CIO India March 2013 Issue by Sreekanth Sastry

VOL/08 | ISSUE/05 Aniruddha Sinha, GM-IT, Air India, insists that it’s possible to create more flexible outsourcing contracts.

Business

Technology

Leadership

Lowe Lintas’ R. Balki: Be wary of social media marketing

WHEN OUTSOURCING WORKS... OR FAILS Successful firms are changing the outsourcing game. Here’s how not to be left behind. Page 38

MARCH 15, 2013 | `100.00 w ww.CIO.IN

CXO Agenda The idea behind the Mahindra Group’s brand architecture.

Outback Adventure Why GHCL built a datacenter in the boondocks.

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From The Editor-in-Chief

PUBLISHER, PRESIDENT & CEO Louis D’Mello ASSOCIATE PUBLISHER Rupesh Sreedharan, Sudhir Argula E D I TO R I A L

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

EDITOR-IN-CHIEF Vijay Ramachandran EXECUTIVE EDITOR Gunjan Trivedi, T.M. Arun Kumar ASSOCIATE EDITOR Yogesh Gupta DEPUTY EDITOR Sunil Shah ASSISTANt EDITOR ONLINE Varsha Chidambaram Special Correspondents Radhika Nallayam, Shantheri Mallaya Principal Correspondents Gopal Kishore, SENIOR CORRESPONDENT Anup Varier, Sneha Jha CORRESPONDENTS Aritra Sarkhel, Debarati Roy, Eric Ernest, Ershad Kaleebullah, Shweta Rao, Shubhra Rishi CHIEF COPY EDITOR Shardha Subramanian Senior Copy Editor Shreehari Paliath COPY EDITOR Vinay Kumaar Lead Designers Jinan K.V., Suresh Nair, Vikas Kapoor Senior Designer Unnikrishnan A.V DESIGNERS Amrita C. Roy, Sabrina Naresh SALES & MARKETING PRESIDENT SALES & MARKETING Sudhir Kamath VP SALES Parul Singh GM MARKETING Siddharth Singh MANAGER KEY ACCOUNTS Jaideep Marlur, Runjhun Kulshrestha Sakshee Bagri Senior Manager Projects Ajay Chakravarthy MANAGER- SALES SUPPORT Nadira Hyder AssT. MANAGER products Dinesh P. Marketing Associates Anuradha Iyer, Benjamin Jeevanraj, Lavneetha Kunjappa Project Co-ordinator Rima Biswas, Saurabh Patil Lead Designers Jitesh C.C., Pradeep Gulur Designer Lalita Ramakrishna events & A U D I E N C E D E V E L O P M E N T SR. MANAGERS PROJECTS MANAGER SENIOR EXECUTIVE PROJECT COORDINATORS

Ajay Adhikari, Chetan Acharya, Pooja Chhabra, Tharuna Paul Shwetha M. Archana Ganapathy

F I N A N C E & O P E R AT I O N S FINANCIAL CONTROLLER SR. MANAGER ACCOUNTS Sr. Accounts Executive MANAGER CREDIT CONTROL Sr. Manager Products Sr. Manager Production Sr. Manager IT

Sivaramakrishnan T. P. Sasi Kumar V. Poornima Prachi Gupta Sreekanth Sastry T.K.Karunakaran Satish Apagundi

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.

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

m a rc h 1 5 , 2 0 1 3 | REAL CIO WORLD

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.

IDG Offices in India are listed on the next page

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contents march 15, 2013 | Vol/8 | issue/05

Case Files 46 | Gujarat Heavy Chemicals Datacenter How—and why—the CIO of Gujarat Heavy Chemicals built a datacenter in a cyclone-prone, secluded sleepy little town—and saved crores. By Debarati Roy

Cover Photo by srivatsa shandiliya \ Cover Design by vikas kapoor \ imaging by Unnikrishnan av

70 | UST Global

3 8

Infrastructure UST Global’s expansion plans were threatened by a datacenter that had hit its power ceiling. Until IT came up with a two-pronged strategy and saved the day. By Eric Ernest

38 | When Outsourcing Works... or Fails

6 6

COVER STORY | sourcing There’s a new normal in the outsourcing world and the success—and failure—of your outsourcing strategy depends on how well you adapt to it. By Anup Varier

60 | Click and Mortar Feature | Retail CIOs are merging online and offline retail to retain customers and reclaim the shopping experience. By Mary K. Pratt

72 | Staying Power Feature | CIO Career Some CIOs outlast the typical five-year tenure by avoiding classic blunders, winning the CEO’s confidence and enjoying a dash of good luck. By Minda Zetlin

m a rc h 1 5 , 2 0 1 3 | REAL CIO WORLD

VIEW FROM THE TOP: “Once social media becomes a marketing tool, you'll see people getting off it a lot faster than they got on it,” says R. Balakrishnan, Chairman and CCD, Lowe Lintas & Partners.

Vol/8 | ISSUE/05

10 10101 10100010 10101001101 10111010010000 10101000101111101 0 00101010101000101 110 0 1 0 1 0 1 10 11 01 01 10 01 001010 00 10 01 00 10 01 01 11 10 01 11 01 10 10 01 00 10 00 10 01 00 01 10 1 01 01 00 01 10 01 01 00 01 10 10 10 10 11 01 10 01 11 01 11 00 11 01 00 01 01 00 10 1 01 01 10 01 01 01 11 00 10 0 01 01 01 0 10 10101 10100010 10101001101 10111010010000 10101000101111101 0 00101010101000101 110 0 1 0 1 0 1 0 1 0 10 11 01 1 0 1 001010 00 10 01 00 10 01 01 11 10 01 11 01 10 10 01 00 10 00 10 01 00 01 10 1 01 01 00 01 10 01 01 00 01 10 10 10 10 11 01 10 01 11 01 11 00 11 01 00 01 01 00 10 1 01 01 10 01 01 01 11 00 10 0 01 01 01 0

10 10101 10100010 10101001101 10111010010000 10101000101111101 0 00101010101000101 110 0 1 0 1 0 1 0 1 10 11 01 01 0 1 001010 00 10 01 00 10 01 01 11 10 01 11 01 10 10 01 00 10 00 10 01 00 01 10 1 01 01 00 01 10 01 01 00 01 10 10 10 10 11 01 10 01 11 01 11 00 11 01 00 01 01 00 10 1 01 01 10 01 01 01 11 00 10 0 01 01 01 0

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contents

(cont.) departments 2 | From the Editor-in-Chief Foment Rebellion By Vijay Ramachandran

9 | Trendlines

5 0

18 | Alert Cybercrime | Tackling Intruders Insider crime | Send Them to the Gallows

78 | Essential Technology

50 | Brand Conscious CXO Agenda | Brand Strategy S.P. Shukla, President-Group Strategy and Chief Brand Officer, Mahindra Group, explains the vision behind the company’s new visual identity, and how its brand strategy allows Mahindra to create beachheads in new markets. By Debarati Roy

Columns

Social Media | Selling Social Internally Social Media Apps | Tweet Till You Drop

82 | Endlines Mobile Apps | Mobile Memorial By Lauren Brousell

24 | Mister Miser Minister Frankly speaking In the union budget, our Finance Minister allocated a ‘grand’ sum of Rs 200 crore for innovations in science and technology. Generous? Far from it. By T.M. Arun Kumar

27 | Sharing Success leading edge Despite shared services’ proven track record, multitudes of Indian CIOs haven't really gotten their feet wet yet. Here’s why—and how—they should. By Gunjan Trivedi

| False Positive

IT Strategy Often, top executives in an organization deliberately want to believe inexistent positive numbers when the reality is something else. Data analytics will fail if executives ignore the numbers. By Rob Enderle

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Executive Coach Devendra Parulekar, partner, Ernst & Young (India), says new demands from the business are opening up greater opportunities for CIOs to re-define their roles. Vol/8 | ISSUE/05

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WHEN YOU RUN THE NUMBERS, DUBAI MEANS BUSINESS. SEE THE FILM AT VISION.AE/VIDEOS/NUMBERS

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Form IV Statement of ownership and other particulars about the magazine Real CIO World, as required to be published under Section 19-D Subsection (b) of the Press and Registration of Books Act read with Rule 8 of the Registration of Newspapers (Central) Rules) 1956. Place of Publication: ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Periodicity of publication: Monthly Printer Name: Louis D’Mello Nationality: Indian Address: ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Publisher Name: Louis D’Mello Nationality: Indian Address: ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Editor Name: Louis D’Mello Nationality: Indian Address: ‘Geetha Building,’ 49, 3rd Cross, Mission Road, Bangalore 560027, Karnataka Names and addresses of individuals who own the magazine, and partners or shareholders holding more than one per cent of the total capital: International Data Group, 5, Speen Street, Framingham MA 01701, USA I, Louis D’Mello, hereby declare that the particulars given above are true to the best of my knowledge and belief. 15 March 2013 Louis D’Mello Signature of publisher

m a rc h 1 5 , 2 0 1 3 | REAL CIO WORLD

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

Vol/8 | ISSUE/05

EDITED BY shardha Subramanian

new

hot

unexpected

New Ad-age: Apps on Billboards

QUICK TAKE:

called “Gaziru” from Japanese electronics giant NEC. The app will also take user motions as commands. For example, flicking a phone at an advertisement after it has been identified by the software will bring up more information about its products, while shaking it downwards will download related coupons.

trendlines

I n n o v a t i o n One of Japan’s largest ad agencies launched a new ad platform last month that mixes image recognition software with GPS and time data from smartphones to link consumers with product information. The new system from Tokyo-based Hakuhodo, which launched on February 18, is based around a mobile app that consumers use to take pictures of ads or commercials. The app uses image-matching technology with an online database of ads to send relevant offers or data back to the user. The “Kokoku Plus” app also records a GPS location and time stamp for each picture, so the information sent by advertisers can be varied based on where and when an ad is encountered. The app requires no registration or personal information from users to operate. “Kokoku” is the Japanese word for “advertisement.” QR, or “quick response” codes are common in Japan, often appearing in the corner of magazine and street ads. Hakuhodo hopes to replace the boxy two-dimensional barcodes, which users must carefully scan using reader software, with the ads themselves. The new platform uses image recognition software

—By Jay Alabaster

What to Watch Out for in an M&A

M & A According to a KPMG-led survey, M&As will bounce back in 2013. To find what a CIO should be prepared for during an M&A, Shubhra Rishi spoke to Dohsung Yum, CIO, The Attachmate Group, to gather what he learnt during the Novell buyout. Here’s what he said.

were presentations from various departments assuring continuity and sharing immediate plans to our employees. That was very comforting. Employee communication is important because they are our assets and we need to make sure that they continue facilitating whatever we deliver.

Experts say the first 100 days after an acquisition are extremely important. What do you think? I totally agree. In the first 100 days after an acquisition, a company undergoes severe productivity loss. There are unknowns, and employees are concerned about what an acquisition means to them. It’s very critical that, as a management team, we act and take decisions quickly to get the right message out to our employees. What did you do to quell doubts? I don’t think we waited a 100 days for a lot of decisions; it was 30 days for us. Between 200 and 250 leaders from across different geographies were called in; there

Vol/8 | ISSUE/05

How much to standardize is a tricky question during an M&A. How do you tackle it? For a company like ours, standardizing business—such as how we buy or who we buy from or processes such as vendor management—happened very quickly at the time of integration. As a group, we are not in the business of necessarily dictating minute amounts of standardization; we allow some leeway. While standardization is going to make us more efficient, ensure cost-saving, we would also like to empower our BUs and employees to make good decisions. The key is to maintain a fine balance between providing enough flexibility and having some amount of standardization. Dohsung Yum REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Is Blackberry 10 the next big thing? voices:

Just when its naysayers were hammering the last few nails in Research in Motion’s (now BlackBerry’s) coffin, the company sprung to life with a new offering: The BlackBerry Z10. And along came a new—and many say improved—mobile OS, the BlackBerry 10 or BB 10. In what’s being termed as BlackBerry’s last ditch effort, the OS seems to have won some fans in Indian enterprises. Ershad Kaleebullah spoke to some of them and here’s what they said: Devices

trendlines

“By the looks of it, BB 10 is great for people who love simplicity and are followers of the BlackBerry cult. That said, it’ll be tough for BlackBerry to make in-roads in the Android and iOS smartphone market. The company has come out with its new offering a little too late and it will take some time to regain user confidence. But it’s possible.”

Sharat Airani Chief IT-Systems & Security, Forbes Marshall “Fans like me have waited nearly a year for a new BlackBerry release. My opinion of BlackBerry has now changed for the better. It seems like it was worth the wait. Customers waiting for BB 10 will not accept another false start from the company.”

Manish Shah GM-IT, Indus Fila “BB 10 in one word is: Outstanding. It is now actually an OS and not just an e-mail platform with extended app functionality. It has speed, intuitive user interface, and some great features. I feel the younger generation will prefer the on-screen keypad, while others would be more comfortable with the physical one.”

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

M o b i l i t y Fujitsu is working on a new technology that will let users download files from PCs to their mobile phones by shooting videos of them. The company says it has developed software that embeds tiny groups of pixels, invisible to the human eye, in computer screen images. When recorded as a short video using a smartphone app, the pixels can be decoded into an ID used to identify the host computer. The file that is being displayed on that computer is then downloaded to the phone. The method can be used to transfer any kind of file to a phone, including presentation slides, word processor documents, or photographs. The end result is point-and-shoot downloads for smartphones. Users shoot a few seconds of video of the file they want on a monitor, and the software creates a wireless link and starts the download. The company is pitching the technology as a solution to the problem of direct file transfers between computers and mobile phones. Transfer by cable or Wi-Fi require manual setup and configuration, while the use of cloud-based services sends files through third-party servers. Fujitsu says the technology can also be used in the other direction, to send photos or other files directly from a phone to a computer. The link between the two devices is established in the same way, using video shot of a computer screen by a mobile phone, and then data selected by users can be uploaded. The platform also works for large screens and projectors, so for example multiple users viewing a presentation can download a file at the same time. Fujitsu’s method requires software on the computer, to embed ID pixels in the display and track which file is currently being displayed on screen. Smartphones need an app to record and process the ID and handle the downloads. The software was demonstrated last month on Android phones and tablets. Fujitsu hopes to commercialize the technology next year. —By Jay Alabaster

Vol/8 | ISSUE/05

il lustrat io n by masterfile .com

Rajat Sharma President-IT, Atul

Instant Copy: Machine-to-Mobile

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World’s Largest Prime Number A mathematician at the University of Central Missouri has discovered what is now the largest known prime number—one with more than 17 million digits. Dr. Curtis Cooper, who has made two other prime number discoveries, has found the 48th known Mersenne prime—2 57,885,161 minus 1. The number is 17,425,170 digits long. Cooper discovered the number on January 25, according to the Great Internet Mersenne Prime Search (GIMPS), a 16-year-old project that uses a grid of computers provided by volunteers to find large prime numbers. If the number was typed out in standard Times Roman 12 point font, it would span more than 30 miles. It also would fill more than six Bibles. A prime number is a whole number that can be divided only by one and itself. Mersenne prime numbers are a class of primes named after Marin Mersenne, a 17th

Record

trendlines

century French monk who studied the rare numbers more than 350 years ago. Mersenne primes are extremely rare. With this discovery, only 48 are known. Each Mersenne prime is increasingly difficult to find. GIMPS noted that the grid that Cooper used for the discovery had 360,000 CPUs peaking at 150 trillion calculations per second. According to GIMPS, the first time Cooper discovered a record-breaking prime number was 2005. His second came quickly after in 2006. —By Sharon Gaudin

BI’s Big Roadblocks v e r t i c a l s Despite its benefits, Indian CIOs in the auto sector don’t want to take the BI route. Here are the top five roadblocks that are discouraging CIOs from embarking on a BI trip.

61% Data quality problems 50% No clear ROI 39% Software licenses are too expensive 36% Ease-of-use challenges 32% Challenges scaling the technology across the entire organization Source:State of the Auto CIO Survey 2012

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

Crash-Proof Cars A u t o m o t i v e An Australian-developed wireless car-tocar communication system designed to prevent car accidents could soon appear in vehicles around the world and possibly new prototypes that don’t require drivers. The technology, which was developed by Adelaide firm Cohda Wireless, gives drivers a 360-degree awareness of surrounding vehicles by broadcasting information about a car’s current position, speed and direction at a rate of ten times per second. “Imagine you’re driving down the road to an intersection and there’s another car approaching on the side road,” said Cohda Wireless CEO Paul Gray. “You have the right of way, but the other car is traveling too fast and not going to stop in time.” If both cars are equipped with the Cohda technology, each driver will receive a warning and can take steps to avoid an accident, he said. Unlike other systems that rely on maintaining line of sight with the other vehicle, Cohda’s technology works around corners where a building may block a driver’s view of another vehicle, he said. Gray predicted the technology could appear in Australian vehicles from 2017. Cohda Wireless, based in Adelaide, was founded in 2006 out of the University of South Australia. It will soon open sales offices in the US and Europe as its technology moves closer to deployment, Gray said. No car makers have put the system into production. However, since mid-2011, there have been large trials of the car-to-car communications technology around the world, Gray said. He estimated that Cohda has its technology in about 50 percent of the cars participating in the trials. To avoid a collision, car-to-car communications technology must be present in both cars involved. However, Gray cited an estimate from the US Department of Transportation that there will be measurable impact on the number of automotive accidents once the penetration rate reaches 10 percent of vehicles on the road, said Gray. Gray predicted it will take about three years to reach that first 10 percent. The long-term goal is to sell the devices to car manufacturers for about $100 (about Rs 5,300) each to encourage adoption, he said. After-market versions may cost two or three times that, he said. “It needs to go into all vehicles to be effective, and hence it needs to be low cost,” Gray said. —By Adam Bender

Vol/8 | ISSUE/05

Exadata Runs 10x Faster

¼ Exadata rack replaced 1 high-end UNIX server and 1 storage rack.

oracle.com/goto/Reliance

10x faster based on month-end closing processes improved. Reliance Commercial Finance is presented by Reliance Capital Ltd. Copyright © 2013, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates. Other names may be trademarks of their respective owners. UNIX is a registered trademark of The Open Group.

Mammoth Room in a Molecule A recent breakthrough in storage research may someday produce a new type of solid-state device that can be used like a hard disk drive and hold 1,000 times as much data. An international team of researchers led by a MIT scientist has discovered a new way of making molecular memory, which stores data in individual molecules. That breakthrough could help the technology graduate from labs to datacenters and drive down its manufacturing costs. The key to the discovery is a new molecule developed by chemists at the

Storage

Indian Institute of Science Education and Research (IISER) in Kolkata. It allowed researchers to build magnetic memory with fewer layers of material, making it thinner, less expensive, and more usable at normal temperatures. The reward for consumers and enterprises could be storage that holds 1,000TB per square inch. Storage devices based on the new discovery probably won’t go on sale within five years, though they may arrive within a decade, said MIT’s Jagadeesh Moodera, who led the research. The findings, published on

Rogue IT? Not a Baddie

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

Vol/8 | ISSUE/05

trendlines

S e c u r i t y Bert Craven, enterprise architect at easyJet, has said that IT departments should loosen their controls and let business users buy and deploy SaaS applications in order to drive innovation. He believes that IT should always secure and ring-fence core systems that are vital to the business’ operations, but it shouldn’t block tech-savvy business employees trying to deliver value through the public cloud.“There have been secret PCs under people’s desks as long as there have been PCs—stuff that IT didn’t know about. IT has to decide the level of control that it really needs, not the level of control that it wants,” Craven said. He added: “You can only control so much and ultimately there are very determined people that will find a way around you, because it’s getting easier to buy stuff in the cloud. If you give everybody a little bit of freedom it’s far more beneficial.” Craven’s comments come off the back of a Forrester and Microsoft report that finds that there are an increasing number of cloud projects coming out of businesses that are not driven out of the IT function. The report describes the business people driving these innovative projects as ‘change agents’, who are finding value for their company independently of IT, in the cloud. “Change agents are having an important impact in terms of being able to deliver business transformation and real value in the cloud. SaaS is being used as an important and effective tool in fostering innovation and business transformation in the company.” He added: “These projects are exclusively focused on applications, which reinforces the idea that the business doesn’t really care about infrastructure, what they care about is functionality.” easyJet’s Craven urged other businesses to consider developing a set of APIs that that allowed ‘change agents’ to go off and buy SaaS that can be easily integrated into the company’s core systems. “At easyJet there are things that are the absolute crown jewels of the business that are for very good reason completely ring-fenced. These are systems where hours of downtime mean our organization grinds to a halt. If you do these core things well and surround them with a rich set of APIs so that the marketing department can go off and find a third party to build some mobile apps, why shouldn’t they?” — By Derek Du Perez

the online edition of the journal Nature, should spawn many more projects to develop more such chemicals and refine memory designs, he said. Molecular memory stores data in special molecules, using the magnetic states of individual molecules to represent the ones and zeroes of binary data. This technique can store data in less space per bit than current hard disk drives use. Previous experimental devices for molecular memory sandwiched the layer of molecules used for storage, called the insulator, between two magnetically charged layers called ferromagnetic electrodes. Changing the relative magnetic orientations of these electrodes changes the conductivity of molecules in the middle, and the two states of conductivity can represent ones and zeroes. The IISER researchers developed a new kind of molecule and discovered its conductivity could be changed with just one ferromagnetic electrode. That meant the other layer could be an ordinary metal electrode. The metal electrode is less expensive to make than a ferromagnetic one, but it also can detect the changes in state of the individual storage molecules. As a result, it could take the place of the sensors that are now used on the tips of hard-drive arms to read the bits on a disk, Moodera said. The resulting storage device would have no moving parts but would still have the long “write life” of a hard drive, he said. The new molecules and layering technique have also allowed the research team to use just one layer of insulator molecules, which should make it easier to manufacture molecular memory. —By Stephen Lawson

E-readers Inspired by Peacocks Researchers have found a way to make colors more vivid on an e-reader screen, which could lead to the creation of advanced displays and spawn the development of color e-books. The researchers at the University of Michigan at Ann Arbor were able to trap narrow beams of light at different lengths, which ultimately reflects as color on a device. The colors remained in place from different viewing angles, and the technology could be applied to e-readers in the future, the researchers said in a statement. That could lead to a new generation of color e-readers in which sunlight could be used as an ambient light source to display color images, much like existing e-ink displays, the researchers said. The technology could also eliminate the need for backlighting typically found in LCD displays. That could improve battery life of a device, as an LCD is considered the most power-hungry component in an e-reader or tablet. The researchers were able to display only static images in a demonstration, but are working toward the display of moving color images in the future. The top e-readers from Amazon and Barnes & Noble today have e-ink

trendlines

Popular Science

screens with grayscale displays, and tablets largely have LCD screens. Technology for e-ink color displays is available in only a handful of products but the refresh rates and resolution still don’t match LCD screens. Researchers drew inspiration from a peacock tail, which shows different colors when reflecting specific wavelengths of light at specific angles. Mimicking the peacock concept, the researchers applied specific measurements to create slits that would reflect colors. A 40-nanometer-wide slit reflected cyan, a 60-nm slit reflected magenta, and a 90-nm slit reflected yellow. The light was trapped inside nanoscale metallic grooves and then redirected through the slits placed in different angles. The researchers created a device to show the trapped light funneled through the slits. The grooves were fabricated and etched in a glass plate with a layer of silver. When light hit the surface, an electric field pulled in specific wavelengths of light and then funneled through the slits. The research could lead to new reflective display screens that could show consistent colors from different viewing angles, the researchers said. —By Agam Shah

Online Invisibility Cloak The Internet economy could face turbulence in the future, according to analysts Ovum, due to digital consumers’ reluctance to be tracked online. Ovum’s Consumer Insights Survey reveals that 68 percent of the Internet population across 11 countries would select a “do-not-track” feature if it was easily available, suggesting a “data black hole” could soon open up under the Internet economy. The survey gleans responses from 11,000 consumers. Ovum warns web advertisers and marketers that consumers are seeking out new tools that allow them to remain “invisible”—untraceable and impossible to target by data means. Ovum said the hardening of consumer attitudes, coupled with tightening regulation, could diminish

Internet

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personal data “supply lines” and have a “considerable impact” on targeted advertising, CRM, big data analytics and other digital industries. Ovum analyst Mark Little said: “Unfortunately, in the gold rush that is big data, taking the supply of ‘little data’ —personal data—for granted seems to be an accident waiting to happen. “Consumers are being empowered with new tools and services to monitor, control, and secure their personal data as never before, and it seems they increasingly have the motivation to use them.” Ovum said the writing was on the wall with recent data privacy scandals such as WhatsApp’s use of address books, and the continuing issues over privacy and data use policies on Facebook and Google websites.

Ovum’s survey found that only 14 percent of respondents believe that Internet companies are “honest” about their use of consumers’ personal data, suggesting it will be a challenge for online companies to change consumers’ perceptions. Ovum believes that Internet companies should introduce new privacy tools and messaging campaigns designed to convince consumers that they can be trusted. It said improving the transparency of data collection and use will help to build trust. Little said: “Data controllers need a better feel for the approaching disruption to their supply lines, and must invest in tools that help them understand the profile of today’s negatively-minded users.” —By Antony Savvas

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c o m p i l ed by Er s h a d K a l e e b u l l a h

Best Practices

Mind the Gap A lack of inkling to contribute to corporate strategy is denting the perception of IT in the eyes of other CXOs. This gap is stopping CIOs from moving to a strategic role.

Try to overcome the poor historical perception of your role. The past is of no help when you are trying to reinvent your role.

Polish your communication skills to market the value of IT in your organization. This will help you get closer to CXOs.

Stop blaming budgetary constraints and start flagging up the lack of support from the business.

Maintain good relations with the internal and external stakeholders. This will be of great use in the long run.

trendlines

For eons, IT experts and CXOs have been harping about the need for CIOs to shake off their ‘support guys’ tag and move to a strategic role. But CIOs aren’t paying attention. And CXOs aren’t happy. According to a survey by Ernst and Young, only 17 percent—of 300 CIOs surveyed in Asia, Europe, North America, and Australia—hold a position at the executive leadership team. Clearly, CIOs aren’t doing enough to warrant the label of a strategic leader. CXOs—who were also surveyed—second that. Forty-eight percent of executives in the C-suite think CIOs don’t get involved in discussing business performance and challenges. Only 36 percent of CIOs said they are highly engaged in such discussions. In terms of adding value to the organization, 60 percent CIOs said they are enabling fact-based decision making for corporate strategy. But only 35 percent of CXOs acknowledge this. Due to their narrow focus on routine IT, CIOs have not been able to win the trust of their CXOs. As a result, 38 percent of CIOs said a lack of support from business is the top most barrier to their effectiveness. This, in turn, is translating into a lack of funds. One in every three CIOs believes that budgetary restraints are big barriers. However, only 5 percent of CXOs agree with them. This gap in perception is proving costly for CIOs and creating distances between business and IT.

Difference of Opinion Top 5 Barriers to CIO Effectiveness Lack of support from executives

5% Budgetary constraints

Top 5 Ways CIOs Add Business Value

38% 35% 32%

23% 18% Unclear corporate strategy of organization 17% 20% Personal restraints 13% 3% Lack of headcount CIOs

C-Suite

Account for IT issues and the related costs

81% 73%

68% 58% Contribute to operational agility of the business 60% 35% Enable fact-based decision-making in terms of corporate strategy 60% 50% Deliver significant cost-efficiencies 59% 53% Minimize possible risks Source: Ernst & Young DNA of a CIO study

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alert

Enterprise Risk management

Tackling Intruders T

I MAGES by PHOTOS.COM

he New York Times’ description of a cyberespionage campaign waged against the news media company by Chinese hackers demonstrates the importance of assuming criminals will eventually break into a computer system, and the best defense is to detect the intrusion as soon as possible. Last month, The Times disclosed that hackers had persistently attacked its computer systems for four months, and had stolen passwords of reporters and employees. Rather than boot the hackers immediately, The Times chose to study their movements in order to build better defenses against them. The attacks coincided with an investigative piece the newspaper published on October 25, 2012, on business dealings that reaped several billion dollars for the relatives of Wen Jiabao, China’s prime minister. The lessons learned from the attack

apply to any organization targeted by hackers with a level of sophistication often financed by a nation-state. Potential victims typically include defense contractors, multinational corporations, the military, think tanks and government agencies. Over the course of the attacks on The Times, the intruders installed 45 pieces of custom malware. With the exception of one instance, Symantec anti-virus software being used detected none of the malware. One important step the company took in September, when it learned it might be targeted by hackers in China, was to notify its ISP to watch for unusual activity in outbound traffic from the network, experts said. AT&T eventually did report seeing anomalies, which started The Times’ investigation

and led to its hiring of security firm Mandiant (not available in India). The newspaper believes the hackers initially broke in September 13, 2012, through a spear-phishing attack. The break-in occurred while The Times was completing its reporting for the Wen family story. Besides employee education, ways to combat spear phishing includes technology on the laptop that only allows pre-approved applications to run. Called whitelisting, the technology is difficult to manage, because employees will constantly seek permission to run other software. “There’s a lot of management overhead with it, but I think it’s the right way to go,” George Tubin, senior security strategist for Trusteer, said. Other technology to prevent infection

Emerging Tech, Emerging Threat findings

The security risks associated with social media and mobility are making CIOs worldwide wary of adopting them. 58% Use of social media introduces significant risks to the business 55% We are more concerned about mobile security than we were a year ago 36% I do not trust Saas providers with company data 34% Mobile computing is too much of a risk to our business

40%

Of CIOs say they are often reluctant to adopt new technologies because of security risks.

source: Kaspersky Global IT Security Risks: 2012

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Tu r

a rg

ey ou rc y be rse cur ity t oda y.

The Cloud Is Here. Join Us To Secure It Now. Founded in 2011, CLOUDSEC summits are Asia Pacific's leading cloud security events for CXOs and senior managers. These events are vendor-neutral and features presentations by industry experts who will address a wide spectrum of real-world challenges and strategies in cybersecurity today. Back by popular demand, CLOUDSEC 2013 will continue to inspire and direct our path towards the cloud, guided by the theme “Have A Safe Journey”. The events will be held in gateway cities in the Asia-Pacific region.

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Enterprise Risk management

from an employee laptop includes sandboxing that limits applications only to the network resources that they need. Another option is micro-virtualization, which isolates the laptop from business applications and data by running risky tasks within a micro virtual machine. Other options include exploit detection technology that makes it difficult for hackers to take advantage of vulnerabilities in software. Once The Times’ computers were compromised, the hackers installed remote access tools, known as RATs, in order to steal data. Once malware gets in computer systems, one of the better ways of catching it is through appliances that monitor application behavior and network traffic. Another technology is a security information and event management (SIEM) system, which can capture and analyze logs from network hardware and software to flag abnormalities. Leading SIEM vendors include Hewlett-Packard, EMC-owned RSA, McAfee, Symantec, LogLogic and Q1 Labs, says Gartner. In general, there is no one technology to combat a sophisticated attack like the one against The Times. Organizations that could become targets have to build layers of security that starts with the employee laptop and builds inward into the network behind the firewall.

“All of these strategies need to be used together. There’s no silver bullet for security solutions,” said Pingree, a security vendor. For companies that have the resources, The Times’ strategy of monitoring the hackers’ movements can reveal important intelligence, said Wolfgang Kandek, chief technology officer for Qualys. For example, hackers may build several openings into a network, so shutting them out too quickly could lead to missing one of those backdoors, Kandek said. “It makes sense to watch for awhile.” The Times said it was able to close every backdoor in its network and to use the intelligence it gathered to determine the additional security technology needed to fend off future attacks. The company also determined that the hackers seemed primarily interested in finding the names of people who might have provided information to the reporter of the Wen family story, Shanghai bureau chief David Barboza. No customer data was stolen. The hackers infiltrated the computers of 53 employees, most of them outside the newsroom. The attackers tried to cover their tracks by first breaching computers at US universities and then routing the attacks through them, Mandiant said. Mandiant believes the hackers are

members of a group the company calls “APT Number 12,” for Advanced Persistent Threat. The group is one of 20 tracked by Mandiant that are spying on organizations in the US and around the globe. China’s Ministry of National Defense denied it had anything to do with the cyber attacks. The Times is not the first US news media company to be targeted after reporting on Chinese leaders and corporations. Last year, Chinese hackers tried to penetrate the computers of Bloomberg News after it published a June 29 article on the wealth accumulated by relatives of then Vice President Xi Jinping, who became general secretary of the Communist Party in November and is expected to become president this year. Also, The Wall Street Journal reported last month that its computer systems had been infiltrated by Chinese hackers bent on monitoring the newspaper’s China coverage. The break-ins at the three companies along with reports of breaches at other news outlets indicate a widespread campaign to spy on US media, the Journal said. CIO

Antone Gonsalves has been a journalist for 30 years. Currently, he is a freelance writer based in San Francisco. Send feedback to editor@cio.in

[Impact of Watering Hole Attacks]

“The rise in targeted breaches—like APT and watering hole attacks—is a major concern for many industries. The impact of such attacks can really dig a hole in an organization’s pocket. The impact on the business, brand, and reputation of a company is unfathomable.” Sachin Jain, CIO & CISO, Evalueserve.com

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alert

Enterprise Risk management

Send Criminal Staffers to the Gallows

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The analyst had uncovered an instantmessaging chat between one of our employees and someone from outside the company. The chat rather baldly outlined a conspiracy between the two men to assault a third man that our employee suspected was having an affair with his wife. In that conversation, our employee discussed a plan to use his wife’s cellphone to text the man and persuade him to visit a park. At the appointed time and place, the two conspirators would attack him. The discussion was incredibly detailed and incriminating. I printed out a transcript, along with information about the employee, and met with our legal department and human resources. HR’s impulse was to give the employee the benefit of doubt, but our

Myanmar Spies on Media

he plain view doctrine allows law enforcement officials in the US to seize, without a search warrant, evidence or contraband perceptible during a lawful observation. As an example, if a police officer who is exercising a warrant to search a house for illegal weapons sees drugs on the kitchen counter, in plain sight, then the officer can confiscate the illegal drugs and charges could be filed, even though the search was for weapons. I mention this doctrine because it intersects to a certain extent with a company policy that states that employees have no expectation of privacy when using company computers and networks. We are basically saying that we will judge anything on them as being in plain view. This policy is what allows my analysts to monitor network activity for security breaches and other illegal activity. Naturally, we are mostly interested in detecting attempts to leak any sensitive company information. To that end, we have indexed a fairly small set of key documents for our DLP tool to look for. But we also look for certain number sequences and keywords that might indicate illegal activity such as downloading child pornography. That’s because we don’t want to be surprised someday with a search warrant that could disrupt our business and result in some bad press for us. It’s better to be on top of such things. And sometimes we do find something. The other day, one of my analysts sent me data he was investigating that suggested someone in the company might be involved with child pornography. Our DLP monitor had flagged some traffic containing keywords that we had included in the rules we use to turn up anything that might be related to such activity. Soon enough, we found out that this wasn’t a child pornography case, but something else that we needed to bring to the attention of law enforcement.

general counsel, concerned that we could be charged with negligence if an assault occurred, disagreed and said we needed to contact law enforcement immediately. I then told the employee’s manager to confiscate his laptop until the matter is resolved. I checked in the other day to find out what is happening and learned that the police investigation is ongoing and that HR has put the employee on administrative leave. There is still a chance that the entire thing was a hoax. All in all, though, I’d be happier with other sorts of justification for such a valuable initiative. CIO This story is written by a real security manager whose name and employer have been disguised for obvious reasons. Send feedback to editor@cio.in

A number of journalists covering Myanmar were warned by Google that their Gmail accounts had been targeted by “state-sponsored” attackers. Myat Thura, a reporter in Myanmar said he had been warned by Google of the attackers trying to get to his account. “I can confirm that we sent out these types of notices, but don’t have any more info for you at this time,” said Google spokesman Taj Meadows. He referred to a blog post from last June which said that Google was extending its warning of malicious activity to users to include information on state-sponsored attacks as well. “If you see this warning it does not necessarily mean that your account has been hijacked. It just means that we believe you may be a target, of phishing or malware,” the post said. Eleven Media Group in Myanmar said that a number of journalists in Myanmar have received warnings from Google that their e-mail accounts may have been targets of “state-sponsored attacks.” It is not clear who the state-sponsored attacker could be. The journalists received the message “We believe state-sponsored attackers may be attempting to compromise your account or computer”, after they logged into their Gmail accounts, the news site said. A number of countries including the US, India, and China are vying for a larger role in Myanmar, where the army is also seen to be resisting the country’s move to democratize. — By John Ribeiro

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TM Arun Kumar

frankly speaking

Mister Miser Minister In the union budget, our Finance Minister allocated a ‘grand’ sum of Rs 200 crore for innovations in science and technology. Generous? Far from it.

Illust ration by mast erfile.co m

f you pay peanuts, you get monkeys. So goes an old saying. And it holds true even today. This is why the best talents in the market—yes, talents not monkeys—are handsomely paid, and really innovative ideas are backed with solid money. Alas, someone forgot to mention this to our beloved Chanakya, India’s Finance Minister P. Chidambaram. So, in his recent budget speech, he allocated a ‘grand’ sum of Rs 200 crore to take some amazing innovations in science and technology to the market. In his budget speech last month, Chidambaram said: “While we extol the virtues of science and technology, I think we do not pay enough attention to science and technology for the common man. (Of course, we don’t. Tell us something new, please).With the help of the Ministry of Science and Technology and the Principal Scientific Advisor to the Government, I have identified a few amazing S&T innovations. (Wow! How interesting. Can we know what these amazing innovations are?) I propose to set apart Rs 200 crore to fund organizations that will scale up and make these products available to the people. (Gee, thanks!) I propose to ask the National Innovation Council to formulate a scheme for the management and application of the fund.” Apart from the fact that the funds will be spent in a complex manner—imagine asking a body to come up with a scheme, which will manage how the funds are spent—the allocation of a ‘princely’ sum of Rs 200 crore is truly baffling. While many people would say that Rs 200 crore is not a small amount—which, admittedly, it isn’t when looked at in isolation—it starts appearing small when one looks at

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photo by srivatsa shandilya

TM Arun Kumar

Frankly Speaking

the intent for which it is set aside. Anyone would realize that allocation of funds must be commensurate with the purpose. So, what can one really achieve with Rs 200 crore these days? Look at it this way. It took Rs 50 crore to produce the Salman Khan starrer Dabangg 2 and this reportedly doesn’t include Salman Khan’s fees. The Salman Khan-Katrina Kaif starrer Ek Tha Tiger cost Rs 75 crore to make and its producers spent an additional Rs 15 crore on just promotions and advertising. Even three years ago, it took an estimated Rs 45 crore to produce the Aamir Khan starrer 3 Idiots. To put it another way, with Rs 200 crore one can get about three Salman Khan movies! But, one can always argue that technology innovations and— taking them to market—are way different from producing Bollywood movies. So, the two, in a sense, are not comparable. Alright, argument accepted. Let’s look at it slightly differently. Even before Google was incorporated as a company, it received a seed funding of $100,000 (about Rs 55 lakh) and within a year, it had raised $25 million (Rs 137 crore) from venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital. Google wasn’t an exception. Facebook got $600,000 (about Rs 330 lakh) from angel investors, including Peter Thiel of PayPal fame, when it was barely more than an idea. And it subsequently raised $12.7 million (about Rs 70 crore) in venture funding from Accel Partners and others. And there are many other similar stories. Look at the similarities. These companies received funding to take just one idea or innovation to market. And they were able to raise a substantial amount. So, investors were—and still are—willing to part with sizeable chunks of money to back ideas or innovations. This also means that a substantial amount of investment is required to take an innovation to market. Contrast this with the announcements of Chidambaram—a mere Rs 200 crore to scale up the few identified or short-listed innovations and “make them available to the people”. Throwing peanuts and expecting great results in return. Perhaps, Chidambaram was compelled to allocate a part of the budget for innovation in science and technology. However, instead of providing a token amount as a goodwill gesture, it might have been better not to allocate anything at all. Better still, if the government and Chidambaram were really keen on further developing these innovations and making them available to people, perhaps it might have been better to have made them available to anyone free of cost. And if any of these were good innovations, surely someone would have spotted an opportunity and backed it with some real money. A half-baked effort like this will not yield any great result. CIO

Arun has covered the IT industry in India since the time 80386 was cutting edge, MS DOS was the predominant desktop OS, and Internet was still a few years away. Follow him on twitter @aruntm

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

Gunjan Trivedi

leading edge

Sharing Success Despite shared services’ proven track record, multitudes of Indian CIOs haven't really gotten their feet wet yet. Here’s why—and how—they should.

image by mast erf il e

he concept of shared services isn’t new. What used to be once called consolidation or centralization of business services in the early 80's, is exactly the same notion that has now evolved to this fancy new name. What has changed, though, is the fact that there have been multiple factors at play over the last three decades that have reshaped the concept and given shared services a new identity. Among them are significant improvement methodologies— such as BPR and Six Sigma—that stressed on getting more out of business processes. This, coupled with the oscillating waves of the economy, added to the urgency to do more with less. In the meanwhile, organizations gained remarkable maturity in identifying, realizing, and adjusting the foundational blocks of the people-process-technology triumvirate. Also, exceptional advancements in information and communications technologies strengthened the model’s backbone and enabled the outreach of shared services. But, as I said, it isn’t new. Not even the function of shared IT services. At least, theoretically. The concept is deep-rooted in the fact that businesses have been taking this route to reduce operational costs, increase efficiencies, and enhance their organization’s architectural ability to transform into a serviceoriented enterprise. However, despite shared services’ proven track record, multitudes of Indian conglomerates have hardly got their feet wet yet. Perhaps, we are yet to find the right secret sauce. In my opinion, adoption of a shared IT services model should be looked at from two very simple aspects. First, the attributes that IT leaders need to adopt the model; and second, what they should and shouldn’t do.

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EVENT REPORT

A Brave new world of Collaboration Collaboration technologies have found it hard to gain a foothold in enterprises. But advancement in collaboration technologies,

their tangible benefits, and employee demand for consumerization of IT are paving the way for its adoption.

58%

Of Indian CIOs at the CIO Summit said that collaborative tools are significantly critical to meeting the goals and to the success of their organizations.

71%

Of Indian CIOs say that they plan to enhance the collaboration facilities of their organizations in 2013-14.

BY GOPAL KISHORE

ew-age collaboration platforms—powered by social media and video—have revolutionized the way employees, customers and enterprises do business. In order to help organizations better understand the nuances of collaboration, CIO, in association with Polycom, organized a panel discussion featuring top CIOs from India’s most prestigious organizations at the CIO Summit 2013.

The Need for Collaboration Collaboration, said Vikram Dhanda, SVP and head IT-Shared Services, Aegis, has been the holy grail of all human activity since time immemorial. Today, it’s that and much more. Advances in new collaboration technologies have liberated employees and aided business. “A platform like social media allows users to contribute on their own accord—instead of being forced to work—and choose where and when they want to provide inputs. Collaboration platforms are playing a vital role in driving this change,” he said.

Custom Solutions Group POLYCOM

Expert Speak User experience is very critical. That’s why we’re trying to make collaboration technologies as appealing as personal applications.” Anantha Sayana, VP & Head-Corporate IT, L&T

Today, user experience and availability have encouraged adoption of collaboration technologies. So much so that we’re considering killing e-mail systems.” Sebastian Joseph, CTO, DDB Mudra

Thanks to collaboration technologies, users are increasingly beginning to contribute on their own accord and choosing where and when they want to provide inputs.” Vikram Dhanda, SVP & Head IT-Shared Services, Aegis

To create a seamless enduser communication experience, CIOs should look at UCaaS as part of a bigger infrastructure and mobility strategy.” Sanchit Gogia, Principal Analyst, IDC

It’s this freedom, said Anantha Sayana, VP and head-Corporate IT, L&T, that’s changing the demographics of the workplace. That’s why young and tech-savvy employees are opting for enterprises that encourage consumerization of IT. “This has changed the entire work ethos. Employees now take the initiative and engage in conference calls to collaborate and get work done. Also, enterprise video is gaining ground because the quality of video and bandwidth is improving by leaps and bounds,” he

said. Sebastian Joseph, CTO, DDB Mudra, echoed the same sentiment. “Younger employees want to collaborate to ideate. It promotes democratization of ideas. There is a high level of acceptance and willingness to adopt collaboration technologies. This reduces adoption challenges by 80 percent,” he said.

Polishing User Experience While collaboration technologies are essential, the panelists stressed on creating user-friendly applications for them to be a success. “User experience is very critical. For example, telepresence is a true replacement for face-to-face meetings. But we cannot use it for every meeting. Users are more comfortable with HD video conferencing as it’s simpler. From a junior executive to senior management, everyone feels very comfortable with video conferencing. We are trying to make enterprise applications as appealing as personal applications,” said Sayana. That’s a very important factor for the success of collaboration technologies. DDB Mudra’s Joseph learnt it the hard way. “We launched a corporate knowledge sharing platform a couple of years back, but it wasn’t well received. We went back to the drawing board, and initiated a collaboration platform akin to Facebook. In short, we made it fun to use. This has driven adoption tremendously. User experience and availability encouraged adoption, and going forward, we are even considering killing e-mail systems,” said Joseph. Once it gets buy-in, collaboration technologies offer an array of both tangible and intangible benefits. Joseph said his organization has been able to reduce travel and communication costs by about 17 percent. “It has also brought in more accountability and increased the quality of ideation,” he said.

This event report is brought to you by IDG Custom Solutions Group in association with

Gunjan Trivedi

leading edge

Once these requirements are recognized, shared services can be then divided into three distinct stages. Stage one is when an enterprise has a singular focus or single-function shared services. Stage two deals with multi-function shared services. And stage three is all about comprehensive, enterprise-wide, shared services that aren’t limited to back-office functions. These stages are quite permeable and do not have air-tight compartments. As organizations approach this model, one stage may merge into the next or enterprises may tread along two stages at once. However, the leadership competencies required at each of these stages vary. Stage one calls for its leader to be highly analytical and to have team leadership skills while maintaining a critical focus on execution and results. The next stage asks its IT leaders to bring in strong communication skills, sharp customer orientation, and build relationships across management, business units, and geographies. In stage three, IT leaders should be able to develop people, be visionaries, and think strategically to not only solve problems but also improve the way problems are solved. No matter at which stage an organization is in, the required leadership qualities or competencies get incrementally added for each layer. For every subsequent stage, a leader must assume the fundamental qualities required for the foundational layer and then keep adding on.

The success of a shared services model also depends heavily on certain fundamentals. Today, CIOs can’t afford to not measure costs or SLAs as comparative benchmarks before moving on, or not document processes and workflows or not have adequate risk monitoring and governance. You need to know your starting point, your end goal, and the path you take. It’s quite easy to fall prey to over-standardization of technologies and processes, or moving just the transactional processes to shared services while leaving out higher-end knowledge processes. It is also quite easy to believe a fallacy that processes that have already been homogenized would automatically fit for purpose. Ironically, it is evident that none of it is any secret at all. Organizations have been leveraging these ingredients successfully while embarking on conventional enterprisewide projects of various shapes, sizes, and forms. But the biggest challenge en route to shared services is sheer inertia. To get over our fear of disruption and move ahead, I think, all we need is to just refresh, recalibrate, and realign our ‘secret sauce’. CIO Gunjan Trivedi is executive editor at IDG Media. He is an awardwinning writer with over a decade of experience in Indian IT. Before becoming a journalist, he had been a hands-on IT specialist, with expertise in setting up WANs. Reach him at gunjan_trivedi@idgindia.com

Devendra Parulekar

Executive coach

No Full Stops Once they become CIOs, many IT leaders coast along till retirement. But it doesn’t have to be this way. New demands from the business are opening up greater opportunities for CIOs to re-define their roles.

n the past, the destination of a CIO’s journey was often retirement, hence the old ‘Career Is Over’ joke. But as businesses evolve, so is the role of the CIO. Changes in the business world mean that today’s CIOs are in an ideal position to take increasing business responsibility and control. This has changed the CIO's role from being a supervisor of IT centers, to a being a business partner who understands and implements current and emerging technologies to increase a company's profits. A CIO performs various roles within an organization depending on the nature of the business. However, there are three broad areas which define the entire gamut of roles performed by CIOs: Execution, enablement and development. The first area, execution, involves dealing with IT cost management and “keeping the lights on” by ensuring that a business’ IT and security needs are up and running. This role is common to all CIOs. The second function that many CIOs are involved in is business enablement, which involves proactively generating ideas, and acting as an information broker by providing insights to support business decisions. This is an area where a more operational focus begins to give way to something more strategic in nature. The third facet of a CIO’s role, one rarely pursued by CIOs, is development. This involves delivering business transformation by introducing new business model innovations. This is the highest level of a CIO’s role and is also the most rewarding part of the job. However, it is only open to those who are truly considered, by the rest of the C-suite, as equal peers.

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REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Devendra Parulekar

executive coach

Staying Relevant With the increasing involvement of IT in driving business to keep a company ahead of the competition, CIOs are expected to identify changes required to improve performance. They are also expected to be accountable for driving end-to-end business process transformation. Instead of only reactively supporting business needs, they must proactively lead structural changes needed within the IT organization, and drive innovations that support an organization’s goals and objectives. This requires the creation of an organizational structure in which IT can play the role of a business enabler, working beside the business as a strategic partner. CIOs need to partner with their executive teams and other business heads to understand what truly drives the business and how technology can help build competitive advantage. This will help them enable the transformation that drives business value in the form of growth and increased efficiency and productivity. Take for example the way one of India’s largest digital cinema chains introduced a path-breaking initiative that revolutionized the way films are distributed and exhibited using pioneering technology and infrastructure. The company introduced MPEG-4-based digital cinema technology to India and built a platform to distribute films to theaters directly—digitally, via satellite. Digital distribution allowed the company to eliminate physical prints or spools (which form roughly 20 percent of a film’s budget), and helped it reduce piracy and overcome logistical problems (ensuring distribution to remote regions). Or take, for instance, how a leading Indian telecom operator recently announced plans to introduce a new business model to manage its fixed line and broadband networks on its own and share this infrastructure with other telecom players. By sharing infrastructure with others, the company aims to drive down its costs, reduce investments and, in the process, improve profit margins. The good news is that CIOs are making extensive use of disruptive technologies to bring about transformation and business model innovation. These include cloud computing, social media, enterprise mobility, and use of business intelligence and analytical tools. Further, CIOs are expected to significantly increase the use of collaboration tools over the next few years. As CEOs prioritize customer centricity as a key differentiator for their organizations’ products and services, CIOs can help transform their businesses by providing end-to-end process views and deliver platforms that are core to customer centricity. One of India’ largest paint

companies, for example, recently implemented enterprise mobility solutions to gain real-time visibility into business processes and empower its sales force with technology to increase efficiency. By using a mobile platform, the company’s sales force was able to access both offline and real-time information anytime and anywhere. This allowed sales personnel to collect, analyze and address customer requirements more quickly and easily, as well as eliminate error-prone manual processes. Another company that’s achieved business transformation using IT is a leading Indian courier service that implemented an IT application to automate the routing mechanism for its shipments. The company used to have a manual process for routing and loading consignments on trucks, which made it difficult to change routes once decided, and resulted in the overloading of trucks. The application automated the process of routing and

As CEOs prioritize customer centricity as a key differentiator, CIOs can help transform their businesses by providing end-to-end process views and deliver platforms that are core to customer centricity.

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

scheduling (which are now decided at the point of origin only) and the loading of trucks, resulting in savings of up to three hours on delivery time. The company also saved significantly on manpower and the costs of hiring vehicle as a result of increased efficiency. Similarly, IT helped a global leader in business process and technology management services implement a collaborative enterprise governance, risk and compliance (GRC) program across its operations, infrastructure and logistics domain. The company is using this automated platform to get a real-time, end-to-end view of the health of its client’s processes covering its operational and logistics status. The business continuity plans on this platform enables the IT team to identify affected client process when a particular datacenter or application is unavailable due to a crisis and send a message via SMS and e-mail up the chain of command and to the task force on the ground. With this enabler, executive leaders are also able to take informed decisions on seat optimization options, thereby reducing the cost incurred per process. The company aims to increase seat-sharing opportunities by approximately 33 percent and pass the benefits on to its clients. IT is not just helping large organizations with business transformation, but also the government of India with the implementation of several nation-wide initiatives. In order to

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Devendra Parulekar

executive coach

combat corruption, the government of India has decided to link a citizen’s Aadhaar or Unique ID (UID) number to several schemes including a direct cash transfer program, the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme), and a pension scheme to ensure transparency and accountability. UID will help directly transfer cash to bank accounts of beneficiaries under these schemes. A significant number of municipal corporations across India are also using IT to transform the way citizen services are being delivered. For example, the Municipal Corporation of Greater Mumbai has put together various ICT-enabled facilities for over 260 citizen services to serve a population base of over 1.2 million citizens—one of the largest in the country. The new system has eliminated key deficiencies in earlier, manual systems including forcing citizens to make multiple visits, wait for long periods, and a lack of transparency. In today’s world, innovation and customer-centricity are becoming inevitable for a business’ survival and growth. Therefore, today’s CIOs will have to take on the role of chief change officers as well as chief innovation officers to help businesses execute their strategies in the most efficient manner.

Road to the High Table Today, CIOs see significant potential in their ability to add value to a business—and they want to leverage that

opportunity to move away from being seen as a mere support function. But are CIOs really serious about getting out of their comfort zones and moving to the next level? According to a recent study Ernst & Young conducted among global CIOs, titled The DNA of the CIO, around twothird of the participants are content to see their role as a final career destination. Only 17 percent of CIOs have a seat at the executive leadership team. What is becoming very clear is that today’s CIOs need both business and leadership skills, in addition to technological ability, to obtain a seat on executive boards. A complete understanding of business processes is vital as their role expands to include the management of processes and the facilitation of innovation. They need to have strong communication skills and financial acumen to succeed at the next level. Finally, to effectively handle the increase in power and influence within an organization, CIOs will require relationship management and political skills of the highest order. CIO The views expressed here are his personal. Devendra Parulekar is a partner with advisory services at Ernst & Young (India) focusing on technology, communications, entertainment and logistics industries. He has over 15-plus years of experience in IT advisory, governance, risk and compliance. Send feedback on this column to editor@cio.in

Rob Enderle

IT Strategy

False Positive Often, top executives in an organization deliberately want to believe inexistent positive numbers when the reality is something else. Data analytics will fail if executives ignore the numbers.

Illust ration by mast erf il e

'm a numbers guy—you have to be if you're an analyst—and I'm a firm believer that analytics, used properly, could not only change your company but also the world. However, I've spent the last few months studying some of the bigger market failures of the last decade and, in many cases, executive management had the information it needed to avoid the mistake but simply chose not to use it. Years ago, I did a study at IBM to understand how the company lost some of the markets it dominated. IBM was extremely numbersfocused, and here I found an intentional corruption of study results to give executives a sense of false comfort. It was so bad at one point that it cost the IBM CEO his job and nearly put one of America's oldest and most successful companies out of business. Analytics is capable of giving executives unprecedented insight into assuring that their decisions are the correct ones, but many who pay for the deployment of these tools will likely instead find they are used to showcase what idiots they were after the fact. I'm not arguing that analytics are bad. If corporate culture favors positive information over accurate, and if the winning choice comes from the most powerful executive, and not the best informed one, then analytics is only going to make a bad decision look worse. If the bad behavior isn't fixed first, it will force whoever uses the tool to either falsify the results or constantly be a source of careerending information on bad decisions—which in itself is a great path to unemployment for the user.

When Numbers Lie Watching Microsoft about five years ago, I couldn't reconcile the fact that CEO Steve Ballmer—even more of a numbers guy than I am—seemed to be making horrid mistakes that should have been 34

M A R C H 1 5 , 2 0 1 3 | REAL CIO WORLD

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Rob Enderle

IT Strategy

avoidable. I figured either the numbers from Microsoft's internal market research organization weren't getting to Ballmer or the folks in market research were incompetent. Both assumptions were wrong. Rather, this organization clearly had a mission to give executives results that made decisions they had already made look smarter—apparently so they were better protected when the decision didn't work out. I figured Ballmer would eventually figure this out, since having numbers that say one thing and results that say another should have clued him into the problem. This was about the time I first ran into argumentation theory, which suggests that we are hard-wired to hold in high esteem people who win arguments. What's really screwy about this, when put in the context of human nature, is that we don't seem to care that much if someone is right, only that he prevails. To that end, we'll follow executives that win arguments no matter what. Now think of Ballmer's position. (I'm picking on Microsoft because I really tried to fix this problem and was catastrophically unsuccessful). Ballmer's a business guy in a company formed around a brilliant software developer, Bill Gates. My working t h e o r y: Ballmer inadvertently tasked research with a role of making his positions look right after the fact to offset the problem of him running a company of experts in an area where he wasn't an expert himself. The sad thing is that, had he approached analytics a bit differently, he could have made better decisions, held his position of power and made Microsoft a better company. I still hope he'll eventually see this path before his time there is up.

However, executives have to be able to accept that the decision they want to make—quickly divesting a troubled unit in this case—may be a bad one. If they aren't, then you still have another problem: Confirmation bias, or the tendency to only see information that agrees with your world view.

You Can't Handle the Truth The famous courtroom scene from the movie A Few Good Men highlights the core problem: Often "the truth" is at best inconvenient and at worst highly embarrassing. Analytics, done right, provides an incontrovertible view of the truth. There are executives and entire companies that largely exist by avoiding the truth. Look at Apple. Here's a company that was designed around the vision and skills of one man, Steve Jobs, but has done so little to adjust for his passing. Apple is running around saying the guy who was executive of the decade really didn't play much of a role while acknowledging Apple couldn't have been successful without him. Both statements can't be true, but they coexist because Apple can't

If corporate culture favors positive data over accurate, and if the winning choice comes from the most powerful executive not the best informed one, then analytics is going to make a bad decision look worse.

Do the Math Perhaps the saddest decision I was ever part of was IBM selling ROLM. I was part of the analysis team—and my report on how to turn the unit around instead convinced Ellen Hancock to sell the unit in the first place. What was sad about the sale was that our internal study clearly said selling this business unit to Siemens would be a catastrophic failure. Still, IBM sold half of ROLM to Siemens and carried 50 percent of the resulting losses for five years. The unit lost more money over that time than IBM initially paid to acquire it. Subsequent analysis showed that, had IBM just shuttered the business, it would have been billions of dollars ahead. The ROLM mistake happened because the decision was made before the research was done. Apparently the IBM executive team forgot it had even commissioned the research. If you're going to do research, it needs to come before the decision is made—afterwards, it has the high probability of making executives look like idiots.

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handle the truth that, without dramatic changes, the firm is crippled without Jobs. Here's another example: A surprisingly small number of the companies that sell analytics tools actually rely on those tools for major decisions. Such companies are unable to handle the truth, even though they could become the best-standing examples of why a company should deploy their products. This leads me to two recommendations if your executives, like most, tend to make decisions on their gut, rather than look for analysis up front. First, avoid analytics as a decision tool. It'll make executives look bad, and they probably won't appreciate that. (It goes without saying that you might want to move to a company with less foolish tendencies.) Second, pick a solution from a company that uses analytics heavily internally, and have the company help you guide your executives to become smarter decision makers. In that case, not only will the tool be more successful, but so will the company. It is far more satisfying to be partially responsible for making your company successful than it is to show that your executives are idiots. Trust me. CIO Rob Enderle is president and principal analyst of the Enderle Group. He writes on emerging technology, security and Linux for many publications and appears on TV shows that include CNBC, FOX, and Bloomberg. Send feedback to editor@cio.in

REAL CIO WORLD | M A R C H 1 5 , 2 0 1 3

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Every Cloud Has a Silver lining

1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1 0 1

Several challenges are getting in the way of CIOs who want to move to the cloud. A roundtable with leading Indian CIOs allows them to air their challenges and provide actionable advice on ways to guard against these risks.

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issues and create actionable insights, CIO magazine organized a roundtable conference in association with Telstra Global in Mumbai on February 7. The roundtable titled Every Cloud Has a Silver Lining, had seven CIOs from large enterprises across various industry verticals. They exchanged notes on the practical challenges and emerging complexities associated with the implementation of this evolutionary model.

Less Pie In the Sky From the discussion, it was clear that organizations have made inroads in the cloud. Steel-to software behemoth, Essar Group, for instance, has benefited from its cloud foray, said CTO N. Jayantha Prabhu. Recently, for example, Prabhu received a mandate from management to send a mass mailer to two million customers, retailers and vendors. Prabhu said he placed his bets on an application running on the cloud and it paid off. “If we had gone with an on-premise model it would have taken six weeks. We went ahead with a cloud model and we were able to execute the task in two days. In addition, it turned out to be cheaper and we got a handsome ROI,” he said. Chronicling yet another cloud success story, he said that a cloud application played an instrumental role in the execution of a social media platform for Essar group called JAM. “We had already signed on to SAP’s SuccessFactor to handle our performance management. When we wanted to introduce a social media platform for the entire Essar Group, we naturally looked to SAP to enable the solution. Leveraging the existing setup, users identities are created with seamless authentication between the cloud and our internal on-premise solution, allowing the entire hosting set-up to be implemented within a week,” he said.

Adoption Pain Points Prabhu noted that there is a huge acceptance of the shift to the cloud but he admitted that security and high licensing cost were two of the issues he faced. He added that the Essar Group is one of the first businesses to have migrated some of its most critical applications to a Microsoft cloud. “Our scale of operations is vast and there are no guidelines from a cloud governance side. This is a major stumbling block. But as a common practice, whenever we evaluate any new application or solution,

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“The cloud has a solid business proposition and service providers are working over time to find solutions to challenges like data security and data privacy. The cloud will change the way people buy IT.”

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0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 Custom 0 0 Solutions 0 0 0 Group 0 0 1 1 1 1 1 1 1 1 1 1 1 1 TELSTRA 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1and 1 data 1 1 privacy. 1 1 1 1“Auditors 1 1 1 compliance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 expect 1 1 1 that 1 1 IT 1 has 1 1complete 1 1 1 control 1 1 1 of1 0 0 data 0 0 generated 0 0 0 0from 0 0 our 0 0computer 0 0 0 the 1 1 1 1I can 1 1present 1 1 1all 1the1 logs 1 1 of1 my1 systems. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 organization’s 1 1 1 1 1 data 1 1 but 1 1how 1 1do 1I get 1 1the1 0 0 of0 my 0 0service 0 0 provider? 0 0 0 0 How 0 0 can 0 0I logs 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 convince them that the cloud environment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 good 1 1 1as 1 what 1 1 the 1 FDA 1 1 guidelines 1 1 1 1 is1 as 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 want? That’s a major showstopper 1 1 1 1 1 1 1 1 1 1 1 1 1 in 1 my1 0 0 0 vertical,” 0 0 0 0he 0said. 0 0 0 0 0 0 0 industry 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 Rangaraj, 0 0 0 0however, 0 0 0 also 0 0said 0 0that 0 as 0 a0 service, 1 1 1 the 1 1 cloud 1 1 is1 ready 1 1 for 1 1standard 1 1 1 0 0 0 0 0 0 pieces 0 0 0like 0 0e-mail, 0 0 0and0 componentized 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 travel 0 0 and 0 0 expense 0 0 0 management. 0 0 0 0 0 0 0 0 1 Andrew 1 1 1Wildblood, 1 1 1 1Head 1 1of Asia, 1 1 Telstra 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Global, stressed that there is a need 1 1 1 1 1 1 1 1 1 1 1 1 1 1 to1 0 0 0 awareness 0 0 0 0 in 0 areas 0 0 such 0 0 as 0 data 0 0 increase 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 security, pricing models, and contractual 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 Managing 1 1 1 1data 1 security 1 1 1 1and1 agreements. 0 0 0 in0 compliance 0 0 0 0 with 0 0 regulation 0 0 0 0is a0 privacy 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 challenge 0 0 0 0 for 0 service 0 0 0 providers. 0 0 0 0And 0 they 0 0 1 1shoring 1 1 up 1 their 1 1 defenses 1 1 1 1by 1imposing 1 1 1 are 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 tighter 1 1 1 restrictions 1 1 1 1 on 1 1user 1 1access 1 1 1and1 0 0 0 0 the 0 0 use 0 0of 0 data 0 0 encryption, 0 0 0 0 increasing 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 as well as providing real-time 0 0 0 0 0 0 0 0 0 0 0 0 0threat 0 0 1 1 1 1techniques. 1 1 1 1 1 1 1 1 1 1 1 detection 0 Talking 0 0 0about 0 0the 0 evolution 0 0 0 of 0 the 0 0cloud, 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Rahul 0 0 0Shandilya, 0 0 0 VP 0 0and 0 CIO, 0 0 Asia 0 0 Motor 0 0 1 1 1 noted 1 1 that 1 the 1 1way 1 cloud 1 1 is1 evolving, 1 1 1 Works, 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 it1 would 1 1 have 1 1 two 1 1definitions. 1 1 1 1 “One 1 1would 1 1 0 0the0 buyer’s 0 0 0 definition 0 0 0 0 of0 cloud 0 0 0the0 be 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 other 0 0 would 0 0 0 be0 the 0 supplier’s. 0 0 0 0 And 0 0 when 0 0 1 definition 1 1 1 1 it 1essentially 1 1 1 1 means 1 1 that 1 1 I 1 say 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 expectations from the cloud are different 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 from 0 0 what 0 0 a 0supplier 0 0 0has0 to0 offer,” 0 0 he 0 said. 0 0 1 Applications 1 1 1 1 are 1 1the1 biggest 1 1 1 concern 1 1 1 for1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CIOs 1 1 who 1 1want 1 to 1 move 1 1 to 1 the 1 cloud. 1 1 1That’s 1 1 0 0 0 of 0 the 0 extent 0 0 0to which 0 0 0applications 0 0 0 0 because 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 are 0 0 customized. 0 0 0 0 0 Exit 0 0 strategies 0 0 0 0 0are0 1 1 1 challenge. 1 1 1 1 “I1 want 1 1 an 1 exit 1 1 policy 1 1 another 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 where I can check in and check out 1 1 1 1 1 1 1 1 1 1 1 1 1 1 at1 0 0 conveniently, 0 0 0 0 0 and 0 0at 0pre-negotiated 0 0 0 0 0 will, 1 1 1and1 conditions 1 1 1 1 which 1 1 are 1 1favorable 1 1 1 terms 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 to 1 both 1 1 sides. 1 1 The 1 1moment 1 1 1this1 is1 achieved 1 1 1 0 0 0 0 0 are 0 0more 0 0 likely 0 0 to0 move 0 0 to0 organizations 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 the 0 0cloud,” 0 0 said 0 0Shandilya. 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 This 1 event 1 1 report 1 1 is 1brought 1 1 to1you1by 1 1 1 0 0 0 IDG 0 Custom 0 0 0Solutions 0 0 0Group 0 0 0 0 0 1 1 1 1 1in association 1 1 1 1with1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

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When Outsourcing B y A n u p Va r i e r The times, they are a-changing. Gone are the days when CIOs could sign on an outsourcing service provider, ask them to ‘take care of everything’, put their feet up, and relax. To be fair, it was never quite that easy. But it’s also true that not as much thought was put into the how-to aspects of an outsourcing deal—if, for nothing else, but for a want of options.

Reader ROI: Changing trends in the outsourcing world The benefits those changes offer CIOs What they need to do to prepare

That’s precisely what’s changed. A new multitude of outsourcers and the advent of the cloud have given CIOs more choice than ever before. Combine those with a growing acceptance among service providers that long-term engagements are a thing of the past, and you have a new outsourcing norm. The new norm gives CIOs more negotiating muscle, allows them to demand greater flexibility, grants them better access to best-of-breed providers, and makes it easier to walk away from providers they aren’t happy with. But CIOs who want these benefits have to be willing to define new strategies and processes and make changes. A number of your peers have already gotten on-board with the new realities of the outsourcing world and they are bringing back plenty of lessons from the field.

Short is Sweeter Fewer enterprises are willing to be tied down to their outsourcing partners for long. That’s evident from a quick glance at the TPI Index, a quarterly snapshot of the global outsourcing market. It shows that contract duration has shifted from six years, on average, in 2003—to 4.9 years in 2012. 38

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

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Cover Story

Staff Management

There’s a new normal in the outsourcing world and the success—and failure—of your outsourcing strategy depends on how well you adapt to it.

Works... or Fails Shorter-term contracts increase flexibility, allowing the IT department to roll with changes more easily. At Deloitte Touche Tohmatsu India (Deloitte), Chief Information Officer Vinayak Muzumdar says he prefers contracts that are threeto-five years long because of the constant change in the technology landscape, which makes it difficult to predict what technology or the business will look like too far in the future. Sumeet Srivastava, regional IT head Asia, Monsanto, a producer of genetically engineered seeds, among other things, also believes in short-term contracts. “Rather than signing long-term engagements we believe in taking shortterm to mid-term engagements on delivery,” he says. Growing competition, the commoditization of IT, and service providers adhering to standards like ITIL, COBIT, and PRINCE2 have led to an increasing level of standardization. As a result, process handovers—once a pain in the neck—are now achievable with much less agony. “We are seeing a lot of CIOs moving in and out of vendors. They are going in for three to four year contracts with one vendor and on realizing the potential benefits of going with somebody else they move on,” says Biswajeet Mahapatra, research director at Gartner. Shailesh Joshi, head-IT at Godrej Industries, has also witnessed how much easier it’s become to shift providers compared to,

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REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Cover Story

Sourcing

say, five years ago. “Service providers are growing and diversifying and today they have the necessary capabilities to handle a transition. There’s still some pain involved in handovers but it has become much simpler,” he says. That’s a point of view that Muzumdar agrees with. “Technology is getting commoditized and the handover is no longer very painful,” he says. That said, he does throw in a word of caution. “We normally don’t shoot for disruptive changes when we switch vendors,” he says. The new vendor has to take the services on an as-is basis and introduce desired changes in a phased manner. Shorter-term contracts and the agility they lend, however, come at a slightly higher

price. But it’s a price Joshi is willing to pay because the strategy gives the Rs 1,469 crore Godrej the flexibility to stay in line with the business—and the outsourcing market. “I have the option to change from one service provider to another depending not just on the services we get, but also based on the features and price other providers offer,” he says. But a short-term contract can also lower the price—if you have the right clause in place. “Even if a contract is for five years, we include a clause that allows us to invite quotations from competing vendors at the end of three years,” says Muzumdar. Based on the quote they get from competing vendors, the first choice of refusal goes to his current vendor. If his existing vendor can match a competitor’s price, he stays on.

Aniruddha Sinha, GM-IT, Air India, included a provision in his contract to review the terms of the SLA at the end of every year to ensure flexibility.

“In three years you will, in all likelihood, need to redefine the scope of your services. So, it’s better to ensure that you get the best price for that,” he says. CIOs who want a taste of that flexibility goodness must be prepared to standardize and commoditize their processes and applications. “The more you customize your application and build complexity, the more difficult it is for you to move to somebody else,” Mahapatra warns. With a standardized IT landscape it becomes easier to change providers and derive maximum cost benefits. They will also need to identify ways of pulling the plug on a contract—in one go or in bits (and bytes)—and give it to another provider. Such an exit strategy needs to be looked at the contractual and the operational level. “At the contractual level you can penalize the vendor for nonconformance and operationally you need to have contingency plans that allow you to switch swiftly from one service provider to another,” says Mahapatra.

Monogamy is Passé Increasingly, CIOs are entering into separate, parallel agreements with multiple suppliers for different services they want outsourced. According to research from consultant firm ISG, 53 percent of global 2,000 companies are opting for more than one partner—compared to 33 percent 10 years ago. Data from the TPI Index also points to how this trend, called multi-sourcing, is gathering speed. It shows that outsourcing deals in the APAC region, valued at $100 million or less, have almost tripled since 2002—both in terms of the number and actual cash value (ACV) of these contracts. While a portion of that increase could stem from a greater number of enterprises signing new outsourcing contracts, it also represents a number of large deals that are being broken up into smaller contracts. Monsanto has used multi-sourcing to great effect. The company currently runs a mobile-based farmer support center called Monsanto Farmer Advisory Services, which

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has over 8 lakh registered users. “We found niche players who could develop mobile applications or business rules management systems and developed our entire platform with their help,” says Srivastava. That’s one of the benefits of working with multiple providers: You get a greater level of expertise. It’s the same reason people don’t go to a multi-cuisine restaurant when they are looking for an authentic experience. “I’m completely in favor of going to multiple vendors instead of opting for one long-term contract, as this allows you to get expertise. Rather than engaging a jack-of-all-trades, we work with masters at individual tasks,” says Joshi at Godrej. It’s a trend that hasn’t gone unnoticed in the analyst community. “Instead of giving a bulk order to one service provider, CIOs have now started giving it out to two or three players,” says Gartner’s Mahapatra. “You then have an overseeing body to ensure that the outsourcing partners are working well together. This allows CIOs to get the best out of all their different partners.” Multi-sourcing is giving rise to both service integrators—the overseeing body that Mahapatra refers to—and to the challenges associated with them. While a CIO might draw up great SLAs with his service integrator, more attention needs to be focused on the SLAs between the service integrator and its partners. After all, a service integrator’s ability to meet a CIO’s SLAs hinges on how well the integrator’s partners are set up. “The primary vendor is not necessarily able to give all the services that are demanded of them. So, they engage with specialists and get the job done. However, we demand this be done transparently and that appropriate redundancies are built in,” says Aniruddha Sinha, GM-IT at the Rs 14,255 crore Air India, which started outsourcing in the early 90s. The airline has two datacenters—one in Mumbai and the other in Delhi—and some of its applications are maintained in a private cloud, where the implementation of applications and the maintenance of the private cloud is done by outsourcing partners.

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Because cloud service providers don’t share details of their architecture, Vinayak Muzumdar, CIO, Deloitte Touche Tomatsu, gets them to, instead, comply to a checklist of standards Deloitte needs.

The Cloud Gives You Wings Among CIOs, there’s a growing acceptance that the cloud represents a real alternative to traditional outsourcing. This is giving CIOs a greater sense of freedom, less sense of being stuck with a service provider they aren’t happy with. According to CIO research, 53 percent of Indian CIOs believe that the risks associated with cloud service providers is about the same or lower than the risks posed by traditional outsourcers and third-party suppliers. And even when there are risks, more CIOs are finding ways around them. Take Deloitte for example. Over time, Deloitte, which has global revenues of Rs 169,020 crore has grown through acquisitions of audit firms such as C.C. Chokshi and S.B. Bilimoria in India. Its strategy of inorganic growth also led to multiple versions of similar applications and there wasn’t always enough time to integrate disparate systems.

In a service organization like Deloitte, HR is of prime importance. “We wanted to have a unified HRMS, a performance management system, payroll, and start self-service capability for employees,” says Muzumdar. After a detailed analysis of their operations Muzumdar decided to go to for software-as-a-service (SaaS) on the cloud. One of the key issues he faced in taking the company’s HRMS to SaaS was that the service providers were hesitant to provide detailed insights into their architecture, a challenge a majority of CIOs face. Deloitte needed a way of figuring out if the service provider was compliant and adhered to the company’s security standards and policies on data protection. Rather than letting that be a dealbreaker, Muzumdar decided to play from the opponent’s court. “Instead of asking the vendor for details on security and how their systems work, we made a checklist of all the REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Cover Story

Sourcing

standards we needed and ensured that they comply with it,” he says. Also, aware of the importance of an exit strategy, Muzumdar also chalked out details like the owner of customizations done till date; how to transition data—and in what format—in case Deloitte decided to shift to another vendor. “We defined our requirements and in what format we’ll need the data, and got this on paper,” he says. Satisfied with all other criteria like scalability, availability, response times, support times, backup and disaster recovery,

of moving to another vendor as the cost of switching over is sometimes very high in the cloud and it can also be technically challenging,” he says. There’s another area that tends to be overlooked with cloud projects: The transition. More specifically, the SLAs that govern a transition. When Joshi at Godrej wanted to move the company’s e-mail to the cloud, he drew up an SLA which took care of most of requirements including e-mail uptime. But the one thing that wasn’t mentioned—and was overlooked even by

Over 50 percent of Indian CIOs believe the risks associated with cloud service providers is the same or lower than the risks posed by traditional outsourcers. Muzumdar moved on to the negotiations on pricing. A key learning is that it is possible to negotiate with cloud providers—if you have the volumes (the number of past and present employees in Muzumdar’s case), or can promise additional business in the future. Today, Deloitte has over 5,000 employees, and it also needs to keep records of past employees. “At a later point, we might want to add a training module to the system. So the deal will be re-looked periodically, especially as the volume goes up,” he adds. “If a vendor sees the promise of sustained business in terms of more modules and functionalities, they are willing to offer a better price. “When they see growth you can periodically go back to the vendor and renegotiate contracts,” says Muzumdar. It’s important, he says, to look at costs holistically. “We also considered the cost 44

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the cloud service provider—was a service support contract during the transition. In the event of something going bad during that period, it was not clear, says Joshi, who was responsible. “This wasn’t initially included in the terms of the contract and we had to then formulate a separate service support agreement,” says Joshi, adding that it’s an area CIOs need to look into.

Work those SLAs Whether you choose a cloud service provider or an outsourcing partner, a single vendor or a multi-sourcing strategy, a 10year contract or shorter-term one, there is no getting away from negotiating service level agreements. Traditionally, deals have been closed with a less-than-optimum amount of thought put into the transition and

transformation details, and even less into an exit strategy. Part of the problem stems from the fact that CIOs are reluctant to develop their own benchmarks and they choose to believe in the ones provided by service providers for the sake of convenience. “Decisions to outsource are made in a matter of months and CIOs ask the vendor to provide them with a set of SLAs, without really assessing if it adds value to them,” says Mahapatra. Instead, CIOs should derive their SLAs based on a service portfolio or a service catalogue that relies on a thorough understanding of their current IT operations, the needs of the business, the number of applications being supported, the tiering of applications, and also considering the support levels they are looking at, advices Mahapatra. This entire process, he estimates, could take up to a year and is hence avoided by most. One of the challenges with contracts, believe some CIOs, is that they introduce rigidity. But that’s not necessarily true. Take the case of Air India. By virtue of the industry it operates in there are a lot of constraints imposed on a CIO looking for service providers. An airline can’t really go shopping for its outsourcing partner. The technology providers for global distribution systems—which is the system responsible for computer reservations— have been an oligopoly (a market dominated by a small number of sellers) in most places and a monopoly in some geographic areas. All of this means that airliners have much less outsourcing choice than most other companies. But Sinha didn’t let any of that get in the way of his pursuit of flexibility. He included a provision in his agreement to review the terms of the SLA at the end of every year. “We have the option to modify the parameters at the end of a year, introduce another factor categorized on the basis of its priority and add penalty clauses proportionate to the priority,” says Sinha.

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Setting up SLAs is only the first part of the challenge. It’s important to ensure providers can actually live up to everything they promise. At Deloitte, Muzumdar is currently in the process of assessing vendors for an outsourcing bid and believes in going a step further with his agreements. “Promising an SLA is one part of the bargain. We make sure to check whether the vendor has good systems and processes in place by asking for process documents and evidence of adherence,” he says. Before entering into a contract, Muzumdar also familiarizes himself with the delivery team of his outsourcing partner, and not restrict his association to the sales and marketing team. “When you interact with the delivery team you’re able to gauge the extent to which processes are being followed at the partner’s organization,” he says.

“Rather than engaging a jack-of-all-trades, we work with masters at individual tasks,” says Shailesh Joshi, Head-IT, Godrej Industries, explaining why he believes in a multisourcing strategy.

Make Way for New Roles As things change in the outsourcing world, there are new roles emerging within the CIO’s team. “An internal finance organization, called IT finance, and vendor management are two important roles that are coming up within the IT team,” says Mahapatra. A vendor management officer on the CIO’s team becomes evermore relevant with the growing popularity of the multisourcing strategy. Staffers in the vendor management office not only manage, maintain, and negotiate multiple contracts but also ensure that the company’s outsourcers adhere to SLAs. “At Air India, we have an IT team member who is entrusted with vendor management and he, with the help of the end user representatives for specific projects, maintains the relationship with the vendor and tries to improve on the services offered by the vendor,” says Sinha. The role of IT finance is to help CIOs do the math necessary to get a new project approved by the business. “The IT finance team helps CIOs justify their investments with figures on payback period, cancellation, net present value, discounted

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cash flows and similar such calculations,” says Mahapatra. Deloitte’s Muzumdar feels that based on the operations being outsourced existing roles will under go change. “The person initially in charge of a function will need to get out of an operational mindset and become a business solution provider with vision,” he says. He believes that organizations need to develop a partnership with their vendors as they are now an integral part of the delivery organization and aren’t just providing products anymore. “So, we will have someone to deal with the vendors on a continuous basis, train them on organizational culture, and brief them of the changes that are likely to occur at the organization so that they have enough reaction time rather than getting a jolt,” he says. Since operations are moving out of purview of IT due to cloud adoptation,

the CIO would also need to have business relationship managers to cater to business function within an organization. Muzumdar says “The organization should look at appointing or assigning IT executives who can act as a single touch point for various technology related issues of a function”. Monsanto has a dedicated vendor management team that acts as a support in terms of resource and service augmentation. “They keep an eye on what is happening in the market and leverage the best technologies that are available,” says Srivastava. This wouldn’t have mattered when choices were few but today, with the new norm in place, IT teams need to keep constantly updating themselves with what is happening outside the organization. CIO

Anup Varier is senior correspondent. Send feedback on this feature to anup_varier@idgindia.com

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Feature

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Case File | Gujarat Heavy Chemicals

Outback

Adventure

Reader ROI:

The benefits of building a datacenter to a remote location The challenges CIOs need to be prepared for

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BY Debarati Roy

eraval, a small fishing port town on the coast of Gujarat, is a picture postcard of contradictions. It’s tucked between the soothing waters of the Arabian Sea and is home to the soot-filled chimneys of India’s biggest manufacturing plants. Its industries house the world’s most cutting-edge machinery, while its fishermen build dhows (fishing boats) with bare hands and measuring tapes. This double-life makes Veraval interesting. But what’s significant about this port town is its geographical location. For one, it blesses the town’s surroundings with an abundance of limestone and salt resources—a prime ingredient in the manufacture of cement, and soda ash, and various other chemicals. Which is why, it attracts manufacturing giants like Aditya Birla Nuvo, Gujarat Ambuja Cement, and Gujarat Heavy Chemicals (GHCL). GHCL, which manufactures soda ash—an essential ingredient for detergents, soaps, glass, and dyes—runs its entire chemical manufacturing business out of its Veraval plant, located barely a kilometer from the coast. But Veraval’s picturesque setting hides a deadly reality: It’s cyclone country. In 2005, a major cyclone hit the Veraval coast and severed GHCL’s communication lines, bringing business to a standstill for several hours. “The first three things that go down when a cyclone hits are power supply, communications, and network channels,” says Chandan Sinha, who served as the CIO of GHCL until a fortnight ago. Since the plant generates its own electricity, powering its operations during the cyclone wasn’t really an issue. Neither did the storm take down GHCL’s rudimentary REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

ImagE by MASTERFILE \ imaging by un n ik rishn an av

How—and why—Gujarat Heavy Chemicals built a datacenter in a cyclone-prone, secluded sleepy little town—and saved crores.

Case File | Gujarat Heavy Chemicals ERP and standalone applications because they were run locally from the plant. It’s link to the outside world, its VSAT, however, was a different story. “We had a VSAT link which was working erratically but it couldn’t be used to access business applications. We could only use it for sporadic communication with other office locations during the cyclone,” recalls Sinha. That incident made a deep impression on Sinha. At about the same time, GHCL was also planning to upgrade its ERP and wanted to build a full-fledged datacenter to provide the business with a strong back-end. The storm forced him to ask himself whether it was a great idea to set up the datacenter outside Veraval and connect users within the plan via a WAN. The other option was building it in Veraval, in the middle of nowhere, far from any support. It was something to think about.

Point of Failure The Rs 1,930-crore GHCL produces about 2,300 tons of finished goods a day. These goods require about 6,000 tons of raw material. If you add it up, that’s over 8,000 tons of material moving in and out of the plant—on an average—a day. Much of that movement is monitored using IT. When trucks carrying raw materials enter the plant, weigh bridges weigh them and

generate a logistic invoice. Similarly, trucks on the way out loaded with finished goods also need an invoice. With about 450 trucks entering and exiting the plant every day, it’s a lot of IT-dependant invoice creation. During peak hours, Sinha says, systems generate one invoice a minute. So when systems go down, invoices pile up, bringing production to a halt. “Not to mention the long cue of trucks outside my factory gates, which opens up another set of problems,” says Sinha. That made it imperative for GHCL to ensure that business users had access to information no matter what. And that could only be achieved if Sinha built infrastructure in a way that users at the plant location could access applications over a LAN. This would guarantee that unless it was doomsday, his business would not come to a standstill. But to achieve that Sinha would have to do something phenomenal. Like build a datacenter in a sleepy little town, prone to cyclones. For most CIOs, either one of those would have reason enough to put as much distance as they could between Veraval and their datacenters.

Going the Full Distance Although GHCL’s plant in Veraval is well connected to important towns in Gujarat,

its distance from the commercial centers of the state made it a risky location to set up a datacenter. The closest city to Veraval, Ahmedabad, is almost 400 kilometers away, and the nearest metropolitan city, Mumbai, is 900 kilometers away. In case of an emergency, it could take anything between 12-24 hours for help to reach Veraval. “Getting hardware to Veraval was not a challenge, but we had to factor in the possibility of a server breaking down. Then it would take us a minimum of 12 hours to source it from the nearest city,” says Sinha. The biggest task for Sinha was to choose hardware that was resilient and could withstand the vagaries of a sea-side location including high humidity levels and salty air. Not only did the servers need to be weather-tested but Veraval’s distance from other cities also made it necessary to ensure that the servers had the feature of remote troubleshooting. “In case of an emergency, someone should be able to perform the first level of trouble shooting without having to be physically present at the datacenter,” Sinha says. He says that the exercise of choosing servers was extremely challenging because while he could find servers that could withstand extreme climate, servers that allowed remote assistance weren’t readily available when he was conceptualizing the project.

Based in the Boondocks Running a datacenter in the middle of nowhere is a tall order, but one that’s worth it. Here’s what GHCL achieved by setting up its datacenter at Veraval.

Lower Capex Costs

Shrunk Opex Costs

GHCL says that it would have cost plenty more to set up a datacenter in a metro; Rs 8 crore is its estimate if it had built it in Noida. It’s datacenter in Veraval cost it only Rs 5 crore in comparison—saving the company Rs 3 crore.

The datacenter’s proximity to the sea allows it to leverage ambient cooling. Thanks to that, it has lowered the number of ACs it uses in the datacenter. Power, too, is generated by the plant, so electricity is not an expense.

Ensured Business Continuity The datacenter was built within the plant so GHCL enjoys high uptime. Today, users at the plant can access applications over a LAN. To ensure uptime, GHCL used mirroring—each server had an additional back-up in an n+1 format. If a server goes down, its mirror will be up and running in the least possible time.

Sinha says he spent about six months evaluating various products. He spoke with his peers from similar verticals operating in, more or less, similar conditions to understand their challenges. “From technical forums to long conversations with solution providers, I checked the performance of the servers and other hardware components,” says Sinha. He tried six ways from Sunday to create a highly resilient datacenter. But he also knew that he needed to chalk out a response plan with the smallest possible downtime in case something within the datacenter went askew. Which is why, Sinha created a mirror—a backup—for every server in the datacenter. “This n+1 provisioning ensured that even if a server broke down, its mirror would be up and running in the least possible time,” he says. And if that went down, Sinha could plug in to his DR site in Ahmedabad. A r at h e r e x p e n s ive arrangement, Sinha managed to offset the price of over provisioning by leveraging a few advantages he had at the plant location. Utilizing the plant at Veraval to build his datacenter meant that GHCL had enough land to spare for a 2,000 sq. ft. datacenter without having to dole out a dime for it. The real estate benefit itself brought down the cost of the project significantly. That the plant has its own captive power generation capability meant uninterrupted power supply at no additional cost. “Real estate is a considerable expense when setting up a datacenter. Having a plant location at Veraval meant that we wouldn’t have to incur any extra cost on real estate for the datacenter,” says Sinha. And despite the over-provisioning, the datacenter cost GHCL only about Rs 5 crore. “A datacenter in Noida or Gurgaon would have cost about Rs 8 crore to build. Not just that, my expenditure on power, cooling, and real estate would have

bereft of the glitz that metros and tier 1 cities offer. So even if he did manage to find people and convince them to move to Veraval, he knew he would have to be ready for a high attrition rate. “I needed a team that was dedicated; that’s what it takes to work under harsh conditions, in a small, little industrial town in the middle of nowhere. Attrition could become a serious problem because replacing a resource would be even more difficult,” he says. While talking to his team members and peers in Gujarat, Sinha unearthed a trait of the local population that he realized he could use to his benefit. “I found out that people from this region are extremely familyoriented and like to live close to their homes. Also, hiring people locally would ensure I picked people who were well-adapted to Veraval’s extreme weather conditions,” he says. —Chandan Sinha Both Ahmedabad and Baroda have a lot of IT and engineering colleges. Sinha decided to go on led to at least three times more opex than a campus hunt and handpicked qualified what I currently spend,” says Sinha. candidates to build a 15 man-strong team And it also wouldn’t have provided Sinha at Veraval. He says the selection process with almost free air-conditioning. The tilted in favor of candidates from the plant’s geographical location in Veraval— Junagarh side of the state—Veraval falls in which enjoys a cool sea breeze—helps Sinha the Junagarh district. This would minimize leverage the concept of ambient cooling for the risk of attrition. the datacenter. This meant he could also Sinha had to invest considerable reduce the number of ACs. time and effort in ensuring that the With the infrastructure in place, Sinha recruits, fresh out of college, were trained had only one more hurdle to jump: adequately and could handle complicated Getting talent to man his datacenter in systems like ERP. Today, it’s evident that the boondocks. Sinha’s bet paid off. He says his team It was a pretty tall hurdle. hasn’t seen even a 1 percent attrition rate since the project took off. “The path I chose was the least obvious Fishing for Talent one, but saying no to the ordinary is what In retrospect, getting the infrastructure has made all the difference,” he says. bits right was a relatively easier problem to That, it has. CIO tackle, compared to finding people willing to work in a desolate location, far away from their families, says Sinha. Despite being an industrial hub, Veraval Debarati Roy is correspondent. Send feedback to has a population of only 1.5 lakh and is debarati_roy@idgindia.com

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Infographics: Vik as K ap oor

Had I built a datacenter in Noida, it would have cost about Rs 8 crore. Power, cooling, and real estate costs would’ve been three times more than what I currently spend.

Co Shukla’s Agenda: To create synergies between the goodwill of Mahindra’s brand and the group’s enthusiasm to enter new markets to strengthen the position of its new products.

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CXO Agenda | Brand Strategy

Brand

nscious

S.P. Shukla, President-Group Strategy and Chief Brand Officer, Mahindra Group, explains the vision behind the company’s new visual identity, and how its brand strategy allows Mahindra to create beachheads in new markets. BY Debarati Roy

new logo. What’s the idea behind it?

S.P. Shukla: The new visual identity has three components. We have a customized word mark (a brand that’s represented by a word, instead of an image. IBM is an example) because we believe that just like your handwriting reveals so much about you as a person, a logo word mark embodies the traits a company displays. We also changed the color of the logo from grey to a deeper shade of red because we found out that—across the globe—red symbolizes vibrancy and energy. And the third element was a ridge, the idea of which comes from Himalayas. When people climb mountains, they climb along the ridges. The ridge adds strong visual impact. Why have a mother brand representing all your sub-brands instead of letting each sub-brand have its own identity?

The vision behind the Mahindra Rise and

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the new visual identity was to consolidate all the Mahindra group companies under single brand architecture. But being a $15.9 billion (Rs 84,800 crore) multinational group with over 100 companies from 18 verticals spanning from agri to aero, the question was how do we unite so many products and services under one banner? That is where the idea of a single brand architecture comes in. We realized that as group companies we might have our individual capabilities in individual sectors and countries. In some countries we are known as the company that makes the most reliable tractors, and in others we are the people who provide the most comprehensive IT services. But what united us together was the name Mahindra. The objective of a single brand architecture was to leverage the brand value of existing, leading products in certain countries. So when other products follow, they get a head start because of

the brand value that people attach to the name Mahindra. We realized that when one product does well, the goodwill that it garners rubs off on other products. What other brand attributes did Mahindra trade off when it finalized on its current set of brand values?

In 2011, we had a group-wide meeting where over 500 of the company’s seniormost executives from over 100 group companies met and discussed what they would like Mahindra to signify. While some suggested that we should strive to become the number one company in all the verticals we operate in, others said we should be in the top 100 global list of companies by revenues. Some wanted us to be the most profitable, and others suggested that we should at least become the number one company in emerging countries. In a group with such diversified interests and with operations in 104 REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Photos by fotoco rp

CIO: In January, Mahindra unveiled its

Interview | Dr Ashok Jhunjhunwala

In a group with operations in 104 countries, reaching a consensus [on what we should stand for] was tough. But, by 2012, we did: We wanted to be among the top 50 most-admired brands in the world.

countries, reaching consensus was tough. But, by 2012, we reached a conclusion: We wanted to be among the top 50 most admired brands in the world. What are the brand benefits of investing in the FIM MotoGP World Motorcycle Racing Championship? (Mahindra Racing is the first Indian team to participate in it).

Our association with racing allows us to give a youthful, vibrant, technologysavvy image to our brands. Within a year of entering the racing arena, Mahindra won the Constructor Trophy (awarded to the best two-wheeler manufacturers.) That had a tremendous impact because champions always have a fan following. The FIM MotoGP World Motorcycle Racing Championship is viewed in more than 200 countries. It is telecast to 250 million households, and during a racing weekend it attracts more than 100,000 people who come to see the race. Mahindra made its foray into racing at around the same time that the company was also getting into the manufacturing of motorcycle and scooters. Racing has been a wonderful platform for showcasing our skills in manufacturing hi-tech products. And because of our brand architecture and synergy between group companies, it’s not just the two-wheeler segment but the entire automotive sector that benefits from it. Similarly, the Sri Lanka Premier League (SPL) was a step we took towards making our presence felt, not just in 52

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Sri Lanka but in all the countries in the Indian subcontinent that share a similar passion for cricket. It was a great platform to reach out to countries like Sri Lanka, Pakistan, and Bangladesh. Racing helped us gain more exposure to markets like Europe, North America, and Australia and cricket helped us in the Indian subcontinent. But Mahindra also launched the MahindraNBA Challenge in India. And hardly anyone here watches basketball. How does that fit into your brand strategy?

When it comes to the NBA, it is not about branding. In many countries, we have associated ourselves with sporting events because the idea is to help develop the sport. It’s about giving back. In Sri Lanka where we had to make a mark, we chose cricket because people are passionate about it. In a country where you are a household name, the approach is completely different from how you position yourself in a market where you are trying to make in-roads. What are the three or four things a good branding strategy should achieve?

Three or four is a highly exaggerated number. Only fools who are not sure of what they are doing need three or four attributes. Branding strategy has a simple objective: Brand recall. In a country where a brand is not established, it’s important to know how many people can remember your brand

without aided recall. For example, if you ask someone in Sri Lanka what they think of cricket and the response is Mahindra, you know you have hit the bulls eye. In a country like India where our brand is already established, you want people to associate your brand with certain company attributes—trust, value for money, and innovation, just to name a few—and the marketing campaign should ideally reflect how people associate themselves with the brand. But no matter which market you go, it’s about how well people recognize and acknowledge your brand. Finally, after discussing the importance of brands so much, do you think there’s too much fuss made around branding? Isn’t all the money and time spent on branding be better invested in creating better or cheaper products and drive sales?

Many consumers think that they are being very objective when choosing products. But in their mind they have already been influenced largely by what they see, hear or read. Let’s take a hypothetical example. It’s summers and you go to buy soap. You’ll almost never ask a shopkeeper for soap. You’re more likely to ask for a brand of soap. That’s what brands help you do. In this cluttered market overflowing with products, they help you focus your mind. CIO Debarati Roy is correspondent. Send feedback on this feature to debarati_roy@idgindia.com

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T h e Te c h Re t r e a t f o r B F S I L e a d e r s

monetary

Value

In an economy that has lost momentum, the BFSI sector is reeling under pressures of financial inclusion, complying to regulations, and reining in opex. And they are leaning on IT to achieve that. To lend a hand, CIO magazine organized CIO Money Matters exclusively for BFSI CIOs. Here are the highlights.

An exclusive initiative under:

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keeping I up with Consumers In a down economy, the BFSI sector is scouting for new ways to strengthen their relationships with customers. To do that, some organizations are revamping legacy IT systems to make their businesses respond faster to customer needs, and others are banking on new technologies. By Gopal Kishore

t isn’t a great time to be a CIO in the BFSI sector. That’s because organizations in the sector face myriad pressures of financial inclusion, increased compliance, regulators demanding increased automation, a need to rein in operational cost—and all this in an economy that seems to have lost momentum. The role of CIOs in the BFSI sector has never been more in the spotlight. In the face of such enormous pressure, they have continued to keep their focus on the most important factor for a service industry: The customer. But the challenge is to continue to provide exceptional levels of service at lower costs and a high level of personalized experience—not just in their branches but on mobile and online banking platforms. The role of IT in delivering these experiences has increased substantially. Due to which, IT is no longer seen as a support center, but the driver of new initiatives and a hub of innovation. In order to help CIOs from the BFSI sector excel in their new-found strategic position, CIO magazine organized the CIO Money Matters 2013 event in Goa on February 8th and 9th, 2013. Instituted

Expert speak “Insurance firms can do a lot with a mobile platform. Our customers, for instance, can now pay their policy premiums from their mobiles.” Ram Kalyan Medury VP & Head IT, ICICI Lombard

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Steal This Idea by CIO magazine in 2009, CIO Money Matters is the only focused event for CIOs in the BFSI sector. In this edition, CIOs, solution providers, and industry experts got together to figure how financial organizations can cope with today’s tough business environment and focus on customers. It also focused on IT’s contribution and impact on business and productivity in this segment.

State of the BFSI CIO Combining data from India’s most extensive CIO survey, the State of the CIO Survey 2013 and CIO Mid Year Review 2012 , Vijay Ramachandran, Editor-inChief, IDG Media, culled the responses of BFSI CIOs and presented the State of the BFSI CIO 2013. Ramachandran said that over half the CIOs in the BFSI sector admitted that the economic slowdown is the biggest challenge, as compared to other verticals where only 13 percent of CIOs said it was a challenge. The near-term focus for over half the companies in India has been about six months, but banks are increasingly taking a longer term-view of 12 months. In terms of new technologies, interestingly, though 53 percent of BFSI CIOs consider cloud to be as risky as outsourcing, 35 percent feel that the cloud will most impact their role in 2013. Surprisingly—when it comes to BI—74 percent still share insights over spreadsheets and reports, while a mere 36 percent use dashboards. Also, CIOs continued to face a talent crunch in

“As a CIO, one should be able to take tough calls to drive business value. Sometimes, in order to succeed, you have to be blunt.”

Joydeep Dutta CTO, ICICI Securities In order to get business on your side, initiate projects that create transparency and build credibility. To ensure projects are not delayed, Dutta set up an internal dashboard where his team monitors outages and downtime, and records bottlenecks in project and workflow management. This dashboard is shared with the business as well. “We needed to be transparent and improve our relationship with the business. The dashboard now captures inputs from the business as well. If there’s a problem, then business and IT both take ownership. IT is no longer solely responsible,” says Dutta.

mobile application development and mobile device management.

Mobility: The Cube Model But for ICICI Lombard, mobility has proven to be a winner. The insurer’s

customers can now view and pay a policy premium on their mobiles. This initiative has won the company’s IT team tremendous goodwill. Speaking on the lessons learnt from the deployment, Ram Kalyan Medury, VP and head IT, ICICI Lombard, said that his team took a cube approach to enable mobility. “We quickly identified the key stakeholders and set the framework. We chalked out the three things we can do with mobility to measure success, and the three business processes that would benefit from mobility and result in quick wins,” he said. Like a cube which has eight vertices, Medury highlighted eight challenges which included choosing the right platform to develop, dealing with rapid refresh cycle of the chosen platform, integrating legacy applications with the mobile application, standardizing on the form factor of the devices, resolving security concerns arising out of a mobile platform, dealing with bandwidth and network issues, addressing the lack of skillsets, and finally providing support to the mobile platform. “When we started, we asked ourselves what an insurance company can really do with a mobile platform. And now we know the answer,” Medury said.

Out with the Old While some BFSI CIOs are tackling the challenges of new technologies, others are battling ancient legacy systems.

“It’s not about how you bulldoze your way into a project, but how you get buy-in. That’s what makes or breaks a project.”

Kersi Tavadia

Yogesh Kapoor

CIO, BSE

Head-IT Operations, HSBC India

Like the Bombay Stock Exchange (BSE). Being one of the oldest exchanges in India, it was swamped with legacy infrastructure, applications and processes. “Most of the time, identifying the problem was the biggest problem. It is difficult to change something that was working for the past 15 years,” said Kersi Tavadia, CIO, BSE. However, change was the top most priority on Tavadia’s agenda. Earlier, Tavadia said, broking was just about booking orders, now customers—in this case brokerage firms—were demanding a better UI and performance. According to Tavadia, the number of terminals at the BSE was no less than a telephone exchange, and nobody wanted to touch that. For every router, there were three spare routers, and all of them were beyond their end-of-life. To add to these problems, technicians at

the BSE would routinely visit brokerage firms and fix problems which were not related to the exchange, but the brokerage firm’s infrastructure. “It took us over a year, but we moved to a 10G network. We also decoupled other components of trading such as risk and collateral management, and brought the equities and derivatives trading on a single platform. Eventually, we also reduced the number of vendors to just one,” he said. However, the clean-up act was not easy. Tavadia had to make tough choices and sometimes take decisions which may baffle others. For instance, half the servers in the datacenter were simply unplugged and his team waited to see if it affected users. “This was because no one knew what was running on which server. This may not have been the best approach, but as a CIO, one should be

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Ramnath Iyer CTO, CRISIL Market the value of IT and show the business the ROI of your initiatives to be recognized as a strategic leader.

For Iyer, there are no two ways to look at the pros and cons of a project. The only yardstick he swears by is ROI. “When several initiatives—led by IT—resulted in exceptionally positive feedback for the business, they came to us and asked if we can do something to raise the bar even higher. This has elevated IT’s status. We understand the end-user, we understand market needs, and we put ourselves in their shoes. Taking a service-oriented approach has really paid off,” he says.

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Subhakanta Satpathy SVP & CIO, Axis Bank Breaking your routine keeps you motivated. So, indulge in something you are passionate about.

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“When you find yourself doing repetitive tasks and everything is mechanical, it’s time to do something new. For me, that’s biking,” says Satpathy. He says biking can be phenomenally stimulative, and sharpen one’s instincts to live up to one’s fullest potential. But it doesn’t have to be just biking. “If not biking, it could be something else. The most important aspect is to focus on something that you are passionate about,” says Satpathy.

able to take these calls to drive business values. Sometimes, you have to be blunt,” he said. Thanks to the project, today, BSE is set to provide back office-as-a-service. “In the past two years, we have made so many changes, which did not happen in the last 15 years,” Tavadia said.

Secret of Project Success Delivering successful projects—like BSE—isn’t easy. There are several roadblocks and more failed projects than successful ones. According to Yogesh Kapoor, headIT operations, HSBC India, some of the reasons for project failures include fuzzy business objectives, out-of-sync stakeholders, and underestimating the complexity of a project. Among the people factors, he listed changing mindsets and attitudes, corporate culture, and a lack of senior management support. In order to resolve these challenges, he suggested identifying the time, costs, and scope of the project. Kapoor cited the example of HSBC’s Evergreen project, which involved bundling the retail banking applications of about eight countries to an application suite, consisting of about 42 applications per country. Kapoor said that the ability to ask the right questions at the right time, and challenge the status quo is the key to success. Another important aspect of good project management was to market the IT team’s performance when things went well. “It’s not about how you bulldoze your way into a project, but how you get buy in. That is what makes or breaks a project. Finally, don’t forget to celebrate the success of your projects,” he said.

Pulling IT Together Making observations from an RBI IT Vision Document, Raj Gopalakrishna, VP-Engineering, CA Technologies, said that most BFSI organizations are looking at enhanced use of IT in areas like MIS, regulatory reporting, overall risk management, financial inclusion, and CRM. According to Gopalakrishna, IT needs to respond faster than ever to changing business needs. “One way to achieve this is to optimize and eliminate constraints in the enterprise software development

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instance, performance issues discovered in production cost millions of dollars annually, simply because they could not be replicated in the development environment. It takes 5-7 developers working for weeks to resolve serious issues,” he added. “Another requirement is for service assurance in the BFSI sector. This is especially needed for online banking in order to ensure successful transactions, and also reduce support costs,” said Gopalakrishna. With converged infrastructure management, CIOs can streamline infrastructure performance and availability across diverse systems, networks, and applications to improve service quality, predictability, and efficiency.

K. Suresh Head-IT, TATA AIG General Insurance Develop new interests and hobbies to maintain a healthy worklife balance. In today’s demanding workenvironment, it’s hard for CIOs to take a breather. But Suresh has found a way out—even though it’s only in the wee hours of the night. “Call me an insomniac, but I have discovered the joy in taking long walks and rediscovering my city.” Suresh has also rekindled his love for new applications. “I end up spending hours working with mobile software and other aspects of technology. It is important to do the things you want to do,” he says.

Creating a Smarter Enterprise

lifecycle,” he said. The shift to composite application development techniques— including SOA, BPM, cloud and SaaS applications—has increased application environment costs and risks. “For

In the last decade, BI tools have become not just more sophisticated, but also user friendly and intuitive. According to Mehul Desai, country sales directorBFSI, India and SAARC, Qlikview, there are several factors contributing to this trend. “The first is that people are surrounded by intuitive, agile, accessible, and self-service kind of software environments like Google and Facebook. Today, users are also bringing in their own mobile devices and are expecting them to be used as productivity tools.” On the other hand, business discovery is a whole new way of doing things to

Expert speak “Today, users are surrounded by intuitive and self-service software environments and they are expecting them to be used as productivity tools in the enterprise.” Mehul Desai Country Sales Director-BFSI, India & SAARC, Qlikview

“Service assurance is a must in the BFSI sector. It needs to

provide mechanisms that support online banking, ensure successful transactions, and at the same time reduce support costs.”

Raj Gopalakrishna VP-Engineering Innovations & Security, CA Technologies

Expert SpeaK “Most organizations save at least 35 percent in terms of cost by moving to managed print services. Also, CIOs can use their print assets more effectively.” K. Bhaskar Senior Director, OIS, Canon India

meet today’s heightened technology expectations. It focuses on the business user and groups rather than the topdown approach of traditional BI. “In other words, there are two separate

but related needs to truly fulfil BI requirements: One for traditional BI covering areas such as managed reporting and a second—newer—focus on business discovery,” he said.

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B. Shashidhar, Chief Manager, NABARD To build strong relationships with their customers, banks should focus on both borrowers and depositors.

Banking is all about building relationships with customers, not just the ones who deposit money, but also the ones to whom the bank lends. Shashidhar calls this banking with human values. “For CIOs, it is an opportunity to help banks move beyond a profit approach and help banks understand the market and guide them with their investments,” he says. According to him, using BI tools and a wealth of data can help banks forecast and even reschedule payments based on specific predictions.

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Srinivas Peddeda EVP & CIO, SKS Microfinance Leverage new technologies innovatively to empower your sales force and your business.

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For Peddeda, managing SKS Microfinance’s 11,000-strong field force was a huge challenge. It was hard for the company to keep a tab on irregularities. So, he empowered his field staff with dongles so that they could send data collection reports daily and do away with a monthly system. This helps resolve irregularities immediately. They also set up a basic red alert mechanism to identify irregularities.

Moving Towards Managed Print Services The cost of printing is often a significant burden on most organizations. Usually, the extent of this burden is rarely clear, and often goes unnoticed. “Keeping aside the environmental impact of printing, its cost, an informationheavy future coupled with changes in the use of technology and software applications, place new requirements on office printing both in terms of volume and quality. This is why organizations should move toward managed print services,” said K. Bhaskar, senior director, OIS, Canon India. “Most organizations save at least 35 percent in terms of cost,” he added. Also, cost effectiveness and user experience do not have to be mutually exclusive. In fact, MPS makes users more conscious of how much they are printing. “For instance, the user may now think twice before hitting print on a document which he shouldn’t be printing in the first place,” Bhaskar said. Also, with increasing compliance and governance regulations, the volume of information created, captured, and circulated has increased. As a result, not only are cost and sustainability of printing facilities affected, but also security of information. “With MPS, CIOs can use the print assets more effectively as well as being able to measure costs, contain them, gain control over the printed output and increase information security. Organizations can also help employees to improve productivity and reduce its carbon footprint at the same time,” said Bhaskar.

Innovation

Click AND Mortar CIOs are merging online and offline retail to retain customers and reclaim the shopping experience. By Mary K. Pratt

m a r c h 1 5 , 2 0 1 3 | REAL CIO WORLD

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Retail

he smell of the perfume, the drape of the fabric, the grain of the leather—these sensory experiences are about the only advantage that brickand-mortar retailers have over online stores when trying to sell merchandise. Unfortunately for traditional stores, today’s shopper carries a smartphone that allows her to scan the price tag in the store and then buy the same thing online for less. The phenomenon, called “showrooming,” causes store managers to harrumph about the “scan and scram” shopper. But what if physical stores had both: The sensory experience of a boutique plus the click-click shopping efficiency and seemingly endless inventory of Amazon. com? What if a sales associate could use a mobile device to order a garment in a different color or size right when the shopper is in the dressing room? Many of the bellwether retail companies, such as The Home Depot, Lowe’s, Macy’s, Nordstrom, Sears and Staples, are spending millions of dollars on IT to bring online capabilities into stores. The tactics include adding in-store Web kiosks, arming sales associates with mobile devices such as iPads, and (paradoxically) encouraging shoppers to use their smartphones in the store. But this approach is only one step toward an even more ambitious goal that pundits call “omnichannel” retail, which unites physical stores, e-commerce, mobile and social selling into one seamless experience for the customer. For Sears, that means customers can order products online and pick them up in stores. They can have Reader ROI: online-purchased items What omnichannel retail means and how it changes shipped to them, and can the game return unwanted items at Why retail stores are in stores. They can get text danger and how to save them messages alerting them to

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special deals, or use Sears smartphone or tablet apps to manage their shopping lists or find product reviews. “Technology plays a massive part in delivering an integrated customer experience, so we’re doing a lot more around servicing you as a customer and delivering products the way you want to be serviced,” says Keith Sherwell, SVP and CIO for Sears Holdings. Consider the role technology plays in how Sears works with a customer looking to buy a lawn tractor. That customer could start with his desktop PC to research which tractor is best for his yard, using the Yard Guru buying guide at Sears.com. Or he could use the Sears app on his smartphone, or in the store at a Web terminal or while working with a sales associate who might have one of the more than 400 iPads and iPod Touches deployed as part of a chain-wide pilot program. Sherwell says Sears calls its approach “integrated retail,” which in the past few years has required upgrades in both its IT infrastructure and its organizational thinking. The CIO won’t disclose how much money Sears Holdings has invested in omnichannel efforts across its brands, which include Kmart, but he acknowledges that hundreds of millions of dollars have been spent in hardware, software and infrastructure upgrades. Those upgrades include adding Wi-Fi to improve smartphone connectivity in the stores. Sears is also experimenting with iPads and iPod Touches to give sales associates greater mobility and flexibility when helping customers. And it’s retraining associates “to understand this integrated retail model and all the tools available to them,” Sherwell says. How far along is Sears in its quest for integrated retailing? Sherwell says that “we’re already most of the way there...and it’s going to get better.”

The New Normal For decades, brick-and-mortar stores were information deserts, devoid of customer-facing technology, while consumers raced ahead, shopping online and adopting smartphones, says Greg Girard, analyst at IDC Retail Insights. Now, he says in a report, “the most successful REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

Retail

strategy to defend stores from becoming showrooms is to bring them into the mainstream of omnichannel commerce.” The term “omnichannel” creates some confusion, though. “A lot of people will right away start thinking ‘multichannel retailing.’ Omnichannel retailing is different,” says Daniel Burrus, founder, president and CEO of Burrus Research Associates. “Omnichannel is integrated, the other is not. An omnichannel approach provides a very consistent experience regardless of the customer touch point and supports the brand and a uniform brand experience.” Retailers have a growing number of channels through which they can reach consumers—smartphones and tablets, websites, physical stores, kiosks, social media and smart TVs—and they have tended to manage each one as a separate activity. But customers now move fluidly between those channels.

The new world of integrated retail has required upgrades in both IT infrastructure and organizational thinking, says Keith Sherwell, SVP and CIO at Sears Holdings.

“A consumer might research a product online, look at it up close in a store, solicit opinions from friends via social networks, use a mobile phone to check competitors’ prices, but ultimately buy it instore using PayPal on their phone,” says Jeffrey Grau, an analyst at eMarketer. “What will matter most is whether the experience was smooth. If the retailer disappoints the shopper during any of these channel handoffs, it will reflect poorly not only on that channel, but on the brand as a whole.”

A Long Journey But the retail industry has a long way to go before it gets to that full-fledged omnichannel experience. “True omnichannel is really rare,” says Cathy Hotka, who runs a retail IT consultancy. The obstacles to reaching that goal are both technical and organizational, she says. Many retailers built up their online operations as separate organizations—and in some cases, actual separate dotcom companies—so their physical stores and their Internet sites have different IT systems that may not work well together. As a result, some retailers still manage their online and offline retail inventories differently, and some even have different pricing policies. “Retailers also still struggle with who should get credit for a sale. So if you get something online and I return it to the store, does the store take a hit for a customer having taken it back? You’d think that by 2013 that would be solved,” Hotka says. Meanwhile, some retailers don’t have an accurate view of their actual inventory, which is a huge problem for omnichannel practices, Hotka says. It means a sales associate can’t scan a barcode to search the company’s online inventory for an item in a desired color or size when it’s out of stock at the store. Also, the retailer can’t offer same-day pickup for online orders, and in-store consumers can’t easily access the store’s online reviews to help them decide on a purchase.“There’s a lot of this work that has yet to be done,” Hotka says. That work isn’t cheap. “You’re talking about hardware, networking, security, interoperability, multi-protocol networks. It’s a lot to make sure they have the bandwidth they need today—and think about the kind of bandwidth they need tomorrow,” Hotka says. In a Wall Street earnings call, Nordstrom announced plans to spend nearly $1 billion

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Retail

Retail CIOs Need to Step Up Their Game To win in the new world of omnichannel retail, CIOs will need to focus on the customer experience and collaborate in the C-suite. or generations, differentiation in the retail industry was based on two things: Price and location. Technology has changed all that, says retail IT consultant Cathy Hotka. “What it means to be a retailer has fundamentally changed. It’s now about the [customer] experience and the promise of the brand,” she says. Techno-futurist Daniel Burrus says retailers will have to be more thoughtful than they have in the past about how they distinguish themselves from each other. “There are many ways to compete. Many think it’s on price, but Apple does well and it has never had the lowest price,” he says. “You can compete on price, reputation, image, service, quality, design, time and speed, values, experience, innovation, and knowledge.” Technology will be crucial to each of those differentiators, Burrus says. “Today’s CIO is an essential part of strategy creation because there are things that we can do now that we couldn’t do even a year ago,” he says. But if the CIO wants to be involved in coming up with breakthrough strategies, he or she will have to break through some mental and organizational barriers, Burrus warns. Retail CIOs who want to successfully develop and deploy the right IT infrastructure must work with other executives to address all possible points that can be used to differentiate the company from other retailers. Burrus says that kind of strategic planning requires more than just cooperation at the C-level: It needs a new level of collaboration. “Cooperating is when you protect your piece of the pie; collaborating is when you work together to grow the pie, and omnichannel is about making a bigger pie for all. It’s not about focusing on the website or social media. It’s about focusing on the customer,” he says. “This all involves data management and lots of integration. It means talking to leaders of all channels so you can work together to create a seamless experience for the customer.” Despite the crucial role technology plays in retail today, Kasey Lobaugh, a principal at Deloitte Consulting, says some retailers aren’t treating the CIO as a strategic partner. “Technology can drive the shopping experience. That’s new in retail,” he says. “But across my clients, I see some [IT departments] who have a seat at table and some who are still treated as a cost center instead of a strategic investment.” Those retailers are in for trouble, Burrus says. “The pressure to have a truly omnichannel, customer-centric experience is there, and it’s becoming more glaring if you don’t do it. If it can be done, it will be done, and if you don’t do it, someone else will.” —M.K.P.

(about Rs 5,500 crore) over five years on upgrading its digital operations, which gives an indication of how expensive the task is. Nordstrom—which analysts say is a leader in omnichannel retailing—has distributed 6,000 handheld devices (modified iPod Touches) so store employees can ring up customers in the aisles and e-mail them receipts, just like at Apple stores. It has

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had a single inventory-management system supporting stores and the online business since 2009. And it has a mobile shopping app that lets customers scan an item’s barcode to check on its availability and browse styles based on personality types. “It’s about meeting and exceeding customer expectations no matter how they choose to shop,” says Nordstrom spokesman Colin Johnson. Kasey Lobaugh, a principal at Deloitte Consulting, says investments like that are bringing the retail industry closer to omnichannel. “We should envision a time when every customer is constantly connected, when they can be in the store and online at the same time connected by their mobile device, so then the two shopping experiences aren’t disparate,” he says. Some consumers are already there: According to Deloitte’s survey of 2,598 smartphone users, 58 percent use their smartphones to shop. And 61 percent of those who use smartphones to shop use them while actually in a store. Some 52 percent use them on the way to the store, while another 45 percent use them on the day or night before shopping. That usage pattern seems to correlate with sales, too, according to the survey. It found that 72 percent of the smartphone owners who used their devices on their last shopping trip actually made a purchase that day, compared to 63 percent of those who didn’t use their devices while shopping.

Merging the Digital and the Physical

“When you treat [the experience] as a singular organization rather than channels, and you think about inventory as a singular concept versus store or online, it unlocks a ton of value for consumers and retailers,” Lobaugh says. “It’s really the convergence of the digital and the physical. That’s really omnichannel. But you have to get over the paradigm that the online business is about a Web page and a disparate experience and mobile is just a website on a smaller device. It’s more about the capabilities to drive the experience.” REAL CIO WORLD | m a r c h 1 5 , 2 0 1 3

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This new way of thinking creates tremendous pressure on the technology organization, because convergence of the digital and the physical means the IT department—indeed, the whole company— needs to think differently about its technology. “It has to fuel the business, not just online shopping, so the entire stack of IT systems has to be re-evaluated,” Lobaugh says. “You have to invest for a world in which digital is a fundamental for every point of contact. Omnichannel is ubiquitous. It’s so fundamental to a retailer’s future strategy.” That message is heard loud and clear at Ahold USA, the $24 billion (about Rs 132,000 crore) parent company of several regional grocery chains, including Giant Food Stores, Martin’s Food Markets and Stop and Shop, as well as the online Peapod store. “Customers are going to define how they want to shop, and if we’re not enabling

John Dettenwanger Jr., CIO at Ahold USA, says onmichannel retail means breaking down the silos that separate brick-andmortar shopping and the Internet.

that, we’ll become irrelevant,” says John Dettenwanger Jr., CIO at Ahold USA. “To me, omnichannel is really about omnipresence. It really flips the view from ‘What’s the advantage to us?’ to ‘What’s the advantage to the consumer?’ We try not to silo this as a brickand-mortar or Internet issue. It’s about creating a more seamless environment for the consumer.” Some of Ahold’s stores have deployed Scan It, an in-store scanning device, and Scan It Mobile, which works with personal smartphones. The tools allow shoppers to scan and bag groceries as they shop, so they can just pay and go rather than waiting at registers to check out. Scan It users also have access to budgeting tools and exclusive offers. Dettenwanger says that’s just the start of what’s coming. Shoppers soon will be able to order items, such as deli products, from their smartphones and then pick them up at the store. Someday they’ll be able to access store maps on their smartphones so they can easily find the row and shelf location of the items they want. They’ll be able to view online 3-D images of items, so they can check out ingredient lists and nutritional items from anywhere, just as they would while picking up the actual item in the store. And they’ll be able to create grocery lists by using their smartphones to scan barcodes of items they have at home. Further down the line, Dettenwanger envisions rolling out a Guess My Order program, which will use customer data to help build their shopping lists—and help build brand loyalty. “People are creatures of habit, and we can predict what you’ll need to buy, so it will look at your history and it will tell you what you need,” he says. “If we take that insight and turn it into real value, that’s where it’s really different. It’s not just pushing stuff at [customers]; that’s not what they want. They want more help. And from a consumer perspective, I’m in a busy world and I’m going to go where I get the biggest help.” Dettenwanger acknowledges that there are challenges to getting there. He says the company needs to standardize and modernize its technology—a task that has been pushed to the forefront because of the pressure to move toward omnichannel retail. And then there’s determining how and when to roll out new capabilities to customers, who, despite their penchant for smartphones, still need time to digest all the possibilities. “There’s a change-management aspect with our consumers. [Retailers] have

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spent many years training them to act in one way, so we have to be judicious in how we roll capabilities out so we don’t overload them too quickly and so it doesn’t become confusing,” he says. That is the art behind this push toward omnichannel: Using technology to enhance a customer’s experience and drive sales without creating a clunky or cumbersome process. Craig Young, vice president of IT for Verizon Wireless, says the company has been working toward omnichannel for several years, following an “Aha” moment when its own study found that more than 60 percent of customers were researching products online before heading into a store to buy. Young says Verizon Wireless wanted to take the online research that its own customers were doing at the company’s website and provide it in useful formats to in-store sales representatives so they could be as helpful as possible to shoppers. That’s crucial, he says, because 80 percent of Verizon Wireless items are still sold in stores. Now a sales associate will know, for example, what phones a customer recently viewed. In the future, as the company gets deeper Facebook integration, Young says the company will pull

until then included just three others—a passion for customer service, being the product authority for home improvement, and disciplined capital allocation driving productivity and efficiency. “We’d like to serve our customers whenever, however and on whatever device they’d like to use to buy from us,” says CIO Matt Carey, who came to Home Depot from eBay in 2008 to help deliver on this vision. Carey points out that the company now allows customers to return online purchases to stores and to pick up items bought online at stores—features that Carey says “people have come to expect, the table stakes.” Carey is pushing beyond basics, too, moving closer to true omnichannel retail by deploying mobile apps that tell customers where they can physically find their desired products in the store and offering computer users visibility into store inventory and pricing so “you’re not wasting a trip to the store, you know it’s there.” Home Depot also lets stores to see each others’ inventory so they can immediately help in-store customers locate what they need, even if it’s in another location. In late 2010, Home Depot rolled out 34,000 handheld devices with inventory lookup and voice communications capabilities for the sales associates. These devices are also used for remote checkout, for example, when stores need to quickly move lines of shoppers preparing for hurricanes, or when associates are helping customers buying Christmas trees from outdoor lots. This year the company is rolling out 25,000 “junior versions” of the handheld devices, which will give more associates access to the core functions, specifically inventory lookup and voice communications. As IT-enabled shopping experiences continue to evolve, Litchford sees retail as on the edge of a technology frontier. Ahead, he sees retailers engaging customers in whole new ways. A customer watching a smart TV that shows a leather jacket on an actor will be able to click the screen to find out where it’s sold or will send a tweet that triggers a response from the customer’s favorite retailer with some suggested items. “Maybe they know me personally because I’m in their loyalty program, and they can go get the sales associate who helped me last time,” he says. “Then there’s all the augmented reality, companies playing with [virtually] putting clothes on me.” That’s already here. This spring, Bloomingdale’s launched a virtual try-on window outside its New York City store, where passersby who stop in front of the window see an image of themselves wearing one of six pairs of sunglasses. Welcome to the future, Hotka says. “It’s nothing short of a complete, fundamental disruption of how shopping works.” CIO

The most successful strategy to defend stores from becoming showrooms is to bring them into omnichannel commerce.” in information gleaned from social media sites to further tailor interactions to each customer. In the past several years, Verizon Wireless has invested in its CRM tools, data warehousing and standardized pricing and inventory, all of which created a strong base from which to launch into omnichannel, Young says. When the company is setting up new systems, he says, it has an eye toward omnichannel. For example, Verizon Wireless developed its Iconic Sales Portal two years ago. It was initially designed to handle the anticipated high demand for the iPhone 4, but now it can be used to support high-volume sales during launches of new iPhones or Android phones. Young says the portal serves as a platform for uniting retail stores with shoppers using online, call center and indirect sales partners. “It was a consistent and seamless customer experience,” Young says. That’s the kind of shopper experience that retailers are aiming for, experts say. “You’re seeing technology as the strategic enabler. You have to be everywhere your customer is, and you have to serve that customer on every device that customer wants to use,” says Tom Litchford, VP of retail technologies at the National Retail Federation. Case in point: In fiscal 2011, the CEO of Home Depot added interconnected retail to the $70 billion (about Rs 385,000 crore) home-improvement retailer’s list of core principles, which up

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VIEW

from the TOP

R. Balakrishnan, Chairman and Chief Creative Director, Lowe Lintas & Partners, questions the wisdom of the crowd, and says we're jumping the gun on social media marketing and mobile advertising.

Flying inthe

Face of By Anup Varier

‘You’re my pumpkin, pumpkin, you’re my honey bunny!’ Three days after it was rolled out, this ad campaign snowballed into a contagious viral, gathering a million hits on Idea’s website. Coming from the stables of Lowe Lintas and Partners—which exalted everyday products like detergent, tea, and now mobiles into memorable brands—it isn’t surprising. At the helm, the company’s Chairman and Chief Creative Director, R. Balakrishnan—or Balki—has spearheaded many of these path-breaking ad campaigns. While his Bollywood stints as writer and director have accorded him a celebrity status, he remains true to his love for ads. A chance entrant into the field, Balki believes that the advertising industry is meant to understand and provide creative solutions to client problems and figure out a pricing model that works in its favor. In this interview, Balki talks about how IT is shaping the future of advertising—and why social media marketing isn’t a great idea.

CIO: What's your take on this whole new world of social media marketing? What do CEOs and other C-level executives expect from you? Read all about it in View from the top. Visit www.cio.in/ceointerviews

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R. Balakrishnan: I think there is too much of a crowd in social media. One needs to be a little more sensitive to social media because once it becomes a marketing medium, you

will see people getting off it a lot faster than they came into it. Every brand is trying to create a group around its proposition. When marketing with social media, one has to be a little wary. It is a good medium for people to come together but if marketers start to

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R. Balakrishnan expects I.T. to Help business stay abreast of new technologies

Create avenues to liaison with clients

Photos by Shekhar Ghos h

Make advertising digital

tap into this then you will find suspicion creeping in. Until a few months ago, there was far more innocence in the medium and that made it attractive. But as marketers start exploring it, it starts turning into a cynical medium. The same is the case with television where you don’t know which news or program is sponsored. Beyond a point, a marketer’s interference in the media to show off their marketing skills—their use of creativity to interfere in content— will have an adverse effect.

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In the US, there are very strict rules around this. There is a lot of content that you pay for—like HBO—which is not an advertising medium and you can’t easily find brand related content there. Brands have less influence here because viewers pay to watch those programs. In India, however, almost everything is led by advertising. The differentiation between content-led and advertisingled programs will happen as the market matures. Right now, broadcasters, mobile operators, and digital media are

all doing everything they can to get a slice of the advertising pie.

Do you see a role for a creative technologist? A creative technologist is a very important role as you need someone who is fully capable of understanding what’s happening in the world and assess new things that are coming up. It could be something as simple as a new app that everybody can use on their phones. This has the potential to

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View from the Top

change their lives. It should be someone who can understand what is happening in the business that they are in and in IT, and is capable of figuring out how to marry the two. That, I think, is the most crucial role of an IT person beyond just supplying tablets, PCs, and mobile phones to people.

In a slowdown, advertising spends are the first to get cut. How do you manage? We start by cutting costs and being a little tight on ourselves in terms of spends and investments. But more importantly, I think recessions call for greater communication. You need people to work harder and stretch for your clients so that payoffs happen. We’ve found that in industries such as ours, a recession is a far more challenging time to do better work because you need to ideate that much more and ideas have to be that much more cutting-edge and focused. So, for me, it is less about cutting costs. It is more about working harder.

Have you seen a dip in advertising budgets? It’s not that advertising budgets are being slashed, but advertising revenues for agencies are not going up as much as they should. The compensation models for advertising agencies are a bigger problem than just revenues. We run on a fee system. We are yet to crack a model where we grow or de-grow as much as our client. I think the growth model for agencies should not just be based on fees and incentives but should let us grow with our clients. If you’re accountable and put your money where your mouth is then the best model would be to say: "We will share your growth." Here’s where the real growth in the advertising industry will happen. We are trying this new model with a few clients. But a lot of our clients are global and have a global compensation model which is agreed upon at the center. Therefore, it 68

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“Once social media becomes a marketing medium, you'll see people getting off it a lot faster than they got on it.” —R. Balakrishnan

takes a little longer for all these things to happen. But I am sure it will because it makes ad agencies more accountable and gives them a share of good results.

Can IT help lower costs? IT has already saved us a lot in terms of cutting costs, streamlining processes, liaisoning with clients, and reducing service costs. It continues to play a huge role in these aspects. The fundamental costs— human costs—however, are not going to be saved by IT alone. Ours is a business where you can only save so much through IT. You could, however, cut down on travel and meetings and IT has already improved efficiencies in a huge way. IT has automated a lot of our studio work and has saved time. For example, you don’t have to wait to see the rushes of a film; all of us can see it at the same time as it’s all online. IT helps improve co-ordination. We are already quite wired in a lot of

ways. A lot of us have iPads, are on the Internet, and are well-connected. I think IT could also play a role in digital marketing but that is still a supporting medium and while it works for some brands, it doesn’t for others. IT can also make TV more interactive and even contribute in the area of mobile phones. This is bound to increase in the future, but for the next two-three years, TV and print are going to be the predominant mediums till all media converges.

What's the state of digital signage in India? The digital signage market is still in a nascent stage in India. But I think feature films are using it a lot more than advertising and brands. Bollywood has gone digital in a big way. Their marketing costs have also become astronomically high and they are using digital signage. They have motion posters and events that are announced via digital signage and the first poster these days breaks on digital even before it makes it to theatres.

How is Lowe Lintas bracing itself for the mobile wave? Things work differently on different platforms be it a tablet or a mobile phone. The penetration of 3G has not yet happened to the extent that it should have. In a lot of cases, the real problem is the quality of the network. I think we are still a few months away in terms of full-fledged connectivity. So, the rise in mobile advertising will have more to do with technology than usage. When the most common touch points become mobile then mobile advertising will explode in a big way. In view of this trend, it is evident that you can’t just do a video and make it available on mobile. You need to ideate on what can be done by using mobile touch points. For example, in retail marketing you can have targeted messages pushed onto your customers’ mobiles when they enter a store. We can use it to ease a lot of

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View from the Top

conventional paper-led communication at airports, theatres, restaurants and places where you don’t usually use mobiles. There is scope for a lot of targeted communication with mobile technologies.

How do you hold on to creative talent in a competitve industry? Ours is a people-driven business. We don’t deal in machinery. All our ideas come from people and the most important thing is how sensitive you are to people and their needs. When people are married to a cause, they will stick together for a cause and will have faith in what they are doing. Organizations are not about retaining people, they are about offering something that will make employees retain themselves. A good organization helps its employees discover what’s in it for them. And if good people find enough in it for themselves, they will stay.

We also tend to grow people from within the system. We look for people who have found something for themselves and can attract people who believe in the same cause. It would be foolish to hire people who believe in exactly the opposite of what you do and expect them to stay. They understand the economic trends for the industry and as long as you are being fair to them—and if they feel looked after— they will stick on.

Do big agencies tend to shortchange small clients? I think a client is a client no matter what. They work with the agency to solve their problems and if an agency doesn’t pay attention to the client, it will lose them. It doesn’t make sense to think that a big agency will pay less attention to its clients. In the end, our business is about doing the best work for the client regardless of whether they are small or big. The revenue

associated with solving the problem comes later. An agency is only as good or bad as the solutions that it provides for its clients problems.

On a personal front, how do you keep pace with new-age customers? I continuously access the Internet and interact with our businesses; I know how that feels. You may never watch as much television as the average consumer, but even if you watch it for an hour you get a fair idea of what's going on and realize how content, movies, and messages are received. You can’t hope to understand every hope, like, and dislike of the new-age customer without becoming one yourself. It is important to be a part of today and not get stuck in the past. CIO Anup Varier is senior correspondent. Send feedback on this interview to anup_varier@idgindia.com

casefiles real people

* real problems * real solutions

Power Play UST Global’s expansion plans were threatened by a datacenter that had hit its power ceiling. Until IT came up with a two-pronged strategy and saved the day. By Eric Ernest The Organization: UST Global is an IT services and business process outsourcing provider, headquartered out of Aliso Viejo, California, whose clients include Global 1000 companies. In 2010, the company’s executives foresaw the need for greater growth. The Business Challenge: To keep pace with that growth, UST Global, which runs its largest datacenter out of Trivandrum, realized it needed to ramp up its IT infrastructure. That, however, was easier said than done. To keep pace with the demands of the business, the IT organization would need to provision for 800 servers over a three-year period; a substantial jump over the 120 servers it ran out of the Trivandrum datacenter in 2010. “"We needed a large number of servers to cater to our immediate requirements and our future needs," remembers Rinosh Kurian, enterprise architect, UST Global. In the way of that plan was the cost of those servers. At about $5,000 (about Rs 2.7 lakh) a pop, the additional 800 servers would put UST Global back by $4 million— way beyond the $2 million it had allocated for the expansion project. But costs apart, the expansion project was doomed by another constraint: A power limitation. According to Kurian, at that time, the Trivandrum datacenter had a power capacity of 70 KW, all of which was already being consumed by 120 servers. It had an additional 74 KW but that was meant to cool the datacenter. “We had established datacenters around 2004, and by 2010 we were at full capacity in terms of power and cooling although we still had space,” says Kurian. There was simply no way Kurian could bring in 800 more servers into the datacenter and still stay under the power ceiling. The Project: Kurian looked at the challenge from multiple angles and came up with

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two-pronged strategy. If he could combine virtualization, more power-friendly servers, and smarter storage solutions, he’d be able to lick the problem. On paper, the plan looked like a winner, but Kurian decided to move forward carefully. "We started with procuring a leading virtualization provider's solution, and deploying it on our existing systems first.” Then he pulled out some of the older servers, which had reached end-of-life, and replaced them with more power-friendly servers, a process that Kurian remembers was "a nightmare from a management perspective." “This allowed us to provision within our power and cooling capacity," says Kurian. UST Global also needed to ramp up its storage requirements. Once again, using his old approach wouldn’t allow Kurian to scale up and still stay within the datacenter’s power constraints. To work around the challenge, Kurian invested in a storage solution which allowed him to increase UST Global’s storage capacity, and simultaneously optimize power consumption. Today, 70 percent of the Trivandrum datacenter’s 200 TB storage capacity is made up of low-speed drives. The rest are high speed (15K rpm) drives. Because the low-speed drives consume less power, the new storage solution uses 4KW of power in total—versus 12 KW, if he had used the old approach. "The advantage of this combination (of storage drives) is that it allows the storage solution itself to move ‘less-used’ data from higher speed drives to lower speed drives," says Kurian. The Benefits: The project achieved what it set out to do: Allow UST Global to grow substantially—and stay within its datacenter’s power constraints. Currently, UST Global operates around 1,000 virtual servers on 20 physical servers, which draw a total of 8 KW. Kurian says that a corollary benefit they were looking to achieve through

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Rinosh Kurian, Enterprise Architect, UST Global, found a way to go from 120 servers to 1,000 without adding power capacity.

virtualization was to use storage replication to replicate the company’s Trivandrum datacenter in Chennai. Today, in the event of a disaster at its Trivandrum datacenter, UST Global can be up and running from its Chennai datacenter within 60 minutes— from a time when it used to take a day to get everything functional. It also armed UST Global with more efficiency. Thanks to the project, UST

Global’s customers can request for additional server infrastructure and get it within an hour, from about five weeks earlier. Finally, Kurian didn’t have to spend all the $2 million that was allocated to the project; his project cost $1.8 million. More power to him. CIO Eric Ernest is correspondent. Send feedback on this feature to eric_ernest@idgindia.com

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CIO Career

Staying Power

Some CIOs outlast the typical five-year tenure by avoiding classic blunders, winning the CEO’s confidence and enjoying a dash of good luck. By Minda Zetlin

ext year,

Peter Weis, CIO of Matson, an ocean transportation and logistics company, will see the completion of a long-term IT transformation project that he conceived and nurtured for most of a decade. “We’re heading into our eighth and final year,” he says. “When we’re done, we’ll have retired every single legacy IT platform. Our mainframe will be shut down.” Finishing this transformation project is a source of enormous pride for him and his team. “The day-to-day pain of working on a project like this fades, but the deep satisfaction stays,” he says. It’s an experience many CIOs will never have.

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CIO Career

someone who is not succeeding,” notes Phil Schneidermeyer, partner Weis has been CIO at Matson for nine years, but the average tenure at executive search firm Heidrick & Struggles. of a CIO in the US is just five years and four months, according to a Why do so many CIOs fail? It’s not always their fault. “It could recent CIO US magazine survey. (The average length an Indian CIO be that the business goes sideways, or events stays with one company is three years, nine months, overwhelm perfectly well-intended strategies,” according to CIO India research). This may be good news Reader ROI: Weis says. “There could be a change of management for the CIOs who spend their careers climbing the ladder How to ensure you don’t get fired or a change of direction. There are always a lot of by moving from company to company. But most CIOs The importance of headwinds for CIOs to try to get through.” find themselves leaving positions where they would have organizational values In many cases, a long tenure is a matter of luck. preferred to stay. “When we do get called in to do a CIO What CEOs love “Some CIOs last because the company hasn’t search, more often than not we’re being asked to replace

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CIO Career

The Politically Astute CIO Humility, credibility, and sharing credit are key skills for long-term CIOs. Longtime CIOs offer the following tips for building and maintaining the executive relationships that could make the difference between a long and short tenure as CIO:

Owens and Minor. “So get over the belief that you know what everybody needs and they’ll figure out that they need it after you give it to them.”

Figure out who all the stakeholders are. “The trap CIOs get caught in is not knowing who the key stakeholders are,” says Phil Schneidermeyer, partner at executive search firm Heidrick & Struggles. “You could have a very hierarchical organization where your key stakeholders are as small as half a dozen people on an executive committee. It could be a partnership organization with 500 stakeholders, each of them a mini-CEO. Whatever it is, you have to know who they are, where they’re coming from, how best to communicate with them, and how often. You have to have credibility, and it doesn’t come from your background. It comes from the relationships you build.”

Earn credibility by completing IT projects on time and keeping systems up and running. “You have to deliver relentlessly over time,” says Peter Weis, CIO of Matson. “Executive sponsors are accountable, and they’re measured based on the large IT initiatives we’re driving that they’ve supported. You have to deliver on time—not one or two times, but over years—so that they don’t have to apply a discount factor to what you say you are going to do. You’re not going to be perfect, but you have to have way more wins than losses. It’s a whole bunch of doubles and singles, as opposed to a few home runs.”

became chief Internet officer at Heritage Auctions in 1999 and then CIO in 2007. And, Weis adds, if your business contacts try to steal the credit for a successful IT initiative, let them. “It’s a lesson I’ve learned over time: You’re better off making business partners look good than coming off as the smartest one in the room,” he says. “Trust is only as good as the level of comfort you’ve built with your business partners, and making every success look like a business success will build that trust.” It can be tough, he acknowledges, because letting business peers take credit for a success means robbing your own hardworking IT staff of those kudos. “That’s a hard one, because you want them to have that recognition. But if you don’t do it, you’re going to lose political support. And IT is by its nature a somewhat thankless job.”

When projects succeed, share the credit as much as possible. “A CIO will earn more respect and more power if he or she points the finger at others and says, ‘You brought more to the table, and so did you, and you, and you,’” says Brian Shipman, who

Humility and accountability are essential for a long-term CIO. “Accept responsibility for errors and acknowledge the effect on the business when those rare instances of failure occur,” Weis advises. — M.Z.

Recognize that the IT department doesn’t have all the answers. “No idea is a good idea unless it was created by a business person and a technology person working together,” says Rick Mears, CIO at

demanded any great feats of strength from IT,” notes Martha Heller, president of Heller Search Associates. When the company aims for major accomplishments and things go wrong, the CIO can quickly become a scapegoat, she adds. “Top management says, ‘IT put in that new system and we’re still having problems!’” The problem could be that users haven’t changed their processes, or many other elements outside IT’s control, she says. Nevertheless, “Sometimes companies throw so much mud at the door of the IT department that there’s no choice but for the CIO to go,” Heller says. When things don’t go as planned, it’s easy for IT to lose the CEO’s confidence, Weis adds. “That lack of confidence can show up as capital drying up and investments in IT slowing. The momentum slows on your strategy, projects slow down, and you begin to lose talent.” With the best talent leaving, it becomes harder to meet goals and fulfill expectations, and so confidence in IT sinks even lower. 74

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“You’ve got a spiral downwards,” Weis says. And sometimes a short tenure really is the CIO’s fault. Classic blunders include the following: Technical failures, missed deadlines and cost overruns. “If the e-mail server goes down several times in a row, that will cause a problem for the CIO,” says Nigel Fenwick, VP and principal analyst at Forrester Research and a former IT executive at Reebok UK. “And that’s just e-mail. If a core system like ERP goes down for an extended period and the company grinds to a halt, the CIO is responsible. So taking care of business is fundamental.” Failures in this area can quickly sour a CIO’s all-important relationships with top executives. “My boss said, ‘You can’t have a strong relationship with me if you don’t have one with my other direct reports,’” Weis says. “For me to understand all my peers’

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day-to-day worries is absolutely crucial, and that’s a key to staying power.” Talking technology instead of finance. “If you approach the CEO and you want to talk about the coolest new storage subsystem you just installed and your Rackspace and the new [voice-over-IP] network you’re implementing, that’s a pitfall,” says Rick Roy, who’s been CIO for nine years at CUNA Mutual Group, an insurance and financial services company serving credit unions and their members. “Not many CEOs want to have that conversation, unless they’re in the technology industry.” Roy says. “Can you translate what you’re doing into business language? How is it helping your company against its competitors? That’s a very different conversation from talking about the new gadget of the day.” Weis agrees. “There’s a squirm factor for CEOs when you start talking about technology. They don’t want to learn about it and they’re uncomfortable with the conversation,” he notes. “You have to be able to speak the CEO’s language of corporate finance. How does a balance sheet look? How is return on invested capital measured?” To make sure he understood these core concepts, Weis got an MBA in his 40s. “It made me a better CIO and way stronger.” Many of the other IT executives at Matson have done the same. Constantly asking for more money. “Some CIOs have an expectation that with every new technology, their operating budget should go up,” says Rick Mears, who for the past seven years has been SVP and CIO at Owens and Minor, an $8.6 billion (Rs 47,300 crore) healthcare supply company. “That’s a recipe for a short-term CIO.” Instead, he says, successful CIOs understand that operating expense is a finite resource. “I see it as technology’s responsibility to free up [operating expense] dollars to offset the funds we need for new [high-impact] technology.” For instance, he asks, can moving servers to the cloud create enough savings to pay for a new e-commerce or business intelligence system that will benefit the business? “That’s an approach that will get the business more comfortable with IT.”

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Peter Weis, CIO of Matson, says CIOs will last longer in the job if they’re experts in the industry, fit in with company culture and know what’s important to the boss.

Inability to build and maintain relationships in the C-suite. When CIOs do fail, “most often the piece they’re not succeeding at is the relationship-management side,” Schneidermeyer says. “Those who succeed have very strong relationship-building skills. It’s a critical core competency at the CIO level, far more so than technical competency or even expertise in the company’s business or industry. A CIO may have grown into that role through strength in managing projects such as application development or consolidating datacenters, and that was fine when that was ‘the job.’ But as the CIO role becomes focused on the business, those skills won’t take you to the next level.”

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CIO Career The most critical relationship is the one with the CEO, whether or not a CIO reports to him or her directly. “The CIO has governance responsibility with regard to information security,” notes Roy at CUNA Mutual. “That’s fairly high on the corporate risk list, so there’s going to be some board-level attention and you need to collaborate with the CEO.” But that’s just one relationship to manage. Even CIOs who report directly to the CEO need to nurture ties with the rest of the organization’s top management. “CIOs who understand the need to communicate across the executive level and the C-suite get support from the C-suite to help them stay in that role,” says Forrester’s Fenwick. Having those relationships in place stands CIOs in good stead during the inevitably difficult conversations that arise around technology. “Everyone wants to button everything up, but not change processes. Everybody wants the latest and greatest technology, but doesn’t want to consider risk management,” Schneidermeyer says. Faced with these tough choices, “it all boils right down to relationship management, and being able to balance competing demands. And you do that by coming together as a management team.”

Rick Roy, CIO, CUNA Mutual Group, says that developing great relationships with other C-level execs is an important step toward a longer tenure as CIO.

Surviving a CEO Changeover One of the toughest times for a CIO to hang on to his or her job is when a new CEO takes over. In some cases, the battle is lost before it’s even begun. “Some CEOs know before they arrive that they’re going to bring in their own management team,” notes Heller, an executive recruiter. Other times, the new arrival brings a change in priorities or focus that can bode ill for the CIO. “Our new CEO was really focused on making changes in the line-oriented part of the business, rather than the support side,” reports one former CIO who asked for anonymity. The new CEO restructured the lines of business but didn’t seem all that interested in discussing the company’s technology. “There was recognition that IT is a key component of change, but it was hard to get the CEO to focus on it,” she says. “I got the feeling that once the re-organization was finished on the line side, the CEO would evaluate the back office. So there was change coming, probably.” Rather than wait to find out, she moved on to a job as CIO of a different company. Though the situation can be challenging, there are ways CIOs can

improve their chances of faring well in the new regime. Begin by making sure you get to have at least a couple good conversations with the new CEO, advises Roy, at CUNA Mutual. Roy stayed on as CIO when Jeff Post took over as CEO in 2005. Getting face time with the CEO can be challenging, he concedes. “Thinking back to when Jeff joined us, he’s a very externally focused CEO who spends a lot of time with our customers and in our industry. In the very early days, I had to orchestrate some travel times together and attended some industry events with him.” It’s not common for CIOs to accompany chief executives to their industries’ trade events, but Roy says it was a great opportunity to learn more about the business. “You have to step out of your comfort zone to engage that leader wherever he or she happens to be,” he says. “It’s not coming to you; you have to go get it.” If, despite such efforts, the new CEO still won’t meet with you, it’s a sign you should probably move on, he adds. Once you’ve got face-to-face time with the CEO, there are a couple of conversations you need to have, Roy says. One is checking

CIO Career to make sure the CIO and the CEO agree about what is expected of IT. The other is a situational assessment. Do you and the CEO see the current state of IT operations in the same light? “If I think everything is fine and the new CEO thinks everything is broken, we need to reconcile as to why we have different points of view and what we’re going to do about it,” Roy says. “You can’t just find yourself 180 degrees from what the new leader is thinking, because that’s not sustainable.” It’s important for incumbent CIOs to be able to demonstrate— with solid information and accomplishments—the value of their IT departments. “That’s big,” Roy says. “If you have the opportunity to tell your story, do it just as you would to your board. Most presentations I’ve done to our board are 20 minutes or less, and you have to make sure you get to the point and leave them with the key takeaway.” Take that same approach with the new CEO, since most don’t have the time or mental bandwidth to absorb details. Lining up talking points about IT’s performance will also help you if the new CEO brings in a consulting firm to review IT operations—another sign that you may be in a precarious position as CIO. “If you have a good story and you tell it well, it will be harder for the consultancy to throw you under the bus,” Roy notes. All the recommended strategies so far will serve a CIO especially well when a new CEO comes in from another company. But more than 75 percent of CEOs are promoted from within, according to a 2011 study by Booz and Company. A CIO can best prepare for this event by being sure to maintain excellent relationships with all the company’s C-suite executives, because who knows when one of them could become your new boss? That strategy worked well for Weis, the Matson CIO. Matson was formerly a subsidiary of Alexander and Baldwin, but it split off into its own company earlier this year, and Matt Cox, formerly the head of the subsidiary, became the new entity’s CEO. “I reported to Matt when he was not CEO,” Weis recalls. “Because of my credibility with him, that reporting relationship didn’t change even though his number of direct reports grew. I did not go through a transition where I was placed under Finance or a COO, and that’s because of how comfortable he was working with IT directly.” “If a CIO is managing internal customer relationships well, that’s a great head start,” Roy says. “Now the customer got elevated to a bigger role [as CEO], and if that’s a happy customer, life is good. You’re there to help that person be even more successful. If that’s an unhappy customer, it’s probably not so good.” In that case, he says, it may be time to start looking for a new job.

Staying Power Rises

In the last three years, the average tenure of Indian CIOs has increased. 2009 3 Years, 2 Months 2010 3 Years, 4 Months 2011 3 Years, 9 Months

source: CIO Research

Do You Fit In? “Having deep industry knowledge is another key part of staying very close to the CEO,” Weis says. “Know your industry—know your boss’s industry! If you know the business and how your CEO is measured, the more closely aligned you are, and the more likely [you are] to achieve success.” Even more important is for the CIO to fully understand the company’s values, Weis says. “Acknowledge the values, write them down, and think about them,” he advises. “Operate by leveraging those values and not trying to change them.” For example, Matson is a logistics company that values operational excellence and consistency, Weis says. “I can’t make Matson value speed over operational excellence and steadiness—I can’t do it. I can nibble along the edges of how fast things can get done, but that’s all.” Does this add time to projects? Probably, he acknowledges. “Maybe the eight-year plan would have been a four- or five-year plan at some other company where we could have had more disruption and I could break a few things.” But in a company where every ship must arrive on time and every delivery must be consistently correct, that wasn’t possible. On the other hand, Matson’s focus on steadiness and consistency meant top executives never wavered from plan. “It’s a testament to our organization’s commitment that they hung in there through lots of technical changes and the worst economic downturn,” he says. And he’s grateful. “Achieving this large transformation has a lot of meaning for me,” he says. “It seems like a once-in-a-lifetime opportunity.” CIO Minda Zetlin is a business technology writer based in New York and co-author of The Geek

Gap: Why Business and Technology Professionals Don’t Understand Each Other and Why They Need Each Other to Survive. Send feedback to this feature to editor@cio.on

Essential

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A CLOSER LOOK AT Social Business

Although most enterprises will increase social business spending in the next three years, they're still struggling with the cultural changes a social business implementation requires. Here's how to make that leap.

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Selling Social Internally By Kristin Burnham

Social Media | What makes your business a top business? According to a report from the IBM Institute for Business Value, it could be how well your company implements social business. In The Business of Social Business, authors James Cortada, Eric Lesser and Peter Korsten argue that social is no longer "simply a 'sandbox' for the under-30 generation." Merely developing and deploying the technology isn't enough. "[...] Companies at the forefront are doing more than developing a presence on major platforms. They are taking their external social tools and embedding them into core business processes. They are using social approaches to communicate better with their suppliers and their employees." IBM's study of more than 1,100 businesses around the globe reveals that investment in social business is on the rise: Forty-six percent of the companies surveyed increased their investments in social business in 2012, and 62 percent indicated they are going to increase their expenditures in the next three years. The sudden rise of social business is challenging the corporate culture at some companies, which respondents indicate is something they're struggling with: Nearly three-quarters report they were under-prepared for the required cultural changes. "Executives are concerned because social business represents a different way of thinking about employees, customers and how work is accomplished, as well as the potential risks Vol/8 | ISSUE/05

essential technology

of increased organizational openness and transparency," the report says. Here are a few ways your company can transform into a successful social business.

Embedding Social "Our survey and interviews have made one thing clear," the report says. "Those organizations experiencing the most success in social business approaches know they have to make fundamental changes in the way their employees worked across the entire enterprise." Successfully embedding social business into an organization requires three steps, according to the report. Step 1: Consider how to incorporate social metrics into traditional enterprises and processes. According to the report,

says. "Analytics can make it possible for organizations to integrate social and traditional data sources to make more effective decisions about customers and the workforce. By examining residual data from social activities, organizations can develop valuable insights not previously available." Step 2: Understand and manage the risks associated with social business. Respondents to IBM's survey cite a number of concerns about the use of social business tools: Attacks on their brands, legal issues, data security and privacy, and unintended disclosure of company information. About half the companies surveyed say they do not have effective processes in place to deal with these concerns, while nearly a quarter say they do, and another third have efforts underway, according to the report.

Organizations experiencing the most success in social business approaches know they have to make fundamental changes in the way their employees worked across the entire enterprise. only about 20 percent of organizations are able to define key performance indicators and track the ROI of social business efforts. Those that couldn't do so struggled with their social initiative. But quantifying results based only on cost-savings isn't sufficient, the report finds. Instead, businesses should consider piloting a project to demonstrate the hard and soft benefits of a social initiative and compare it to the performance of individuals not using the social tool. "We also heard from respondents that justifying the ROI of social effort is only one potential use of social data," the report

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Successful businesses have established policies for employees to follow when engaging in social business and have a governance structure for monitoring enterprise-wide social business behavior, the report says. In addition, successful businesses must achieve the following: • Identify potential exposures, proactively involve the right experts and develop risk management plans. • Think through their problems and understand regulatory drivers and their impact on the organization. • Ask questions about why a behavior is a risk and how to mitigate it.

Firing Up Twitter The London Fire Brigade is exploring the possibility of setting up the world's first 999 emergency Twitter feed, allowing citizens to report incidents using the microblogging platform. The Brigade began using Twitter and Facebook in 2010 and has since established the second largest community of social media followers of any UK local or regional public sector organization. Its Twitter feed, @LondonFire, is currently used to provide real-time information about incidents that are taking place across the capital. Facebook is used to provide fire safety information, as well as engage with the public in an informal way. "When it was first set up in 1935, people said that dialing 999 to report emergencies would never work. Today, BT (a British telecom provider) handles over 30 million emergency calls each year," said Rita Dexter, deputy commissioner of London Fire Brigade. "It's time to look at new ways for people to report emergencies quickly and efficiently and social media could provide the answer in the future." The London Fire Brigade said it has already experienced people tweeting it to report fires but strongly advises against this, as its Twitter feed is not monitored round the clock. Fire chiefs said people should continue to dial 999 to report emergencies. The Brigade aims to work with the government and other blue light services to establish the extent to which social media might be used. — By Matthew Finnegan

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Sales Channels

Kristin Burnham covers consumer technology, social networking and enterprise collaboration for CIO.com. Send feedback on this feature to editor@cio.in

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Tweet Till You Drop social media Apps | American Express is rolling out a new service on Twitter that lets card holders make purchases on the social network through specialized tweets. Dubbed "Amex Sync," the technology integration will allow Amex users who sync their cards with Twitter to buy products just by including special hashtags. It launched with an offer for discounted Amex gift cards and will expand to include a range of physical products from companies including Amazon, Sony, Urban Zen and Microsoft's Xbox business. It works like this: Card members can sync their eligible cards to Twitter by going to sync. americanexpress.com/twitter and adding a billing and shipping address. So, for instance, users can now tweet #BuyAmexGiftCard25 to purchase a $25 Amex gift card for $15. The system sends users a confirmation tweet in their @ Connect tab within 15 minutes, and after the user tweets back to confirm the purchase, the product will ship to the address on file via two-day shipping, courtesy American Express. Users can search for products by checking the "favorites" that will be highlighted on the @AmericanExpress Twitter page, American Express said. Offers will be available throughout the year. "We want to ensure long-term, sustainable value for card members who sync," said Shari Forman, VP of global strategy. The technology is an extension of "Card Sync," a proprietary service designed to offer coupon-less savings to Amex card holders who tweet special-offer hashtags. The success of that service showed that there was "significant power" in combining Amex's assets with Twitter, said Leslie Berland, Amex's SVP of digital partnerships and development. The service is also designed to let users take advantage of discount offers in brickand-mortar stores. In a video about Card Sync, a user shopped for flowers after tweeting #AmexFlowerOffer, and received an automatic credit on his card statement following the purchase. Users' account information will be kept private and won't be shared, Amex said. American Express said the Card Sync integration could eventually be applied to other social networks, but it declined to specify which ones. â&#x20AC;&#x201D; By Zach Miners

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â&#x20AC;˘ Engage key functional experts before problems occur. These include people from areas such as HR, legal, IT, communications, finance and risk. Step 3: Establish a unique application of traditional change management principles to influence corporate culture and performance. According to the survey, 48 percent of organizations have support from the C-suite, but only 22 percent believe that managers are prepared to incorporate social business into their daily practices. IBM suggests three actions that will assist people in understanding the value of social initiatives, involve the right stakeholders and provide the appropriate support and motivation. Get people involved in using the right tools. Create hands-on opportunities to use new social business tools; provide one-on-one coaching and reverse mentoring and encourage leaders to model desired behaviors to signal social "permission"; and capture success stories through the use of social tools such as wikis, blogs and videos. Apply traditional change management concepts to support transitions. Appoint a number of social business champions or subject experts to encourage and accelerate adoption; provide education about why this is important and what the guidelines are for using social media tools inside and outside the organization; and recognize desired usage and behaviors. Incorporate social approaches to support the change. Develop user narratives and scenarios of possibilities provided by using social approaches; use social networking approaches to identify and engage with influencial leaders. "The case for why more organizations are implementing social business practices comes down to sustaining their competitiveness and profitability in economies in which rivals, partners and customers are adopting new ways of conducting business," the report says. "More than simply using social media tools, we have entered a new period of fundamental transformation in the way work is done at all levels of the enterprise and across all organizational boundaries." CIO

endlines mobile apps

* By Lauren Brousell

The 9/11 Memorial site in New York City honors the men, women and children killed in the terrorist attacks of September 11, 2001, and the World Trade Center bombing of 1993. Visitors can stand where the twin towers fell, view the memorial pools and read panels listing victims’ names. Because there were nearly 3,000 victims, “we recognized that we needed an easy way to find a name,” says Sean Anderson, CTO of the September 11 Memorial and Museum. So the organization developed a mobile app, the 9/11 Memorial Guide, that helps visitors quickly find individual names and allows them to view victims’ photos and bios. Another app, Explore 9/11, provides a seven-stop walking tour of the memorial that follows a time-line of 9/11 events. The site is open to visitors 24 hours a day, every day, so the IT infrastructure supporting the apps, website and ticketing system must work flawlessly, Anderson says. The apps have been downloaded 1.2 million times and the website gets about 1 million visitors per month.

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Mobile Memorial