CIO November 15 2008 Issue by Sreekanth Sastry

leaDershIp

voL/04 L/04 | ISSUE/01

3rd

TeChnOlOgy

ANNIversAry NNIversAry ry Issue

Despite the slowDown own

BusIness

50%

of IT leaders say that they plan to increase staffing in 2009.

Our first-ever State of the CIO Survey explores the CIO’s evOlvIng rOle and defines nexT year’s agenda.Page 18 here anD there

31.9%

of IT leaders admit to quitting an organization in under two years.

novEmbEr 15, 2008 | rs100.00 www.C I O. I N

Cover Final.indd 1

what’s insiDe: De: Dr. subir gokarn okarn on the State of the Economy

Keeping it within

rajeev ajeev Chandrashekhar on the State of the Industry

less than a third of CIOs outsource less than

Indian IT leaders on handling a slowdown, transforming into a business strategist and whether India Inc. is under-invested in IT.

of their IT operations.

10%

11/18/2011 9:38:08 AM

From The Editor-in-Chief

“Intuition and flying-by-the-seat-of-your-pants have no place in this environment.” “While sitting at a management table you can’t wear the CIO hat.” “Get your priorities right, and get street smarter.” “As pedestrian as it may sound, follow the basics.” “Figure out ways to contribute to the top line.” “Make yourself indispensable to the customer.”

These are some of the voices in this special issue, which marks CIO Magazine’s third

Listen Well; Listen Wisely The slowdown doesn’t equal shelving your plans.

anniversary in India. These are voices of CIOs and CEOs and economic gurus; voices of wisdom, of knowledge, and of insight. Voices that are not dimmed or diminished by the fog of uneasiness that has descended over our great land — a nervous haze By tweaking your focus from created as much by incidents on faraway just IT to that of business, shores as it has been nurtured by you’ll be better prepared to speculative euphoria overwhelming good accelerate growth once the sense on ours. brakes come off. These voices speak to us of dealing with tough times and tougher situations. But as they do so they are not prescriptive, rather they mark trails that have been blazed by standout individuals, trails that serve very well as markers to a better tomorrow. They offer advice on issues which might seem diverse and far removed. You might ask what’s the connection between surviving a slowdown and not thinking like a conventional IT leader or between the state of the economy and that of the CIO role? The points of intersection are varied and many. So much so, that slowdown and innovation are not mutually exclusive. Au contraire. One of the many voices in this issue, Dr Subir Gokarn, chief economist, Standards & Poor’s (Asia-Pacific) makes a call for re-inventing organizational commitment to innovation and adhering to it regardless of business conditions (Page 44). Another, is that of FICCI president, Rajeev Chandrashekhar (Page 50), who advocates sticking to the plans that your organization had, and seeing them through with greater rigor. I’m especially grateful to 226 of your peers who shared their thoughts in our first ever State of the CIO Survey (Page 36). Many voices speak here, warmly resonant with the changing dynamics of the role, indicating the path that lies ahead. Advice is a curious thing. It’s not always easy to follow. Easier to provide, you’d think. Except when it comes by way of years of walking the talk; of falling, of failing, and of trying once more. Mere advice this? Not really. But, counsel, guidance, encouragement and hope? Absolutely!

Vijay Ramachandran Editor-in-Chief vijay_r@cio.in 2

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e is sU iv er 3r sA d ry n An

content novemBeR 15 2008‑ | ‑vol/4‑ | ‑issue/01

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20 I Surviving the Slowdown

44 I “We’ll Bounce Back in 2010”

STr aTegy Growth is slowing down whether you like it or not — and it won’t be exclusive to a few verticals. Shopper’s Stop’s group CTO points out that this is only the beginning. As the CIO of a sector under fire, he tells you how to manage. By Arun Gupta

STaT e oF T he eCo no m y Dr. Subir Gokarn, executive director and chief economist, CRISIL, shares his views on the economy, how to get by, and why you’ll probably be stronger for it. Interview by Pankaj Mishra

24 I Make the Business Your Business Leade rShi p There are two parts to every IT leader’s job: the nuts and bolts and the business. Bharti Enterprises’ Group CIO urges CIOs to shed their ‘IT gatekeeper’ tags and don their business hats in order to fulfill their roles. By Dr. Jai Menon

50 I “Be Paranoid and Cautious” STaT e oF T he i n duST ry Rajeev Chandrashekhar, President of FICCI, says that industry leaders should plan in advance instead of trusting their intuition. Interview by Pankaj Mishra

32 I The (Right) Color of Money

CoVEr: dESI gn by anI l Vk

iT i n veST menTS Break the numbers down carefully, advises the CIO of JWT as he studies the State of the CIO Survey and knocks down the theory that Indian enterprises are under-invested in IT. By Sunil Mehta

36 I State of the CIO 08 Su rv ey Our first-ever State of the CIO Survey sets out to explore how the CIO’s role continues to evolve in today’s business climate, and helps define the IT leader’s agenda for 2009. The survey went over the CIO’s place in an organization, budgetary responsibilities, business and leadership challenges, and the key skills needed for the job. By Team CIO

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content

Essential Technology | 72 BPM | BPM Without Busting the Budget

Feature by Bill Snyder Pundit | In Open Source Denial

Column by Bernard Golden

From the Editor-in-Chief | 2 Listen Well; Listen Wisely

By Vijay Ramachandran

NOW ONLINE

5 6

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

Telecommunications Your Plan for Unified Communications |â&#x20AC;&#x201A; 56 Unified communications promises to integrate your Blackberry, your e-mail and any other tools and devices you use to communicate and collaborate at work. Early adopters share four keys to successful implementations.

7 2

Feature by John Brandon

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ADVISORY BOARD

Advertiser Index

Abnash Singh Publisher Louis D’Mello Associate Publisher Alok Anand

Editor ial Editor-IN-CHIEF Vijay Ramachandran

Resident Editor Rahul Neel Mani assistant editors Gunjan Trivedi,

Kanika Goswami

Correspondents Snigdha Karjatkar, Sneha Jha,

Chief COPY EDITOR Sunil Shah Copy Editors Deepti Balani,

Shardha Subramanian

72, 74, 78 & 80

Global Head-Internal IT, Tata Consultancy Services

Airtel

Anwer Bagdadi

AMD

Alok Kumar

Senior VP & CTO, CFC International India Services Arun Gupta

VP & CIO, Mahindra & Mahindra

SENIOR Designers Jinan K Vijayan, Jithesh C C

Unnikrishnan A V Sani Mani (Multimedia) Designers M M Shanith, Anil T, Siju P

P C Anoop, Prasanth T R Photography Srivatsa Shandilya Production Manager T K Karunakaran DY. Production Manager T K Jayadeep Ma rk eting and Sa l es VP Sales (Events) Sudhir Kamath GENERAL Manager Nitin Walia Senior Mananger Siddharth Singh, Rohan Chandhok Assistant Manager Sukanya Saikia Marketing Priyanka, Patrao, Disha Gaur Bangalore Kumarjeet Bhattacharjee, Arun Kumar, Ranabir Das Delhi Saurabh Jain, Rajesh Kandari Gagandeep Kaiser Mumbai Parul Singh, Hafeez Shaikh, Kaizad Patel Japan Tomoko Fujikawa

USA Larry Arthur; Jo Ben-Atar

Events VP Rupesh Sreedharan Managers Ajay Adhikari, Chetan Acharya Pooja Chhabra

Avaya

4&5

Canon

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

Vinoj K N, Suresh Nair

Aujas

Customer Care Associate & CTO, Shoppers Stop

Creative Director Jayan K Narayanan

Girish A V (Multimedia)

Airtel

VP-HR & Process Architect, Britannia

Arvind Tawde

Lead Designers Vikas Kapoor, Anil V K

ADC Krone

Alaganandan Balaraman

Des ign & Production Lead Visualizer Binesh Sreedharan

President, IT Operations & Center of Excellence, UCB Pharma

Cisco

13 & 53

C.N. Ram Rural Shores Chinar S. Deshpande CEO, Creative IT India Dr. Jai Menon Group CIO Bharti Enterprise & Director (Customer Service & IT), Bharti Airtel

CommScope Computer Associates

59 IFC

Dell

Emerson

Epson

IBM

Manish Choksi Chief-Corporate Strategy & CIO, Asian Paints M.D. Agrawal Chief Manager (IT), BPCL Rajeev Shirodkar CIO, Future Generali India Life Insurance Rajesh Uppal

Kodak Microsoft

61 9

Chief GM IT & Distribution, Maruti Udyog Prof. R.T. Krishnan

M-Tech Pro

Jamuna Raghavan Chair Professor of Entrepreneurship, IIM-Bangalore S. Gopalakrishnan CEO & Managing Director, Infosys Technologies Prof. S. Sadagopan

Nokia

IBC

Nortel

R & M

SAS

Seagate

Director, IIIT-Bangalore S.R. Balasubramnian Exec. VP (IT & Corp. Development), Godfrey Phillips Satish Das CSO & Director ERM, Cognizant Technology Solutions

Sigma Byte

35 & 41

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, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027, India. IDG Media Private Limited is an IDG (International Data Group) company.

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

Executive Director, PricewaterhouseCoopers

Socomec

Tata Teleservices

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

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

Group CIO, ITC

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new

hot

unexpected

Storing Data in an atom a that could store quantum information, but the instability of the electron made it unsuitable for storing information. "To overcome the problem, researchers moved the information into the nucleus where it survived much longer," the NSF said. Data in the electron cloud, which is a million times bigger than the nucleus, can be manipulated, thus serving as a middle-man between the nucleus and the outside world, researchers say. "Nobody really knew how long a nucleus might hold quantum information in this system," Princeton researcher Steve Lyon said in the press release. Under the theory of quantum mechanics, atoms and other objects can exist in multiple states, literally being in two places at once. In quantum computing, each individual piece of information could thus have more than one value simultaneously. â&#x20AC;&#x201D;By Jon Brodkin

IllUStratI on by UnnIkrIShnan aV

S t o r a g e Someday, you might take business data off a disk drive and move it into the nucleus of an atom. Scientists have demonstrated what is being called the 'ultimate miniaturization of computer memory,' storing data for nearly two seconds in the nucleus of an atom. This is a key step in the development of quantum computers, according to the National Science Foundation (NSF). Using a new technique, an international team of scientists "demonstrated that

information stored in the nucleus has a lifetime of about three-fourths of a second," the described the NSF in the journal Nature. "This is significant because before this technique was developed, the longest researchers could preserve quantum information in silicon was less than one-tenth of a second. Other researchers studying quantum computing recently calculated that if a quantum system could store information for at least 1 second, error correction techniques could then protect that data for an indefinite period of time." The scientists, from Princeton University, Oxford University and the US Department of Energy, broke the one-second barrier with a system that uses the electron and nucleus of a phosphorous atom embedded in a silicon crystal. The electron and nucleus each behaved like tiny 'quantum magnets'

Quick take

Saradindu Paul on Leadership As more organizations embrace IT as a strategic partner, the role of a CIO is getting broader. The progressive CIO is using his functional expertise as a strategic tool to act more boldly as a leader. Sneha Jha spoke to Saradindu Paul, GM-Corporate IT, Electrosteel Casting, and here's what he had to say:

LeaderShip

Why is it important for CIOs to be a part of the strategic management team? CIOs are becoming catalysts for business growth. As they have in-depth visibility across business processes and can sense the pulse of key process owners, they can contribute in framing strategies. They can transform an organization from being person-centric to system-centric. They are ready to take the driverâ&#x20AC;&#x2122;s seat and set a vision for the organization. Where can IT leadership bloom? IT leadership can evolve in any area of the organization. Spending reasonable time with every link in the value chain

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and maintaining a close understanding of financials will help CIOs rise up the ladder. How can CIOs acquire the skills of a business strategist? CIOs develop the information repository and manage it. They feed knowledge to decision makers. Being the custodians of knowledge, they are uniquely positioned to look through the evolution of business. Therefore, they possess the skills required to understand the business from an enterprisewide perspective and strategize.

Saradindu Paul

Should CIOs spend more time with C-level executives? IT solutions are built on many technologies. Therefore, as an architect, it is important to participate in strategic planning with other c-level executives in each line of business and develop knowledge of various components. Business executives should take advantage of the vision and insights of CIOs. It paves way for delivering a 'next-level' solution and executing an effective business strategy. REAL CIO WORLD | n o v e m B e R 1 5 , 2 0 0 8

Why Do IT Projects Fail? Even after months of preparation and thorough planning, some IT projects fail miserably putting IT heads in a soup. With thinning IT budgets, there is a lot more at stake. Snigdha Karjatkar spoke to some of your peers to find out the reasons behind failure:

project

ManageMent

“Inadequate planning, less involvement from end users than needed and communication gaps within the IT team add to a project’s set of woes.”

trendLineS

Jason Gonsalves VP Corporate Planning & It, kansai nerolac Paints

“Most projects fail when targets are not explicitly stated. Wrong execution and a lack of a backup plan can also be reasons for failure.”

satish Joshi Patni, Executive VP & Cto

“One of the main reasons is a lack of ownership from business users.

Project mismanagement and failure to retain talent also creates problems. If a project is implemented but fails to deliver what it promised, then, too, it is a failure. M.k. vasanth v kuMar

Executive VP-It & Supply Chain, GlaxoSmithkline Pharmaceuticals

lend Your

voice

Write to editor@cio.in 12

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Growing the Mobiles Market — Afghan Style S u r v e y Mobile penetration rates will increase to 95 percent by 2013 from 46 percent in 2008, according to a new survey of 34 emerging markets by Tariff Consultancy. The report, titled Emerging Mobile Markets 2008, analyzed countries in Africa, Asia, Eastern Europe and Latin America. In Africa, the research firm conducted studies in Egypt, Ghana, Kenya, Libya, Morocco and Nigeria. The report provides overviews of the main trends, operators and new services being launched in each country, as well as a subscriber forecast for the next five years. "The rapid growth of mobile penetration across the world indicates that these markets will approach maturity more quickly than previously thought," said Margrit Sessions, managing director of Tariff Consultancy. "By the end of 2013, we are likely to see one SIM [subscriber identity module] card for every person as the norm in most countries," she added. Although China and India are projected to remain as the two single largest markets, the fastest growth in new mobile subscribers over the next five years is set to come from Afghanistan, Cambodia, Indonesia and Iraq. By 2013, Iraq is forecast to have the highest mobile penetration rate of all of the 34 countries. "The imminent launch of mobile broadband data services provides an exciting new revenue stream, as users are able to break free of low-speed fixed or dial-up access, which will continue to have relatively poor levels of penetration," said Sessions. "Mobile is going to become the standard for accessing the Internet in many of these countries from now on." Mobile operators with experience in developing markets are introducing bundled data services into emerging markets, Sessions noted. The introduction of new USB (universal serial bus) dongles with flat-rate tariffs, along with larger data allowances, will spur adoption, she said. The survey identified Nigeria as one of the countries in which new mobile investment is taking place, with the availability of new mobile licenses and spectrum continuing to attract investors as the government seeks to raise revenue.

—By Rebecca Wanjiku

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Indian Disaster Recovery Under the Scanner The results of a survey on disaster recovery (DR) revealed the key influencers that are driving Indian enterprises to re-evaluate their DR strategy and highlighted the impact that unforeseen events have on businesses without DR plans. While a whopping 74 percent of the respondents claimed that the rampant increase in virus attacks prompted them to revisit their DR plans, 68 percent are choosing a re-evaluation to avoid data loss incidents and 54 percent to prevent accidental or malicious employee behavior. Virtualization and enterprise mobility have independently led 60 percent to re-examine their DR strategy on an ongoing basis. "Disaster recovery planning is not limited to virus attacks or natural calamities but various supplementary factors that hinder seamless business operations. Enterprises should identify, classify and prioritize critical assets for disaster prevention, detection, response, recovery and mitigation," says Anand Naik, director, Systems Engineering, Symantec. According to the survey, 22 percent of Indian enterprises conduct full

trendlines

Security

scenario DR tests only once a year or less because of a perceived fear of disrupting business and a lack of resources. Among the many reasons for not conducting DR tests, respondents ranked a lack of staff availability (56 percent) and disruption to employees (58 percent) the highest. This was followed by budgetary issues (44 percent) and disruption to customers (46 percent). Plus, 32 percent said DR testing could affect sales and revenue. Disaster incidents increasingly put enterprises at risk and drastically affect business health. In fact, the repercussions could be severe and expensive if a disaster disrupts mission critical applications and services. Only 26 percent of respondents said they could achieve baseline operations within one day. Another 23 percent felt it would take a full week to achieve 100 percent normal operations. Seventy-six percent said that a loss of company information was the most feared consequence in the list of disasters. Negative impact on overall customer loyalty (68 percent) came a close second and damage to employee productivity (66

percent) came third. Respondents were also concerned about harm to their company's brand and reputation came a close second (64 percent), and competitive standing (50 percent). Virtualization is the major factor that is causing 61 percent of Indian respondents to re-evaluate their DR plans. This can be attributed to the different challenges posed by virtual environments; processes for physical environments may not necessarily apply to virtual environments. In addition, legacy DR tools in virtual environments lack enterprise-class protection. Of the surveyed enterprises, 44 percent carried out full-scenario testing on a monthly basis. However, a significant percentage (22 percent) of tests failed to meet the average time required for recovery that is 12.81 hours. Respondents also reported the top reasons why their tests failed: human error (58 percent), technology failure (40 percent), insufficient IT infrastructure (46 percent), out-of-date plans (38 percent) and inappropriate processes (38 percent). â&#x20AC;&#x201D;By PC World India

The Next Killer App?

Daily Internet Activities Daily Internet Users

E-mail

Online Search

Check News

Check Weather

Research Hobby

Surf Web for Fun

Visit Social Networking Sites

60%

49%

39%

30%

29%

28%

13%

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In fo graphics BY ANIL T

Almost half of all Internet users now use search engines on a typical day, up from one-third of users in 2002. E-mail remains the most popular online activity â&#x20AC;&#x201D; for now.

Source: Pew Internet & American Life Project

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CMYK

Virtualization Changes All M a n a g e m e n t Virtualization is dynamically transforming the way IT resources are managed in enterprises. The 'big shift' is that IT management is no longer confined to physical hardware but also the virtual. "The key is to have the ability to manage both the physical and the virtual," said Bill Hiff, Microsoft general manager for Windows Server and Platform Strategy. He said IT departments must have a well-planned strategy in implementing virtualization to fully realize its benefits. Hiff noted the growing adoption of virtualization in the Southeast Asia region as companies focus on cost savings and higher efficiency. "With virtualization, companies actually have fewer resources and physical assets to manage. Therefore, there are fewer costs associated with managing that infrastructure. As a result, it's much easier to move systems around, much easier to be dynamic and agile to respond to the business," he said. Some of the ways that virtualization can drive efficiency includes faster application testing and seamless deployment for end-user applications. It also enables organizations to streamline communications, automate processes, and allow employees to access information and applications anytime and anywhere. Nicky Eala, server business group lead at Microsoft Philippines, said that virtualization is attracting not only bigger corporate clients but also the medium businesses. He observed local companies that are moving for virtualization are considering it in line with server consolidation, application virtualization, and terminal services deployment. Microsoft expects more Filipino companies to adopt virtualization as it offers a reliable, scalable and high performance platform that plugs into customers' existing IT infrastructures and enables them to consolidate demanding workloads. —By Helen Andrade-Jimenez

Outdo. Outlast. Outperform.

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trendlines

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alternative views BY Sneha Jha

business Software Consolidation Cons Vs Pros

“With reduced vendor choice available to customers, bargaining power weakens. It is difficult to get information to take decisions.”

P hotos by Sr ivatsa Shand ilya

trendlines

Vijay Sethi VP & CIO, Hero Honda Motors

“A plus is that CIOs need to deal with fewer vendors. Instead of getting a screw driver, a hammer, and a hacksaw, the CIO, gets a repairman to deliver results.” H. Krishnan AVP (IT), Indian Rayon

Business software consolidation creates problems and confusion in the minds

When we talk of business software consolidation, we are talking

of the operating teams of both vendors and customers. For example, software vendor A owns product X and acquires software vendor B which owns competing product Y and the vendor now wants to push product Y aggressively. While the official stand would be that merger will create synergies and provide best of both worlds to customers — the fact is that the new operational team of vendor A is not able to convince customers why product Y is better than product X and why customers should replace or upgrade product X with product Y. From a CIO perspective, the two extremes are best-ofbreed solutions that they may or may not be able to integrate. Organizations do not have the capabilities to evaluate products every time and one relies heavily on inputs given by pre-sales team. With reduced vendor choice available to customers, their bargaining power also weakens. It is difficult to get information to take decisions. Also, if one has deployed solutions from an 'acquired' organization, the acquiring company may even discontinue the product over a period of time forcing the CIO to upgrade to a new solution. This impacts long-term IT strategy especially in case of enterprise solutions like ERP, BI or CRM.

not just of a merger of commercial enterprises, but a marriage of their product offerings. Consolidation generally takes place among complementary offerings so that the final product is much more complete and adds more value to business. For example, when SAP sold R3, SCM, APO (advanced planning and optimizer) and CRM as add-ons, it was not as usable as when it was integrated in the ECC versions. If this does not happen, customers will loathe accepting such an arrangement. The most obvious plus for CIOs is that they need to deal with fewer vendors. And one hopes to get an integrated software. Since software vendors themselves consolidate only with those who offer added value in the software usage chain, it would definitely enhance the usability of the software. The second benefit is that maintenance and support of the software would be simpler when vendors are few and large in terms of competency and capability (technological and financial). The third benefit is that consolidation reduces governance and management costs — explaining various business needs to one vendor and letting it work out the solution rather than figure out how to use different software solutions for different problems. It saves costs in terms of drawing up agreements, monitoring and enforcing service agreements and warranties. In other words, instead of getting a screw driver, a hammer, and a hacksaw, and the CIO deciding where to use what, one gets a repairman to deliver results.

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I N S I D E 18

VIEWPOINT 20 I How to Manage the Slowdown 24 I Why Being a Business Strategist is Critical 32 I Are We Under-invested in IT?

INTERVIEW 44 I Dr. Subir Gokarn on the State of the Economy 50 I Rajeev Chandrashekhar on the State of the Industry

DATA POINTS 36 I The State Of the CIO Survey 2008

n o v e m B e R 1 5 , 2 0 0 8 | REAL CIO WORLD

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Our first-ever State of the CIO Survey sets out to explore how the CIo's role continues to evolve in today's business climate, and helps define the IT leader’s agenda for 2009. The survey went over the CIo's place in an organization, budgetary responsibilities, business and leadership challenges, and the key skills needed for the job. 2008 could go down in history in two ways. It could be the

time we sweated out a tough economic period – but lived through. We’d look back and say, ‘it wasn’t that bad’ and maybe have ‘lived-through-2008’ badges. Or, it could be remembered as the year the world kidded itself into thinking the worst was over. Only the future will tell. But one thing is for sure, the turmoil that’s finding its way to Indian shores is forcing CIOs to ask themselves new and important questions: is outsourcing a choice my peers are making to meet the almost-certain challenge of budget cuts? Will hiring go down? How should I direct my energies into cost-cutting? What do I need to do to help my enterprise survive this storm? And then there are the more eternal questions. What do my peers make? Should I be focusing on things other than IT? Is my organization underinvested in IT? Critical data has never been more in demand.

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The survey also brings good tidings. Innovation, say many experts, will lead companies out of this trough. If that’s true, then Indian CIOs are well-armed to take on the challenges that the near future is likely to pack. Over 60 percent of CIOs say that bringing innovative ideas to the table is already a significant part of their role. Our survey also shows that business intelligence is a very high priority for 2009. That’s another thing surveys are good for: they point a direction your peers are taking — which is useful if you plan to follow their lead or strike out in a new direction.

REAL CIO WORLD | n o v e m B e R 1 5 , 2 0 0 8

Here's What Our Survey Says

2nd

What ‘lowering their company’s overall operating cost’ ranked on a list of IT priorities for 2009.

30.1%

The amount of a CIO's IT operations that they outsource on an average.

51%

The number of CIOs who agree or strongly agree that IT leadership is involved appropriately early in mergers and acquisitions. Arun Gupta, Group CTO and Customer Care Associate, Shoppers Stop, says that CIOs need to figure ways to directly contribute to the top line.

Column -02-Arun Gupta.indd 20

Are You Geared To Survive?

11/14/2008 4:53:59 PM

Coping With a Slowdown

Surviving The Slowdown Growth is slowing down whether you like it or not. Shoppers Stop’s group CTO tells you how to manage.

The bad news is now universal. Everyone is affected by

Photo by Srivatsa Sh an dilya Imagin g by un nikrishnan AV

the slowdown, be it individuals or companies. For CIOs, the hard-times have begun to mean a lot of things. A credit crunch tops the chart, with profit margins sinking and investment budgets shrinking. As market growth brakes, every organization is beginning to look at how it can maximize profit. With fixed costs facing inevitable cuts, budgets have started to come under tremendous pressure. Operational costs follows closely. These changes in fixed and operational costs immediately impact the bottom line even as capital expenditure comes under significant pressure to deliver ROI. These choppy waters will definitely rock a CIO’s boat. During the economic upswing, businesses weren’t demanding ROI models from CIOs. Now, they’re back with a vengeance. CIOs will have to seriously seek alignment with CFOs — again. Third on the list to the chopping board is manpower and staffing. A freeze on further employment is fast becoming a reality in many organizations. Several verticals, especially the services industry, have already begun to downsize. The slowdown’s ripple effects will continue to be experienced over the next few quarters. For India, this is just the beginning. And for CIOs in India, it’s time ti tighten their belts and get ready for turbulent times.

Grip that Paddle When there is a recessionary trend, obviously consumption goes down. This means that companies may not grow as fast they did or even see negative growth. In such a scenario, CIOs will have to start looking at new areas. Prime your engines. CIOs should review their IT portfolio and ensure that everything that’s already deployed is being leveraged effectively. A lot of the time, we see an upswing in adoption as soon as we create a solution. Soon, adoption subsides. CIOs need to pull that curve of use back up. We need to ask users why they aren’t using a solution optimally; or what has changed in

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Coping With a Slowdown the solution — or in business — that makes the technology unusable. Then realign underutilized technologies. ERP is a good example. During a growth period, many Indian organizations implemented ERP and moved beyond. A lot of them declared operational go-lives without really figuring out the benefits of these systems. This is a good time to look at process-alignment and rationalize additional systems that have been created around such processes. We need to become disciples of Michael Hammer, the proponent of organizational re-engineering, and start to look at re-engineering processes to improve business effectiveness. Use your influence. We need to figure out ways to contribute to the top line. One

regular vendor-supplier-buyer relationship. I believe CIOs can exert enough influence to get such arrangements started. do more than integrate. In the corporate world, mergers & acquisitions are as much a reality as liquidation. It’s already happening in a big way in the US. It hasn’t yet come to India but, CIOs should be prepared either to be an acquirer or to be acquired. Typically, an M&A sees two activities: integration and technology matches. That’s going to change. I think CIOs will have to start looking at aggressive synergies that they can create within the two organizations starting with people, technology and process. If a company is being acquired, its CIO needs to be prepared to be a smooth facilitator. Simply put, if he or she does not

Leverage your relationship with IT vendors. If your company sells cars, CAn yOu InfLuEnCE yOuR IT sOLuTIOn pROvIDER to convince its employees to buy your cars? — Arun Gupta Group CTO and Customer Care Associate, Shoppers Stop

way is to leverage your relationship with IT vendors. Conventionally, a relationship with vendors has been ‘buy-and-sell’. But, CIOs should find a way to extend that relationship to create a more synergistic one. For example, if your company sells cars, can you influence your vendor to convince its employees to buy your cars? At a previous company, we had an arrangement with a car manufacturer to allow our employees to buy their cars at a discount equivalent to the dealer margin. Cars were directly shipped from the manufacturer. Our employees got a discount, and the car company got a captive base of potential customers. A lot of symbiotic opportunities exist that are much more mutually-beneficial than a 22

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facilitate the seamless transfer of processes and supporting technologies, the CIO will not have a future in the merged entity. Show users how to save. CIOs will have to help organizations leverage technology to reduce operating expenses, such as travel or commuting. Today, many companies have deployed video conferencing. But the technology’s use still hovers at single-digit percentages. People love to travel. They love face-to-face meetings. But users will have to start discovering new ways of working. CIOs should start encouraging people to use e-mail and IM more and using phones less. Every single call a user doesn’t make, saves some. For a large organization, some adds up.

Consolidate aggressively. If you have not already consolidated your systems, you better get to it right now. Most have already started, albeit in varying degrees. CIOs need to get aggressive about it, because there are real savings to be made. Reconsider status quo. This is also a good time to re-look IT blueprints. Keep critical locations on MPLS or leased-line networks. But shift less-critical locations to Internetbased VPN solutions. Also, CIOs should leverage their relationships with vendors to re-negotiate payment terms and schedules and save anything between 5 to 15 percent. Outsource. Another way to effectively sail through these troubled times is to outsource. But keep in mind that outsourcing should be done judiciously. The extent an organization outsources is proportional to its maturity. If your organization is new to outsourcing, then start small to fulfill a demand without impacting anything. Start expanding from there, while reducing the size of your team. If business demand goes through the roof, you don’t have to hit the market hunting for talent. Your outsourcer will cater to spikes in demands. This is a good way to manage swings in the fortunes of a company. Challenge conventional wisdom. IT departments should become change agents. IT has probably the best visibility of processes across the organizations and the way they impact each other. Go out and start challenging conventional wisdom. When people are apprehensive and scared — which is the scenario we are beginning to get in — people will listen. If there’s a risk that you can take away, they will listen. Finally, as William Edwards Deming said sarcastically, “It is not necessary to change. Survival is not mandatory.” Whether a company sinks or swims during this turbulent time depends on a CIO’s ability to seamlessly adapt to a situation. Adaptability is the key to survival. I strongly believe that when it rains, you should learn to live in the rain. Start building that shelter. CIO —As told to Gunjan Trivedi Arun Gupta is group CTO and customer care associate at Shoppers Stop. Send feedback to editor@cio.in

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From Our Survey

73.1%

of CIOs say that they are part of their organizationâ&#x20AC;&#x2122;s business executive management committee.

84.6%

of CIOs say that IT was their primary area of experience before their current positions.

12.6%

As his title suggests. Dr. Jai Menon, Director Technology and Customer Service Bharti Airtel and Group CIO of Bharti Enterprises plays many roles.

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The amount of time CIOs say they spend with external business partners/customers.

Are You a Business Man?

11/14/2008 4:55:29 PM

Business Strategists

Make the Business Your Business Bharti Enterprises’ Group CIO urges CIOs to shed their ‘IT gatekeeper’ tags and don their business hats in order to fulfill their roles.

A decade ago, the classic CIO role centered around implementing

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business processes using computing power. Today, that fallacy isn’t in vogue anymore. It’s now important for the CIO to concentrate on business outcomes more than anything else. A CIO should be more concerned about transforming the business and defining business rules. To do so, they have to shed their ‘IT gatekeeper’ tags and take on the role of a business strategist. There are two parts to a CIO’s life: one is the ‘necessary’ and the other is the ‘sufficiency’ part. It is necessary to be a gatekeeper for IT and look after servers, applications, and uptime. For example, an element of my necessary job is to take care of 2,000 servers, over 2,000TB of data, 8GB of bandwidth and a 2,000-strong IT team. However, as a CIO, I have to do more. That’s where the sufficiency bit comes in. That’s where I find myself today. By sticking, merely, to the necessary part of the job, an IT leader can’t be called a CIO and cannot claim a seat on a management table and work with CEOs. It’s the sufficiency part that CIOs must worry about. Here’s how we can become business strategists.

Be a Sport, Wear Other Hats To evolve to business strategists, CIOs need to adhere to a few rules. One, they should, in addition to their current role, take on additional functions. In my early days at Bharti-Airtel, I was responsible for launching a new business

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Business strategists unit — a P&L (profit & loss) responsibility — in addition to being CIO. I ran Airtel Enterprise Services for a year and today it is one of the three business units that reflects in Airtel’s balance sheet. Or take the marketing role I continue to play. I am responsible for business development and alliances with strategic partners. I am a CIO, but I am responsible for launching new products. In the past, these have come in the form of deals with RIM for Blackberry, with Apple for the iPhone and other alliances with Microsoft and Google. Most recently, I was in charge of a deal with Infosys for Airtel’s DTH platform. This role is purely marketing and business development. I’ve also added customer service to my role. This makes me responsible for call centers, billing, collection, payment, provisioning and activation and almost 40,000 people. My point is that the best way a CIO can evolve as a business strategist is to take on adjunct business responsibilities. These naturally create learning opportunities, thus opening up a chance to become a strategist. If you want to be a business strategist, wearing a pure technology hat will not help. It requires a huge amount of drive, conviction and great deal of both internal and external marketing skills.

Build MAnAgeMent truSt To open up these chances to take up new responsibility, a CIO needs to win the trust

of his management. But how? By showing them that you are a leader. CIOs can do this in two ways: one, by showing them your track record and showing how you demonstrated leadership skills in other parts of your career. The second approach is by building new capabilities to handle business matters. In my first stint at IBM, I was a technology researcher but also created a business unit to launch rich Internet media products. When I went to Bell South (AT&T), my first role was that of a CTO but my second role was marketing where I ran a portfolio of emerging alliances — all new businesses. When I joined Bharti, I used these experiences to show the management that I had a natural proclivity for additional business responsibilities.

Start With COStS To grow as business strategists, CIOs should have perfected the skills of crunching business numbers, revenue numbers and have honed their negotiation skills. Today, the toughest part of being a CIO is making choices. You can’t make these choices unless you can crunch numbers. Take for example, the creation of the IBM Utility Model. I was only able to create that because I knew how to do financial modeling. It was done in tight collaboration with the group CFO but if I didn’t have commercial orientation, there was no way I could have created this model.

For those who are not number oriented, start with the belly of the organization: cost. That’s the natural place to begin. A CIO must understand cost before he starts talking about revenue. Business process digitization has a direct correlation to cost and it makes sense to start from there. How do you build efficiencies and productivity into your information tools? How do you empower your staff so that they are far more productive? How do you work on service models that are directly related to cost? Once CIOs understands these, then they can start worrying about revenues. Except in cases where revenues come from IT products, this is a model to follow.

Learn to Merge It is critical and almost non-negotiable to be heard by management if you want to be a business strategist. A CIO who gets lost in a layer below top management will get little chance to become a strategist. But there are many CIOs who find themselves far from success despite many attempts to mark their presence at management meetings. It’s important to remember that while sitting at a management table you can’t wear the CIO hat. Wear your management hat and talk about matters like employee development, HR issues, new business opportunities and strategies. It’s what I have done and I’m part of the Airtel Management Board.

It is almost nOn-nEgOtIAbLE tO bE hEARD by mAnAgEmEnt if you want to be a business strategist. But there are many CIOs who find themselves far from success despite many attempts to mark their presence at management meetings. It’s important to remember that while sitting at a management table you can’t wear a CIO hat. — Dr. Jai menon

Director Technology and Customer Service Bharti Airtel and Group CIO of Bharti Enterprises

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Business strategists

Create Process and then InnOvAte CIOs must get into business process definition. At Airtel, we wanted to undergo an organizational transformation. We called the project ‘E-Tize’. It started during early 2007. The business processes around E-Tize were written by my team and I. We looked at over 130 business processes and developed over 30 major software modules and wrote over 200 applications. Today, E-Tize clocks over half a million transactions a month (all internal), has 15,000 log-ins every day and 20,000 users. It uses 150 servers, 750 CPUs and 150TB of storage. It has already saved us over a 1,000 trees worth of paper. This straightaway resulted into a 30 to 40 percent reduction in our operational expenditure. This is an example of how business process transformation can come from IT and make the internal organization more efficient. This is where CIOs can start, by helping define business processes. After that, CIOs need to look for innovations that IT can assist with and jump on these opportunities to produce new products and thus new revenue streams. CIOs should not think of themselves as back office guys. The problem with Indian enterprises is that CIOs are typically misunderstood as back office people who manage the ERP. That stigma has to go.

read the CuStOMer'S PuLSe It is because CIOs think of themselves as back office people that they are far removed from an organization’s customers. To be a good strategist, a CIO must understand the business and it is impossible to do that without being close to the customer. I can’t recommend one single remedy to get there. It’s up to CIOs to do it formally or informally, whether it is part of their job role or not. But, if they don’t, then they will just be lost in servers and software and won’t understand what they’re trying to achieve. This exposure doesn’t have to be done on 28

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a full-time basis but it must be done regularly. In my case, I have enormous internal customer engagement. In terms of external customers, I listen in to the call center calls. I have also launched a program called ‘Customer Pulse’ that demands everyone in IT to call five customers every month for their feedback. Customers are an incredible source of information — which is useful for business process transformation. At Airtel, we are on our way to being present in 400,000 villages and unless we understand what our customers there want, we can’t deliver better products. In fact, I am visiting some villages next week (while this was being written) as part of our direct customer engagement program. I talk to a lot of enterprise customers, too, about their bandwidth provisioning or management. It is important for CIOs to connect with their customers or they won’t be able to understand the business’ pulse. You’ve

The Things CIOs Are Doing CIos were asked to choose five activities that best characterized their focus and how they spent their time in their current role. here are the most popular ones: aligning It initiatives with business goals Improving It operations/systems performance Implementing new systems and architecture

got to feel the pulse of the customer to reduce their pain. In the current paradigm, though, this is tough to do. Technologists and IT professionals have been trained to worry about technology and let the business worry about the customer. The language that IT professionals use is ‘IT’ and possibly ‘business’. They hardly ever use the word ‘customer’. This will require a great cultural change. And there are only two ways to do it. One, because you feel it is necessary to do, is to simply go ahead and do it. The other way is to create a mandate. I can bet that most CIOs will find this hard and very challenging. This is why I believe CIOs must undergo training and learn different roles before they come back to head IT. The next generation of CIOs can be appointed to the top position only after they have undergone these experiences. And that’s a problem because these experiences don’t come automatically. You need to have a string of experiences to develop these skills. If someone aspires to be a CIO, he or she has to ensure that they undergo a rotation of job roles. It’s important to remember that you can’t live in your comfort zones. There are two parts to this: how do we reshape the current generation and how do we create the next generation of CIOs. It is easier to create the next generation because you can mandate that no IT professional can fill a CIO’s shoes until he or she has gone through a rigorous process of understanding cost and revenue modeling. It’s the current CIOs with whom its a little tough. In some cases, enterprises can institute learning programs or have joint projects. It is not necessary only to have internal and external mentors. CIOs can learn a great deal with peers from within the industry industry. CIO — As told to Rahul Neel Mani

driving business innovation Cost control/expense management Source: the state of the CIo 08

Dr. Jai menon is director technology and customer service Bharti Airtel and Group CIO of Bharti enterprises. Send feedback to editor@cio.in

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IT Investment

The (Right) Color of

Money Break the numbers down carefully, advises the IT helmsman at JWT as he studies the lie of the land and knocks down the theory that Indian enterprises are under-invested in IT. One of the beliefs I've always held is that numbers

It’s easy for people to get a fix on IT investments as a percentage of revenue or billings. This is then compared to the numbers coming out of the western world. If we based ourselves on these percentages, we don’t seem to be on par — in terms of IT investment — with other nations. However, the figures should be looked at in two — distinct, but — correlated perspectives. One is that Indians are, largely, conservative in terms of price and get things done at very competitive costs. That shouldn’t be mistaken to mean that we are not investing. We invest carefully. Just because someone else invests double the number we do, doesn’t necessarily mean that they are more efficient — in IT terms — than companies in India. Saying that we’re under-invested in IT is pulling figures out of context. Indian companies are definitely ‘rightly-invested’ in IT and its success is evident to the entire world. Also, with the help of statistics, we tend to form opinions with the help of shallow, sweeping figures that lack deeper perspective. What’s needed is a view of the businesses the respondents work for. For example, advertising companies classify revenues as the ‘net of cost’. If we were to classify revenue conventionally, our revenues would be about seven times what they are now. 32

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cannot manipulate the facts, but individual perspectives can. Tweak the context a little, and you start to see the same numbers in a different light. Looking at IT spend figures, there is a tendency to quickly suggest that Indian companies under-invest in IT — despite their managements claiming that they see IT as a business function. However, if you were to add a dash of ‘Indian perspective’, you would see why I can’t agree with this suggestion.

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11/14/2008 5:54:41 PM

Your Budget From Our Survey

2.4%

Average IT spend as a percentage of revenue

Average I.T. budgets of companies that make less than Rs 1,000 crore:

Rs 17.5 lakh Average I.T. budgets of companies that makemore than Rs 1,000 crore:

Rs 105 lakh Have You Invested Enough?

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Sunil Mehta, Senior VP and Area Systems Director (Central Asia), JWT, says Indian companies are not under-invested in IT.

11/14/2008 5:54:43 PM

IT Investments in India Globally, the trend for investment in IT, if I am not wrong, is about 4 percent of revenue. The State of the CIO Survey tells us that about 21 percent of companies with revenues under Rs 1,000 crore invest over 5 percent of their revenue in IT. It also shows that 13 percent of Rs 1,000 crore-and-above companies invest over 5 percent in IT. These are pretty decent figures. Plus, if you look for companies with IT investments of over 3 percent and above (as a percentage of revenue), and you’ll find they are over 21 percent. If a fifth of the Indian industry invests that close to the global average, we can’t be under-invested in IT by any standard. In addition, let’s look at these numbers from a company-specific perspective. If a company that makes over Rs 1,000 crore has very few employees, why would it invest an inordinate amount in IT? Similarly, the investment figures for the services sector don’t hold good. But, for the manufacturing sector, companies should probably invest more than 5 percent of their revenue in IT. I think the point is clear: statistical figures should be carefully scrutinized before making generic statements.

These Are Hard — NOT ImpOSSIBlE — Times This brings us to another dilemma: that of managements tightening budgets and cutting IT costs. I think it is simply natural for a management to do so. It is easier for a company’s management, especially during troubled times, to look inwards first to cut costs. Naturally, an organization cannot withhold payments to its auditors, avoid paying its suppliers or cut down on raw materials. It can re-negotiate payment schedules but cannot build its products with only half its supplies. Hence, it is easier to look internally at areas where it seems probable for an immediate cost reduction. IT happens to be one of them. When IT budgets are slashed by 25 to 50 percent, it’s the CIO’s challenge to re-list priorities: what, if not accomplished, will hamper operations or invite problems in the future? If a CIO is smart, he or she will sit with senior management to discuss 34

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these priorities, to point out the must-haves from the nice-to-haves and I don’t see why management will not understand. CIOs need to figure out in which quarter they want to invest in a certain technology or activity. They can always defer an investment by a month. Sometimes, CIOs can re-negotiate with vendors where payment schedules are concerned and seek their help. At JWT, our CFO and I make a unique team. I’ve specialized in finance during my MBA, and our CFO brings an engineering degree to the table. This techno-commercial

CIos should take these tROubLED tImEs as an opportunity to make sure that they are meeting their COmpLIAnCEs AnD REguLAtIOn nEEDs. — sunil mehta senior vp and Area systems director (central Asia), JWT

mix helps us both figure out how our functions work and understand each other’s perspectives. He knows, by default, that I recognize business demands, or know the areas where we may face issues, or where we should or should not spend, and importantly why we should spend. And, I know that because he appreciates technology, he will understand why we need a certain budget. This kind of symbiotic relationship is beneficial for organizational growth. Mutual appreciation helps, especially CIOs, to make

wise investments at the right time. I believe even CIOs who don’t have commercial backgrounds, should think like CFOs while running the IT function. This way, they will come up with ideas to generate more money in terms of revenue and cost-savings, and create new efficiencies. It is one of the best ways to loosen the purse strings of top management for required budgets. This mutual understanding between business and IT has gained more importance in recent times. Troubled market scenarios have forced organizations to tighten their purses. During such times, the only companies and IT functions that survive are those where the IT teams look beyond the IT support role, and where managements look at IT more as a business function. There are many success stories of IT teams going beyond just a support function and delivering business advantages. IT is no longer a ‘black art’. IT folk have all become part of the business. They are now included in most of business activities. I have people in IT going on sales pitches with the sales teams, for example. Often, they address technology or operational-related queries of clients. IT is no longer looked at as a support function by the management. I believe that CIOs should take these troubled times as an opportunity to make sure that they are meeting their compliance and regulation needs. I look at such tough times as lessons in disguise to improve processes and make them more efficient. A smart CIO can maneuver his priorities, action-plans and budgeting smartly. Such strategies help a CIO to go ahead with an expense in a manner that the impact is minimal on the budget during a critical stage. I have a two-pronged mantra for CIOs to see the right color of money: get your priorities right, and get street smarter. CIO — As told to Gunjan Trivedi

Sunil mehta is Senior vP and Area Systems Director (Central Asia) at JWT. Send feedback to editor@cio.in

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The Survey

All That Tha Tha att

DATA Dat D ata ata Our first State of the CIO Survey reveals the different facets of Indian CIOs. If thereâ&#x20AC;&#x2122;s anyone who thinks that the CIO is a simple animal, hereâ&#x20AC;&#x2122;s an eye opener. And as the business environment gets tougher, CIOs are metamorphosing to blend into the new world, graying old lines and opening new possibilities. By Team CIO

Survey Methodology The State of the CIO Survey 2008 was administered online in the last week of October 2008. Two hundred and twenty six (226) IT leaders responded to our invitation and participated in the survey. All were heads of IT, with 90 percent responsible for enterprise-wide IT and the remainder for divisional IT. Fifty seven (57) percent were from organizations with annual revenues over Rs 1,000 crore; 39 percent of respondents represented enterprises with annual revenues of Rs 1,000 crore or less and the rest were associated with Government departments or non-profit organizations. Over 98 percent were male. Percentages described within may not add up to 100 due to rounding.

n O v e m B e R 1 5 , 2 0 0 8 | real CIO WOrld

Open the gatefOld fOr the SUrVeY reSUltS

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The Survey

All AbouT you

Your Boss While Indian CIos report more to their MDs or CEos than to any other level, it’s still only 46 percent — despite the fact that top management claims that IT is of critical strategic importance. 26%

20.4%

ceo

Tenure of office

coo

6.6%

Average tenure in your current post:

4 years, 60 Days

cfo

13.3%

group cIo

13.8% others

19.9%

Money and Industry Although the industry you work in makes a difference to your earnings, your title also plays a role. IT leaders who have mD/President/ Director/VP designations earn on an average Rs 6.7 lakh more than their peers who hold Group CIO/CIO/CTO/Head IT/Gm titles.

Industry

Average Salary

IT enabled Services (BPo, (BP KPo, Medical Transcription, Back office)

Rs 46 lakh

Finance/Banking/ Insurance

Rs 45.4 lakh

Pharmaceutical/Bio-Tech

Rs 40.3 lakh

IT Software & Allied Services

Rs 39 lakh

Manufacturing

Rs 23.5 lakh

WhO’S On the MOVe? A good 30 peRcenT of IndIAn cIo’s quIT In undeR 2 YearS.

Big company, Big compensation* How You Allocate Time Indian CIos are team players. They spend the largest chunk of their time with IT staff. The third and fourth most important capacities to fulfill their role as CIos are: team leadership and people development. Knowledge of their business’s market comes a close fifth, in comparison.

14%

24%

34%

13% 16%

Your company’s executives External business partners/ customers Non-IT employees IT staff or team IT vendors/service providers

When it comes to a pay package, how big the company you work for can be as important as the vertical.

rs lakh

revenue under Rs 1,000 crore

rs lakh

revenue over Rs 1,000 crore *average annual earnings

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I.t. experIenCe COUntS

84.6%

All AbouT you

of cIos primarily have an IT background.

Which Activites Are critical to Be cIo?

What else Apart from IT?

long-term strategic thinking and planning

80.1%

Expertise in running the IT function

61.5%

Team leadership

46%

People development

28.6%

Knowledge of your business’s market

28%

Collaboration and influence

26.1%

Meeting or beating business goals

24.2%

Change leadership

23%

Meeting or beating business goals

24.2%

Customer Service

Identifying and seizing commercial opportunities

17.4%

Administration/Operations

CIos are also responsible (in a leadership capacity) for the following non-IT areas.

33.5%

Security

28.5%

Strategy

22.2%

Risk Management

19.6% 19% 17.1%

Procurement

10.8%

Line of Business (as head)

InnovATIon In Action Where innovation grows has no correlation with an organization's vertical, its IT budget, its size or who controls the IT budget.

value of IT in Innovation In the last two years, IT’s importance in driving business innovation has increased significantly. Today, only a fraction of CIos believe that IT does not play a pivotal role in enabling innovation.

68.8%

a quaRTeR Of CIOs HaVe nO ResPOnsIBIlITy OuTsIDe I.T.

dRIvIng BusIness InnovATIon Is AMong THe Top 5 AcTIvITIes THeY spend THeIR TIMe on sAY

42% of CIOs.

gauging success Through Innovation Innovation has taken centerstage. Most respondents say that bringing innovative ideas to the table is an integral part of their role and is instrumental in gauging their success.

60.6%

22.7% 1.4%

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7.1%

In the last two years the importance of innovation has become… Less important Somewhat more important Significantly more important Unchanged

21.1% 1.4%

16.9%

Innovation isn’t part of my role A modest part of my role A significant part of my role A dominant part of my role

real CIO WOrld | n O v e m B e R 1 5 , 2 0 0 8

Your IT Department Average I.T. Spending as a Percentage of Revenue

2.4%

In comparison, the average IT budget of your US counterpartsis 6.7%

Who Decides the Size of the Wallet? With that time ofthe year around the corner, it's important to know who makes budgets decisions at your peers' organizations.

2.7%

Completely business areas' responsibility

5.4%

More business areas' responsibility

17.5 Rs 105

revenue under Rs 1,000 crore

lakh

revenue over Rs 1,000 crore

25.7%

More IT's responsibility

Completely the IT organization's responsibility

28.4%

VS.

IT Budget by Company Size*

Rs lakh

37.2%

Equally apportioned between business and IT

It's one thing to know who decides how big your budget will be, however it's important to understand who decides how its spent.

Who Holds the Purse Strings? Once you've got the money, who says on what and when it's spent? Centrally controlled by IT organization

Blended control by IT and business units or functions

Directly controlled by business units or functions

Centrally controlled by non-IT executive

57%

31.8%

4.6%

*Average annual budget

What You Focused on in 2008 Although, over 80 percent of CIOs feel that IT should proactively envision business possibilities and initiate with technology, external customer focus is an area that they feel is least important to their competency.

1. Drove innovative new market offerings or business practices 2. Lowered the companyâ&#x20AC;&#x2122;s overall operating costs 3. Improved end-user workforce productivity 4. Re-engineered core business processes 5. Improved security/risk management 6. Improved quality of products and/or processes 7. Managed customer relationships 8. Supported global expansion 9. Enabled regulatory compliance 10. Acquired and retained customers 39

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Who is in Charge of Designing Solutions? 2.7%

Completely business areas' responsibility

9.5%

More business areas' responsibility Equally apportioned between business and IT

45.9%

24.3%

More IT's responsibility

16.9%

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Outsourcing Not Really Taking Off Despite conventional wisdom that outsourcing can make IT more efficient, few Indian CIOs have decided to go down that route. Companies in the BFSI sector are especially averse to it.

How Much of Your IT Operations Have You Outsourced?

Polar Opposites The percentage of IT leader who outsource at the both ends of the outsourcing spectrum.

I outsource:

3.6% 0.7% Nothing

Between 91-100%

How much an enterprise outsources seems to have little correlation with its size. Companies that make under Rs 1,000 crore outsource, on an average, 26.7% of their IT, while their larger counterparts outsource 30.9% oftheir IT operations.

Quantum of Outsourcing

CIOs ranked outsourcing as the lowest among their 15 top management priorities for 2009 â&#x20AC;&#x201D; from a field of 15 items!

Percentage of Respondents

None

3.6%

1% to 10%

29.5%

11% to 20%

15.8%

21% to 30%

12.2%

31% to 40%

9.4%

41% to 50%

4.3%

51% to 60%

5.8%

61% to 70%

7.9%

71% to 80%

6.5%

81% to 90%

4.3%

91% to 100%

0.7%

A third of all respondents outsource 10 percent or less of their I.T.

Which Business Processes Have You Been Fixing? 1. Customer service/support 2. Human resources 3. Accounting and finance 4. Asset management/maintenance 5. Inventory management 6. Supply chain/logistics 7. Compliance 8. Sales 9. Risk management 10. Order/invoice processing

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The Survey

Business Intelligence Reigns

your AgenDA

CIos are divided on a number of things, however, what they did agree on was that business intelligence would be a top technology priority with 58% plumbing for it.

Taking care of the Business

Top 5 Technology priorities in 2009

In the current year, aligning IT initiatives with business goals and improving the performance of IT operations rank first and second, respectively, across companies.

Top 5 Management priorities for 2009 1. Aligning IT and business goals

1. Business intelligence 2. Ensuring data security and integrity 3. Datacenter optimization 4. Virtualization 5. Supply chain automation/visibility

2. IT-enabled process improvement 3. Controlling IT costs 4. Business continuity/risk management 5. Improving internal user satisfaction

7.6%

cIos WHo sAId THAT gReen I.T. WAs An AReA THeY WeRe ResponsIBLe foR ouTsIde I.T. THe nuMBeR Is sIgnIfIcAnT BecAuse of IT's RecenT AppeARAnce on THeIR RAdAR.

38.7%

Hiring In 2009, my headcount will…

50%

11.3%

Looking forward: IT’s Impact Asked what would have the greatest impact on the business in 2009, CIos were clear: Driving innovative new market offerings or business practices.

1. Drive innovative new market offerings or business practices 2. lower the company’s overall operating costs 3. Improve quality of products and/or processes 4. Re-engineer core business processes 5. Manage customer relationships 6. Improve security/risk management 7. Improve end-user workforce productivity 8. Support global expansion 9. Acquire and retain customers 10. Enable regulatory compliance

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Increase Decrease Remain the same

deSpIte the SlOWdOWn ExACTly half oF ThE RESPonDEnTS SAy ThEy WIll InCreaSe headCOUnt In 2009. oF ThIS, OVer 80% ThEy WIll gRoW STAFF STREngTh bY Up tO 30%. Vol/4 | ISSUE/01

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“The impact of monetary easing will become visible in the second half of 2009, providing the basis for recovery in 2010,” says Dr. Subir Gokarn, chief economist, Standard & Poor’s, Asia Pacific.

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State of the Economy

“We’ll Bounce Back

in 2010” Dr. Subir Gokarn, chief economist, Standard & Poor’s, Asia Pacific, shares his views on the economy, how to get by, and why if you survive, you’ll probably be stronger for it. By Pankaj Mishra

“It is now all too clear that we are seeing the most dangerous

shock to the mature financial markets since the 1930’s, posing a major threat to global growth. —Charles Collyns, Deputy Director, Research Department, IMF.

Photos by D R LOHIA

In its recent report on global economy, the IMF predicted that the global growth rate for 2008 will stand at 3.9 percent and in 2009 it will go down to 3 percent. The bad news is that when the global economy records growth less than 3 percent then it is in a state of global recession. And when economic growth in the United States fell to 0.3 percent — in the third quarter — the rest of the world sat up. Thousands of kilometres away, India began to feel the heat. With crashing markets and a bruised industrial sector, the country is looking for ways to weather the storm. That’s where experts like Dr. Subir Gokarn, chief economist, Standard & Poor’s, Asia Pacific, come in. Having worked as the chief economist at Indira Gandhi Institute of Development Research and the National Council of Applied Economic Research, Dr. Gokarn is considered one of the best economic experts in the country. As India prepares to cope with repercussions of a global economic recession, Dr. Gokarn shares his insights about the real challenges, and also offers some advice on how best to negotiate economic uncertainty.

CIO: How will a weak US economy impact India and its exports? Subir Gokarn : At the aggregate level, exports from anywhere in the world to US markets will slow down. However, even as this is happening, there will be some churn in the marketshares of exporters. For example, consumers in these markets may opt for cheaper garments, footwear or appliances, which will benefit exporters from some countries.

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However, the effect across sectors will vary considerably. From an Indian perspective, traditional manufactured exports may benefit a little from consumer down-trading, but overall volume growth will be slow. For services, particularly IT and ITES, there really aren’t any substitute sources, so anybody who continues to offshore will retain India as a primary source. But, we have to consider the fact that the financial sector in these economies has been the most adversely affected by the current circumstances. This means that growth will be weaker for a while, as the system restructures itself. Other services, such as those related to healthcare, education and so on, are unlikely to be affected, as the demand for these is not driven by business cycles. In short, there will be an impact. The magnitude will depend on the depth and duration of the downturn. At this point, there are broad expectations that things will turn around by 2010, as the huge stimulus provided by central banks and governments around the world begins to take effect.

seen as one of these, because of the strength of its domestic drivers. How can Indian enterprises strategize to cope?

You can’t strategize to deal with the immediate situation. That requires tactical or even crisis-management responses. If your strategy has not already accommodated the likelihood of a slowdown, you will find it that much more difficult to navigate. So, let me talk about effective strategizing in more general terms. As pedestrian as it may sound, follow the basics. First, make yourself (as a product or service) indispensable to the customer. When he begins to cut expenses, you must be at or close to the bottom of the list. Second, diversify across geographies, product segments and market segments. As the balance of global economic power evens out, As pedestrian as it may sound, follow it makes increasing sense to invest the basics. basics MAkE yOURSELf in products and delivery models InDISpEnSAbLE tO tHE that will satisfy the needs of very CUStOMER. When he cuts expenses, different customers. you must be at or close to the Third, build an organizational structure that can easily bottom of the list.” accommodate both the upturn and downturn. This means the ability to ramp up or ramp down quickly Over the next few years, where is without disruption. Fourth, make an organizational commitment India’s economic growth heading given the current slowdown in to innovation — both product and process — and adhere to it the world economy? regardless of business conditions. If you already have these We currently estimate that growth during 2008-09 will be components built into your strategy, good tactics should see you 7.5 percent and slightly lower than that in 2009-10. However, we through at least a moderate downturn. believe that the impact of monetary easing — domestically and globally — will become visible in the second half of 2009, providing the basis for a robust recovery in 2010. Of course, new shocks could Which sectors do you expect will witness more challenges? emerge from anywhere and derail the process, but for the moment, Generally, sectors that got a boost by falling interest rates — real in the absence of any such shocks, this is our view. estate, automobiles, consumer durables and so on — will see the most significant slowdown. These should start recovering as the interest rate cycle turns, but more importantly, as the financial Will India now be less attractive to foreign investors who system begins lending again. As for sectors that are slowdowninvested over Rs 76,000 crore last year? proof, low-cost and mass-market segments typically gain because Let me place this in the more general context of emerging markets. of down-trading, just as in the case of exports. Global investors will now obviously be cautious in re-entering this asset class, given the sharp erosion in values. However, many will go to the next level and differentiate between emerging economies What about organized retail? Will it collapse? on the basis of their structural features, which are conducive to the No, not at all. Organized retail is being driven by long-term quickest turnaround and the fastest recovery. India will clearly be demographic and income dynamics, combined with the efficiency 46

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State of the Economy of supply chains. It is being hindered by issues of land use and displacement. As conflicting stakeholder interests are resolved, the economics of organized retail are just too compelling. What reforms does the Indian financial sector need? What issues to be addressed?

I want to state very emphatically that we should not use the current turmoil in the global financial system as an excuse to abandon our domestic reform agenda. The key issues for reform remain key issues even if the current circumstances have changed the context a bit. The reform agenda should be dictated by the objective of having a financial system that best serves the need of an economy experiencing rapid and sustained growth. This involves three essential elements: efficiency, risk management and inclusiveness. Our perspective on the roles of different players — private vs. public, banks vs. markets, foreign vs. domestic, etcetera — may evolve and will certainly be influenced by current circumstances. But we should not lose sight of the objectives. There is a lot of work to be done on all of them and we must persist with a reform agenda that takes us towards these objectives. Can the government credibly pursue reforms, what with the imminent elections?

I don’t look at the reform process as the prerogative of any specific government. We have seen, over the past 17 years, that it is dynamic, irrespective of who is in office and under what compulsions the government operates. Our reform history suggests that the best chance of a significant reform agenda being implemented is in the first year of a government facing a macroeconomic crisis. This provides both the opportunity and the time horizon to appropriate the benefits. So, regardless of who forms the government in 2009, I would expect to see a reformist approach. But like it or not, we have to wait until then to see where things go. Do you think the next budget will be populist because of the general election?

This is a misconception. The 2008 Budget was the pre-election Budget and it came with its share of populist measures. Budget 2009 will be a vote-on-account. The new government will present its Budget in the monsoon session of Parliament and I expect significant reform initiatives. How do you see the decision to waive farmer loans, worth over Rs 100,000 crore, and the hike in government salaries with regard to the current economic situation?

I think the farm loan waiver is the most significant political initiative in the Budget. I do believe that the issue of farmer distress is significant and we must have an effective policy response to it. This will involve some fundamental changes in price incentives, input subsidies and, very importantly, insurance and safety net mechanisms. A loan waiver is a short-cut with one-off benefits to 48

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farmers, while it causes significant damage to the financial system by way of moral hazard. I would hope that the government backs the waiver up by making the structural changes necessary to minimize farmer distress. The issue of government salaries is a complicated one. There is no question that, even after taking job security and other attributes of government employment into account, they are seriously underpaid. The kind of domain skills and expertise that are desperately needed are simply not coming in any more because of the enormous wage differential. Even if we are moving more and more in the direction of private enterprise, an efficient government is still critical to our growth performance. If we cannot attract enough talent into government, it will not be able to deliver. So, higher salaries are a must. Unfortunately, the one-size-fits-all approach of the government

“I WAnt tO StAtE vERy EMpHAtICALLy that we should not use the current turmoil in the global financial system as an excuse to abandon our domestic reform agenda.” in implementing Pay Commission recommendations spreads the increase very thin, not allowing it to create the necessary incentives. We must combine higher pay with significant process reform and performance-based differentiation. This is a huge challenge, which we have shied away from tackling. Are we already witnessing cuts in capital and operational expenditure by Indian corporates? What are the longer-term repercussions of this pull back?

Yes, we are and it is a typical response to the slowdown. Let’s not forget that the Indian economy is coming out of a prolonged investment boom that began in 2003 and some slowdown was on the cards in any case as companies consolidated and planned for the next phase of expansion. In fact, the new capacity that was created during this boom has actually contributed significantly to the ability of the corporate sector to withstand the multiple shocks that hit them this year. This came in the form of improved energy efficiency and overall productivity. If the slowdown is not very prolonged, companies should come out of it in reasonable financial shape, ready for a next round of investment as the recovery scenario laid out above unfolds. CIO Send feedback on this interview to editor@cio.in

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â&#x20AC;&#x153;The medium and long-term India investment thesis remains intact and unchanged,â&#x20AC;? says Rajeev Chandrashekhar, President of FICCI.

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State of the Industry

“Be Paranoid and

Cautious” Rajeev Chandrashekhar, President of FICCI and chairman and CEO of Jupiter Capital says that industry leaders should plan diligently instead of trusting their intuition. By Pankaj Mishra

Recently, Jet Airways showed the door and then brought back

Imaging by un nikrishn an AV

over 1,900 probationers, in a move that put pink slips in the public spotlight. With soaring airfares and a history of losses, aviation sure is feeling the pinch.

But it can take heart from the fact that it is not alone. The media made the aviation industry among the most visible faces of a slowdown that’s hitting the retail, real estate and the BFSI sectors as well. Banks and other financial institutions face a liquidity crunch that’s forcing them to turn down enterprises, most recently SMEs, oil companies, and micro-finance institutions — a sector that has seen a growth of 60 percent in the past few years — but is now on the decline. IT isn’t far behind. According to a survey by CII, the IT industry has fallen 2-3 percent in pricing during April-September 2008 compared with the previous six months. The manpower utilization level has come down by 5 percent and employment has reduced by 3 to 5 percent. It’s the same story everywhere. According to the Index of Industrial Production figures released by the Government of India, manufacturing has grown, but the pace of growth has fallen drastically. Between 2006 and 2007, the rate of growth for that sector was 10.7 in August. Between 2007 and 2008, that number fell to 1.1 percent (for the same month). The IIP might not be a number everyone follows, but the India’ Inc’s growth rate is. And according to FICCI (Federation of Indian Chambers of Commerce and Industry) president, Rajeev Chandrashekhar, India’s not going to 8 percent this year. Founder of BPL Mobile, and a member of the Rajya Sabha, Chandrashekhar is also the chairman and CEO of Jupiter Capital, a venture development, management and investment company — so he feels the slowdown firsthand. In this interview, Chandrashekhar provides perspective on the slowdown and how industry leaders can deal with it.

CIO: Do you think we will see over 8.5 percent growth? Rajeev Chandrashekhar: No. I think the growth is going to be more in the range of 7 percent. So Indian industry will grow, only slower?

Our economy will grow. Companies will face pressure to get to the next level of cost efficiency, but in the medium-term, we will get back to our robust growth rates. The key is to ride out this short storm.

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state of the industry Is the Indian economy positioned to meet the slowdown many economists are warning about?

Will a slowdown lead businesses to seek investments that can be justified quickly? Will long-term strategic objectives suffer?

We are reasonably positioned. However, the concern is really over the investment and consumer spending aspects of our economy which are clearly vulnerable — and on which the economy has been riding on for the last few years.

The medium and long-term India investment thesis remains intact and unchanged by the global financial situation and so, investments in these times will be strategic — made by investors who see long-term value in India.

Which sectors will still do well?

What is your advice to CEOs for 2009?

It’s difficult to say. I think overall the economy and its elements will continue to do well and outperform regional peers. However, relative to previous years, growth rates will be moderate. Is our services-driven economy more vulnerable?

My advice is to be paranoid. Paranoia and extra diligence in investments and costs help during these times. Don’t change your plans — just increase the rigor with which these plans are firmed up and finalized. Intuition and flying-by-the-seat-of-your-pants have no place in this environment.

Our services economy will be impacted for sure. But like I said, it’s a question of riding out this storm and being smart enough to do it.

Do you think that Budget 2009 will be populist or severe?

Globally, election-eve budgets in democracies tend to be just that —

Don’t change your plans — just increase the rigor with which these plans are firmed up. FLYIng-BYTHE-SEAT-OF-YOUR-PAnTS has no place in this environment.” How should India balance between manufacturing and services?

We are a trillion-dollar economy (or at least we were till devaluation). So, we need both robust and competitive manufacturing and services sectors and we need to serve both domestic and international markets as well as consumers and enterprises. Will retail lose further steam?

In the short term, there is a possibility of consumer spending slowing down in general. This will, of course, impact the retail sector. You know the IT and telecom industry well. What can the IT industry do to address a slowdown in its primary markets?

I think it depends on who your clients are in the US. It is clear that the financial sector there is facing a shakeout. It’s also clear that those running smaller, lesser-capitalized businesses are going to be under survival pressure. So, if you are an IT services company, your future strategy depends on which side of this restructuring you find yourself on. It is going to be tough for a number of the smaller IT services companies in India for sure and I expect to see some consolidation. 52

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election budgets. I only hope that the election budgets don’t create big fiscal holes in our finances. That’s the maximum we can hope for. And what is your outlook for industrial growth in states like Bihar and UP?

What applies to India applies to all states. States must expect and plan for a slowdown in investments and must compete hard for long-term strategic investors that will continue to look at India. States also need to worry about financing their infrastructure investments since public finances will also be under pressure. What agenda will you drive at FICCI to ensure the continuing competitiveness of Indian industry in these challenging times?

I would advice all corporates to tighten their belts, including deferring expenditure or investments they believe can be postponed. CIO

Send feedback on this interview to editor@cio.in

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Telecommunications

Unified communications promises to integrate your Blackberry, your e-mail and any other tools and devices you use to communicate and collaborate at work. Early adopters share four keys to successful implementations. By John Brandon

Your Plan forUnified Communications Reader ROI:

Why unified communications is complex Strategies for deploying new telecom technology Obstacles to consider

Feature -01.indd 56

in Chicago with 12 employees — half of them in Madrid — Accenture CIO Frank Modruson had a brainstorm. He was, at the same time, holding a private video chat on his laptop with Paul, an employee who based in Minneapolis. Modruson decided to connect Paul to the video conference so Paul could contribute to the discussion. He plugged a VGA cable into the laptop and clicked a button. In a second, Paul was talking to those in Chicago and in Madrid. By turning the laptop's Web camera toward the telepresence screen, Paul could see the participants and they could see him. They engaged easily on a complex topic — infrastructure outsourcing — and reached a decision fast. As a large enterprise with 180,000 employees in 49 countries, Accenture prides itself on responding quickly to clients: consultants will jump on a plane at seemingly a moment's notice. The exchange between Paul and his colleagues was possible, thanks to a unified communications platform that goes well beyond video conferencing and chat to integrate the many communications technologies Accenture's employees use. Unified communications (UC) is primarily a software undertaking that helps unify disparate technologies. At Accenture, the unified communications platform includes presence indicators on the front end which provides a way for employees to tell people where they are (for example, at a meeting or on the phone); on the back end, the platform unifies technology silos, creating a single inbox that handles voice mail, video, IM and e-mail, so people can communicate wherever they happen to be. Accenture employees can switch seamlessly from a video conference to an online collaboration session or, with the

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Il lustrat io n by pc anoo p

uring a video conference

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Telecommunications click of a button they can elevate an instant messaging chat to a phone conversation — or even send a fax — all using a common platform. For Modruson, the key benefits are financial: he says Accenture has saved millions in travel costs by using telepresence. In June alone, 425 employees avoided international travel and another 250 avoided domestic travel by using telepresence. "Our management team is fairly distributed around the world, so the vision we have is for better remote collaboration," says Modruson. Unified communications constitutes the applications and functions that are used to implement fixed mobile convergence (FMC). FMC focuses on bringing the fixed and mobile components of communications together; UC involves giving people the tools to move seamlessly between multiple communication channels, both wired and wireless. It's becoming a trend, according to Bob Hafner, a managing vice president at Gartner, because there are too many silos, too many messaging "cooks in the kitchen." "Unified communications is a way to provide the tools employees really need so they can communicate more effectively," says Hafner. Yet UC is a project you should not leave to your telecommunications director. Instead,

Unifying communications is a project you should not leave to your telecommunications director. Instead, deploying UC successfully requires a CIO to champion it. UC requires the cooperation of various groups within IT. deploying UC successfully requires a CIO to champion it. UC requires the cooperation of various groups within IT such as networking, server administrators and telecommunications managers; among end-user departments inside a large company and with multiple vendors for servers, VoIP, networks and video conferencing. Early adopters of UC, including Modruson and CIOs from Groupe Danone, United Natural Goods, Gamestop and CNL Financial say you shouldn't invest in UC lightly. UC has an impact on numerous corporate policies and practices, including the mobile devices used by employees, as well as with telecommuting practices and regulatory compliance issues. UC presents challenges in getting employees to adopt the technology.

Identify the Benefits It's important to have a comprehensive plan that starts with a solid business case. You also need to consider the impact on your infrastructure, the approach you wish to take toward deployment and the impact the technology will have on business as usual. Says Jeff Donaldson, the CIO at video game retailer Gamestop: "We don't want to deliver a product company-wide 58

Feature -01.indd 58

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that we are incrementally developing — we want to deliver a feature-rich environment." UC offers potentially big returns. Forrester found, using its Total Economic Impact Model, that companies could achieve significant productivity improvements and cost savings with UC products. The technology investment includes the umbrella system that ties components such as IM and video conferencing together (such as Microsoft's Office Communications Server 2007). A UC initiative may include other elements, such as added bandwidth and storage (to accommodate video conferencing and voice mail). "The business case is primarily built on business process improvements," says Elizabeth Herrell, a vice president at Forrester. These include reducing delays in decision making, rapid problem resolution and accelerating the sales cycle, she says. UC improves collaboration among work teams, helping companies improve time to market and reduce travel and training expenses, Herrell adds. E. Jeffrey Hutchinson is the CIO for North America of Groupe Danone. He describes UC as a kind of "Brady Bunch" process (a reference to the opening of the classic show, where viewers are introduced to the combined family) that integrates text, audio, video, VoIP and messaging. Some of the components, such as phones and network switches from Cisco and messaging tools from IBM, were already installed. Now Groupe Danone is working on upgrading laptops; Hutchinson's team is evaluating built-in webcams, for example, to see if the current generation supports the video resolution they're looking for. Like Modruson, Hutchinson sees reduced travel as a major benefit. He has direct reports, working in seven different locations. Yet he can hold regular meetings using high-definition video over VoIP. The hard-dollar returns can be hard to pinpoint initially. "But we look at it from two perspectives: how well does it increase sales and enable profitability? And, how well does it increase productivity?" UC also figures into Groupe Danone's sustainability initiatives, helping reduce carbon emissions. Gas prices put the benefits of reducing travel front and center. "The gas crisis was not apparent when we started the effort," Hutchinson says, "However, as we all know, it is now. So we adjusted our focus and increased the speed of deployment of office-based HD video gear in local conference rooms." The company's goal was to reduce (or eliminate) travel cost and downtime for one-day internal meetings. "Based on the requests from the user community, we re-prioritized our focus around external ‘gateway’ connections for the same reason," Hutchinson adds.

Understand Infrastructure and Software Needs The return you get from UC depends on the infrastructure investment you need to make it work. Assuming you have already deployed an IP network (necessary for integrating IP-based communications), UC applications can still have a dramatic effect on network traffic. Legacy e-mail, voice mail and IM platforms may not support integration and can create headaches for IT staff in different areas of the department (a UC initiative often forces a decision about

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Telecommunications

44%

predecessor to OCS) to work with MSN Messenger, whether data networking and telecommunications although both are Microsoft products. Omnicom teams should be combined). "Your network has to eventually chose OCS and Cisco's IP telephony be ready to support it, your messaging platform platform as core UC components, then hired AT&T needs to be ready and fully capable, and you may to integrate all the pieces, including fax-to-e-mail need to expand storage," says Joel Schwalbe, the services from Interstar Technologies and a tool CIO and a senior vice president at CNL Financial. from Ascendant Systems that provides mobile When Schwalbe's team began to investigate device users with a single phone number. UC, it uncovered two potential obstacles: first Joshua Sigel, vice president of IT operations of all, says Schwalbe, he learned that CNL's and applied technologies at UNFI (formerly document retention program, required for Unified Natural Foods), is deploying UC to help government compliance, did not necessarily his company enable workers to be productive address voice mail. Under UC, voice mail would anywhere, to reduce travel costs and increase become part of the e-mail system, which is subject Source: Gartner face-to-face communication despite geography. to retention. Voice-mail files are potentially much He's using Avaya for IP telephony and phone, and larger than e-mail, requiring more storage or Cisco for networking, along with Polycom and Microsoft Round changes to the data archiving process. Tables for video. But he has instructed his IT staff to monitor UC "We had started down the path and then realized we've got developments: Avaya might not be as strong in video conferencing to get our compliance folks involved and made sure everybody as another vendor right now, but that could change as its UC was weighing in on what we're doing," says Schwalbe. "Our offering matures. He's also watching developments in telepresence current policy indicates that we must maintain 100 percent technology from Microsoft. of all e-mails for our FINRA [Financial Industry Regulatory "We focus on the best of breed in each category but don't want Authority]-licensed associates. However, when voice mails are to be tied down to a particular vendor who has not implemented introduced to the e-mail system — which are not subject to the everything we need," says Sigel. same regulatory compliance — then we need to adapt the policy Analyzing multiple vendors when choosing UC products is all part to consider the content of the e-mail, not just the e-mail itself." of the procurement selection process. Hutchinson recounts looking Meanwhile, the unification of voice, fax and e-mail on the same at multiple vendors including Cisco, Tandberg, Microsoft and others. servers created a requirement for more centralized storage, he says, "At that time it was not HD," he notes. The application's ‘roundtable’ to especially as it relates to data de-duplication for each medium. identify participants did a good job of identifying who was speaking. Not only that, but Schwalbe determined that CNL's Microsoft "But we also needed to see who was on the other end of the video link," Exchange 2003 messaging platform wouldn't support integration Hutchinson adds. "In our case, we use projectors or displays on walls, with Office Communications Server 2007, the platform with which which causes participants at the table to have to turn away from the he chose to integrate the company's communications technologies. MS Video solution, and then we didn't get the benefits." "We really feel that to derive the value, we need to upgrade to Exchange 2007 before we will go full-on with unified communications," he says. "We really want to take advantage of the collaboration capabilities with the Office 2007 suite Exchange 2007, OCS 2007, as well as our VoIP communications servers." Given all the variables, experts recommend a measured approach Another infrastructure consideration is that, when unifying to deploying UC. Forrester's Herrell says most organizations begin communication components, the individual components might not by integrating a few applications such as presence (who is where in be designed to work together. Omnicom Media Group made its first the organization), messaging and audio conferencing, and then they foray into UC with a project to standardize on a federated instant gradually roll out other applications. messaging platform. Employees were running three main IM clients: "I suggest organizations begin with pilots and identify AOL Instant Messenger, Yahoo Messenger and Windows Live employees that could gain from its features such as remote Messenger. "Our branding was being compromised because people workers, knowledge workers and those who are involved in were using their personal IMs," says CIO Kenneth Corriveau. There projects that require ongoing collaboration with teammates," says were security issues, too, because employees were using three public Herrell. While not all UC technologies can be considered core to IM clients. "There was no way at the time to protect our environment running the business, UC helps employees communicate and be from viruses or P2P file transfers. Moving to a corporate solution more productive. As such, you can't let UC deployment get in the gave us all this capability," he says. way of mission-critical applications such as ERP, even though the But that took two years due to the lack of messaging standards complexity of unifying systems and introducing telepresence on between clients and a wish to not disrupt end users, according company networks is sure to cause networking complications. to Corriveau. "There were many components involved, and the Pilots help CIOs examine exactly how UC will change the technology was maturing from a variety of perspectives," Corriveau infrastructure and determine how to mitigate performance risks. notes. They even had trouble getting Microsoft Communicator (the In pilots, Hutchinson advises involving both employees who are

of companies

say UC improved speed of communications across the business.

Decide on a Deployment Strategy

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Telecommunications knowledgeable about technology (such as those in IT) and those who have limited technology expertise to provide adequate feedback about the impact of new tools, its usability and benefits to the business. When you hear an IT staff member say, ‘My video conference tool crashes my instant messenger (IM) client,’ Hutchinson says, you can address those concerns by approaching vendors and addressing interoperability with them, or by changing network settings and server configurations. Gamestop's Donaldson began with 150 employees at headquarters, along with another five or so in Europe to test international capabilities. The company is using Microsoft OCS and Microsoft Office SharePoint Services, and is considering other tools as well. "Our primary purpose of the incremental approach is to test-market the solution and ensure value is obtained prior to a full rollout, and to create a feature-rich solution prior to the full rollout company-wide." At Accenture, Modruson is taking a more aggressive approach with 6,000 initial users followed by a mass deployment. In Modruson's view, the more people who can use the technology, the more effectively they can collaborate. When the company installed telepresence to just a couple of locations in early 2008, it wasn't used very much. When they rolled out these features to 13 locations this summer, there was a snowball effect: many more employees at all sites started using the technology.

Focus on People No UC strategy can be complete without a plan for how people can make the switch. Any change, notes Modruson, brings more complexity initially, even if its goal is to simplify and streamline. "There is a risk of relying on Internet connectivity," he says, noting that remote video conferencing or IM doesn't work if a connection is not available. "And there's a challenge associated with change management — the technology changes the way people communicate and therefore there's a shift in behavior required." Gartner's Heller says the best strategy to counter some of these risks is to make sure everyone in the organization understands what's happening: employees should know how far-reaching the UC program will be. You'll need to define for them how the applications and devices they use will change. You'll also need to tell them how to resolve technology-induced problems. Finally, you, along with business leaders, will need to define new expectations for how employees should communicate with each other. The last challenge with UC is harder to quantify, but still important. Accenture's Modruson observes a human latency factor: where IT might envision highly improved communication, employees still find ways to avoid voice-mail messages, do not reply promptly to e-mail or just get overwhelmed with a new approach to communication. One way Accenture addressed the problem was to make sure communications were truly unified — for example, voice-mail messages were delivered quickly as audio files to an e-mail inbox, so that employees receive all messages in one place and can listen to voice mail on a computer, not just with a phone. UNFI's Sigel believes UC is inevitable. CIOs should just look around, he says, to see all the ways employees are communicating 62

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Unifying Unified

Communications An increasing number of products in the market promise to help enterprises reduce the costs of delivering and maintaining unified communications applications. Delegated administration: The best communications management solutions enable administrators to delegate administration and control to other administrators based on their location or function. A system that can offer automated self-management options via Web portals allows for the creation of multiple types of administrators based on role, location and user access rights. Self-service: Self-service Web portals automate and simplify common operations, giving users a convenient and cost-effective way to troubleshoot and manage their own services. A user-friendly, Web-based management portal with online support also helps eliminate the need for extensive training. Device management: A UC management solution should offer device management capabilities to ensure control and safety as well as increased efficiency and less device downtime. Some solutions allow device updates to be done ‘over the air,’ without requiring time or effort on the end-user’s side. Security: The best solutions do not require disruption to the enterprise infrastructure, but sit on top of the existing infrastructure, leaving it unchanged. It is critical to provide IT administrators and employees with a comprehensive management user interface that automates tasks and ensures that the proper IT policies are followed. Extensibility: With changing company requirements, it is critical to utilize a solution that will easily grow with changing needs. It is best to choose one that is extensible to third-party front-end and back-end applications, preferably using industrystandard API and SDKs, which allows the customer to make additional extensions if necessary. — Francois Depayras with one another. Integration will be essential to keeping people in touch and productive. So, it's best to begin the hard work of analysis, building the business case, deploying a solution and working through the challenges that will invariably arise. Modruson agrees that UC is a game-changing exercise. "Unified communication technologies will significantly enhance the connectedness of our people," he says. "The ability to reach out and communicate with colleagues improves efficiency and productivity and ultimately enhances our ability to better serve our clients." CIO John Brandon is a freelance writer based in Minnesota.Send feedback on this feature

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EvEnt REPORt

Presenting Partner

KeepIng

It SIMple When Business Service Automation was offered as a way to simplify It for better business outcomes, it caught attention of many It leaders who gathered to discuss this in an Indian context. “Managing the egos of the people in a dynamic scenario is a problem. I think automation would solve this.” SatiSh PendSe CIO, Hindustan Construction Company

“It’s important to have a well documented process in place, but something to fix the changes in the process should also be there.” GoPal PPal RanGaRaj VP - IT, Reliance Life Sciences

Historically, enterprises have operated with a technologycentric view of It infrastructure and attempted to create standardized processes across technology 'silos.' However, today's organizations are faced with the reality that this component approach is not enough to meet the dynamic requirements of the business. this is driving organizations to move toward processes and technologies, such as Business Service Automation (BSA), that enable a more flexible, consistent business-driven approach to infrastructure management. Michel Feaster, director - service automation software technology, solution group, HP Software, initiated a roundtable discussion recently, by throwing some light on BSA’s significance. She observed, “Organizations are facing a lot of challenges like exponentially growing devices. It services is itself becoming so complex, specially managing applications, and the challenges in rolling them out. Our

EvEnt REPORt

observation is that these challenges are creating a storm and a whole new set of issues is emerging around managing and delivering the services in this environment. CIOs have already spent on infrastructure and a lot of money regularly goes in to just managing it. this reduces the capability of CIOs to innovate, because usually the cramped budgets cannot keep up with these activities.” Arun O. Gupta, customer care associate and CtO, Shopper's michel FeaSteR Stop, said, “this Director - service automation software seems like a situation technology, Solution group, HP Software where companies have created a mess of their operations and then are approaching a solution to tackle it. One needs to set control process properly. If you are not standardized in your processes, loopholes are bound to occur in the system. the execution is driven by discipline. It’s all about process discipline while handling It services.” Putting forward the example of the Y2K problem, Sunil Mehta, Sr. vP and area systems director - central Asia, JWt, said, “to combat this issue some automated solutions were offered, which proved to be very costly then. the organizations decided to create the code inhouse and get rid of this malicious code. this shows that sometimes your own resources are so skilled that you may not have to go out looking for solutions.” He further added, “It’s easy to get technically skilled employees, but it’s not easy to find business oriented technical skills, and it’s important to retain these key people. therefore, we want to invest in improving skill sets and are investing on our human resources. this way the knowledge base moves up. the same team is managing more processes now.” Addressing their concerns, Feaster of HP Software, said, “It’s true that the process and the people are important to the organization. It’s almost certain that if you automate the wrong things you won’t get proper results from automating the system. In such situations there is an opportunity to get greater efficiency out of existing resources. there's a lot of knowledge in the processes and the workflows that you can take out of your people's heads and codify it into technology. Use the technology to codify the information and hire lower skilled

“Automation gives an opportunity to get more efficiency out of your existing resources.”

“proper analysis and a successful implementation might take the pain points away from a particular process." PRaSad dhumal National IS Manager, DHL Express

“execution is driven by discipline. It’s all about process discipline while handling your It services.” aRun o. GuPta Customer Care Associate and CTO, Shopper's Stop

“Implementation of automation has to be scalable, it has to start small only then can it be a success.” t.P. anantheSwaRan Head-IT, Mumbai International Airport

“Sometimes your own resources are so skilled that you may not have to go out looking for solutions.” Sunil mehta Sr. VP and Area Systems Director Central Asia, JWT

EvEnt REPORt

Working Wonders WitH Bsa BSA relieves employees from mind numbing, repetitive work, along with providing hard dollar benefits like availability and cost savings; soft dollar value in terms of job satisfaction. this gives enough reasons to go forward with automation. Business Service Automation plays a role in bridging the gaps in the emerging It that’s grown ever so more complex with the infrastructure explosion, growing number of It services and large operational expenses in the organizations. the infrastructure and environment is likely to get more complex in another few years down the line. In contrast to this, Indian organizations are facing issues like retaining It staff and increasing their productivity despite mind numbing and repetitive tasks. these problems triggered HP to acquire ‘Opsware,’ the market leader in the automation space. For most organizations applications and the supporting infrastructure do not really map together. BSA gives the capability of automating control of the

infrastructure, so we can put power seizure on all the devices and manage all the change at lower cost and risk. this means that It I staff wouldn’t have to do a lot of manual and tedious work. this leads to reducing human intervention where you can do without it, and putting them exactly where you need them. People are required to control technology, but some functions can be put on an auto pilot, so to speak. A leading technology firm which is involved in delivering multiple applications to its customers, wanted to assure consistency in systems across different geographies. they had challenges around business continuity about delivering stable and reliable applications in a heterogeneous environment. they were also having a

workers for a set of tasks, and then skilled resources can focus on just the most important products and services. this engages them and keeps them in the company. I think there is a role to play in both making the process more efficient and getting more out of the existing It team. When you codify the available knowledge you don’t have much to lose, in case your resources are threatened.” "Consistency can’t be achieved until you automate the processes. Whenever you deal with end point compliance or security, sending a resource to make an end user’s operations compliant is not viable. So automating that process really makes sense in this situation,” said Suvanjay Kumar Sharma, vP - corporate strategy and chief enterprise architect, Yes Bank. It was t.P. Anantheswaran, Head-It, Mumbai International Airport, who pointed out that the concept resembles infrastructure automation. He said, “From this explanation, there seems to be no difference between BSA and It infrastructure automation. It’s all about better management of your infrastructure.” In response, Feaster said, “Everyone talks about management and monitoring but don’t consider the step in between this, which is someone has to go and change the device and desktop to fix a problem. BSA helps in

tough time finding and retaining skilled resources. they then used automation technologies to gain visibility about the configuration environment at the datacenter. By doing this, they saw a real improvement. now, they have segregated duties; have a complete auto trail on all changes that are made. this provides control, documentation is automatically done, and it also provides real-time reports. When you talk about automation, it’s not only about manual work but also about the consistency of the environment. It‘s also about how you reduce variance and how you consistently keep getting the same results. BSA helps to boost customer satisfaction by increasing consistency.

automating that step. Speed is a great value proposition when going in for automation, and the second is availability.” talking about some more value propositions that BSA can offer, Kamal Dutta, Director, HP Software, said “Policies have gained a lot of focus in the organizations. How do you enforce a policy, and once enforced how do you trace it or audit it? Policies and their enforcement plays a vital role in Indian enterprises. So, there should be a way to make sure that they stick to the policy, and this can be made possible through automation.” Gopal Rangaraj, vP - It, Reliance Life Sciences, said, “It’s important to have a well documented process and a monitoring mechanism in place. But we need to make changes in parallel with business changes. the alerts may buzz me to change something but, how do I go about doing it? We have had cases where few days were spent to set right a stack of switches that had burnt out. We need something to settle that for us.” Feaster said that to address this issue they had some solutions where the whole management of the desktop is automated. the idea is to reduce the involvement of the helpdesk. She said, “In this case, we also automate the way the user troubleshoots the

EvEnt REPORt

issues. the whole point is to not only drive the number of tickets down, but also drive the number of tickets handled by humans down. this way you are trying to provide help through automated diagnostics, automated utilities and automated configuration management. By this you are meeting your business objective. You can reduce the number of people and costs involved.” “We need to upload a lot of changes across our stores on daily basis. We simply don’t have that kind of coverage. We Kamal dutta are connected through Director, HP Software leased lines. What role would automation play in this scenario? Some solutions in this case do not guarantee they have connectivity all the time. If something goes wrong in the infrastructure you can’t see that in the absence of connectivity. this is a major challenge,” said timothy D. Kasbe, CIO, Reliance Retail. Putting forth his views on automation, Satish Pendse, CIO, Hindustan Construction Company, said, “It’s difficult to find a person with skills to handle a lot of technologies that keep coming up every now and then. Even if we get such a person, then retaining him is a challenge. Because managing the egos of these people is a problem. While managing my business I would like to concentrate on other things instead of managing all these issues. I think automation would have a solution to this.” Expressing his ideas on the way forward, Prasad Dhumal, national IS manager, DHL Express, said, “We need to identify what we want to automate — is it infrastructure management or service delivery to business. Proper analysis and a successful implementation might take the pain points away from a particular process.” He also pointed out that in an airplane, landing and takeoff are two important functions where pilots are required. the rest of the flight can run on autopilot mode. But you can’t imagine a flight without pilots. So we can’t totally eliminate human resources from our system even if we opt to automate it. Sharma of Yes Bank said,“Business was earlier informationcentric and now it is communication-centric, in this scenario you need to automate more, because human beings can’t manage

“There should be a way to make sure that the process sticks to the policy. This is made possible through automation.”

“Whenever you deal with end point compliance or security, deputing a resource to make an end user’s operations compliant manually is not viable.” Suvanjay KumaR ShaRma VP - Corporate Strategy and Chief Enterprise Architect, Yes Bank

“It's a major challenge to detect changes or faults in the infrastructure in the absence of proper connectivity.” timothy d. KaSbe CIO, Reliance Retail

“the critical issue is how we manage data model and the deploying agents through business service automation.” SRidhaR Rane Head-Technology and VP, Barclays PLC

such heavy communication traffic.” Anantheswaran of Mumbai International Airport said that when implementing automation in the Indian context, has to be scalable. It has to start small and only then can it be a success. Adding to this, Mehta of JWt said,"One more thing that should be considered in the Indian context of implementation is that if the investment can promise less than a year for ROI then it is absolutely saleable in senior management. this helps CIOs take some quick decisions."

Essential

technology Business process management requires BPM tools, right? Not always. In some cases, there are other process management tools that can do the job for less.

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

BPMWithout Busting the Budget By Bill Snyder

| Managing a global transportation network featuring shipments by truck, plane and ship is difficult enough. But managing the sea of data that surrounds that network can be even tougher, and that was becoming a challenge for YRC Worldwide. Many shipments the $9.6 billion (about Rs 3,840 crore) company moved were accompanied with corresponding paper documents, including purchase orders, bills of lading, tracking stickers, proof of delivery and, ultimately, an invoice. What's more, much of that paperwork was exactly that â&#x20AC;&#x201D; paper, says Michael Rapken, YRC's CIO and executive vice president. "The [order-entry] process was manually intensive. Customers could make mistakes on forms. So could our order-entry people," he says. Mistakes of this kind were one issue, productivity was another. It was simply taking too long to complete each transaction. YRC didn't look at the problem in isolation. Rapken and his team realized that the orderentry issue was an opportunity to rationalize key parts of YRC's business process and IT structure, parts of which run on mainframes. But the company was not about to rip up and replace its existing systems. Instead, it undertook a carefully modulated deployment of business

BPM

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essential technology

process management (BPM) and document management software. And they aren't sorry they did. The result: "A huge success. We saw an average increase in productivity of 50 percent for order-entry people," says Rapken. And the bill was not enormous either; it was approximately $500,000 (about Rs 200 lakh) for the heart of the project. Business process management can be a very scary phrase for many IT leaders. It conjures up visions of a years-long project and multi-million-dollar consulting bills. But, as some CIOs are finding out, it doesn't have to be that way. Companies like YRC and others are discovering that you don't always need a traditional BPM tool when it comes to solving a specific business problem. While some situations absolutely require them, companies are finding that putting other process management tools to work can yield significant ROI without busting the budget.

First, Define Your Project If there were a top 10 list of confusing IT buzzwords, BPM would be right up there.

management systems or packaged business applications," he says. Before getting serious about BPM, suggests Le Clair, ask yourself and other stakeholders in the organization (not just IT): do your processes involve mainly people, documents and decisions? Or is most of the action behind the scenes and system to system? The answers can help you decide whether you need a classic BPM solution. Document-intensive processes, such as order entry, billing or tracking, can create major headaches when not integrated with the overall flow of a company's business process. Yet the potential to solve these problems through the use of business process management software â&#x20AC;&#x201D; or tools that are closely related â&#x20AC;&#x201D; is often overlooked, says Le Clair. Sometimes, a solution that looks like enterprise content management will do the trick, while full-bore BPM would be overkill. Case in point: Under Armour, a $675 million (about Rs 2,700-crore) seller of performance-oriented apparel and footwear for athletes. Like many clothing

BPM is scary because it conjures up visions of long, multi-million-dollar projects. But some CIOs are finding out that it doesn't have to be that way. It's like the story of the blindfolded men touching an elephant and figuring out what it is, says Forrester Research senior analyst Craig Le Clair. "Some BPM vendors feel like integration tools, others feel like rich human tools for participating in processes and others feel a lot like document

Essentisl Tec.indd 74

manufacturers, the company has sharp spikes in order and supply chain data as it gears up for seasonal product shifts or promotional pushes, says Steve Walker, Under Armour's manager of supply chain systems. Much of Under Armour's seasonal product data is developed in an external product

$3 billion: the size the

business process management market is expected to be by 2009, if it maintains its current growth rate. Source: IDC

development system, and then manually created in the SAP Business Suite. That was a problem. Pricing data, for example, changes radically every spring and fall; keying in that information could take up to two weeks. Not only was it slow, but the process led to errors and irritated high-level employees who were forced to spend time entering data. "SAP is great for automatic processes, but we needed to push the data through and we had to do it manually," says Walker. Under Armour's IT team first attempted to solve the problem with a data conversion program, but it turned out to need too much maintenance. SAP offers a built-in testing tool that might have been a workaround, but it was too difficult for end users, says Walker. For an initial cost of about $25,000 (about Rs 100 lakh), in early 2008 Under Armour

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essential technology

deployed an add-on system from Winshuttle to automate the product creation process by importing data from an Excel format into SAP. Administrators write scripts in transactionShuttle that are somewhat analogous to macros; they then push them to users, who can run them in a related application called runShuttle. Little or no programming is needed, says Walker. The payoff was substantial. One step in the product-creation process consumed 560 person-hours manually; when automated, the same task drops to 112 hours, an improvement of about 80 percent, says Walker. "That's just material creation. Do that 12 times a year and it really adds up," he adds.

difficult. Indeed, many still resort to mapping by pencil and paper, says Neil Ward-Dutton, research director of Macehiter Ward-Dutton, a UK-based analyst and advisory firm. Level 3 Communications, an international provider of fiber-based communications services, faced a huge mapping challenge as it developed the Unity Program. Unity is a three-year effort to overhaul the company's overgrown infrastructure, which had swelled to some 1,200 applications as it digested eight newly acquired companies, says Rob Smallwood, Level 3's senior vice president for IT. The plan included efforts to inventory and integrate disparate systems from the acquired companies and refresh the process

Be sure that business management and IT are closely aligned before you undertake BPM.And, not everything has to be done with new technology. Good ROI, to be sure, yet Winshuttle doesn't even bill itself as a business process management vendor. Big ERP apps like SAP's often have areas that need to be complemented in order to manage a process, and that's where Winshuttle and similar products play a role.

Complexity Determines Tool Choices Conceptually, at least, Under Armour's deployment was fairly straightforward. But other document- or system-intensive processes are more complex, requiring careful process mapping, which companies often find

Essentisl Tec.indd 76

and application architecture to provide a single, consolidated platform for sales, service delivery and billing. The company had been documenting its business processes via Visio and Powerpoint, although Smallwood jokes that "you might have found something on a napkin at a branch office as well." The process was just too cumbersome and lacked flexibility. Given the complexity of the task, it was clear Level 3 needed full-blown BPM tools, including one enabling it to map its new set of processes. In 2006 the company introduced Savvion BusinessManager, which gave the business

process managers and IT the ability to handle processes from modeling and simulation through execution and monitoring. The deployment was successful â&#x20AC;&#x201D; instead of taking a quarter or so to implement a new process, IT can handle the job in two to four weeks, says Smallwood, and the application count is down to about 400. The BPM software was an important part of the transformation, but the IT exec emphasizes that the company underwent a cultural shift as well. "We did not have the business process team aligned with IT from day one," he says. That changed. High-level executive signoff on major IT projects is always important, of course, but Level 3 CEO Jim Crowe went further, becoming an advocate for the project, both internally and externally. Crowe's support, says Smallwood, made it easier to convince line-of-business staffers that changing some ingrained habits was vital.

A Cost-Effective Approach As YRC's IT team worked to streamline the company's order-entry process, it looked at data relating to eight months of shipping history, or approximately 8 million shipments. It became clear that customers ship to the same sites; in fact, half of shipments reviewed fell into predictable patterns, or pairs composed of shippers and consignees. As a result, YRC employees repeatedly entered the same billing information. It also became clear that entering the same billing information again and again was unproductive and expensive. To solve this, the company built a proprietary

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essential technology

application on top of its mainframe systems. Called CABE, for computer assisted bill entry, the software analyzes prior entries. When it detects a repetitive series of transactions between a shipper and a destination, it automatically populates a bill. An incorrect prediction can easily be changed by the order-entry personnel. CABE went live in 2006 at the company's Roadway subsidiary, with immediate benefits, says Rapken, adding that the company is now deploying the system in other divisions as well. The CABE deployment was made easier, and the ROI even greater than it might have been, because YRC had earlier deployed an image-scanning and content management system called OnBase. As a result, paper invoices, of which there were many, were quickly loaded into the system, and even more important, all order-related documents could be tracked and managed. Baseline productivity for the order-entry personnel quickly increased by nearly 50 percent. A year later, some team members have upped their hourly production another 130 percent. Errors have dropped as well, and that means receivables are collected that much faster. Lessons learned? There are two, says Rapken. Be sure that business management and IT are closely aligned before you undertake a BPM project. And giving a nod to the company's venerable mainframes, he adds: "Not everything has to be done with new technology. Sometimes it makes sense to teach an old system new tricks." CIO

BPM Toolbox The companies below were identified as leaders in Gartner's 'Magic Quadrant'. Pegasystems | The SmartBPM Suite is a highly integrated product with many features to support agility, accelerate the modeling of process workflow and deploy applications across a variety of thin-client and rich-client user interfaces. Savvion | BusinessManager 7.0 is one of the most mature BPM suites, able to handle high-volume workflows requiring tight coordination of people and systems. Boasts process-modeling and repository tools that are accessible to business users. Lombardi | Provides an environment for incremental, business-driven process improvement. Lombardi Teamworks 6 earns high marks from both business and IT. BEA Systems | Its AquaLogic BPM Suite lets business users collaborate with IT during all phases of the business process life cycle. However, integration with other BEA middleware products is a work in progress. Tibco | Business Studio 2.0 is an Eclipse-based, unified design environment that supports business process analysts and developers and is compliant with key standards. Provides a highly graphical process simulation tool. Integration with other Tibco middleware needs work. Metastorm | As the leading BPM vendor on the Microsoft platform, it has broadened its suite with a string of acquisitions. Built-in rule processing technology is 'somewhat simplistic', although the suite supports external rules engines like Fair Isaac's Blaze Advisor or Microsoft's BizTalk Server Business Rules Engine. Appian | Appian Enterprise provides a thin-client architecture for design time and run time, which also allows the company to offer a software-as-a-service version of the system known as Appian Anywhere. Another strength is a complimentary business intelligence product, Analytics Everywhere, for analysis of process data. IBM | IBM brings a broad array of technologies, consulting resources and partners to bear on accelerating user adoption of BPM as a management discipline. IBM's BPM strategy encompasses many products from divisions including WebSphere, Lotus, Tivoli, FileNet and Rational, so that customers are presented with a menu of choices rather than a single suite. Global 360 | Best known for its Process360 BPMS for the Microsoft platform, although it also offers process management components (including some for the Java server market) for those enterprises that don't want to purchase a full suite. Software AG | Its webMethods BPMS appeals to business users that need to continuously modify and improve business processes via a model-driven approach, while also addressing IT requirements such as process life-cycle governance.

Bill Snyder is a freelance writer. Send feedback on this

â&#x20AC;&#x201D;David F. Carr

feature to editor@cio.in

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Pundit

essential technology

In Open Source Denial CIOs deny the existence of Open Source within the enterprise, but their hiring patterns tell a different story. By Bernard Golden Enterprise Management

According to a report written by me in partnership with O'Reilly Research, there's more Open Source (OS) in the enterprise than most people think. Titled Open Source in the Enterprise, the report identified the following findings: There are six key drivers for enterprise Open Source adoption. Employment of OS skilled personnel is surprisingly high, representing about 5 percent of all US large enterprise IT hiring over the past three years. Enterprises need to create OS action plans. These plans will vary according to the sophistication level of enterprises and their experience with OS.

Cost: reducing IT costs by implementing free or low-cost Open-source software. Sovereignty: reducing dependence on US-based software companies for local economic development and national sovereignty reasons. Innovation: using OS to create new business offerings or creating OS products to reduce operational costs and make new offerings less expensive to bring to market. During the survey we realized that it's not easy to figure out how much Open Source is present in enterprises. One of the traditional methods to identify its use — vendor reports — is missing, as most Open-source software is downloaded anonymously. Self-reporting by enterprises cannot be relied upon, either,

data mining techniques are inexact, the report concludes that OS employment represents somewhere between 5 and 15 percent of total IT staffs, indicating that OS is playing a significant role in large IT organizations. We were surprised at the percentage of jobs OS represents. Even accounting for the fact that the number has some inaccuracy, 10 percent is definitely more than we expected. Given that there are compelling reasons to adopt Open Source, and recognizing that it has at least a de facto presence in all enterprises, it is critical that organizations treat OS seriously and develop a methodical approach to implementing an OS strategy. The final section of the report describes three action plans, designed for organizations

Open Source is already important to your organization, and avoiding confronting it is a forfeiture of responsibility. The six key drivers motivate enterprises to adopt OS. While no enterprise leverages all six, all pursue one or more of these as part of their OS strategy: Agility and Scale: the ability to quickly grow and modify software systems to respond to rapidly changing business conditions. Breaking Vendor Lock-in: reducing proprietary vendor dependence and controlling enterprise IT architectures. Quality and Security: improving the operations of enterprise infrastructure by leveraging Open Source characteristics of transparency and rapid improvement. 82

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because companies are often unwilling to share information to avoid conflict with existing vendors or keeping competitive information confidential. So, we examined actual job postings from large enterprises to determine how much demand for OS talent exists. This provides a proxy for OS adoption, since it is unlikely that organizations would staff for unnecessary skills. By analyzing a database of total job postings for large enterprises, the O'Reilly Research Group determined that OS recruitment represents 10 percent of IT jobs. Taking into account the possibility that the

ranging from OS neophytes to companies advanced in OS use. But here’s the takeaway that’s important: every organization needs to move beyond OS lethargy and create a formal use and strategy. It's no longer adequate to make a vague statements that OS really isn't that important or that it's so different you don't want to devote the time to come up with something. Open Source is already important to your organization, and avoiding confronting it is a forfeiture of responsibility. CIO Send feedback on this column to editor@cio.in

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