work seamlessly estimated regional demands. These demand with software for figures, based on gut-feelings, went to the central demand forecasting all India co-ordinator. Since we operate on 90 How SCM can days of production-disptach lead-time, this increase lead time process was unable to give us uniform figures. How SCM can Ultimately, actual sales against forecasts would improve production be as low as 40 percent,” says Murali. alignment ratio IllUSt ratIon by pc ano o p

By KaniKa Goswami

REAL CIO WORLD | a u g u S t 1 5 , 2 0 0 8

Case File

A Stitch in Time

and how we could optimize it,” says Kailasanathan. The company was beginning Titan zeroed in on an Advance to feel the pinch. It realized Planning System (APS) which that the ever-expanding could deliver forecasts that world of Titan could SNAPSHOT took into account resource get difficult to handle if constraints like plant and processes stayed where they Titan supply capacity. The study were: archaic. Industries threw up three options: Battling unreliable Revenue (2006-07): Rs 2,136 crore SCM 2.0 from i2, a solution forecasts and mismatched from Adaxa and SAP’s APO inventories, among other Employees: < 3,600 solution (Advance Planner things, Titan felt that it needed and Optimizer). Titan an application that could take Plants: 5 decided to go with APO for care of demand planning, functional reasons. “SAP production planning, VP & CIO: N.Kailasanathan gave us more advantages procurement scheduling, because we already had a shop floor scheduling and stabilized SAP ERP backend,” distribution planning. says Kailasanathan. A tall order, but Titan knew that it was The project kicked off on April 2, already running on borrowed time. 2004. In its first phase, the objective So the IT team, comprising core experts was to integrate supply chain design from production, supply-chain and and implement the demand planning sales pulled up it socks and started the module. The second phase would see the groundwork on evaluating which solution implementation of the supply networkwould work best. After studying other planning module and in the third phase, companies with similar needs, they made a the production planning and detailed short list. “We got experienced consultants to scheduling module. tell us where our present supply chain stood

Present Tense All said and done, the implementation was no less than a Herculean task. It was plagued by more problems than one. Getting data from 200 retail stores and about 100 redistribution stockists on time was a challenge. Apart from that, they were impeded by hardware limitations. “The system would crash frequently when we ran the optimization model. That was one of the biggest pain-points and it delayed our go live date,” says C.S. Ramesh, GM-IT, Titan. Optimizing the SNP (Supply Network Planning) put Titan in a quandary. “We had to break the network into logical splits so that it could run sequentially. This went on for four to five months. We wanted to first streamline the processes in SNP — including production planning. But establishing the optimizer was a nightmare.” To tame that bull, the vendor suggested that Titan move up from 32bit to 64bit. “They ran it on their server, using our database, and only when they confirmed the stability of the 64bit did we start using it,” Murali recalls. Titan went online with the new 64-bit system in June 2007, and

All in Good Time

The APS demand forecasting system benefited Titan in more ways than one.

Helped increase production by Reduced wastage of raw materials by

45%

Helped increase the number of manufacturing units from

2 to 5

15%

Reduced production planning time from Infograph ics BY p c an oo p

Helped increase the number of outlets from

170 to 240 52

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7days to 3days

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That Moment in Time Good times were just round the corner. The project brought with it a bundle of perks for Titan. The business benefits came, largely, from demand and supply planning — both of which were illogical earlier. The new system provided a streamlined demand planning process. Importantly, the system allowed Titan to create semi-finished watches (in the first stages of production most watches look the same) and wait for a confirmed forecast to produce finished goods. This strategy of postponement improved Titan’s market response time and ensured that they made fewer ‘non-sellable’ watches. The system also took advantage of the deployment optimizer, which allowed Titan to distribute finished products from its five assembly plants on an optimal basis. The Dehradun and Baddi (Himachal Pradesh) plants optimize their supply-planning schedule — they have been designed to ensure that constraints in availability, distance and demand are met. The data received from the forecasting system is run past field sales personnel who provide their own insights to the figures. “We run the forecast at gender, price and brand level. And forecasts are

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“ Since we went live, production has increased between 40 percent and 45 percent over a threeyear period. ” — n.Kailasanathan Vp & cIo, titan

segregated to variant level and that is being used by sales forecasting,” says Murali. The implementation brought relief from high product alignment ratios. “Alignment improved significantly — from 70 percent to about 85 percent,” says Kailasanathan. “This in turn reduced the stock of finished goods, in relative terms.” It also allowed Titan fine tune the mix of the products it had in the market. The system also significantly reduced production planning time from a week to three days. As far as tangible benefits are concerned, Kailasanathan points out that since the project was deployed, production figures have gone up. “Since we went live, production has increased between 40 percent and 45 percent over a three-year period. From 70 lakh watches, we are now at 100 lakh. We have also opened more outlets — 170 to 240,” he says. The number of manufacturing units has also increased from two to five, and additional complexities that have cropped up have been effectively taken care of by the new system — without any additional resources. Expansion, Kailasanathan maintains, is more of a strategy decision as technologies grow. And this is facilitated when processes are streamlined, making operations smoother.

Future Perfect ‘Nobody knows what the future holds’ — a phrase Titan is alien to, simply because it has its eyes set on tomorrow. In the end of 2007, Titan moved to the next version of APO — the SCM 5.0. The next step will involve a deployment of assortment planning on the APO. “This is a specific module in the APO and we plan to exploit it for our World of Titan showroom needs. It involves forecasting the right product mix required for different showrooms depending on an optimal mix of brands, gender, color, etcetera,” Ramesh says. They also plan to use a function called ‘real time deployment.’ This function will alert Titan to re-stock an outlet once stock levels fall below a fixed level. “It is expected to go live any day now,” Ramesh adds proudly. From letting time call the shots to knowing what the future holds, Titan Industries has empowered itself to move ahead of time. The melodious signature tune plays on. CIO

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

REAL CIO WORLD | a u g u s t 1 5 , 2 0 0 8

photo by SrIVatSa ShandI lya

now they have worked up a usage capacity of up to 48GB. There is scope for future expansion, says Kailasanathan, because currently usage is at about 16GB to 17GB. But slowly, the primary reason for deploying the APS was fading: checking forecast errors. “The system forecast error level was very high, running into unimaginable numbers like between 150 and 500. SAP told us that this was because we had excessive data, which was not conducive for good quality forecasting,” says Murali. But all was not lost but there was light at the end of the tunnel. “APS’ are not like ordinary implementations. They have fewer users — most with a stake in the business. So they themselves became anc hors and started using the system. It took some persuasion to get users to accept the optimizer figures, but once we showed them how accurate they were, everyone came around,” says Ramesh.

Shinzo Nakanishi, MD, Maruti Suzuki, is depending on IT to help the giant car manufacturer sustain its marketshare — and keep the company number one.

Staying In The Lead By Rahul Neel Mani

If it’s true that living at the top is harder than getting there, then Shinzo Nakanishi has a job on his hands. As the new MD of Maruti Suzuki, he needs to prop up his company's majority — though slipping — marketshare. His task isn’t going to be easy. Not with GM and Toyota threatening to drive into Maruti Suzuki’s turf, not with Hyundai gunning for a quarter of the car pie, not with Ratan Tata’s Rs 1 lakh car. The quiet Japanese has reason to be unnerved. But on his side he has a company that gave India the Maruti 800, the Omni, and the Swift. In fact, over half the cars on Indian roads have rolled off a Maruti production line. And, fortunately, the slide in marketshare seems to be in check: after losing 5 percent between 2001 and 2003, Maruti Suzuki has only lost 1 percent in the last five years. It now owns 54.6 percent of the market. Already, he has his game face on: he’s put into action ideas that will help the company meet its one-million-by-2010 goal. As part of his strategy, he’s banking on IT to make the company more agile and add grease to new business complexities. If Maruti Suzuki wants to stay at the top, it has to do what it has done best — even better — and Nakanishi knows it.

Outside Japan and Korea Maruti Suzuki is the largest car maker in Asia. What’s your long-term strategy to keep the status quo? 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.

a u g u s t 1 5 , 2 0 0 8 | REAL CIO WORLD

View from the Top with AD.indd 54

Shinzo Nakanishi: You’re right. Maruti Suzuki leads in sales growth, marketshare, and in customer satisfaction. We need to stay focused on the goal of achieving one million sales by 2010. This will

require capacity expansion and upgrading our manufacturing facilities, for which we have announced an investment of Rs 9,000 crore. The expansion of our sales and service network is also underway. We have set ambitious targets for productivity, quality, safety and cost, in line with the one million sales target, and our teams in these areas will continue to focus on those targets. In addition, I believe Maruti Suzuki is ready to play a much bigger role in Suzuki’s

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View from the Top

global operations, and it is my task is to make that happen. Maruti Suzuki’s manufacturing capability has reached a level where we want to make small cars exclusively for export to Europe. Of the three million cars that Suzuki wants to sell worldwide, about 30 percent have to come from here. Maruti Suzuki’s R&D has also shown tremendous potential with its contribution to the Swift and Concept A-Star (one of the three global cars the company showcased early this year). R&D at Maruti Suzuki will strengthen over the next three to five years, both in terms of infrastructure and capability. We have also started to share our sales and service practices with other Suzuki companies worldwide. We also share Maruti IT solutions with Suzuki subsidiaries and I expect this flow to gain momentum in the next few years. We have also lined up critical initiatives that will improve the experience of our customers and partners. We have an aggressive plan for new model launches and want to invest substantial amounts in marketing infrastructure as well.

Are we going to see more global cars like the Concept A-Star? Let me share the key points of Suzuki’s worldwide strategy with regard to models. Suzuki Motor Corporation has chosen a strategy of ‘World Strategic Models’ to drive long-term growth. As part of this strategy, we have been developing global models,

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Shinzo Nakanishi expects I.T. to: Reduce complexity Increase agility Help meet growth challenges

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View from the Top

which are European in overall styling and design, and carefully modified to suit local markets. What this means is that Indian customers get international levels of quality and design, at the same time as customers in other key markets. Swift, which was launched worldwide in 2005, was the first model to emerge out of this strategy. Since then, Suzuki has launched the Grand Vitara, SX4, and Splash under the same strategy. Suzuki is also widening the range of models on offer. An indication of this was provided at the Frankfurt Motor Show and again in Tokyo where Suzuki displayed the Concept Kizashi. Splash and A Star will be introduced as part of the World Strategic Model approach in India. Suzuki wants to expand its image from a manufacturer of minis and small cars, to a company that offers a full range of models. While continuing to offer value to customers, there is a conscious effort to introduce contemporary design, style and a level of premium. You will agree that with the launch of the Swift and SX4, Maruti Suzuki has successfully expanded our brand image in India.

What about work on the engine front? You will agree that Suzuki engines are recognized worldwide for power-packed performance. Our customers will vouch for that. Now, our engineers are evolving the next generation engines that will serve the Indian market, among others. These next generation

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“With growth there is pressure for more speed. IT has solutions to complexities that arise out of this need.” — Shinzo Nakanishi engines should be even better in terms of fuel efficiency, emission, performance and other parameters. They will reflect all the learning and development that Suzuki has done in the area of engine technology in the past. These engines are likely to be available in our models in the next three to five years.

Speaking of R&D, how is the Indian center contributing to the Suzuki Motor Corporation? Our R&D has shown tremendous potential through its contribution to the Swift, Concept A-Star and now the DZire. We will be strengthening our R&D so that Maruti Suzuki

can play a much bigger role in Suzuki’s global operations. We have already increased R&D strength from about 300 engineers to 480 in the last few months. I want that to go up to 1,000 in the next three years. We also plan to set up an independent R&D centre at Maruti Suzuki, for which we have applied for land from the Haryana Government. This facility will be at par with the facility in Suzuki, Japan.

There is a long waiting list for the Swift Dzire. How do you plan to get your cars to customers faster? We propose to set up warehouses in different parts of the country to stock spares as well as new cars. At present, all our new cars and spares are dispatched from our facilities in Haryana. With these warehouses, we expect to be able to service customers better and faster in different parts of the country. Yes, some of our cars have been on a waiting list for many months. The response has been beyond our expectation. We are expanding capacity at the Manesar plant. It has already been increased from one lakh cars a year to 1.7 lakh cars a year. We expect to take it to an annual capacity of three lakh cars in 2008-09.

What about your dealer management system? Does it add speed and efficiency? DMS is one of Maruti Suzuki’s unique initiatives that has brought us many

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View from the Top

benefits and to our dealers, too. It is a reflection of the advantages that IT can bring to large businesses. DMS connects Maruti Suzuki dealers through a single IT network. Towards customer care, this helps provide an uniform experience to customers for their maintenance activities, irrespective of their purchase or previous location. This is possible as the carâ&#x20AC;&#x2122;s database is shared across the network. Further, by connecting the entire dealer community through DMS, we get a comprehensive overall view. It helps compare business performance parameters across dealerships. We are happy that the DMS will soon cover the entire service network.

Maruti Suzuki is said to produce a car every 22 seconds. How much did IT contribute to that record? We are a large-volume company and every year our volume is going up. During the last fiscal we sold over 7.74 lakh vehicles. Our model range has expanded. We have set up new plants. We are expanding production capacity further. With the growth of the business, operational and business complexities have increased manifold. From material procurement to manufacturing, final sales and after-sales service through a large network, there is more pressure for efficient integration and speed. Our IT has played a crucial role in providing solutions to these complexities. And

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many of these solutions are developed in-house. In fact, many of our IT solutions are recognized by the Suzuki group of companies.

SNAPSHOT

Why did Maruti Suzuki move from a homegrown ERP to more standard platform?

Cars sold*:

Maruti Suzuki

Turnover:

Rs 17,860.3 crore* 764,842

Is Mr Khattar a hard act to follow, especially given the ever-growing competition in the Indian market?

I have been associated with Maruti and India for 54.6% 17 years. I was here when Sales Outlets: the Maruti project kicked 600 off. I was here again when Cities covered by Government of India As an organization we service: disinvested from Maruti lay a lot of emphasis on 1,220 and passed on management world-class processes. As Chief GM-IT: control to Suzuki in 2002. I a policy, we have relied on Rajesh Uppal have been the chairman of our unique process and *2007-08 Maruti since then. the solutions to support I believe one of the them. This has provided us reasons for Marutiâ&#x20AC;&#x2122;s success has been a definite strategic advantage. We have its ability to strike a balance. We have decided to use standard ERP for standard borrowed the best in terms of Japanese processes like finance and HR where a technology, quality and work culture. At standard product helps our requirements the same time, in our relationship with with minimum effort. employees, partners and customers, we have been Indian to the core. This balance Do you consider your CIO will continue. as a strategist? What do Mr Khattar has a terrific legacy, and you expect of him? we can show gratitude to his efforts by building on his legacy. Maruti Suzuki has As you now know, IT is a well-evolved to now play a much bigger role in Suzukiâ&#x20AC;&#x2122;s and important management function at global operations. Besides, we have to take Maruti Suzuki. As the size of company major initiatives to better the experience and its operations are set to expand of our customers and partners. CIO manifold in the near future, our agility and responsiveness from necessary IT solutions will be critical. IT is a part of the top management team that decides on Rahul Neel Mani is resident editor. Send feedback on policy and direction for the corporate. this interview to rahul_mani@idgindia.com Market Share*:

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Seeking a New Information Agenda Various IT leaders share their insights on how to create an effective information strategy.

nformation is that intravenous substance to the organization that flows all across system to bring life to it. The management being the brain decides how much information does a system need in order to survive. One wrong decision may damage a part, or may even affect the overall health of the organization. Wrong information, too much information or too less of that can make months of planning crash in face. CIOs being the one with the horizontal view of the organization and having the means to deliver information have the responsibility to strategize its flow. Continuous automation of information systems, a web of tools to process it and changing dynamics of business leave the CIOs in a complex state to provide a clear roadmap to a balanced dose of information. Various challenges faced by IT leaders and the strategies they can rely on to manage information was the agenda of the CIO Roundtable Discussion in Mumbai. Arun O. Gupta, CTO, Shopper's Stop, initiates the discussion by throwing light on systems that are still dependent on silos. According to him most companies started IT implementation in early 90s and they initially adopted ERP, again looking at how they

Presenting Partner

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“We work closely with CIOs to help them draw a roadmap for their information strategies in a cost effective manner.” Naveen Gupta, VP (Technical Sales & Services), IBM Software Group

will use the information they moved on to silos. The idea behind all this was to make systems efficient by automating processes. Ultimately, when information sharing came in to picture, everyone demanded for a single view towards the information. And since these systems were not designed to share information, they had to continue feeding information in silos. Now that we are looking at system renewal and upgrades, we should design the systems keeping our information strategy in mind as the base. Explaining further Alok Kumar, Senior Vice President-IT, Reliance Infosolutions, says, “We understand the importance of

sharing data, so we conceived the idea of bulldozing silos, and started consolidating data. We service 40 plus companies across which we need to share this data. Now as people wanted access to information and our primary focus was the convenience for users, we had to go with breaking these silos.” M.D. Agarwal, DGM-IS, Bharat Petroleum Corporation, says, “We can’t totally overcome the silos that have been generated over time. It’s necessary to find the gap between the silos, and for that various technology options are available. Some technologies offer complete view of the system that helps us clearly define our requirements.” Dhiren Savla, CIO, Kuoni Travel Group (India), throws some light on the problems being faced by CIOs in breaking these silos. He says that breaking of silos involves taking away controls from users, which makes them resist against this change. So, it becomes necessary to make users understand the relevance of doing so. Only when you communicate the benefits associated with doing this, will they accept such a change. C. Mohan, CTO, Reliance Life Insurance, says, “A CIO should strive for a system where the information reaches the lowest level on self service mode. As an example to this, we launched different portals for customers, agents and employees, in the process of starting some intermediary portals. A CIO should keep in mind that the design for information systems should be futuristic. The return on investments would not show in the initial years, so we need to be patient with this.” Emphasizing the need of a roadmap in developing an information strategy, Satish Pendse, CIO, Hindustan Construction Company, says, “It’s a CIO's role to build this roadmap. He's the one who should drive the consensus around it. He needs

From top: M.D. Agarwal, DGM-IS, Bharat Petroleum; Shashi Kumar Ravulapaty, CTO, Reliance Consumer Finance; Satish Pendse, CIO, Hindustan Construction; Alok Kumar, Sr. VP-IT, Reliance Infosolutions; G. Rajagopalan, CIO, Tata Power

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Events

From left: Meheriar Patel, GM & Head-IT, Globus Stores; Arun O. Gupta, CTO, Shopper's Stop; V. Subramaniam, CIO, Otis Elevator Company (India)

to create awareness to other senior level executives and take them in to confidence that the information needs to be de-silosized. The way to create this roadmap would be to discuss the concern with senior level executives of different functional units. After talking to them you will realize that information resides in your system in different forms — transactional, non-transactional, some information resides in digital media and some may reside outside your organization in any form. Your strategy should address how to deal with all the kinds of information that is important to your organization. Find out

the solutions, prioritize them, evaluate them in cost effective manner, and then take it forward in a form of a plan.” Further giving an idea on how to strategize, Anwer Bagdadi, Sr. VP & CTO, CFC India Services, says, “With the evolving technologies we need to decide whether we want to continue with silos and use middleware to harness this or take advantage of a new methodology. Our decisions will keep on changing every few years with changing technologies and with the evolution of new methods to deal with data. What we always need to keep in mind everytime is the customer requirement.

From Left: Pankaj Sindhu, Director-IT, Fulford (India); S. Raghunath Reddy, AVP-IT, UTI Asset Management Company 62

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CIO

This would make our ideas clear on how to strategize further.” Adding to this Vikram Idnani, Head-IT, Trent, says, “Converting tacit knowledge in to explicit knowledge should be a part of your strategy. Another aspect is to understand what information we actually want to share. Then only will we be able to visualize the flow of information.” Explaining on how to deploy different kinds of information in system V. Subramaniam, CIO, Otis Elevator Company (India), says, "We workout roles on responsibility matrix, keep data in secure place, and make it available only on what-to-share and who-to-share basis. Turnaround time of generating and producing this information when needed is a critical factor in all this. Challenges occur in storing information, delivering it and its timely churning when required.” Talking of infrastructural requirements for information processing Meheriar Patel, GM & Head-IT, Globus Stores, says, “It’s good to take help of legacy systems, it’s not always necessary to have a new system for information processing in place. We have an apparel chain across 24 plus locations and in order to see that a particular fashion is not repeated, we have a system in place that captures information season after season and responds accordingly. We have also used business intelligence systems in some locations and put reporting and decision making upfront.

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Events

From left: C. Mohan, CTO, Reliance Life Insurance Company; Dhiren Savla, CIO, Kuoni Travel Group (India); Anwer Bagdadi, Sr. VP & CTO, CFC India Services

While getting new technologies or tools onboard, two factors should be kept in mind, i.e. to improve efficiency and to implement new systems that will add revenue to the business.” Taking the discussion forward Pankaj Sindhu, Director-IT, Fulford (India), says, “We are living in an information overloaded world today. A lot of decision making happens on the basis of intuition. As a CIO we should make an effort to bring down the decisions made on the basis of intuition by providing enough information.” But, V.

Subramaniam thinks about it differently. He says, “Intuition comes from looking at past records, transactional details or executive summary. Then CIOs use their experience, expertise and intuitive abilities to chart strategies. As a CIO we should facilitate decision making based on their intuitions but in the background of right information available. Facilitating this kind of decision is what matters.” Explaining further, Anwer says, “We should look at how do we complement or supplement a thought, rather than to avoid a constructive intuitive thought.

From left: Vikram Idnani, Head-IT, Trent; Sudhir Gosar, CTO, In2cable (India) 64

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Intuition to make a strategy is good, provided it’s backed by proper data and information. Arun O. Gupta brings to light a different aspect of discussion by saying, “The reports that we put across the management are also a kind of highly processed information. It takes a lot of effort and time to produce this. I want to know if these are being used for taking decisions, or are used to check the health of the organization. In what manner is this information being used logically, or are these being produced just for the sake of a mandate? The truth is that a lot of information processing that we do in our organizations proves meaningless. So it’s necessary to decide what data we need to process.” As an answer to this, Shashi Kumar Ravulapaty, CTO, Reliance Consumer Finance, says, “The hunger is not for information but for intelligence. As we handle huge volumes of data, we also have the capability of converting it in to information. The information that we have in our organizations is not the only one that is important to us but it may be there outside as well. Now when we collect all the meaningful information inside and outside organization and relate it to thebusiness, it’s then we are using this intelligence. So a CIO is also responsible for bringing intelligence to use while processing this information.”

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Essential

technology Illustration by unnikrishnan AV

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

The greatest virtualization challenges for IT leaders are yet to come. Think process management, network provisioning, and IT organization makeovers.

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Adventures In Managing Virtualization By Laurianne McLaughlin Virtualization | Evan Jafa, chief information officer of First American, says getting your virtualized servers set up and running right really is just the start of any IT leader's virtualization work. And that if you don't think holistically about virtualization, you're in for a rude surprise. "I think lots of folks are going to find out that virtualization poses a whole new set of concerns for security, networks and applications," says Jafa. In fact, he calls management a make-or-break issue for virtualization. "Monitoring and management becomes absolutely critical in the virtual environment," says Jafa, who started work about three years ago on a large project to consolidate First American's data centers and standardize its storage and networking technologies. To that end, his organization is directing much of its energy today at management processes and tools, wide application of ITIL process to the virtualized environment, and even the re-shaping of IT staff.

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essential technology

Jafa hopes that in the future virtualization will play into better management of his networking technologies as well. He's already testing some new technologies to advance that goal. If you're trying to do holistic virtualization planning, Jafa's advice may prove particularly interesting.

Big Provisioning and Disaster Recovery Wins First American's business, which posted $8.2 billion (about Rs 32,800 crore) in 2007 revenues, delivers information such as mortgage, real estate and financial data. So while many IT leaders closely monitor virtualization projects to ensure that application service levels don't slow down for internal users, Jafa's team also keenly focuses on application performance for external customers. The company has two datacenters with about 4,500 physical servers, soon to be 6,500 (due to new business units). It serves 40,000 to 50,000 concurrent users during peak business hours; its network carries 10 to 21 terabytes of data per hour, averaging about 15 terabytes per hour, Jafa says. To keep all that data flowing smoothly, Jafa says his tool chest currently includes

on standard servers, he says. The team also sees a 30 to 35 percent reduction in energy consumption per virtual machine compared to its physical counterpart, Jafa notes. To date, IT has virtualized 25 percent of their servers, Jafa says. These include production servers and test and development and staging boxes. In some cases, entire business units now have had all their servers in a virtual environment, he says. "My goal is to reach 50 percent virtualized this year." "Any server that IT's using is going virtual," Jafa says, which means some 300 servers will be consolidated onto seven or eight physical machines soon. "We continue to work on virtualizing disaster recovery." Jafa says he is also bringing DR in house: "That's going to be completely virtualized", he says, noting he hopes to complete the disaster recovery project by the end of the year. Virtualization has helped Jafa's team as the company centralizes IT services for an array of BUs. "The process of bringing them on and migrating them has become faster," Jafa says. The company's IT provisioning has improved by a factor of 65 percent. On the DR and high availability front, virtualization has given Jafa equally dramatic results. For every 100 servers, he now puts

Server virtualization is only the start of changes â&#x20AC;&#x201D; not the end.You need to start thinking about standardizing processes and utilizing shared resources,across not only servers but also storage and networking. offerings from VMware, Microsoft, BEA (WebLogic) and "lots of Linux". His team is also using HP's SiteScope tools for hardware performance monitoring. Jafa says he defines virtualization as "achieving the highest efficiency of any given system at any given time". In servers, virtualization is netting him 50 to 60 percent utilization rates, compared to 10 to 15 percent 68

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aside four servers for failover and six to eight servers for workload help at peak usage time. Previously, the company's high availability arrangement meant that he needed to put aside 200 servers for the same purpose.

Politics and Process Lessons But server virtualization is only the start of the changes â&#x20AC;&#x201D; not the end. "As we started

37%

The percentage of CIOs who say that organizational politics is their top challenge in a bid to achieve virtualization success. Source: CIO Research

to think about virtualization, we started to think about standardization," says Jafa, as in standardizing processes and utilizing shared resources, across not only servers but also storage and networking technology. In the course of doing his planning, Jafa says he has run across two key challenges that other IT leaders have cited in a recent CIO survey, Your Virtualized State in 2008: workload balancing and IT staff management issues. "Capacity planning has become critical in the virtual world," Jafa says. "That one we're still maturing and figuring out." He says he hasn't had to deal with much squabbling among IT members who are being asked to work together in new ways. The bigger political challenge, he says, involved First American's diverse collection of business groups. "We have many business units and to get them off the notion of 'my servers' and 'my storage' took a lot of work," Jafa says. "I credit our (IT) change management organization." Still, he says, he faces a wave of organizational questions, ones that he feels most IT leaders will have to battle soon. "Virtualization will pose a serious challenge organizationally to IT," he says. "The current vertical disciplines that we have will not be

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appropriate." For example, he says, IT may need a horizontal group with members from various teams to handle provisioning. How is his group dealing with this situation in his own organization? "So far we haven't torn down the vertical organizations," Jafa says. "Through the architecture organization, we have brought those teams together." His IT team now has an overall architecture team that works on design, architecture and process questions, he says. Process, he believes is key. Jafa, who was already a big fan of using ITIL to standardize IT process before he started the virtualization efforts, weaves ITIL into his team's efforts in the physical and virtual worlds. Jafa says close to 55 percent of his team is ITIL-certified and he has a full-time ITIL instructor in house . "In the virtual world, processes become super critical," Jafa says. "We want to make sure to test our processes to see how they will do. For example, provisioning has to be constantly defined," he says. "We just did a whole assessment of exactly what will the impact of virtualization be on our processes," he says. "We have to meld some of our processes for the virtual world," he says, noting network design and even software design has to change in the virtualized environment. "Now we can look at the long term impact." On that networking front, Jafa is now working with Cisco to test out technologies such as Virtual Switching Systems (VSS) and VFrame (a family of provisioning and automation tools), in a quest to make his network more standardized and simpler to manage — essential for the long term. "Network provisioning becomes as critical as server provisioning," Jafa says. "We are very interested in virtualization of the LAN, so we don't have all these protocols for storage and fibre in the network. The simpler the protocols and the more collapsed the protocols are, the easier the virtualized world will be managed." CIO Send feedback on this feature to editor@cio.in

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Encounters With Complexity What you need to remember when you’re flying in the face of complexity. By Michael Hugos

Project Management | Every profession has at its core an encounter with a central reality. For the football player, it’s the encounter with the opposing player trying to take that ball away; for the stock trader, it’s the encounter with financial uncertainty; for the airline pilot it’s the encounter with gravity. I think for the IT professional, it’s the encounter with complexity. Our profession uses highly-complex stuff to do what we do. We exist to deal with that complexity and shield others from it. Whether it’s moving a data center, installing a new application package or developing a custom designed system, we experience a dizzying rush of details as we contemplate all the things that need to get done and all the things that could go wrong. Thanks to that overwhelming flood of complexity, I feel fear every single time I start a project. I even believe that if I’m not afraid, it’s a sign I must be missing something (or worse — that I don’t care). It comes down to figuring out how to deal with my fear. IT projects occur when people need to respond to business challenges (there are only challenges, never problems), and challenges come in two flavors: good and bad. With the first flavor, people come to you with smiles and tell you about a great opportunity if only you could do something for them. In the second, people arrive with worried looks and say they need something done in a hurry or terrible things will happen. I’ve noticed both flavors taste alike. 72

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In both cases, the talk zooms back and forth from high-level big picture stuff to lowlevel minute details. The air is charged with emotion, with people taking either an overly optimistic or an overly pessimistic view of the situation. Either way, I usually wind up hearing more minute details than I can handle and getting only a vague big-picture view of how all these details fit together. Then the conversation stops. And people always have just two questions on their minds. They turn to me with searching expressions on their faces and ask: “So what’s it going to cost?” and “When can you get it done?” They are simple questions, but answering them involves all the complexity inherent in the people, process, and technology that would be or could be used to deal with these challenges. This is the point when I really feel afraid. Ernest Hemingway said people carry fear in their knees. He may have been right, for I often feel a tingling sensation there along with butterflies in my stomach. This must be my body preparing for fight or flight. At this moment, I try to remember three things. First, take a deep breath. Second, take another deep breath. Third, very few problems are really as hard as they at first seem. If I make it to the second deep breath, I know I’m off to a good start. Then I collect myself and say, “That’s a very interesting challenge you have, and I want to help.” This reassures people and gives me a chance to constructively influence the

Manage your encounters with complexity with a disciplined use of simplicity. situation instead of just being a stick in the mud or an obstructionist. Then I continue with, “Let’s start this project by defining the challenge and what we need to do to meet it. Next, we’ll design a system to do that, and then we’ll build the system.” Everybody nods in agreement; after all, what could be more logical than those three steps — define, design and build? Sometimes people are even able to see that detailed questions of time and cost are a wee bit premature and they don’t keep mercilessly pressing me for further answers until we have at least done a decent job of defining what is needed. I make the three steps relatively short in duration and the activities in each step are pretty straight forward and easy to explain. I shield people from the underlying IT complexity this way. By offering up this simple three-step approach, I blunt the initial onrush of details and unreasonable expectations, and start channeling what happens in a way that allows for answers to emerge as we work through each step. In other words, I manage the encounter with complexity with disciplined use of simplicity. These three steps comprise a simple yet powerful way to deal with complexity. And much of their power comes from the very fact that they are simple enough to remember and use even in the heat of the moment — when it really counts. CIO

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