February 15 2008 by Sreekanth Sastry

Alert_DEC2011.indd 18

11/17/2011 4:35:35 PM

From The Editor-in-Chief

Zero point one percent. That’s about the number of women out of the pool of CIOs

Where’s the Glass Ceiling? Running enterprise IT is definitely not the career path of choice for most women.

in India. Given that a tad over 15 percent of engineering graduates are women, why do their numbers thin out so massively by the time they are ready to run IT in an enterprise? Why is it that tracking down a woman CIO is tougher than finding water in Rajasthan? There are many factors that one can point to. There’s our subcontinental society for one, which runs the gamut of the modern to the medieval with seemingly little in the way of contradiction. So, 31 percent of the women with an engineering degree simply do not work. Of those that do, a third teach. This leads to what a whole bunch of CIOs refer to as ‘supply chain issues’ — there just aren’t enough women who choose to join IT departments. Add pressure from their families to this equation and many capable One of the biggest women IT executives end up giving up negatives has been the on career. alpha geek attitude that A CIO I spoke with recently, ranted has been an integral part about the ‘patriarchy’ that created glass of IT departments. ceilings in organizations. However, most IT leaders that I have asked specifically about this are convinced that the women in their teams are as good, if not better than their male counterparts. But, let’s try another tack. Research shows that of the women engineers who do go the distance, 20 percent do get to mid-management and 3.9 percent to the upper echelons. They just don’t choose the IT department to build a career in. Why do they prefer marketing, HR and even finance? Is the lack of women in the IT ecosystem got something to do with the enterprise IT not being attractive enough? A pharma CIO told me that one of the biggest turn-offs was the alpha geek attitude that went with territory 10 to 15 years ago. He, however, believed that this had undergone change as had the core CIO attributes from technology to change agent. He felt that we will begin to see more women CIOs emerge shortly. That’s an interesting thought — IT’s not only about technology. As more organizations begin to view IT as a strategic enabler and not a support function, that might just be the thing to also get in women from general management into the IT war room. I look forward to that day. Hallelujah.

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

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Content,Editorial,Colophone.indd 2

Vol/3 | ISSUE/07

2/15/2008 3:02:04 PM

content february 15 2008‑ | ‑Vol/3‑ | ‑issue/07

I P hoTo by SRIVaTSa Sh an dI lya

2 7 Integration

Executive Expectations

COVER sTORy | COCA-COLA’s sECRET FORMULA | 27

VIEW FROM THE TOP | 38 C.K. Ranganathan, Chairman and MD, CavinKare, says that in an organization that is defined by differentiated marketing strategies, IT helps to keep track of multiple market segments.

Coca-Cola’s success in India isn’t based only on a closely-guarded combination of ingredients. Here’s the more-secret story of how it runs — and thrives on — its massive distribution chain.

CoVER: dESI gn by b InESh SREEdhaRan

Feature by Kanika Goswami

Interview by Kanika Goswami

Leadership GIVInG UP THE POWER | 18 The successful integration of high performance and organizational culture starts with the CIO. Column by Tom Murphy

Customer Focus yOUR CUsTOMER, yOUR FUTURE | 42 For CIOs to truly become businesspeople, they need to start thinking about — and organizing IT for — their business customers. Feature by Cindy Waxer

more » 6

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

content

Essential Technology | 53 Mobile| What’s Next for Notebooks?

Feature by John Edwards Pundit | As Ye SOA, So Shall Ye Reap Column by Michael Hugos

From the Editor-in-Chief | 2 What Glass Ceiling?

By Vijay Ramachandran

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

c o.in

Case File Transformation in the works| 34 Too many systems with too many reporting tools giving you a blinkered view? All it took for TransWorks to simplify a cumbersome monitoring process was a cube. Here’s how a single dashboard gave it a bird’s eye view. Feature by Balaji Narasimhan

2 0

Mid-Market The tie that binds| 44 CIOs remain committed to ERP systems despite innovation, integration and cost issues. Why? Business cant live without them. Feature by Thomas Wailgum

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Content,Editorial,Colophone.indd 8

2/15/2008 3:02:15 PM

ADVISORY BOARD Ma nagement

Publisher & editor N. Bringi Dev

CEO Louis D’Mello Editor ia l Editor-IN-CHIEF Vijay Ramachandran

assistant editors Balaji Narasimhan

Gunjan Trivedi

Abnash Singh

Avaya

4&5

Group CIO, Mphasis Alaganandan Balaraman Vice President, Britannia Industries

D-Link

Alok Kumar Global Head-Internal IT, Tata Consultancy Services

Special Correspondent Kanika Goswami

Anwer Bagdadi

Chief COPY EDITOR Sunil Shah

Senior VP & CTO, CFC International India Services

Copy Editor Shardha Subramanian

Advertiser Index

Emerson

Arun Gupta Des ign & Production

Creative Director Jayan K Narayanan

Designers Binesh Sreedharan Vikas Kapoor; Anil V.K Jinan K. Vijayan; Sani Mani Unnikrishnan A.V; Girish A.V MM Shanith; Anil T PC Anoop; Jithesh C.C Suresh Nair, Prasanth T.R Vinoj K.N; Siju P

Photography Srivatsa Shandilya

Production T.K. Karunakaran

T.K. Jayadeep

Customer Care Associate & CTO, Shopper’s Stop

Epson

Arvind Tawde VP & CIO, Mahindra & Mahindra Ashish K. Chauhan

Lenovo

President & CIO — IT Applications, Reliance Industries C.N. Ram

Microsoft

IFC, 21 & IBC

Head–IT, HDFC Bank Chinar S. Deshpande CEO, Creative IT India

Oracle

Dr. Jai Menon Director (IT & Innovation) & Group CIO, Bharti Tele-Ventures

Mark eting a nd Sa l es VP Sales (Print) Naveen Chand Singh VP Sales (Events) Sudhir Kamath brand Manager Alok Anand Sukanya Saikia Marketing Siddharth Singh, Priyanka Patrao, Disha Gaur Bangalore Mahantesh Godi Santosh Malleswara Ashish Kumar, Chetna Mehta, B.N Raghavendra, Delhi Pranav Saran, Saurabh Jain, Rajesh Kandari, Gagandeep Kaiser Mumbai Parul Singh, Rishi Kapoor,Pradeep Nair, Hafeez Shaikh Japan Tomoko Fujikawa USA Larry Arthur; Jo Ben-Atar Events VP Rupesh Sreedharan Managers Ajay Adhikari, Chetan Acharya Pooja Chhabra

Manish Choksi Chief-Corporate Strategy & CIO, Asian Paints M.D. Agrawal Dy. GM (IS), Bharat Petroleum Corporation Limited Rajeev Shirodkar VP-IT, Raymond Rajesh Uppal Chief GM IT & Distribution, Maruti Udyog Prof. R.T. Krishnan Jamuna Raghavan Chair Professor of Entrepreneurship, IIM-Bangalore S. Gopalakrishnan CEO & Managing Director, Infosys Technologies Prof. S. Sadagopan Director, IIIT-Bangalore S.R. Balasubramnian Exec. VP (IT & Corp. Development), Godfrey Phillips Satish Das CSO, Cognizant Technology Solutions Sivarama Krishnan

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

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

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

Executive Director, PricewaterhouseCoopers Dr. Sridhar Mitta MD & CTO, e4e S.S. Mathur GM–IT, Centre for Railway Information Systems Sunil Mehta Sr. VP & Area Systems Director (Central Asia), JWT

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

V.V.R. Babu

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Content,Editorial,Colophone.indd 10

Group CIO, ITC Vol/3 | ISSUE/07

2/15/2008 3:02:15 PM

new

hot

unexpected

Politics 2.0 0 of the IT cell at BJP, says, “At a basic level, all organizations — be it a corporation, an NGO or a political party — are the same. They all have to do certain things: raise resources and deploy them optimally to realize desired goals. The logic of using IT to make the organization more efficient and effective comes quite naturally.” Bora cites party-wide communication as the biggest challenge that BJP wants to overcome using IT. The party has about 40 lakh active members across the country, of which only a small percentage regularly get the in-house journal Kamal Sandesh, the prime intra-party communication vehicle of the BJP. “It is quite difficult for our senior party leaders to visit each state every month. The national leadership

doesn’t get the entire picture of what is happening at the grassroot level, as information is sometimes filtered. We are trying to figure out how we can use technology to enable communication between the top-most leadership and grassroot level. We want to complete the loop with our thrust on party-tomember IT initiatives,” states Bora. The national IT cell, which was setup in

IllUStratI on by MM Shan Ith

t e c h n o l o g y Political parties in the country are generally known to be technophobic, as they rely heavily on conventional means of running their day-to-day business. For example, few saw any merit in adopting new-age tools — even television and mobile telephony, recently, so it sure is surprising that to reach out to party members and the public at large, they are beginning to use IT. A few national-level political parties have decided to change the course of things. The Bharatiya Janata Party (BJP) seems to lead that pack. Its newly formed national IT cell has chalked out an aggressive 24-month IT rollout roadmap that promises to metamorphose the way that the saffron party works and reaches out to its audiences. Prodyut Bora, the national convenor

(Continued on Page 12)

Quick take

N. Nataraj on Software Licensing S o F t W A R e One of the pain points generally faced by CIOs is software licensing. What can they do to optimize this area of the enterprise? Balaji Narasimhan spoke to N. Nataraj, CIO, Aztec Software and Technology Services and this is what he had to say:

have various systems of licensing — like concurrent licenses and processor based licenses — which may suit different enterprises at different times. Another problem is that, while larger enterprises tend to get information about their licenses, vendors do not normally share this information with smaller companies.

How can virtualization help a CIO handle licensing? In the context of licensing, virtualization definitely helps. With virtualization, I need the same licenses, but at the same time, it is more manageable. However, I think that the biggest advantage of virtualization is that it reduces hardware costs more than licensing costs. Since virtualization makes things easier, your go-to-market is much better. What should vendors do to make licensing simpler? Most of the time, we don’t get flexible licenses that can be managed from a central pool. This is something that vendors need to fix. Vendors also

Vol/3 | ISSUE/07

What should CIOs focus on when negotiating with vendors? More than pricing, CIOs need to drive value. They should ask themselves, what value am I getting, and how am I utilizing it. This is comparable to mobile phones — you have a plethora of features, but most people use only SMS and make and receive calls. So, you end up having a lot of features, not using it, but still paying for it. Vendors can here partner with CIOs by ensuring that the enterprise gets the maximum value from the software that they are selling. This way, they are creating stronger value for their custom ers, and this bond will be useful for both. N. Nataraj REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

Can chargebacks demonstrate IT value? Chargebacks are one way in which the IT department can show clearly the value that it brings to the enterprise. But how valuable is chargeback in building priceto-value relationship for IT services? Balaji Narasimhan spoke to some of your peers and this is what they had to say: i.t.

VA l u e

“In our company, chargeback is based on four parameters, namely the number of computers, e-mail IDs, people, and transactions. Chargeback is not very systematically quantified, but the perception is that it has delivered value.” tRendlineS

pratap GharGe Senior GM & It-head, bajaj Electricals

“There are both tangible and intangible benefits. Business derives benefits from you by using IT properly. You are charging for time and materials. Unless what you are charging for is used properly, business will not benefit.” S.r. Mallela CIo, aFl

“It is one of the factors that can demonstrate value of IT. It

determines to what extent the services of the IT department have been used, but it says nothing about factors like quality.”

Sharad Saxena

Joint GM & head-Corporate t technology, ICICI

lend Your

Politics 2.0 (From Page 11) June last year, has already begun putting the infrastructure and backbone together. Running on a small IT budget of about Rs 15 lakh BJP is going all out to embrace an Open Source ecosystem, right from applications such as OpenVZ server virtualization software to infrastructure such as routers from Vyatta. The party’s national data center is already in place at New Delhi, with scalable bandwidth backbone of up to 10Mbps. And it plans to rollout IT cells at various state units of the BJP. “The cells in Gujarat and Tamil Nadu have already been formed. A third at Rajasthan is on the way. State-level IT convenors are being appointed to do their part in the deployment,” points out Bora. Applications like EPrints (a digital data repository to be extensively used by the party’s media, research and documentation cells), the server virtualization application and Qmail for party-wide mail have already been deployed. The rolling out of various technologies such as Asterisk (VOIP), Pentaho (BI), Zope (content management), E-presence (video conferencing), Untangle (unified threat management) are on the anvil. “We have plans to use a single sign-on software called OpenID. The software is being customized extensively so that it features a common user interface for our users,” says Bora. BJP also plans to utilized the country-wide cyber-café network of Sify I-Way's to train party members. “E-learning in the corporate world makes sense because people know how to use computers. Here, we have people who haven’t touched a keyboard in their lives. Therefore, we have planned to utilize about 30,000 Sify I-Way's around the country. We’ll take a local leader, and run him through live or recorded webcasts. With each session, IT interactivity will be taught to the leaders,” says Bora. Syncing the e-learning and e-communication initiatives with major events such as the Union Budget, annual meetings or elections is on the cards. “Our local leaders will go to the café, where our economic experts will share their opinion on the Budget in a simplified manner through webcasts, in a language that these leaders can take to the grassroots,” says Bora. “After the initial 24-month IT deployment is complete, we will start rolling out the network to 1,500 district offices. The initial thrust will be party-to-member. Party-to-public is a few years away,” says Bora. —By Gunjan Trivedi

Voice

Write to editor@cio.in 12

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

Are You Satisfied with Senior Management? Employees with a Favorable View of Senior Management Effectiveness. India 68% China 56% United States 55% Germany 50% United Kingdom 47% Brazil 47% Source: Kanexa Research Institute, survey results based on 1,000

trendlines

s u rv e y According to a survey of employees in Brazil, China, Germany, India, the United Kingdom and the United States, 54 percent of workers have favorable views of their senior management. But what employees specifically value in management varies by geography, according to the study. Indian workers like it when leaders are quick to respond to marketplace opportunities and competitive threats. Brazilian workers appreciate managers who place a strong emphasis on customer service and are transparent about the company's direction. German workers value organization leaders who act on innovative ideas and work to improve product or service quality. Chinese workers are more likely to rate senior management as effective if they feel they have a promising future at the company or if the company creates higher quality products or service than the competition. American workers attach importance to being well-informed about issues facing the company. Americans also care about the prompt resolution of customer problems.

respondents in six countries.

â&#x20AC;&#x201D;By Stephanie Overby

IP-Theft Proof Your Desk

Vol/3 | ISSUE/07

Trendlines.indd 13

worth billions of dollars to a company, all because someone didn't log off their computer," says Winkler. Understand that you cannot hide. Don't think you can hide keys or passwords in your paper clip drawer or taped under your keyboard. If you've thought of a place to hide sensitive

information, someone else will have thought of it too. And, we hope this is obvious, but don't ever tape passwords to your monitor. Clean your desk off. "Lawyers are the worst I've ever seen, and they are the ones who write the policies to safeguard IP," says Winkler. Information should not be readily available to the passerby. "Don't make the cleaning person the richest person in your company," says Winkler. Shred. Shredders are often available only in the legal department and executive suite, but intellectual property passes through all departments of a business. Have shredders available at desks and be sensitive to trash that is otherwise sensitive, valuable or proprietary.

Illust ration by MM Shanith

Have you ever left your desk drawers unlocked, forgotten to log off your laptop when you leave the office, or post your passwords where you and everyone else in the building can see them? Even the most conscientious employees are vulnerable to the occasional lapse in IP safety and could use a regular refresher. Ira Winkler, president of the Internet Security Advisors Group and former National Security Agency analyst, offers his advice for keeping prying eyes at bay. Realize the likelihood. Yes, it can happen to you. It sounds stupid, perhaps, but very few people think that they will be victimized by IP thieves. It's important to recognize and remember that intellectual property theft is a real threat. Log your computer off. Lots of people walk away from their computers and leave sensitive information available for the taking. "I've found documents

Security

â&#x20AC;&#x201D;By Kathleen S. Carr REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/14/2008 8:08:17 PM

Four tips

For Better BI in 2008 Extending business intelligence (BI) across the organization is a challenge because a lack of BI and IT skill sets continue to plague companies, according to David Hatch, research director at Aberdeen Group. Hatch offers four tips to get around these challenges. B u s i n e ss I n t e l l i g e n c e

ONE:

One new method to consider is BI accessed through a third party, for example, SaaS BI or on-demand BI. Look into the availability of BI as an embedded capability within enterprise apps such as ERP and CRM. Users may find BI products offered through these providers easier to learn.

TWO:

Web 2.0 data sources and other unstructured data do not obviate the need for traditional structured data, but they can be used to boost BI efforts. The ability to enhance historical data with relevant and timely information found in blogs, comments, and competitors' websites is becoming more important.

THREE: To create an environment of business intelligence self-sufficiency, trendlines

establish a group composed of both business users and IT representatives to collaborate on prioritizing user needs and choosing or developing BI tools.

FOUR: Look for data generated by business processes that lend themselves to automated analysis and even actions taken on the basis of that analysis. For example, some financial service organizations use applications that automatically analyze fluctuations in currency rates, and that automatically initiate trades based on those decisions. — By Diann Daniel

I Can’t Get No Satisfaction It's not your imagination: the money guys are happier. According to a recent survey by career and recruiting network ExecuNet, IT executives are the least satisfied of all those in the management ranks.

Illustrat io n by ANIL T

C A R EE R

41% of IT execs

65% of CFO’s

called themselves satisfied in their current jobs.

and comptrollers called themselves satisfied.

67%

of HR execs called themselves satisfied.

Source: ExecuNet

Trendlines.indd 14

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

How Well Does Your IT Shop Welcome New Hires? I . T M a n a g e m e n t Want to find out what new employees think of your IT department? Just ask them, says Direct Energy CIO Kumud Kalia. Kalia takes 20 minutes to meet with all the people he's hired in the past 90 days to ask them for their observations while they're still fresh. It's a trick he picked up from executives at a previous company and implemented once he entered the C suite. Kalia likes to use this informal group meeting to get real-time feedback on the company's on-boarding process, to find out what the newest employees think of the work environment, and ask them how they've interacted thus far with colleagues, business partners and customers. He also likes to pick their brains about how Direct Energy compares to other companies. "This is good for breaking down old myths that support grass-is-greener kind of views (that can crop up)," says Kalia. "We can also get some insight into best practices we haven't considered." This kind of information has a short shelf life; employees forget their early experiences once they're settled. New employees obviously won't want to be too harsh, "but it is possible to get at the truth without overt criticism of co-workers or the company," says Kalia. He's let the practice slide as his time has become tight, but he intends to reintroduce it this year. "I've noticed a few new faces around and think it's a little sad that I don't recognize everyone," he says. "This will help connect me to new staff. It's important that employees have met with their department head and feel like they have a relationship." —By Stephanie Overby

Vol/3 | ISSUE/07

2/14/2008 8:08:18 PM

ReseaRch

Unmasks Anonymity NeTwoRks

relies on examining the actions of an anonymous user, through which the user's intent and often their identity can be inferred. For example, if an attacker is able to modify certain characteristics of an anonymized data stream coming through an anonymization network such as Tor, the attacker can often discover the first Tor node connected to by the client, Murdoch said. In experimenting with such techniques on Tor, Murdoch said he was able to de-anonymize 11 out of the 13 Tor nodes tested. One of the techniques examined in the paper explores the link between processor load and the behavior of the system's clock crystal — its 'clock skew.'

When the processor is undergoing a greater load, it is emitting more heat, which in turn affects the temperature of the clock crystal. Murdoch's innovation is to deliberately induce a pattern of processor load in an anonymous service, and use the resulting clock skew data to determine the identity of the service."It could be deployed in practice by an attacker using one machine to access the hidden service, varying traffic over time to cause the server to heat up or cool down," Murdoch wrote. "As systems become hardened against more conventional attacks, this attack could become a plausible threat," he wrote. —By Matthew Broersma

Extreme Commuting Beats Relocation Executives would rather spend three hours or more commuting back and forth to work than relocate for a new job, and employers are increasingly accommodating their preferences, according to a survey conducted online by executive search firm Korn/Ferry International. Executives dont mind travelling to work by plane each week or commuting by car for more than 90 minutes one way each day. Seventy percent of survey respondents say more candidates prefer extreme commuting over moving. the leading reason executives don't want to relocate, is they don't want to uproot their families. only 10 percent of recruiters cited housing market costs as executives' rationale for not wanting to move. Four out of five executive recruiters, or 82 percent, said companies will consider increased business travel over moving for prospective employees. S tA F F M A nA g e M e n t

Reasons executives dont want to relocate:

the high tech industry is the most receptive to extreme commuting, according to respondents, 40 percent of whom ranked that industry as the highest. other industries open to increased business travel include financial institutions and consumer products companies. retailers and insurance companies rank among the least receptive to increased business travel as an alternative to relocation. When companies require a candidate to move for a job, 64 percent of executive recruiters say those employers make the inconvenience worthwhile for the candidate.

What companies are doing to attract candidates to relocate: Additional Compensation

64%

Flexible Work Environment 40% Options for Family Visits 37%

Family Ties

50%

Lifestyle Factors

Corporate Perks 24%

27%

Housing Market Costs

10%

Other 15%

Other 8% Decreased Relocation Budgets Stress Involved in Relocating 16

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Additional Vacation Time 13% Higher Titles 10%

– by Meridith levinson Vol/3 | ISSUE/07

Source: Korn/Ferry International, survey results based on 198 Korn/Ferry International consultants.

tRendlineS

n e t W o R k i n g Anonymity systems designed to allow users to carry out actions on the Internet without identifying themselves can often be cracked with a bit of unorthodox thinking, according to a Cambridge researcher Stephen Murdoch. The techniques aim at removing the cloak provided by anonymity systems such as Tor, which can be used by legitimate users looking to protect their identities, as well as by criminals covering their tracks. Murdoch's results show that even supposedly infallible techniques can be defeated by exploiting real-world weaknesses in the systems. One technique explored in the paper is called indirect traffic analysis and

alternate views

B Y Ka n i k a G o swam i

Reasons for outsourcing Churn in internal IT vs Core Competencies

“A CIO will look at how best he can manage his bandwidth, and outsource only those tasks that are mundane and keep the

more exciting things in-house.” Abnash Singh Group CIO, Mphasis

P hotos by Srivatsa Shan di lya

in non-IT companies since IT companies already have a growth path for people to get into mainstream activities and abilities related to their business. Non-IT companies like FMCGs, textiles, etcetera, have IT teams who do only specific specialized work — network or server management. In non-IT companies, the reason to outsource becomes attractive because of their inability to attract people to work on specific projects, where one needs only limited skills. This would actually encourage outsourcing because outsourcing with a service provider would ensure opportunity, growth, upgrading, access to new technology and replacement. For non-IT organizations, outsourcing can be in some of the core areas like construction management, applications and support, and of course, software support, etcetera, which are handled much more like commodities now. A CIO will look at how best he can manage his bandwidth, and outsource only those tasks that are mundane and keep the more exciting things to himself. A CFO will ask what else can be outsourced? The CEO would look at it in terms of what is achieved by outsourcing per se but how it will give better service to the organization. So its completely dependent on the C-level perspective, whether the company wants to outsource, and how much. Ultimately, outsourcing requires a different champion; IT can never drive it by itself. It affects a business decision.

Vol/3 | ISSUE/07

Trendlines.indd 17

talent pool would be developed well, from an operational role to a managerial role; it’s a win-win situation.” Sunil Mehta Senior VP & Area Systems Director (Central Asia), JWT

I agree that people are taking the outsourcing model very seriously, but I think more and more companies choose outsourcing because of talent pool, not because of internal churns in the IT departments. So it’s always good to outsource because you’ll be in tune with current technologies. It’s a trend that will be there for a couple of years but it may not be very affordable over a period of time. For example, if TCS gives 20 percent increment and your company gives 8 percent and you are forced to pay 20 more next year, you are going to be governed by higher costs. That will lead to an ROI kind of situation as everything, every time is going to be cost-benefit analysis based on what suits you at that point of time. Only if there is an expertise which is not available, then it makes sense to outsource. But for your core business functions, it is not necessary that you outsource. You can only outsource backend services, giving out front end services becomes very difficult like managing your VPN or hardware, maybe even software development, but not software analysis. Outsourcing is a must, but in bits and pieces. I think core competence of a business will always be within the company. In my case, in our industry, there is not much knowledge available outside as a third party who can come and service us. Thanks to outsourcing, our talent pool would be developed well, from an operational role to a managerial role; it’s a win-win situation.

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

trendlines

Outsourcing is more applicable

“Thanks to outsourcing, our

2/14/2008 8:08:19 PM

Tom Murphy

Leadership

Giving Up The Power The successful integration of high performance and organizational culture starts with the CIO.

s IT leaders, we know we must be agents of change. Some of us have embraced this challenge more readily than others. The main reason we have struggled to meet this new expectation is that for years CIOs were not valued for their leadership skills per se but rather for the project management and technical skills necessary to meet the basic blocking and tackling of IT service delivery. Now we find ourselves setting strategy and creating competitive opportunities for our companies. What this means is that we can no longer lead through control of projects and resources, expecting our staff to do as we say. Rather, we have to demonstrate we are worthy of being followed. We need to be authentic. Authenticity of leadership is the first step toward building high-performance teams.

The Leader Makes the Culture

Il lustratio n by MM Shan ith

A high-performing IT organization has a culture that I call purposeful. This culture is characterized by: A clear, compelling purpose that drives decisions and ignites passion among employees Shared values that serve as guidelines for delivering on the organization’s promise to its constituents A work environment that encourages individuals to take ownership of the organization’s performance and its culture The successful integration of performance with culture starts with the CIO. We establish our organization’s shared values. Then we live them. I have experienced how powerful an organization becomes when this is done well. But I have also been in 18

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Coloumn Giving Up The Power.indd 18

Vol/3 | ISSUE/07

2/14/2008 6:16:24 PM

Tom Murphy

Leadership

situations where I have neglected to connect my goals with those of my team and my company. Early in my career I had a management style best described as ‘lightning rod’. I loved to be at the center of things. I relished being the person everyone called when they needed to get something done. This role was helpful in situations where I needed to create the appearance of cohesion in a team — for instance, when the business had a negative perception of IT. I was able to cut through roadblocks and force action. It made me look good. However, I failed to notice the negative impact of my management approach over time. During this period, my decisions reflected my own purposes. I left organizations regularly, seeking the next big thing. And I left my teams rudderless because I had not developed effectively the capabilities of everyone around me. Their business relationships suffered, and negative perceptions crept back when I left. I was continuing along this path of charismatic control when I became CIO of Royal Caribbean in April 1999. The next year, Terry Pearce, author of Leading Out Loud, urged me to rise above this tendency and become a more engaged leader. Pearce was conducting a workshop with my team. Before leaving, he pulled me aside and challenged me to give away my ‘power’. I began developing shared values and attempting to create a purposeful culture. I committed to staying at least five years. I told my direct reports my plans and asked them to hold me accountable. Then came 9/11. A month later I had to lay off 50 percent of my organization. And I became a believer in what I was espousing because I saw the benefits of the new leadership approach in action. I watched as the survivors sought refuge in our shared values, relying on their belief that these would not change even though everything else was changing. I understood then that my team was motivated not by my persona but by the common cause of restoring an organization they believed in. The team became stronger with a group of leaders united in our values and purpose. Although we planned to do nothing more than maintain the current IT environment for the next year, we ended up introducing some of the most advanced IT capabilities in our industry, such as a ship-side Internet café and online cruise bookings. We also benefited from the creation of a climate where my staff was not afraid to tell the truth. We used a process I call ‘undiscussables’, with ground rules for discussions about uncomfortable subjects. Initially, we had 64 ‘undiscussables’, ranging from whether DB2 or Oracle was the right future database platform to problems with vice presidents whose behavior

was not aligned with our values. We addressed every item. Two years later, we didn’t need the process because we had learned to address even the most difficult issues and keep moving ahead.

How to Live Your Values Here are three ways that you can improve your connection to your team and begin building a purposeful culture. Connect with your organization’s purpose and values. I look for the key element of the company’s strategy and

Bad leaders use control to get results. Good leaders get people to work for them. Great leaders get people to work for a cause that is greater than any of them.

Vol/3 | ISSUE/07

Coloumn Giving Up The Power.indd 19

attach IT to it so the team can see how their efforts enable the company’s success. Evaluate and align key IT practices so they promote enhanced performance, risk-taking and commitment. We have continuous improvement teams, which look for opportunities to celebrate success, create recognition and reward programs, and streamline processes. We introduced ‘No Meeting Thursdays’ to allow managers time to spend with their teams. Model the organization’s purpose and values. I try to greet every person by name and express a sincere interest in what he is doing. At AmerisourceBergen we agreed as a team not to have a holiday party last year and instead donated time to a local food bank. When we promote someone, we highlight that person’s results and behaviors. We built our organization by hiring a lot of outsiders. As we started to promote from within, we proved that we were willing to work with people to grow internally. This, in conjunction with a clear career path grid, has made it easier for managers to match their staffs with projects that will help them achieve their career goals within the company. Bad leaders use control to get results. Good leaders get people to work for them. Great leaders get people to work for a cause that is greater than any of them — and then for one another in service of that cause. Engaging in a common purpose and executing that purpose according to shared principles enables your team to accomplish something no individual could do alone. This is what our role as IT leaders is all about. CIO

Tom Murphy is senior vice president and CIO with AmerisourceBergen. Send feedback on this column to editor@cio.in

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/14/2008 6:16:25 PM

Susan Cramm

Executive Coach

Leaders Are Role Models How you can use simple but powerful actions to communicate your leadership agenda.

Illustration by pc ano op

ou're not paranoid. Everyone is watching you. Fact is, the typical executive feels like they are living in the Police song ‘Every Breath You Take’. Everyone is watching ‘every move you make, every bond you break, every step you take...’ for a sign of who you are and what you care about. The realization is daunting to new executives. I remember my first week as a CIO. I couldn't walk down a hallway without wondering if I was suffering from a wardrobe malfunction. There is power in all the attention — if you use it wisely. We all know stories of leaders who, through simple but powerful actions, quickly communicated their leadership agenda. I recently heard about a new superintendent of a school district who, in response to some neighborhood complaints about kids walking on homeowners' lawns, took the time to drive down to observe the trampling-in-action and resolve the situation. What made the story worth repeating was that the superintendent's behavior stood in stark contrast to that of the local principal who had simply dismissed the issue as one outside the school's control. What made the story powerful was that it was clear to everyone that the superintendent intentionally selected the incident to communicate in actions what he had already communicated in words — that he expected the principals to know and take care of the kids and their community. Unlike the superintendent, many leaders unconsciously condone behaviors that, if questioned, they would profess to oppose. I can think of CIOs who signaled to their organizations that teamwork was unimportant (by gossiping), that integrity was situational (by accepting gifts from vendors), that business collaboration was an elective (by spending most of their time 20

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Coloumn When You’re a Leader, Everyone is Watching You.indd 20

Vol/3 | ISSUE/07

2/14/2008 6:17:59 PM

Susan Cramm

cAreer counselor

in their office) and that strategy trumped results (by devoting most of their time to ideas versus deliverables). The superintendent could have ignored the situation. Instead, he chose to demonstrate what it means to get close to the customer by making clear the priority that should be placed on feedback from the community and the kids. Similarly, a CIO who is interested in conveying the same message can do so by spending time talking with external customers and building relationships with business counterparts. The key to powerful symbolic actions is that they are focused, unexpected and personal. Don't muddy the water by leveraging every teachable moment. Your behavior will be viewed as manic rather than measured. Choose behaviors that are in stark contrast to the past so that the stories are memorable and will be repeated. Finally, lead by example by demonstrating the behavior that you expect others to emulate. Here are some suggestions for dealing with particular challenges. If your organization is troubled with execution issues, you can convey urgency by getting close to the problem. Consider the CIO who, frustrated by the Keystone Kops' approach to production issues, asked to be informed of any issue impacting more than five people. Not only did the issues get resolved faster, but the CIO shifted the focus from problem resolution to prevention by asking, ‘What do we need to do to make sure this never happens again?’ over and over until that question started being asked at lower levels. If you want your leaders to focus their priorities, be sure that you are clear about yours. Leaders keep their organizations on track by frequently referring to overarching goals when making key decisions and developing not only ‘start’ but ‘stop’ lists when setting objectives and developing plans. If you want to communicate a sense of urgency, use time boxing and demonstrate flexibility on cost and scope. Follow the lead of a CIO who introduced the term ‘30-day wonder’ to a doubtful organization and then helped staff members amaze themselves as they delivered faster than ever before. If you want to encourage innovation, select a project to personally lead and provide seed money to those who are willing to take risks and lead change. If you want to instill a performance oriented, accountable culture — remove the senior level leader who is obviously phoning it in. If you want to promote teamwork, be open about your weaknesses, ask for and respond to feedback, call out unproductive behaviors such as gossip and force your leaders to have difficult conversations face-to-face. Leading change takes more than compelling strategies, great hiring and speeches. Smart leaders understand how to leverage the attention focused on them by using teachable moments to convey their leadership agenda. Through actions that are simple, powerful and symbolic, leaders can quickly communicate their agenda and avoid the sense of impotence and dread that comes from relying on others to communicate it for them. 22

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Coloumn When You’re a Leader, Everyone is Watching You.indd 22

Reader Q&A Q: How can you tell if you are sending the right message? Actions are subject to mistranslation. How can a CIO get feedback to correct a wrong impression? A: Symbolic action is about doing things to reinforce your

verbal messages and eliminating actions that conflict with what you intend to communicate. It starts with a strong point of view of your strategic opportunities and how you want others to behave. For some leaders, the opportunity is to eliminate conflicting behaviors. In other cases, it's leading by example. Confidential feedback can identify behaviors that aren't working, although it's tough to interpret and identify substitute behaviors without some help. Since you can't ask those you intend to influence (it sounds feeble to ask, ‘How should I behave so I get others to do what I want?’), it makes sense to ask a trusted advisor, perhaps someone in human resources, a colleague/friend, or a coach. Q: I will be re-organizing my IT department. What actions can I take to convey the need for this decision? A: You need to communicate both logically and

emotionally. Logic (‘Why are we doing this?’) is easier. It can be expressed in traditional forums by sharing the enterprise and IT challenges, alternatives and implications. Emotion (‘What about me? ‘) is trickier. It must address the fundamentals of motivation: equity, achievement, and connection. Equity requires treating others fairly and respectfully. Achievement entails supporting the goals and motivators of others. Connection means making others feel part of a community. For your re-organization, powerful symbolic actions include: communicating individually or in small groups to discuss the reasons for change, ensuring that reductions impact all levels, asking where people want to be in the new organization, providing transition support where needed, and being on the frontlines to listen, empathize, and inspire. CIO

Susan Cramm is founder and president of Valuedance, an executive coaching firm in San Clemente, California. Send feedback on this column to editor@cio.in

Vol/3 | ISSUE/07

2/14/2008 6:17:59 PM

Laurie M. Orlov

Applied Insight

Say Yes and Mean Yes You say yes when business colleagues ask for something new, but usually you don't really mean it. That won't fly anymore. An expert in IT organizations advises how to adjust your (and your team's) attitude.

Il lustratio n by un n ik rishn an AV

hen it comes to new requests from business peers, IT organizations typically put on a happy face. From the CIO to the help desk, staffers try hard to fit new systems into old ones, get changes onto the list of prioritized projects and get a grip on emerging technologies. But behind the smiles, let's face it: the job of an IT organization is to protect information with standards, preserve prioritized investments and minimize risk. In fact, to do the job has historically meant finding ways to keep smiling and still say no: we can't, we shouldn't and we won't. We don't support Treos when we have standardized on BlackBerry. And of course, saying no also left behind a prescriptive echo: use this, wait for that and we'll be rolling out that portal or sales force automation system to your department...someday. But times have changed, and IT is poorly positioned to cling to the ‘it's our policy’ refrain. From business execs to college interns, everybody wants what they want, whether or not it's within policy and plan. And IT departments now have to figure out how to say yes more often. So, what the heck are we supposed to do when we can't keep loading new demands on our already sagging plates? How are we supposed to know what users really want? The answer involves some wrenching behavioral and structural changes in IT.

The New End User In the old days, the only way employees could access most software or hook up a new piece of hardware was with help. Today, the list of tools an employee can use without IT help just takes your breath away. Between the USB slots in laptops, the boatload of social networking sites, hosted apps, open-source and easily downloaded tools, it's a new day in the office. Then there's 24

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Coloumn You Say Yes,You Mean No.indd 24

Vol/3 | ISSUE/07

2/14/2008 6:14:59 PM

Laurie M. Orlov

Applied Insight

the technology employees use at home, where many are running mini IT departments for their spouses and kids. And, of course, Sue in accounting expects to be able to easily connect her work laptop to the Internet through her home wireless network. Given the situation, it's better for IT execs to be tuned in enough to know what users are about to ask. As Rich Fagan, CIO of CalTech, notes: "In a university setting, we know that when the iPhone shows up in the store, the next day faculty members will be looking for help, so we are prepared to try." On the day Vista launched, the CIO of a large European airline sent an e-mail explaining why the airline's rollout won't be for at least a year. But it's not enough to head requests off at the inbox — it's reactive and defensive. Here's what you need to do instead:

Four Ways to Get toYes Energize a curious culture. Alastair Behenna, the CIO of Harvey Nash, a global talent management firm, figures out what emerging technologies are all about, so when business users come with ideas, he knows what they're talking about.

Push your staff out of its comfort zone. Once they talk with users, IT can identify improvements to business that are highly valued. He's explored mash-ups; how to create an avatar on Second Life; and what various permutations of salesforce.com can do for his company. More importantly, he ensure his staff experiments, too. "We have a lab where our team — from the help desk to the Web folks — is encouraged to spend as much as 10 percent of its time figuring out if there is commercial benefit to something [new] and doing a proof of concept. Today, we are looking at the touch iPod for use on the road because of its Web browsing capabilities." This enables him to present users with technologies that they will benefit from before they request for them, or be ready with a lightweight proof of concept when they ask for something. Create a common language. Like any foreign language, the techno-babbling of IT — Web 2.0 this, SaaS that, SOA those other things — creates frustrating barriers. Behenna observes that IT has developed a language that once gave it power over the business. But that language has made IT weak. Users ignore what they don't understand, corporate systems wither and then, Behenna says, "For IT, failure will come as a complete surprise!" How to fix the dialogue? Acknowledge what end users know and use it as a starting point for a conversation. "We should hear a request and say 'let's discover how best to do what you ask'," says Behenna. "'Let's help you make an informed choice by familiarizing you with what we can support today and then we will see how we can help with what you want to do.'" 26

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Coloumn You Say Yes,You Mean No.indd 26

Push your staff out of its comfort zone. We've long talked about moving business analysts out into the business. It's time to take another look at org structures and physical locations to ensure that as many people as possible from all levels of our organizations spend as much time as they can with end users. The CIO at a large chemicals company sends his staff into the field and assigns everyone a metric to meet. Improving customer service, for example. At a telecom firm, IT staffers visit work centers from billing to customer care. They participate in calls with customers to find ways that processes can be automated. Once outside the comfortable walls of IT and talking with end users, IT can identify improvements to business operations that have never been requested but would be highly valued — like automatic notification of customers when service tickets are closed. In this way, IT can collaborate — get to yes — with the service staff to streamline work. Learn how to sell. Being able to sell your services is an essential (and often missing) ingredient for IT organizations to move from a baseline of saying no to being capable of saying, 'Yes, let's see how we can help.' Imagine that tomorrow, your IT infrastructure and applications became revenue generators, and think then how the staff would interact with its constituents who are paying customers. IT staff would need relationship management training. All interactions would have to be tracked so that their costs are included as part of the profit structure of the firm, and all conversations would have a sales, marketing or services dimension. This happened at Security Benefit Group, where Dave Keith was CIO from 1999 to 2006. After Dave led IT's redesign of the company's systems, he led an initiative to launch a business process outsourcing (BPO) service running on the new environment. Eventually, the initiative became a revenuegenerating division. IT workers were spun off to staff the new product group and Keith became that unit's CEO, according to a report about the initiative. One of Keith's staffers, trained in relationship management, went out and closed several significant new business deals. Much to this person's surprise, he learned he was capable of selling — despite his legacy in IT. Leaders must move IT from a no to a yes mind-set. But your staff won't wake up one morning worried that they have said no too often. You need to set the tone for the role IT will play. If you agree that collaboration trumps proscription, that anticipating needs is preferable to reacting, and that your staff is too insular, it's time to inspire them (and train them) to behave differently. Help them gain new relationship skills and send them out to learn how work is performed and how technology can be used. And perhaps the next time you or your team members say they'd love to help, they'll really mean it. CIO Laurie M. Orlov does research and consulting on business and technology strategy. She is a former vice president and principal analyst at Forrester Research. Send feedback on this column to editor@cio.in

Vol/3 | ISSUE/07

2/14/2008 6:14:59 PM

Cover Story | Integration

s ' a l o C a c Co t

e r C e S mula

r o F

selyo l c a n nly o o ret d c e e s s a e b r t ' o ia isn the m d s n ' hain. I e c r n i e n o s H i s t . e s u t c b distri s suc edien ' r e a g l v i n o i s C s f a o a Coc tion its m a — n i n b o s m e o v c ri guarded it runs — and th how f o y r o t s By KaniKa Goswami

Reader ROI:

The importance of an information network

In 1977, Coke’s secret formula got it into trouble with Indian government. Because the company refused to

How getting information in time can save your company money

give up the formulation that went into its drink, it was asked to pack up and leave. So, when the Indian economy opened

How to simplify MIS generation in a varied and distributed set up

up in the early 90s, the cola that much of the world has come to associate with soft

Vol/3 | ISSUE/07

drinks, wanted in. It had 16 years of catching up to do. And it was in a hurry. REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

Cover Story | Integration In true style, it threw plenty of money at the problem. By partnering with cricket tournaments and creating now-famous taglines like ‘Life Ho To Aisi’ and ‘Thanda Matlab Coca Cola’, Coca-Cola India made sure that they were heard and seen. It also snapped up the competition including popular ‘cold drink’ brands like Limca, Maaza, Citra and Gold Spot. According to a report by the Tuck School of Business, Dartmouth, the company pumped in $ 1 billion into its Indian operations between 1993 and 2003. This frenetic pace extended to the way the company created a mammoth distribution system by partnering with bottling plants all over the country to keep the market juiced up on cola. By the turn of the century, the oversights made in those early days would start to hurt the company. In the heat of expansion, CocaCola signed on multiple — and standalone — bottling deals. Each plant had its own system of accounting, monitoring, and inventory. Plus, their just-get-in-therequickly approach to planting the CocaCola flag in the remotest regions created a tenuous distribution chain. At around the same time, the business was trying to muscle its way into the rural market by introducing a smaller bottle at half the price of the traditional Rs 10 bottle. The idea was to meet the competition — from lemonade, tender coconut water, lassi and tea — on its own turf. Simultaneously, Coca-Cola doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003. The two-pronged strategy paid off: per capita consumption doubled between 2001-2003 and the company increased its market penetration from 13 to 25 percent. But greater demand from more retailers made it only harder to supply the drinks, which meant that some far-flung regions only got a trickle. The organization decided to fix the problem and brought in Project COLA (Countrywide Outbound Logistics Automation). COLA is developed around the ERP system and is designed to cover all functions including manufacturing, sales, distribution, finance and logistics.

SAP, Tally, Scala, DSND, Prism, DAS and MECS. The organization’s MIS was spread across three solutions: Kompass, DPRS and ROSS. Individually each of these worked well, but the diversity caused a huge delay in putting together sales and distribution data. With 26 types of systems running at 26 profit centers, data that finally found its way upstream was real old, 54 days too late. And, of little help to the sales staff. “The ground situation was a practically archaic MIS. The situation needed to be remedied. There was a basic lack of control, making it difficult to plan inventory. There were also many write-offs. We could see the software needed updating, but even then it would solve only minor problems,” recalls Gopal Shukla, CIO, Hindustan Coca Cola. On another front, just getting a crate of Coke to every last district in the country was a logistical nightmare. The operation depended on distribution data. Without data it would be hard to push Coca-Cola’s products. “At Coca-Cola, the process of distribution is in two parts. Coca-Cola has 25 co-owned bottling plants. And, about 15 sub-sourced and franchised plants. We have about 75 company depots and franchisees, which are our direct sales outlets. Each of these depots has between 30 to 100 routes, and each of these routes is a set of 50-100 outlets," says Shukla explaining the complexity of keeping track of lakhs of outlets. "The ERP systems move along this line, all the way from direct sales outlets to the routes that get our products to metro outlets.” Then, there were the indirect distribution outlets, the distributors who demarcated their own territories, and sold fizzy drinks to smaller towns, sub-stockists and super-stockists. To make things worse, unlike other FMCG operations, distribution in the beverage industry isn’t built on a one-way street. Because bottles are refilled, the industry has a distinctly different requirement of data entry at the sales and distribution level. Companies like Coca-Cola have to keep an inventory of bottles that return empty — and those that return full.

treaCle trICkle

Hard art oF dIStrIbutIng SoFt drInkS

The number of days data took to travel from retailers to decision-makers at Coca-Cola.

luggish as treacle. That’s the only way to define the flow of information from retailers around the country to manufacturing plants — which made production planning an elevated form of educated guesswork. This is because when Coca-Cola returned to India in 1993, it set up a concentrate plant and then quickly acquired a number of bottling plants across the country, demarcating geographies to ensure that it covered as much ground as possible. At last count, Hindustan Coca Cola had over 25 bottling plants spread across the country. However, this strategy created a disagreeable byproduct: a massive gap in MIS. Each of the plants used its own transaction system, as a result there were multiple transaction apps at work including Jaguar, 28

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

roject COLA was meant to add some fizz to the flow of information. In its first phase, it would help direct sales outlets like company depots. The second phase would cover indirect sales distributors and their routes. It aimed to build an integrated ERP solution that simplified transaction efficiencies, sales practices and provided better audit clearances. It would also work as a unified MIS platform. The first step in creating an accurate picture was setting up a Distribution Automation System (DAS) — a transaction system that kept all sales movement accessible. A DAS system has been used in several FMCG companies in India. At Coca-Cola, it was tailored to meet specific requirements that included ‘centralized masters’ and

Vol/3 | ISSUE/07

Cover Story | Integration a day-end transaction summary for MIS analysis. The objectives of the software were to provide complete transparency and control to distribution operations, while adding value to certain marketing operations. DAS is still being rolled and will cover about 35 percent of the organization’s distributor network by the end of this year. DAS was integrated with Project COLA to ensure data was at people’s fingertips. This data could then be put into an MIS system developed by Salient technologies for the bottling industry called Margin Minder. Shukla calls it ‘God’s gift to the bottling industry’. Bottling operations at Coca-Cola are built around a profit center. A number of these centers make one regional group (there are three) says Shukla. “The system puts a distributor database at each of these physically separate locations. A plant, a godown or a depot can have its separate ERP. After midnight, all of these offices send data to a central location, so that everybody gets an MIS report the next day. On this accumulated database, there is a data warehousing system and the Margin Minder, which has been designed uniquely for bottling operations,” he says. Each of these locations is connected by lowcost connectivity. Since each region has its own ERP system, creating an expansive network is not critical. “It’s a complete wall-to-wall implementation. It has logistics, production, etcetera, at the plant; logistic inventory at the warehouse; and sales at the depots. At the central location, we get the benefit of a single ERP system, yet we have the flexibility of not being dependent on any one. We have now consolidated all the systems into one single base,” Shukla explains. The benefits? All the goodness of a single solution including a single set of processes, rational efficiencies, controls, audit clearances. “You can retire all old applications,” Shukla adds. In addition, the organization bypasses the disadvantages of a distributed system since any transaction that affects two sites is sent on a real time basis. In effect, when a truck leaves a plant for a depot, the depot gets to know within a few seconds about its departure.

of the guy on the front who’s actually doing the distribution for us. It also improves controls and enhances data collection. We are targeting about 40 percent of all our indirect distributors, which translates to about 400 distributors, by the end of this year.” The handhelds come with dot matrix printers for invoices and RFID sensors that identify who’s taking out how much of which product. It serves to reduce settlement time from several hours to minutes. Because the software has been written to firmware, the device doesn’t need a standard OS and is fairly low-cost —less than Rs 10,000 each. Currently, 250 units are being used in Hyderabad and Delhi, with about 650 more awaiting deployment.

Photo by Srivatsa Shan dilya Imaging by MM Shanith

Downstream Data

he backbone of the system is a number of small but critical applications, most of which have been developed by Shukla’s team. These apps collect information from the bottom of the distribution pyramid. Among these is a handheld device that is installed in trucks (see 'The Colour of Smart Distribution'.) “Low-cost handhelds are currently being used in our direct sales. These greatly benefit the productivity

Vol/3 | ISSUE/07

Cover Story - 02.indd 29

“The toughest part is walking into a finance manager's office, and telling him he's no longer the day-to-day boss. Taking away power from a man —

it is extremely difficult to sell that.”

— Gopal Shukla CIO, Hindustan Coca-Cola

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/15/2008 12:03:05 PM

Infographics BY pc anoop

Cover Story | Integration Another application that forms a part of the solution is the Cooler Tracking System (CTS). It currently comes as a sticker on CocaCola refrigerators that the company provides to its stockists and is monitored by sales executives. “There are about 250,000 coolers in the market today, and our business is highly-dependent on their placement, the positioning of products inside and of course, how well it is working,” says Shukla. CTS helps keep track of the number of coolers in inventory, those that have been installed and those that are under maintenance. The application currently tracks 250 coolers. It’s aim is to build more accountability in sales teams and strengthen asset control. The ROADnet Route Optimizer forms the third leg that DAS stands on. The application runs on a mobile device with GPRS carried by business development staffers. Their job is to make rounds on fixed routes and check the availability and arrangement of Coca-Cola products. Since they keep track of what needs replenishments, they can also bunch together outlets that need restocking. This helps with dynamic route optimization and ensures that delivery trucks do not make too many unnecessary runs from the plant. The application has already made its mark. In Hyderabad, for example, there has been a reduction in the number of routes by almost a third — from 22 to 17. Vehicle utilization, thanks to advance information, has gone up by 91 percent. The savings? Estimated at about Rs 1.20 per case — that's Rs 23.64 crore, given that Coca-Cola sold 197 million cases in 2007. The device also helps Coca-Cola monitor sales in real time, cross-sell better and track how an outlet is performing during a sales promotion. Shukla plans to rollout ROADnet in all 9,000plus outlets in Hyderabad, Delhi and Mumbai markets by the end of the first quarter of this year. The first pilot in Ahmedabad, Gujarat, has shown excellent results, he says.

Can’t Beat Real Data

ll these devices send data to the Margin Minder. The app provides analytical reports that help not only in distribution MIS but also in manufacturing, finance and even HR. The advantages of this application? “The unique feature of Margin Minder is its response time. It’s extremely good,” says Shukla, “Irrespective of the connectivity bandwidth of the client, it manages to give you a view you are looking for at a very good response time.” The RED Cube on the Margin Minder offers some of these insights. “Everything about market execution, availability, activation is tracked by RED,” Shukla says “This data is given to AC Nielsen who does a survey of about a hundred thousand outlets every month. At the end of the month, we have studies that provide follow up action for different areas. RED gives us two advantages: pinpointed surveys — not just generic ones — and now a GPRS coding onto city map. It’s still in a pilot stage but it allows us to track transactional data from a system as well as RED survey data, matched to every outlet,” says Shukla. The pilot has been kicked off with data collection on Motorola MC35 handhelds at over 300 large outlets in Delhi, and it is to be ramped up to 3,000 outlets countrywide over the next few months. “At the end of the day we take data on a yesterday basis, put it into a staging area, clean it and make it ready for uploading into a multidimensional cube,” says Shukla. He adds that the organization can drill down by customer, product, sales hierarchy and profit center. “In each you can see many sub-dimensions. And you can query the system with very simple key strokes.” Shukla is emphatic that the people who pose queries need not be IT-savvy and most business managers can find out their top-ten customers by volume, profitability, brand, SKU or by sales person. They can also retrieve data on profitability per brand or customers

The Color of Smart Distribution By introducing applications at the bottom of the distribution pyramid, Coca-Cola can get more accurate data — faster. Now, it can make quicker decisions and save money and resources.

A sales executive has a fixed route covering between 50-100 outlets. He checks for the visibility of CocaCola's products and uses a mobile application to place orders for a retailer — reducing paperwork.

Cover Story - 02.indd 30

He can also help CocaCola monitor a retailer's performance — handy when evaluating which retailers are eligible for a scheme.

After visiting everyone on his route, a sales executive has a better idea of who needs more stock urgently. With this information, he can ensure that delivery trucks make fewer trips.

2/15/2008 12:03:06 PM

Cover Story | Integration who have only chosen to buy certain brands. “We can do trend analysis on the system, we can see how volume has moved, during a certain scheme. And how profitable a scheme has been,” he says.

SHakIng tHe bottle wIll buIld ld PreSSure

Incorrect distributor claims for discounts have reduced to 6,000 from 30,000, saving Coca-Cola about 1% of its revenue — enough

to pay off their IT budgets for three years.

ut these benefits didn’t come easy. Putting complex devices worth Rs 10,000 in the hands of mostly illiterate truck drivers is a decision that is hard to make. Fortunately, he wasn’t alone. The core team that made project COLA possible, was created with much deliberation. Headed by director of business process and a profit center head, D. Narayanan, the 75-strong team consists of people from all areas of expertise. They included core business people, a design and implementation team, a central operations team, an infrastructure team, and finally a rollout team. “The implementers have done similar projects in other organizations and they bring best practices with them,” says Shukla. Currently, about 40 rollout experts have been hired from JKtech, but as the rollout nears completion, the project will need more hands on the ground and not just ERP experts, he says. The rollout experts are also expected to train end users, handhold them for a few weeks and provide an additional month of onsite support. As for the devices being operated by truckers, Shukla says he has the situation under control. In order to reduce the possibility of damage, he says that the handhelds were designed for use in the field. “They can withstand a fair amount of rough use. They are only sensitive to water and need to be kept away from rain. We provided carrying straps and water-proof bags and specially-built padded docking places in the trucks,” he says. But there were still problems with the printer, keyboard and the power-supply. “Therefore, we maintain some fast-moving spares onsite, and we back it up with an arrangement to courier the devices

Using an onboard hand-held, a delivery truck can inform Coca-Cola how many cases it has delivered to a distributor.

Based on data from sales executives, delivery trucks can plan their day and route to optimize vehicle utilization.

back to the vendor for major repairs,” he says. Thanks to their low cost, he says he can afford to stock a few spare units to see users through a repair cycle. Higher up on the distribution pyramid, the problems were less technical. COLA, he says, took the better part of two years to take effect. “We started in 2005, spent about 18 months standardizing processes,” recalls Shukla. “A pilot was built and tested, then went live in February 2006 in Ahmedabad. During this time we did a lot of workshops all around the country, we had a core team of people from the business, who were building, figuring out best practices and getting buy-in from these locations.” The project’s duration itself could have run them aground. “Running a project over three years is a big risk, people change, teams change, management perspectives change, business prospects change, imperatives change. You’ve got to be flexible, you have to keep up the momentum and that’s a big task. Standard ERP implementations pose a high risk, but when they intrude into people’s jobs, it becomes more difficult. Luckily, our attrition has been really low. And, our teams were highly engaged. Although, we did have a change of top management, we didn’t have to worry.” Change management, he says, was the biggest challenge. To get thousands of distributors and employees to change the way they worked and to let go of some decision-making power was a huge challenge. “The toughest part in a project like this is walking into a finance manager's office, and saying, ‘till yesterday you had an excel worksheet in which you had all your customers listed. You approved every order and knew how much outstanding everyone had. But from now on, the system will do that for you. It will decide how much credibility someone has based on past sales. And, the system will decide each order. You will no longer be the day-to-day boss.’ Taking away power from a man — it is extremely difficult to sell that,” he says.

Thanks to RFID, delivery trucks no longer have to waste time validating their identity and cargo every time they exit or enter a plant, godown or depot.

Cover Story | Integration There were countless opportunities for pushback. “There are about a hundred such instances where automation took over the manual tasks. The change of processes is one of the toughest things to do in a project of this size. We touch between three to four thousand people. It isn’t easy,” Shukla adds. He meets this challenge with a long-term change management implementation along the gradual rollout. For each rollout, change management processes start a month in advance, he says. This persistence has paid off. Today, Project COLA is about halfway through its complete rollout. Almost 55 percent is done including the heavy layer of in-house distributors and depots, as

fortnight, which automatically documents the performance of each distributor and rewards them on that basis. “If ten schemes apply to a distributor, he or she gets those ten schemes with item, value and limit, printed at the end of the fortnight. The whole process is now streamlined. The system now generates settlement of claims.” The advantage? The number of distributors making incorrect claims for discounts (because accounting was a problem) has decreased from 30,000 to 6,000. Which means Coca-Cola isn’t rewarding distributors unnecessarily. “Money is no longer wasted. This has generated a reduction of discounts of between 1.5 percent to 1.75 percent. With $ 700 million (Rs 2,800 crore), a reduction of 1 percent pays off our IT budgets for the next three years,” he says. Then there are other benefits. Coca-Cola used to generate about a 10 lakh invoices every year. Each of these had to be validated against orders for dispatch, a PoInT-To-PoInT this approach involves hand-coding integration. It remains a tried-and-true method for cumbersome process. Postmoving data. This approach has problems. Think of a company running 100 apps, each in its own box; then COLA, only the exit from, say, picture how many lines need to be drawn to connect those boxes. When one app needs to be changed, every a plant and the entry to, say, connection to that app must change. And development and maintenance costs can be high. a godown has to be validated MIddleware Whether it’s called object, event or session management, data translation or one of many by sending data via RFID acronyms, middleware creates a layer between applications. The applications are not connected point-to-point; readers. Shukla likens it to a they’re connected to a middle layer, which receives the data, translates it, then sends it. bank statement: deposit and eaI ProducTs also called integration servers, describe more powerful kinds of middleware. These tools are withdrawal slips only need to designed to integrate the data in companies’ back-office systems with their front-office apps using a single be checked at the month's end. integration layer. These products come packaged with connectors that can, for example, connect ERP systems That means savings on 10 lakh to mainframes and CRM systems. documents a year and ensuring BusIness Process ManageMenT BPM is a is touted as the next generation enterprise integration accurate payments and records. software. It aims to bring the business and IS side together to figure out cross-functional business processes, Predicting and beating market which include suppliers, customers, employees and partners, then streamline and automate them. demand with supplies is also an —Todd Datz important contribution — it is key to a larger market share. COLA helps hugely with that. Shukla exemplifies: “You have 3,000 distributors who need 50 active SKUs replenished every well as the finance and HR modules. What’s remaining are the week. How do you decide who gets how much? We developed a Webmodules for indirect sales outlets and distributors. There are no based app, which is based on last inventory, secondary sales, what was major changes planned for the business model and Shukla expects replenished, etcetera. If you get this right, you can predict demand, the indirect distribution system to get on to COLA as smoothly as therefore longer-term production and how to load production.” the direct one did. The uniqueness of the product has added another dimension to cluttered data sheets. Managing how much credit the company could extend to distributors entailed maintaining records of the number of he changes that COLA introduced have begun to be felt bottles that a distributor bought — and crucially — how many came upstream. “Our key benefits come from we what did as a change back unsold. This complicated situation has been largely eased by in process. That was the objective, and it has affected our supply COLA and collecting downstream data is much easier. The process of chain substantially,” says Shukla. deciding credit is now much more transparent with much less scope Another important benefit is that COLA enables an accurate for data mismanagement or data entry errors. computation of eligibility for schemes for distributors. In Among boy scouts, it's common knowledge to follow water if you conventional systems, all the sales vouchers need to be collected want to find the fastest route down a slope. But when it's bubbles and added up before and the eligibility of each distributor could be going up you want to follow, sometimes IT can do the trick. CIO determined for various schemes. “We have to validate and summarize sales data of 4,000 to 5,000 distributors — every 15 days. It was a very heavy, manual task,” Kanika Goswami is special correspondent. Send feedback on this feature to says Shukla. To work around this, they now have settlements every kanika_g@cio.in

aPProaCHeS

to Systems Integration

more FIzz to tHe bIz

Cover Story - 02.indd 32

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

Transformation In The Works

Too many systems with too many reporting tools giving you a blinkered view? All it took for Transworks to simplify a cumbersome monitoring process was a cube. Here’s how a single dashboard gave it a bird’s eye view.

Reader ROI:

Why accessibility is key How to make information actionable Making reports simpler

Case Study.indd 34

tacked files, thousand operations, multiple systems and a million reports. Imagine sitting in the corner office with these ‘essentials’, running an eye through every single word of every report generated by every possible department in your organization. Sounds like a mammoth exercise? It is. Nobody wants to be at the receiving end of such a deluge. But, N. Gajapathy, CIO, Transworks Information Services, Asia, found himself in one. A wholly owned subsidiary of Aditya Birla Nuvo (erstwhile Indian Rayon), Transworks provides various CRM services like inbound customer services, technical support, e-mail and Web-based chat support, outbound telemarketing, and non-CRM KPO services like integrated marketing

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Imaging by ANIL T

By Balaji Narasimhan

Vol/3 | ISSUE/07

2/14/2008 8:19:18 PM

Case File

Cube in the Cubicle services, data and transaction processing, among others. The company has operations that span 33 global facilities, including offices in Canada, Germany, Hungary, India, Philippines, UK and US, delivering services to Global 1000 automotive, financial services, technology and telecom companies.

Cooks and the Broth Considering its size and range of its many operations the need for setting up numerous systems was more than just apparent. “Transworks deployed multiple systems for its key operations such as recording, dialing, quality scoring, training evaluation and so on,” recalls Gajapathy. “However, each system had its own reporting mechanism, and the senior executive team had to access multiple dashboards to get these reports. Consequently, crossfunctional analysis was non-existent. The senior management found the process cumbersome, and weren’t sure of the reliability and accuracy of these reports.” At that time, Transworks was running a mix of applications on a range of platforms. Consequently, there was no integration and

To overcome these challenges, Gajapathy realized that Transworks had to integrate data from all these systems. And the best way, he felt, was to create a portal that would provide all the reports required by top management on a single platform. And that platform was to be called ‘Cube.’ While architecting the portal, Gajapathy wanted to ensure that the solution provided superior performance and for this reason, he chose Windows 2003 64 bit OS. Since top management wanted a greater level of accessibility, he used a Web-based front end with integrated security. The database functionality was provided by an ETL (Extract, Transform, and Load) tool developed using SQL Server 2005. Gajapathy says that Cube allows data presentation based on various parameters, like business verticals, business channels, and contact type across multiple sites. The ETL tool can also connect to heterogeneous data sources from various business units, and Cube also possesses the ability to drill down on all reports up to the transaction record level. The core of Cube lay in its capacity to analyze data. Therefore, each transaction record was stored to provide deeper analysis, points out Gajapathy.

Senior management can now view all the reports from a single location and also filter reports based on their requirements just by having the Cube in the comfort of their cubicles.

Solving the puzzle The data generated by Cube can get complex as it has to deal with information from various sources. Hence, it was suitably designed to possesses the ability to display animated flash graphs that represent multiple dimensions and also allows ‘slicing’ of data in fine layers. This made data easily readable and also helped in faster decision making. “Cube even provides trends analysis of agents across multiple sites, verticals and hierarchies,” says Gajapathy. Transworks also built .Net-based graphical interfaces that gave it a more professional look, and added a graphical dashboard for the reports. “Managers can now view reports in the form of speedometers, pie-charts, 3-dimensional or N-dimensional tables and charts,” says Gajapathy. But the biggest advantage of Cube has been the acceptance by the senior management. Gajapathy says, “Earlier, senior management never used to access reports because it was quite cumbersome. This flexibility has

Photo by Srivatsa Shandilya

no way of tying all the pieces together in order to provide meaningful and timely analysis to the top management. Matters were complicated by the scope of activities involved and naturally, the data generated pertaining to these activities was large. “We realized the need to help ourselves find ways of extracting data out of legacy systems, and turning the information into actionable data for decision-makers,” says Gajapathy.

“The executive team has been able to take decisions based on this innovation. So, we have decided that the scope should be expanded.” — N. Gajapathy, CIO, Transworks Information Services.

Vol/3 | ISSUE/07

Case Study.indd 35

2/14/2008 8:19:19 PM

Case File includes all our sites in other feels Gajapathy, has also geographies, encompassing improved his company’s seven countries.” competitiveness. “Cube Transwork’s future plans also has actionable dashboards include adding performance that are highly interactive SNAPSHOT prediction and data mining and also help in seeing TransWorks capabilities into Cube. the impact of previous Employees 11,000 Already, Cube is linked across decisions, and forecasting all sites of Transworks in how they will impact us Global Facilities 33 India, and sustains processing in the future. This sort of speeds of 15 lakh transactions comprehensive analysis Revenue (2006–07) Rs 1,510 crore per second. allows us to respond quickly Processing speeds apart, to change with effective CIO ASIA N. Gajapathy Gajapathy is pleased with decisions, and sharpens our the paradigm shift that Cube competitiveness has brought about in his organization. considerably.” Earlier, the company spent 90 percent of its In addition to the above features, since time gathering data, and 10 percent making Cube also stores all transactions, it enables decisions. “Now, we use 10 percent of the time the company to get a full understanding of to gather information, and spend 90 percent the history of all operations and changes, time in making decisions,” he states. He is thereby reducing compliance risk and also quick to point out that the solution has lowering the cost of maintenance and been achievable and cost-effective. auditing. Gajapathy says, “We can use Cube The extra time for decision-making, for just about anything. Management reports, While Cube has strategic importance, audit summaries, financial statements, it also plays a role in operations. For productivity results, analysis of various instance, divisions are also able to get processes and more can all be functionally cross-functional reports. For example, for and visually enhanced.” And this operational purposes, training and is not an idle boast — the agent performance can be easily Cube has been used correlated. The agent’s for everything from performances can be monitoring server categorized into different By bringing multiple systems onto a single platform, TransWorks has made monitoring uptime to cafeteria scales and the progress easier and given its senior management feedback. made by individual agents more decision-making power. Gajapathy feels that can be tracked. since Cube has improved “Cube has been the completeness, independently developed, accuracy, and quality of designed and implemented his organization’s data, the by a team of subject matter next step forward is to move experts, who understand from business intelligence the dynamics of this segment to predictive analytics. completely,” says Gajapathy. Tr a n s w o r k s has Thanks to the positive results, disengaged itself from the Gajapathy is keen on taking Cube vicious circle of a complicated forward aggressively. “The first monitoring system to the version went live in 2006. We simpler and defined Cube. have been appreciated by several The cubicle now, is not that customers, and the results have bad a place to be in. CIO Thanks to been tremendous. Since the With over 10 the Cube, senior executive team has been able to monitoring tools management spends take several decisions based on across various processes, 10 % of its time searching the results of this innovation, Assistant editor Balaji decision-makers spent for data and 90 % in making we have decided that the scope Narasimhan can be reached at too much time gathering reports. decisions . should be expanded. Cube now balaji_n@cio.in

ensured application scalability, enabling our organization to scale up to meet new requirements as growth demands.” Some of this usability has come from the fact that the Cube automates reports that earlier had to be generated manually. Giving an example, Gajapathy says, “For instance, let’s assume that the marketing team wants to run a campaign-wise analysis. Earlier, this had to be done manually, but with the new reporting application, the details of each campaign are converted into percentages so that comparisons across campaigns are easily possible. Now, especially for outbound campaigns, senior management can visually analyze patterns to determine whether a particular time of a day or a week leads to better results.” Thanks to this, these reports improve decision-making and even allow for midstream campaign corrections.

Going Forward

Infograp hics BY ANIL T

View from a Cube

Case Study.indd 36

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

2/14/2008 8:19:20 PM

Trendline_Nov11.indd 19

11/16/2011 11:56:19 AM

Slice & Dice

Che Guevara proved that everyone loves a rebel. Seventeen years ago, when C.K. Ranganathan set up CavinKare, many say he challenged the FMCG status quo in India. By targeting the rural market, he took on Big FMCG on turf they had called their own – and hadn’t figured out. To understand and supply rural markets, he used all the commonsense skills his father taught him and reinforced it with technology. Today, he continues to use IT to back up ‘gut-feel’ with numbers and to orchestrate differentiated marketing strategies across multiple markets. One industry watcher likened the company to 'a delighted host that divides its attention across audiences and tries its best to be inclusive.' The strategy seems to be paying off. What started off with Rs 15,000 has become a Rs 500-crore company with 11 brands. And over half of CavinKare’s revenues are generated by the rural market. Che also proved that rebels can’t be taken lightly.

CIO: CavinKare was among the first to offer products sold in sachets. What was behind this idea? 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.

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

View from the Top - 01.indd 38

By Kanika Goswami

C.K. Ranganathan: Actually, my father worked on that concept before I did. When he started, Godrej’s Velvette (a shampoo sold in sachets) was already present in the market. He thought something like that would work for him

as well. So, he developed a sachet-making machine. He made small bags, which could be filled with liquid and sealed off, and the small sachet was born. My elder brother carried on the family business and when I branched out, I took up the idea of marketing via small pouches. This is because we had observed that a man in the rural market prefers a fifty-paisa sachet of pickle that is enough for one meal, rather than buy a 200-gram bottle.

P hoto by chan droo

C.K. Ranganathan, Chairman and MD, CavinKare, says that in an organization that is defined by differentiated marketing strategies, IT helps to keep track of multiple market segments.

Vol/3 | ISSUE/07

2/14/2008 8:28:21 PM

View from the Top

C.K. Ranganathan expects I.T. to: Drive growth Help shrink inventory Substantiate gut-feel ideas

View from the Top - 01.indd 39

2/14/2008 8:28:24 PM

View from the Top

CavinKare started as a small-scale unit. How did you handle growth? When you’re growing from a small unit, it is fundamental to handle the emotions of the people who have made your growth possible. People grow with your growth but when you reach a certain level, suddenly opportunities fan out and some people cannot handle such a large canvas. Then, the organization must make an effort to train them and keep them growing. Despite this, sometimes people have limitations and are not able to hold up to the challenge. I don’t think this is a permanent limitation, just that people work differently at different times. That's when organizations must come together and handle such people appropriately. They need to talk to the individual and see what the organization can do. If this is not handled well, you will be allowing some incapable individuals to move on, which can harm both him or her and the organization. There are other challenges in expansion. You need to create infrastructure, IT, bring in money and recognize the needs of people. All of these are important. You need numbers as well as quality. Sufficient capital is needed, so is IT infrastructure. These are our growth drivers, and I think some of these are underestimated. In an attempt to get accurate data on time, people end up doing many repetitive exercises. Entrepreneurs who need to grow have to identify these problems.

What role did IT play? IT is a fundamental growth driver for us. Had we not transformed into an IT-enabled company, I don’t think we would have achieved the kind of growth we have. With so many distributors, it requires a lot of time to draw up such a large canvas across India. Getting sales data, production data — if these are done manually, no information can come on time. Then you start taking decisions based on gut-feel. This may be 42

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

View from the Top - 01.indd 42

“Had we not transformed into an IT-enabled company, I don’t think we would have achieved the kind of growth we have.” — C.K. Ranganathan okay for small decisions but for growth, decisions based on gut-feel can be very costly. Gut-feel is important but it has to be backed by numbers and statistics. Fortunately, we were able to get into technology very early — when none of our competitors did. When we were only about Rs 150 crore we chose to implement SAP. This was not something that many companies did. In those days, SAP was a huge product for a small organization. We could have been afraid since we weren’t sure we had the competence or expertise to handle it. But we had decided to develop those skills, and if you are committed to growth, everything will fall in place. If, in fear, you say you are not capable, nothing will work out. At CavinKare we have a nationwide distribution management system and vendor management systems to help us. These are Web-enabled processes and provide us with sales data from across the

country on a weekly basis. We are also implementing stockist-tracking software. This will allow a stockist to be connected to our Web-enabled system and give us sales data on a daily basis. Because this data will be connected to our ERP we will know how much inventory needs to be maintained. We will also get data for better supply-chain management. I will know if production planning is on track. It’s quite dynamic, and thanks to this network of information, I need not maintain too much inventory.

Differentiated marketing strategies play a huge role in CavinKare’s success. Is growth a driver? We base product development on customer feedback. As far as the importance of customer insight is concerned, at CavinKare, we consider it our fundamental driver. Understanding customers and their needs, and translating those into direct innovations, makes us what we are. I think that is the fundamental for marketing strategies.

What is technology’s place in the FMCG industry? Do is more or less important than marketing strategies I would say that marketing strategies and product technology are complimentary. Especially in the FMCG market, both are imperative. These two complete each other like a train rides on the rails laid below it — neither can function without the other.

You said money was a major consideration. Did innovation bring in funds? Many people who would like to start a business plan for the long term and gather experience. They never end up doing it. Then when they retire they look back and regret. Typically, people want grow in their career, get to comfortable level and then they don’t

Vol/3 | ISSUE/07

2/14/2008 8:28:24 PM

View from the Top

want to take chances. To be an entrepreneur, you have to be ready to let go, be ready to take risks. The fear of losing is the biggest enemy and many people suffer from it. When starting any business, ‘vitamin M’ is a very important resource. We used many innovative approaches to bring money into the system. We were perhaps the first in our segment to start outsourcing production. In those days, many companies did not consider it prudent. Fundamentally, we did it for two reasons: to keep cost under control and, contrary to what many people believed, to ensure that quality was delivered consistently. We broke that myth. The next thing was that we had very little capital investment. We just started focusing on infrastructure planning, distribution network and innovative strategies to develop products. No energies were wasted in daily production. And then people said ‘if you are not known, you have to sell on credit’. That’s another myth we broke. We might not have been known then, but still sold only on cash. We had many small innovations. Actually, as an entrepreneur, I think nobody has money problems, only a lack of ideas. People keep lamenting about a lack of money, but in most cases it is money-making ideas that they need to mobilize funds.

How does IT drive innovation at CavinKare? Consumer insight backed by technology is what drives innovation at CavinKare. For us technology permeates across the organization. It’s like the veins in a body. Today, without technology, you will be pushed back by two decades. You can’t compete in today’s world without technology. FMCGs are no exception, we need to innovate using the newest technology just as much as the other sectors.

For growth, what do you focus on: planning strategy or executing it? Vol/3 | ISSUE/07

View from the Top - 01.indd 43

If you are aiming at growth, fundamentally both are important, planning as well as execution. Excellent plans fall flat if not executed well, neither will great execution skills amount to anything without a good plan. You’ll only become a 'me-too'. Both need to go handin-hand for you to become a force in the market.

SNAPSHOT

CavinKare: Employees:

600

What plans do you have for your next generation of products?

Brands:

We are on a constant expansion spree. Over the Markets: last few years, we have been Personal, homecare, food adding seven to eight products to our kitty every year. We Stockists: About 1,500 just started floor cleaners, in our food range we are adding Outlets: 25 lakh (direct and value-improved cashews and indirect) dates. As far as innovations Turnover: are concerned, our floor Rs 500 crore cleaners are high-powered — only 1 ml is required against plan to 8 to 10 ml of our competitors. 11 brands

The Indian rural market is growing at double the pace of the urban market. How do you meet this challenge?

We have a separate channel for rural markets and another for department stores and malls. All product development is done keeping those channels in mind. For example, a person with a rural background will be uncomfortable in a superstore. He will feel better buying from a kirana store. What I need to do is to provide products that he can buy from the smaller shop. Even though department store products are very competitive, we have to undertand that people from a particular level have a different comfort level with these stores. Today 52 percent of our revenues comes from rural markets, the urban markets give us about 48 percent. From this last 7.5 percent comes from the export market in neighboring countries like Sri Lanka, Bangladesh, Nepal. We are now expanding aggressively into Singapore, Malaysia and the US. We have also developed products for supermarkets and launched in Gulf countries. We are doing exceedingly well with the products in those channels. What one needs are channels within channels. This calls for a different kind of people. We have translated this very efficiently into our sales strategy. That helps us hugely in coming out with products that are relevant to the markets we operate in.

Does your head of IT have a role in the development of these products? The technology head at CavinKare contributes hugely, particularly to sales operations and data collection across the country. IT is a major enabler in these activities. It’s very very important, especially to our most critical function: supply chain management. If you look at the formulation front of product development, data is captured before R&D can play its role. I need to do a huge number of formulations depending on product attributes. Ingredients need to be optimized. I have done about 10,000 formulations in the last three years, but to focus on the formulation that will give me the best results, I need help from technology. And that is why IT and technology play a huge role in our processes. CIO

Kanika Goswami is special correspondent. Send feedback on this interview to kanika_g@cio.in

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/14/2008 8:28:25 PM

Mid-Market

the

Tie

Binds that

By thomas wailgum

Imag Ing by bInESH SREE DH aRan

CIOs remain committed to ERP systems despite innovation, integration and cost issues. Why? Business can’t live without them.

Feature -02.indd 44

Can’t live with them, can’t live without them. That pretty much sums up how CIOs and IT leaders feel about their ERP systems, according to a new CIO magazine survey that primarily focused on small to mid-market companies. What they told us revealed the extent to which companies are completely married to and dependent upon their ERP systems. More than 85 percent of respondents agreed or strongly agreed that their ERP systems were essential to the core of their businesses, and that they “could not live without them.” But this marriage is also showing some signs of stress: CIOs are still plagued by complex system integrations, high cost of ownership and ERP systems that are difficult to use. They are also yearning for innovation from their vendor partners.

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Reader ROI:

Why ERP systems are more important than ever What mid-market CIOs want from their vendors Why alternative systems have yet to catch on

Vol/3 | ISSUE/07

Mid-Market

interoperability. Those days are over,” says Ray Wang, a And yet, CIOs appear unwilling or unable to divorce their principal analyst at Forrester Research. “ERP systems are companies from their ERP systems and try something new, more important than ever.” such as software-as-a-service (SaaS) or open-source models. In fact, IT leaders are entwined in this marriage for the The degree to which companies are wedded to their long haul. When asked if their company would be able to ERP systems comes as no surprise to Amy Doherty, CIO of live without its ERP systems within the next five years, more American Financial Realty Trust, a Rs 1,704 crore publicly than 80 percent disagreed or strongly disagreed. traded real estate investment trust. Doherty says that over For better or worse, it seems, ERP is here to stay. the past 15 years, companies have attached more and more critical data, including financials, to these systems. “The tighter your integration with ERP,” she says, “the more critical it becomes to your business.” So how are you using ERP? CIOs told us that their core ERP Doherty ought to know. For about two years, American modules were used chiefly for accounting and financial Financial Realty Trust has run a JD Edwards ERP module applications (96 percent); procurement, order processing and that’s specialized for the real estate industry. In that short supplier management (78 percent); inventory management time, it has become increasingly critical and popular, with (64 percent); and HR management and payroll functions (55 more internal business users and external partners wanting percent). (Multiple answers were allowed to the question.) to know “what it can do for them,” Doherty says. “It’s the When asked in which areas of their business ERP worked database of record in our company. We run our business best, respondents overwhelmingly cited the financial side on it.” of the house (70 percent). Next were procurement, order Doherty was one of nearly 400 IT leaders — all with their processing, supplier management (42 percent), inventory own ERP systems and tales of frustration and satisfaction — management (33 percent), and HR management or payroll who responded to our October (26 percent). 2007 survey. Seventy percent The vendors supporting of respondents said their the respondents’ companies businesses fell into the small were a who’s who of and midsize category (up to Rs enterprise software providers. IT leaders are reluctant to 3,996 crore in revenue). Nearly 20 percent of those change ERP systems despite struggling We wanted to know surveyed cited Oracle as their with integration and other issues. everything about their organization’s ERP provider, company’s back-office suites followed by SAP (14 percent); of financial, HR and inventory PeopleSoft (14 percent), % CIoss who definitely won’t consider dismantling management applications. which is owned by Oracle; their ERP systems in favor of other models Who were their trusted Microsoft (11 percent); Infor vendors? On which areas (10 percent); JD Edwards % (maintenance, upgrades, (8 percent), also owned by CIoss who probably won’t consider dismantling their licenses) were they spending Oracle; Lawson (6 percent); ERP systems in favor of other models the most ERP funds? How Sage Group (5 percent) and —CIo Research much innovation were QAD (2 percent). their vendors providing? In an age where all business What were their persistent challenges? And were they technology applications should provide some competitive looking at alternative ERP models, such as SaaS or openadvantage, 76 percent of IT chiefs said operational efficiency source applications? was the goal of their organization’s ERP investment, followed Our respondents answered those questions and more: by support of global business (12 percent), growth (5 percent) they strongly disputed IT scuttlebutt that ERP systems were and IT cost reduction (4 percent). The survey results did not now shrugged off as legacy inside 21st-century businesses. surprise Forrester’s Wang. “If you look at the [ERP] decision Almost 80 percent disagreed or strongly disagreed with makers,” he says, “you often find CFOs, CIOs and other the statement, “My company views ERP systems as legacy operational leaders.” systems and no longer invests in them.” Interestingly, just 4 percent of IT leaders said their ERP “There was talk in the past that ERP systems were system offered their companies competitive differentiation legacy, lacked the agility and flexibility, and did not support or advantage. However, Wang says that among SMB IT

The Big PicTure

Preserving the Status Quo 20.3 37.4

Vol/3 | ISSUE/07

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

Mid-Market dissatisfied with the level of innovation delivered by their leaders, his research shows that vertically focused solutions ERP supplier, nearly half declared themselves satisfied. (meaning those specific to an industry or business) are the Twelve percent weren’t sure. most important attribute for an ERP system, and make it Doherty says there’s a significant difference in what more likely to provide a competitive differentiator. ERP innovation means to To CIOs like Doherty, different CIOs. “I’m satisfied competitive advantage is just that they’re being innovative that: being able to leverage with their products,” she her JD Edwards real estate says, in reference to Oracle. applications as much as she CIoss are open to embracing ERP “But they’re not offering can for her business peers. alternatives although few have innovation for my business.” However, “there are some actually done so: For example, 'green industry differences as to buildings' are the next big when you can have competitive 43% thing in real estate. Doherty advantage with ERP,” she are re using or will consider using an alternative model says that’s an area where she says. For example, within the would welcome ERP systems financial services industry, 54% Won’t consider using an alternative model innovation. Her company’s where Doherty worked on ERP tenants as well as prospective systems for seven years before 2.8% not ot applicable ones are starting to ask for joining her current company, buildings that can “everyone’s got it, so there’s not —CIo Research improve energy efficiency really competitive advantage.” and lower energy costs. But in the real estate industry, To make such green a robust ERP package that is initiatives viable, Doherty’s company needs to integrate embraced by users can be more of a differentiator because ERP systems such as billing with newer building data they aren’t as common in this sector as they are in industries management systems that manage climate control such as financial services and manufacturing. “Then it systems. The payoff is happier tenants, and more efficient becomes how efficient you are at using your ERP systems,” and environmentally-friendly buildings. But “how she says. do we do that without it costing us a lot?” she asks. Given that For IT chiefs like Pam Haney, IT director at Irvine the market for real estate applications is so small, she says that Scientific, a Rs 112 crore life sciences company, issues of she can’t imagine ERP partners wanting to do that. competitive advantage are overshadowed by ever-present Irvine Scientific’s Haney also sounds pessimistic. “We’re customization needs with her ERP system. “What we’re not getting innovation,” she says. Although she’s a member faced with is having to deal with ERP packages that are not of QAD’s customer advisory board, she says it has taken designed for process manufacturers” like her company, says QAD too long (two years in some cases) to get new features Haney, who also took the survey. into its products. Her gripes range from the slow rollout of In turn, she has had to make do with bigger packages newer initiatives, such as electronic signature features, to that are 'revamped' for Irvine Scientific’s specific needs. still-missing functionalities from yesteryear, such as e-mail The problem lies in the fact that while her company is small, addresses in customer files. “This is 2008!” she says. “They “we have big company needs,” Haney points out, such as are so far behind on being innovative.” (Haney has since sent operations in Ireland that introduce multi-currency issues. RFPs to several new ERP vendors.) Given those currency and conversion issues, and the fact that To probe more deeply into how the vendors are doing, her current ERP system can’t reconcile all of the application the survey asked IT leaders to share how satisfied they were changes (such as in the shipping and invoicing tools), the end with the level of innovation provided based on access to result, she says, is that “we’re doing a lot things manually or information, flexibility, integration, total cost of ownership with customizations.” (TCO) and usability. Responses to the first three categories were almost evenly split between those who were satisfied and those who were not. The giant ERP vendors, with their workhorse enterprise But when it came to TCO and usability, CIOs reported packages, are not exactly hothouses of innovation for some interesting differences. On usability, CIOs were small and midsize companies. “The large vendors provide quite happy: more than 60 percent were satisfied or very innovations but no longer can get to the micro-vertical satisfied. On TCO, 54 percent were not very satisfied or not solutions that customers expect,” says Wang, referring to at all satisfied. “Cost of ownership continues to be onerous,” highly targeted, industry-specific applications. Yet while Wang concurs. In fact, 26 percent of respondents who were 38 percent of those surveyed pronounced themselves

What Alternatives?

innovaTion, Where arT Thou?

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

Mid-Market dismantling or considering dismantling their ERP systems But just how much have these challenges and struggles in favor of other models cited lowering their total cost of driven IT leaders into the arms of another ERP provider? ownership as a primary motivator. (Just under 30 percent According to our survey, not much. cited their desire for increased flexibility.) Just 9 percent of respondents reported using an alternative Wang says that in order to show better TCO, vendors ERP model. Those models included SaaS, open-source tools must deliver more value for the maintenance dollar, reduce and various in-house applications. Forrester’s data reveals maintenance fees and allow third-party vendors to compete. a similar trend, says Wang. “Our numbers also show SaaS Despite the persistent challenges, the majority of CIOs adoption in the high single digits and a reluctance to make surveyed planned to spend money on ERP software in significant adoption of new models,” he says. 2008. While 11 percent were making a new purchase, 54 Historically speaking, CIOs have been reluctant to take percent planned a minor or major upgrade next year. Just many chances with their ERP systems. (Can you imagine over 25 percent said they weren’t spending on ERP software, this conversation: 'Should we try something completely and 10 percent were not sure. Total annual ERP costs were untested with our company’s most critical data?') Irvine split among maintenance (35 percent), services (including Scientific is regulated by the Food and Drug Administration, upgrades, integration and consulting work — 34 percent) which makes Haney leery of untried technologies that could and licensing costs (32 percent). run afoul of FDA restrictions or mess with the company’s It seems that there are always costs with ERP systems, even if ERP audit trail or security functionalities. “There’s some a company isn’t upgrading to the next edition. “There’s always open source that I’m using in IT, but would I want to go been something, whether open-source ERP?” she implementing new modules, says. “I’m not so sure. I’m customizing or paying for pretty conservative.” ongoing maintenance,” Haney Doherty says that says. “And if you don’t pay she’s open to looking at operational perational efficiency — not maintenance, and then you let alternatives. But with competitive advantage — is what drives [the contract] expire, when you something like open-source investment in ERP. do an upgrade in the future, ERP systems, she’s not so you will have to pay.” sure. “It’s not proven yet,” 75.8% she says. CIOs who said their primary goal was to gain The results of the operational efficiencies survey illustrate that 11.5% reluctance. Nearly 54 Support of global business percent of those responding Beyond ongoing expenses, 5.1% said they probably or CIOs face many persistent Growth definitely would not challenges with their ERP 4.1% consider moving to an systems. (We didn’t offer CIOs who said their primary goal was to gain alternative ERP model. And 'costly implementation' as competitive advantage while 35 percent of CIOs a choice, but it is sure to 3.6% said they would probably have been high atop many IT cost reduction or definitely consider trying CIOs’ lists.) IT leaders —CIo Research something different, they’re found themselves stymied not actually doing it. Yet. by complicated systems So with a reluctance to integration (39 percent), a lack go whole hog on a new ERP endeavor, Haney, like other IT of customization around particular business strategies (38 leaders, will plug away with what she has and work to wring percent), high cost of ownership (36 percent), difficulty in more efficiencies out of the core system that is the backbone accessing or extracting useful information (32 percent), and of Irvine Scientific’s business. “We are trying to continually systems that were difficult to use or not intuitive (31 percent). use more of the products and be more efficient and give the None of this is news to Haney or Doherty. That’s system more functionality,” she says. “We are very much the cost of doing business with ERP, they say. What dependent on it. I couldn’t say enough about that.” CIO does surprise Doherty, who is president of the Greater Philadelphia PeopleSoft-JD Edwards user group, is that the challenges are both ongoing and so pervasive among CIOs. “It’s frustrating that software firms are not jumping through hoops to fix them,” she says, “because we all have Thomas Wailgum is senior editor. Send feedback on this feature to the same problems.” editor@cio.in

Efficiency Advantage

inTo The arms of anoTher vendor?

Vol/3 | ISSUE/07

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

Customer Focus

Customer, Future Your

Your

For CIOs to truly become businesspeople, they need to start thinking about — and organizing IT for — their business customers. By Cindy Waxer

Reader ROI:

Why customer focus means IT re-organization How to engage with the customer What IT attitudes need to change

Feature -01.indd 48

Let’s face it: the work of making the customer happy rarely tops an IT professional’s to-do list. Unlike slashing costs, boosting revenue or pushing the envelope on innovation, increasing customer satisfaction simply (and unfortunately) doesn’t fall under the umbrella of buzz-worthy IT undertakings.

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

2/14/2008 6:23:49 PM

Customer Focus

“Many CIOs are a little cavalier about making raising customer satisfaction an explicit goal,” says Harley Manning, vice president and director of Forrester Research’s customer experience group. Rather, he says, objectives such as cost avoidance and innovation are far more likely to receive top billing on a CIO’s project roster. That’s because not only is bolstering customer loyalty a hard sell among corporate bean counters, its (arguably) intangible benefits and its (allegedly) nebulous returns often make it a thankless job. After all, when it comes to customer feedback, CIOs typically hear one of two things: harsh criticism or the sound of one hand clapping. But despite this history of practical difficulties and emotional disincentives, some of today’s top CIOs are making customer satisfaction a priority — and reaping huge rewards as a result. They’re discovering that focusing on the customer can yield substantial benefits, including (but not limited to) saving money, increasing sales and enhancing productivity — as well as keeping the customer satisfied. In fact, by tackling customer-centric IT projects, CIOs can reshape their role as key corporate players and position themselves for greater enterprise responsibility by aligning with the major concern of their executive peers and bosses. Business, after all, is all about serving the customer. If you want to be part of the business (and you do, don’t you?), you want to be a part of that.

gas and electric metering system allowing PG&E to collect data without setting foot on a customer’s property. Electric meter data travels along a system of power lines to a PG&E data center for processing while gas meters rely on radio frequency transmitters to deliver data back to the company via a public wireless network. Once a SmartMeter system is up and running, PG&E can collect energy usage information regularly and pinpoint power outages as they occur. Future plans include allowing customers to access their usage data online, and the information is broken down so they can better manage their energy consumption and expenses. For example, a homeowner may discover that running the dishwasher every day at 4 p.m. is 20 percent more expensive than waiting until midnight. “The SmartMeter project is geared toward letting our customers have more control over their energy consumption while helping them save money in the process,” says Lawicki.

Customer Focus Means Organizational Change Pat Lawicki lights up when discussing her customercentric IT initiatives. As CIO of Pacific Gas and Electric Company, a Rs 50,000-crore San Francisco-based utility, Lawicki serves 150 lakh customers scattered across twothirds of California. Among them are Silicon Valley behemoths such as Hewlett Packard, Sun Microsystems, Oracle and Cisco. So when the California energy crisis, the Enron debacle and an executive staff overhaul in 2005 threatened to permanently tarnish PG&E’s reputation with its customers, Lawicki began working on a series of customer-focused projects. The centerpiece of her efforts was PG&E’s SmartMeter program which provides customers with an automated

Vol/3 | ISSUE/07

Feature -01.indd 49

Pacific Gas & Electric CIO Patricia Lawicki says the success of customer-focused initiatives hinges on “sitting down with all the lines of business.”

REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/14/2008 6:23:55 PM

Customer Focus By end of 2008, it’s expected that 16 lakh new meters analyze “the large amount of technology investment that will be installed across northern and central California, was required” to revamp PG&E’s approach — and her and within the next three years, PG&E wants to have the own — to her customer’s satisfaction. SmartMeter program up and running in nearly 60 lakh homes and businesses. But as they provide customers with real-time insight into energy consumption, saving customers cash and the hassle of having to call PG&E to report outages Leonard Peters, associate dean and CIO at Columbia seems like a no-brainer. Lawicki says that launching Business School in New York, knew it was time to customer-focused initiatives (including a service that replace his school’s “antiquated and clunky” course allows building developers to apply for new gas or management system when he began to receive “a ton” of electric service connections online) wasn’t as simple complaints from faculty and students. as flicking a switch; it called for a complete overhaul of So, in fall 2005, he began evaluating a number the company’s IT organization in order to enable it to of vendors. After an in-depth review of courseware function as a single, centralized entity. products, he chose Angel Learning. Deployed at the The first step was creating a Solution Delivery Center beginning of the summer 2007 semester, the Web-based dedicated to the consistent delivery of IT solutions. This e-learning solution lets students track upcoming and group of employees, including IT staff, the VP of marketing overdue assignments, send and receive e-mail, schedule and subject matter experts from other lines of business, events, check grades (if used by faculty), participate in focuses on the skills needed to provide services and discussion groups and create teams for project work. It solutions to PG&E’s business partners and customers. also allows faculty to administer pre-course work more Prior to introducing the Solution Delivery Center, Lawicki easily and communicate requirements for multiple says IT-related processes, such as providing Web-based courses from a single, Web-based application. customer support, depended on whichever PG&E But the intense competition among business schools department a customer was dealing with. By replacing for students and faculty meant Peters couldn’t take any a hodgepodge of departmental styles, approaches and chances on the system’s design and functionality. In systems with a body that ensures consistent, enterprisewide addition to working with Angel Learning to customize it, IT processes, PG&E cleared the way for undertakings such in 2005 Peters partnered with both faculty and students in as the SmartMeter project. order to create a baseline of The creation — and requirements. He cobbled re-examination — of IT together a group enrolled roles also readied PG&E in the school’s New Product for other customer-centric Development course to endeavors. A newly determine what the system’s fashioned chief customer key attributes should be. He officer, responsible for then used a video-grapher all aspects of customer to record faculty members service at PG&E, works and staff sharing their with the IT department thoughts on the antiquated to design customersystem’s shortcomings and focused strategies and their expectations for the develop products around new solution. customers’ needs. Even Dubbed 'Voice of the Lawicki had to step back Customer Sessions', and assess the part she was Peters shot 28 hours to play in the company’s of video, edited it into new approach to customer 40-minute segments, and satisfaction. Upon careful then posted them on the consideration, she began business school’s intranet to see her role at PG& E as streaming media clips Columbia Business School CIO Leonard Peters recorded as 'transformational' and, for all to see. faculty members and staff sharing their thoughts on the drawing on her years of By engaging the school’s old sytem’s shortcomings and their expectations for the weathering mergers and customers (its faculty and new solution. acquisitions, started to students) in the system

To Serve the Customer, Engage the Customer

Feature -01.indd 50

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Vol/3 | ISSUE/07

2/14/2008 6:24:02 PM

Customer Focus design process, Peters says, “People felt like we really got it; we really understood what the challenges were and where we needed to take the course management system. And that helped generate enormous credibility.” Peters’ strategy of soliciting customer feedback in the design phase didn’t end with the roll-out. Currently, Peters performs weekly health checks of the system — the results of which are regularly communicated to faculty and students, along with notifications of system updates and modifications. There is also an advisory team that has constituents from around the community who are focused on the continued improvement of the environment. For example, some faculty members post quizzes on the system. Answers are hidden until a pre-determined time and date, at which point they’re automatically released for public viewing. An early, unintentional release of quiz answers, however, would be ruinous. So Peters performs regular checks to ensure that the system is configured properly, and to notify faculty members of upcoming content release dates. “Probably one of the best things we do is the health checks,” says Peters. “More than anything, it ensures quality.” In fact, by keeping faculty and staff informed of the course management syst e m’s t e ch n i c a l gl i t ch e s , modifications and latest capabilities, Peters has greatly reduced the number of help desk incident reports from 70 during the week of September 17 to a mere 11 during the week of October 8. And, he says, the kids love it.

Unlike the User, the Customer is Always Right

3 Tips for Customer-Focused IT Leaders Talk to the Users Develop a customer-focused project in a vacuum and you’ll end up being the only one who likes it. The counsel of third-party providers and your customers is essential. “Hire a project manager who knows your customers’ line of business,” says Adirondack Medical Center CIO Mike Kelly. “Involve your customers from day one. Let them know that this is their project, not yours. Provide all the support they need.” Pacific Gas and Electric CIO Patricia Lawicki is quick to agree. The success of her automated gas and electric metering systems hinged, she says, on taking “a holistic approach” by “sitting down with all of the lines of business and instilling the concept that the sum of the parts is greater than any individual project.” Focus on the ROI Convincing corporate bean counters that a customer-centric project is worthy of a sizable investment is often a hard sell. That’s why it’s crucial IT project evangelists convert intangible benefits such as increased customer satisfaction into hard ROI figures that will pry open a corporation’s coffers. Says Harley Manning, vice-president and director of Forrester Research’s customer experience group, “My first piece of advice would be start with the hard metrics. And when all you have is soft metrics, take the time to make the connection to a hard metric.” For example, try translating customer satisfaction into measurable variables such as customer retention, increased revenue per transaction and lower customer support cost. Be Patient If you’re expecting customers to fall madly in love with your creation the moment it goes live, you’re likely to be disappointed. “You need to transition people as gracefully as possible to a new system,” says Leonard Peters, associate dean and CIO at Columbia Business School in New York. So when Peters introduced faculty and students to a new course management system, he made certain to offer targeted and customized training. Training opportunities ran the gamut from classroom sessions and one-on-one consultations to student forums and lunch-and-learn programs. Change is hard and people don’t like it, even when the change is for the better. Give your customers time to get used to it. —C.W.

Adirondack Medical Center’s private practitioners didn’t just ask for a new electronic health records system in early 2004, “they demanded it,” according to Mike Kelly, CIO of the Rs 320-crore New York-based healthcare network. Composed of an acute care facility, two longterm care facilities and numerous outpatient facilities,

Vol/3 | ISSUE/07

Feature -01.indd 51

AMC services 50 private practitioners who either care for patients or refer patients to the organization’s services. One of the primary goals of AMC’s EHR system is to share patient information across New York’s 26 regional healthcare facilities in a secure, HIPPA-compliant manner. Electronic patient medical records may include reports on past diagnoses, surgical procedures, imaging studies, allergies, drug histories and laboratory test results. By providing REAL CIO WORLD | F E B R U A R Y 1 5 , 2 0 0 8

2/14/2008 6:24:02 PM

Customer Focus doctors with greater access to this information, AMC’s goal is to ensure that physicians can provide patients with care appropriate to their conditions and that the delivery of this care is accurately recorded and preserved. On this last issue, Kelly says that “Our physician community is justifiably concerned that in order to be paid for their services in the future, they’re going to have to provide greater documentation that they actually delivered the services that they claimed to provide.” But while it was clearly time for AMC to graduate from its antiquated system of paper charts and place patients’ medical records on their physicians’ laptops and desktops, Kelly and his IT department knew the transition wouldn’t be easy. Although AMC’s physicians were “eager adopters of medical technology,” Kelly was also aware that his customers — those same physicians — were a notoriously demanding group and jealous of their time and that it would be a hard sell convincing them that enduring stringent HIPAA-mandated online security measures would be worth their trouble. “Our physicians viewed authentication, backup, permissions and access control as nuisances designed to aggravate them and slow them down,” Kelly says. Rather than fight a lonely, uphill battle, he developed a number of strategies to garner support. For starters, he held regular meetings with AMC’s medical staff to involve them in the decision-making process on everything from software and hardware purchases to ISP and networking selections. In this way, Kelly sought to reduce potential friction and encourage a sense of collective ownership of the project. Next, he hired a project manager with extensive physician office billing and management experience to lend expertise, credibility and an objective voice. Finally, the IT department held training classes for end users, including hospital sponsor meetings, at 7 a.m. or at 5:30 p.m. to accommodate the physicians’ schedules. “Our physicians now understand that IT projects are very complex and very time-consuming,” Kelly reports, “and, as a result, they’ve become our biggest fans.” For good reason: since introducing the EHR system last year, some of AMC’s private practitioners reportedly have been able to treat an average of five additional patients a day — 20 additional patients a week. By tracking patients’ visits electronically, AMC has managed to cut the time it takes its many of its physicians to be reimbursed by 20 percent. And plans include building a patient portal (scheduled for a 2009 release) so that patients can take a more active role in their health care choices.

Adirondack Medical Center CIO Mike Kelly says their physicians viewed authentication, backup, permissions and access controls as nuisances designed to aggravate them and slow them down. fully prepare a CIO for the rigors of a customer-focused IT undertaking, or guarantee its ultimate success, understanding the nature of the beast can make a huge difference. AMC’s Kelly, for example, knew that physicians won’t stand for being dictated to. Columbia Business School’s Peters understood that implementing anything for a group of academics was as much about managing their expectations as it was about devising an implementation plan, no matter how sophisticated. IT accomplishments in higher education are often measured by alumni support and school spirit — customer satisfaction — not simply by dollars alone. “The returns we get are very different from a corporation,” Peters says. In all cases, however, CIOs who are embarking on customer-facing projects need to remember something no businessperson ever forgets: the customer is always right. CIO

Making the Change While no strategy — whether it’s getting ground-floor support, forging alliances or collecting feedback — can 52

Feature -01.indd 52

F E B R U A R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

Cindy Waxer is a frequent contributor to CIO. Send feedback on this feature to editor@cio.in

Vol/3 | ISSUE/07

2/14/2008 6:24:07 PM

Essential

technology What’s the only thing an enterprise user loves more than his blackberry? The laptop PC. That relationship will soon be spiced up by slimmer designs, smarter storage and faster boot-ups.

Vol/3 | ISSUE/07

Essentisl Tec.indd 53

From Inception to Implementation — I.T. That Matters

What’s Next For Notebooks By John Edwards Mobile | Notebook vendors should pay more attention to their enterprise customers, says Gabriel Vitus, IT director of the Vancouver-based Certified General Accountants Association of Canada. "Not only on the big issues, but also on the little things," he says. "Like button placement." Even today, many CIOs feel that too many notebooks have batteries that conk out in the middle of a job, weigh too much, or fail to keep critical information secure. "There's plenty of room for improvement," Vitus says. Yet as 2008 dawns, CIOs have some reason for optimism. Notebook makers are prioritizing improvements to design, storage, and displays that could make the notebooks of 2011 quite different than the workhorses of today. "Notebooks are rapidly evolving and improving," says Rob Enderle, principal analyst of the Enderle Group consultancy. Does a three-pound laptop that runs some eight hours sound good to you? Then you may like the machines of 2011. If one company has its way, you may also be able to use those machines for quick e-mails and Web browsing without firing up Windows. REAL CIO WORLD | F E B R U ARY 1 5 , 2 0 0 8

2/14/2008 6:20:31 PM

essential technology

The Obesity Problem Like a growing percentage of the US population, notebooks face an obesity crisis. Vendors must respond to increasing performance demands while keeping their products from inflating to unacceptable dimensions. To balance the parameters of weight and size, batter life, durability, security and performance, notebook vendors must work as carefully and precisely as a Swiss watchmaker. And to counter bloat, vendors are looking to lighter materials, more highly integrated components and new space-saving design approaches. "Design is an overarching trend," says Enderle. "Dell has tripled the size of its design staff," he says, adding that Lenovo and Toshiba will continue to stand out among mobile vendors known for cuttingedge designs. "Design is becoming a key battlefield, and buyers will ultimately benefit by receiving more powerful and compact notebooks," Enderle says. What kind of design changes are we talking about? Look for more case colors,

technology's biggest challenges — its high cost and relatively low capacity (the current ceiling is about 64GB per solid state drive) — should fade away, Shim says. "The benefits will be enormous," he says. "By getting rid of spinning hard drives, you will both boost the seek time and save energy." Within three years, about 15 percent of enterprise-class notebooks will have pure solid state drives, predicts Jack E. Gold, president and principal analyst of J. Gold Associates, a technology strategy consulting firm. "The rest will slowly transition to hybrid drives, where you have magnetics but also a front-end solid state component to speed them up, which also helps power management," he says.

ANew Display Just as solid state memory could transform notebook storage, OLED (organic light emitting diode) displays could radically change the way users look at their systems. But this technology looks to be a bit further out. Compared to conventional LCDs, organic

To balance the parameters of weight and size, batter life, durability, security and performance, notebook vendors must work as carefully and precisely as a Swiss watchmaker. more metals, sleeker designs, brighter displays, better speakers, better integrated cameras, quieter fans, lighted keyboards, secondary displays and more exotic screen hinges, Enderle says. At the same time, a storage revolution promises to attack several notebook problems, including weight, speed and power drain, says Richard Shim, a notebook analyst at IDC. "Solid state drives — flash memory — will change notebooks by providing a medium that's faster, less fragile and more power friendly," he says. During the next few years, solid state 54

Essentisl Tec.indd 54

F E B R U ARY 1 5 , 2 0 0 8 | REAL CIO WORLD

displays are thinner, brighter and less power hungry. The technology already serves a niche market — small, high-quality displays for mobile phones and media players. Notebook-sized 10- to 12-inch organic display prototypes shown by Sony in early 2007 offer an eye-pleasing 1,000,000:1 contrast ratio. Because organic displays emit light rather than reflect it, the screens provide significantly better outdoor viewing than most current notebook LCDs, which wash out in sunlight. Flexible organic displays are also more or less unbreakable, says Robert Street,

a senior research fellow at the Palo Alto Research Center (PARC). "That would be a huge benefit in notebooks, especially in ruggedized models," he notes. The problem is, manufacturers haven't figured out how to affordably massproduce them yet. (In October 2007, Sony announced an 11-inch OLED TV display, priced at about Rs 68,000.) Building affordable organic displays into notebooks will require transforming laboratory techniques into affordable processes for volume production. "We think that an inkjet printing-based approach shows great promise," Street says. He says it may be only a couple or years before the first notebooks featuring organic displays begin appearing on the market. Some notebook vendors say the wait for OLED's debut may be more like four years.

Energy Crisis Dim displays can be annoying. But poor battery life may be the biggest gripe among notebook users today — and unfortunately, there's no brilliant new battery technology waiting in the wings. Why are notebook users so cranky about batteries? For starters, while battery technology has progressed markedly over the past several years, powerful microprocessors, wireless transceivers and other enhanced components have more than gobbled up those energy gains. Lithium ion remains the current gold standard for notebook batteries, and notebook makers say they're not expecting a successor that supplies more notebook power without driving up system weight or size anytime soon. Instead, today's notebook makers are focusing on other power-saving techniques, such as intelligently throttling back the power to various notebook components. "I'm not anticipating any significant change in battery technology in the foreseeable future," says Brett McAnally, senior manager of Dell's Latitude notebook PC product group. "To provide longer battery life, we'll have to look toward

Vol/3 | ISSUE/07

2/14/2008 6:20:31 PM

essential technology

optimizing devices by analyzing user behavior and saving power consumption wherever we can," he says. "Right now, that's the best approach."

Stepping Up Security On the security side, most CIOs still live in fear of lost notebooks. But that's changing, as encryption and options like fingerprint readers become easier to manage and more powerful. Xavier Lauwaert, VAIO product manager for notebook maker Sony Electronics, predicts a growing number of notebooks shipping in the next few years incorporating advanced biometric devices, such as voicerecognition systems and webcam-based retina scanners. "Enterprises that handle a lot of private information, such as banks and insurance companies, will consider these technologies a rather inexpensive investment when compared to the risks involved," he says. Companies such as Absolute Software already offer Computrace, a 'LoJack for Laptops' type service; this helps enterprises track down, lock-up and recover errant notebooks by tracing IP addresses transmitted by stolen machines. Phoenix Technologies, best known for supplying BIOS software to PC vendors, wants to take the LoJack approach to the next level. Its new FailSafe notebook management system, which notebook makers can embed into the PC's core firmware, helps track, control and recover lost or stolen notebooks. Users can encrypt, lock and even destroy data on lost laptops to protect sensitive or private information. "The idea is not only that you can locate, very quickly, a stolen notebook, but wipe its hard drive clean," Enderle says. "By putting the code in BIOS, that makes it even more difficult to remove, or even know it's there." Look for FailSafe in notebooks starting in mid-2008, Phoenix says. Perhaps even more intriguing, Phoenix is pushing embedded virtualization technology for laptops that it calls HyperSpace: this technology would let

Vol/3 | ISSUE/07

Essentisl Tec.indd 55

Your Laptop, Circa 2011

What might enterprise notebooks look like in three years? Here's the vision from Kevin Wrenn, senior vice president of PC business operations for Fujitsu Computer Systems: "The ideal notebook in three years will weigh three pounds, offer a 14-inch screen [and] deliver eight hours of battery life," he says. That may sound like a pretty bold prediction, even for thin and light notebooks. But analysts like Jack E. Gold, president and principal analyst of J. Gold Associates, a technology strategy consulting firm, concur. "You will see thin and light machines — three pounds or less — with battery life of eight-plus hours for road warriors," Gold says. Integrated support for wide area wireless technologies, such as WiMax or another type of Wireless wide area network (WWAN), will also be standard, Wrenn says. "Integrated WWAN will be a must," he says. "Fees and costs will begin to go down and WWAN will become the industry norm." On the storage front, Wrenn believes that hard drive capacity will soar beyond 300GB and solid state drives will surpass 100GB. "Once ubiquitous wireless is achieved, online storage will gain in popularity," he predicts. Notebook operating time will be extended through enhanced automated resource management combined with slightly higher capacity battery cells. "By doing this effectively, we are able to turn off devices when not needed, thus saving power and reducing heat," Wrenn notes. "Expect this trend to continue, but in addition we will see battery capacity creep up in ratings." Wrenn believes that the transition from square to rectangular 'widescreen' displays will be all but completed by 2009. But flexible OLED displays are at least four years away, for large displays in laptops, predicts Wrenn. And what will such a dream machine cost? "When have you ever known [notebook] prices to increase?" is Wrenn's response. "Initially, pricing will be high for some of these items," he predicts. "But, as always, they will reduce [in cost] and find their way into the mainstream." —J.E.

notebook users boot up in seconds and use applications such as e-mail, a media player and a Web browser without firing up Windows. (If you've ever used an Apple MacBook that powers up in seconds, you know how appealing this sounds, compared to waiting for Windows to load.) Phoenix hopes the first laptops to with HyperSpace embedded in them will appear in 2008.

‘OutThere’Ideas Overall, enterprise notebook vendors tend to have one trait in common with CIOs: they treat new technologies conservatively. That means some much-discussed ideas take years to actually crack into enterprise machines. What notebook technologies remain stuck in neutral? "People still talk about fuel cell [batteries], and there are still quite a few companies

that think they'll put fuel cells into notebooks within the next few years," Gold says. But he doesn't believe that notebook users are exactly anxious to begin carrying vials of volatile liquids in their pockets and briefcases. "That's still kind of 'out there'," he says. This suits CIOs including Vitus just fine. "We're simply looking for affordable notebooks that allow us to work more efficiently and productively," he says. "We'll leave the gee-whiz to somebody else." CIO

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

REAL CIO WORLD | F E B R U ARY 1 5 , 2 0 0 8

2/14/2008 6:20:31 PM

Pundit

essential technology

AsYe SOA, So ShallYe Reap We’ve created a wall of jargon around IT. It’s time to pay the price. By michael hugos communication | I got a call from a reporter who was doing an article on SOA and wanted me to clarify some things. I told him I’d be glad to share my wisdom on the subject. He began by asking me to define SOA. “Oh boy,” I thought. “This guy doesn’t understand the simplest things. Where’s he been for the past three years? I guess it’s my duty to explain IT to the masses.” I took a deep breath and said, “Now, this is pretty complex, so listen carefully and take notes. " “SOA stands for service-oriented architecture; that means you use services to orient your architecture. Are you with me?”

object-oriented design and programming. Aren’t what you now call services the same as what you used to call objects? And weren’t those objects also supposed to be loosely coupled?” He was starting to bug me with his smarty-pants questions. I patiently explained that object-oriented stuff is old hat, last century, ancient history. I told him that SOA is the way we do things now and that he should stop cluttering up his head with useless, has-been ideas. He persisted with this irritating line of questioning, but I did my best to stay polite. “Tell me how this is different from objectoriented,” he said. I told him that SOA is

“Then you get those SOA — or ‘Sowa’ — systems cooking away, and you use complex event processing — we call that CEP, or ‘Sep’ — to keep track of what’s going on. And then the last thing you do is to deliver those Sep Sowa systems — we IT guys also like to call them composite applications, or CA (not to be confused with the vendor called CA) — is create a personalized Web-based portal. And there you have it. “Oh, and I almost forgot: You also need to have a WSDL — that’s ‘Wizdle’ — to be able to define all the objects — I mean services — in your company that you can use to create your Sep Sowas.”

Do you know what PCMCIA stands for? 'People Can’t Memorize Computer Industry Acronyms.' “OK, but please explain what that means,” he persisted. I told him that you could think of all your existing systems as being made up of services. You could create new systems by recombining services you already have and writing a couple of new services. Presto! Whole new applications developed right before your eyes. Of course, you have to make sure those services are loosely-coupled so they bind properly at runtime. “Is this like code reusability, which IT people have been talking about since the mainframe days?” he asked. I told him no, this is different. This time we really mean it; we’re not just talking about it. His next comment was, “This sounds a lot like 56

ET-Pundit.indd 56

F E B R UA R Y 1 5 , 2 0 0 8 | REAL CIO WORLD

standards-based. I figured that ought to put him in his place. Then he asked if these standards are like the old CORBA or DCOM standards. He was pushing my buttons now. I took another deep breath and continued. “In the bad old days, all we had was CORBA and DCOM, and let me tell you, that was a hassle because people didn’t agree on those standards, so they weren’t any good. Now, with SOA, all you do is make a UDDI — we call that ‘Uddie’ — and that’s what lists all the services in your company. Then you use SOAP, or ‘Soap,’ to get those services to talk to each other over a service bus. Think of that like a real bus, as in, ‘You gotta get the right services on the bus.’”

Then, to really drive home my point, I said, “And remember, SOA is business-based, not like all that old stuff that came before and fussed over lots of technical bits and bytes things.” The reporter was silent. I figured I’d finally gotten through to him. Then he asked, “Do you know what PCMCIA stands for?” “Of course,” I said. “Personal Computer Memory Card International Association.” “No,” he said. “It means ‘People Can’t Memorize Computer Industry Acronyms.’” Then I heard a click: the line went dead. CIO Mike Hugos is the author of Building the Real-Time

Enterprise. Send feedback on this column to editor@cio.in

Vol/3 | ISSUE/07

2/14/2008 6:21:25 PM