ERP 1.0 is over What's Next ? by ctof magazine

S P I N E

CTO FORUM

Technology for Growth and Governance

BEST OF BREED

ERP 1.0 IS OVER. WHAT'S NEXT? | THE ADVENT OF ANDROIDS | MAKING GAME THEORY WORK FOR MANAGERS

The Adventof Androids PAGE 15

January | 21 | 2010 | Rs.50 Volume 05 | Issue 11

I BELIEVE

StayHungry, StayHungry,Stay Stay Hungry,Stay Hungry, Foolish PAGE 04

ERP1.0 IS OVER

WHAT’S

NEXT?

IT MAY BE TOO EARLY TO WRITE OFF ERP, BUT THE BUSINESS SOFTWARE HAS STARTED SHOWING WORRISOME SIGNS OF FATIGUE | PAGE 18

A QUESTION OF ANSWERS

Volume 05 | Issue 11

Drive a Hard Bargain PAGE 12

A 9.9 Media Publication

EDITORIAL RAHUL NEEL MANI | rahul.mani@9dot9.in

The Ultimate Cloud War. In the

battle for supremacy in the cloud, it's the user who wins

everal interesting developments made the headlines of business and technology portals this month. But one that caught my attention was the $250 million Microsoft-HP deal unveiled recently. In a nutshell, the deal is simply a joint go-tomarket effort. Yet it got noticed by experts and analysts alike. Speculations abound on the reasons for the deal. Some say it’s a public cloud play. Others feel it is a private cloud foray. Still others interpret it as an indirect

attempt to lock customers into buying integrated hardware/ software/services stacks that the two companies are calling ‘Smart Bundles’. But, I can't help but interpret it as an open war for the supremacy in the cloud. Here’s why. In case you didn’t notice, the deal was announced a day after Microsoft’s arch rival (in the virtualisation space) VMware announced its takeover of Zimbra, the messaging vendor from Yahoo. Also, this

EDITORS PICK 26 Making Game Theory Work for Managers

A new model generates answers representing the best compromise between risks and opportunities in all likely futures.

new alliance could serve as an effective response to a similar tie-up between Cisco, VMware and EMC on private clouds announced in November 2009. Now, it will be interesting to see how HP, which already has a similar relationship with VMware, does the balancing act. A few HP blogs claim that Microsoft is ‘a’ preferred provider of virtualisation solutions for HP and not ‘the’ only provider. Smart Bundles — which are the combinations of HP hardware, Microsoft and HP infrastructure software, and different MS-HP apps build on top of SQL and Exchange Servers — will be available to small/mid-size businesses and partners who want to offer them as a cloud service. Although there has been no written commitment, there is

speculation that at some point Microsoft and HP can also offer BI, online-transactionprocessing and messaging apps in the Azure (Microsoft’s cloud operating system). This will give Microsoft a strong foothold in the virtualisation, management and data centre spaces, where VMware is also aiming for supremacy. Clearly, battlelines are getting drawn in the cloud! But for customers, it’s a winwin – they will now have a choice between Microsoft and VMware.

CTO FORUM thectoforum.com

21 JANUARY 2010

V O L U M N 0 5 | I S S U E 11

JANUARY 10 CONTE NTS

CTOFORUM

THECTOFORUM.COM

BREATHING LIFE INTO THE OLD WARHORSE

THE ADVENT OF ERP 2.0 Page 20

COV E R D E S I G N: B I N E S H SR E E D HAR AN

Page 23

SURYA BHARDWAJ Vice President, India Applications, Oracle India

COVER STORY

18 | ERP 1.0 is Over :

S P ARYA Vice-President IT, Amtek Group.

COLUMN

Whatâ&#x20AC;&#x2122;s Next? It may be too

04 | I BELIEVE: STAY HUNGRY, STAY FOOLISH A CIO who strives to do something different that the world will sit up and notice.

early to write off ERP, but the business software has started showing worrisome signs of fatigue

BY- G N NAGARAJ

52 | VIEW POINT: THE PROBLEM WITH RELATIONSHIPS Social CRM may be a great concept, but it is tough to bring customer and company together. BY- DYLAN PERSAUD FEATURES

COPYRIGHT, All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd. is prohibited. Printed and published by Kanak Ghosh for Nine Dot Nine Interactive Pvt Ltd, C/o K.P.T House, Plot Printed at Silverpoint Press Pvt. Ltd. TTC Ind. Area, Plot No. A-403, MIDC Mahape, Navi Mumbai 400709

CTO FORUM 21 JANUARY 2010

thectoforum.com

15 | BEST OF BREED: THE ADVENT OF ANDROIDS BlackBerry changed mobile technology. The next wave will be led by Apple's iPhone and Google's Android

VOLUME 05 | ISSUE 11 | 21 JANUARY 2010

www.thectoforum.com Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Publishing Director: Anuradha Das Mathur EDITORIAL Editor: Rahul Neel Mani Resident Editor (West & South): Ashwani Mishra Sr. Assistant Editor: Gyana Ranjan Swain Consulting Editor: Shubhendu Parth Principal Correspondent: Vinita Gupta Sr. Correspondent: Jatinder Singh Correspondent: Sana Khan DESIGN Sr. Creative Director: Jayan K Narayanan Art Director: Binesh Sreedharan Associate Art Director: Anil VK Manager Design: Chander Shekhar Sr. Visualisers: PC Anoop, Santosh Kushwaha Sr. Designers: Prasanth TR & Anil T Photographer: Jiten Gandhi

12 A QUESTION OF ANSWERS

12 | “Drive a Hard Bargain”

“Solid state drives (SSDs) will complement the traditional hard disk drives (HDDs)," Teh Ban Seng, VP & MD, APJ, Seagate 26

REGULARS

01 | EDITORIAL 08 | ENTERPRISE ROUNDUP 48 | BOOK REVIEW advertisers’ index

26 | NEXT HORIZONS: MAKING GAME THEORY WORK FOR MANAGERS A new model generates answers representing the best compromise between risks and opportunities

49 | HIDE TIME: SERIOUS REGARD FOR BUSINESS A CIO who believes that if the leader has trusts his team, they will surprise him by surpassing his expectations

IBM REVERSE GATEFOLD VERIZON IFC TATA INDICOM 05 APC 07 MEGANET 33 TATA COMMUNICATION IBC CISCO BC This index is provided as an additional service.The publisher does not assume any liabilities for errors or omissions.

ADVISORY PANEL Ajay Kumar Dhir, CIO, JSL Limired Anil Garg, CIO, Dabur David Briskman, CIO, Ranbaxy Mani Mulki, VP-IS, Godrej Industries Manish Gupta, Director, Enterprise Solutions AMEA, PepsiCo India Foods & Beverages, PepsiCo Raghu Raman, CEO, National Intelligence Grid, Govt. of India S R Mallela, Former CTO, AFL Santrupt Misra, Director, Aditya Birla Group Sushil Prakash, Country Head, Emerging Technology-Business Innovation Group, Tata TeleServices Vijay Sethi, VP-IS, Hero Honda Vishal Salvi, CSO, HDFC Bank Deepak B Phatak, Subharao M Nilekani Chair Professor and Head, KReSIT, IIT - Bombay Vijay Mehra, Executive VP, Global Head-Industry Verticals, Patni SALES & MARKETING VP Sales & Marketing: Naveen Chand Singh National Manager Online Sales: Nitin Walia National Manager-Events and Special Projects: Mahantesh Godi (09880436623) Product Manager – Rachit Kinger Asst. Brand Manager: Arpita Ganguli Co-ordinator-MIS & Scheduling: Aatish Mohite Bangalore & Chennai: Vinodh K (09740714817) Delhi: Pranav Saran (09312685289) Kolkata: Jayanta Bhattacharya (09331829284) Mumbai: Sachin Mhashilkar (09920348755) PRODUCTION & LOGISTICS Sr. GM. Operations: Shivshankar M Hiremath Production Executive: Vilas Mhatre Logistics: MP Singh, Mohd. Ansari, Shashi Shekhar Singh OFFICE ADDRESS Nine Dot Nine Interactive Pvt Ltd C/o K.P.T House,Plot 41/13, Sector-30, Vashi, Navi Mumbai-400703 India Printed and published by Kanak Ghosh for Nine Dot Nine Interactive Pvt Ltd C/o K.P.T House, Plot 41/13, Sector-30, Vashi, Navi Mumbai-400703 India Editor: Anuradha Das Mathur C/o K.P.T House, Plot 41/13, Sector-30, Vashi, Navi Mumbai-400703 India Printed at Silverpoint Press Pvt. Ltd. D 107,TTC Industrial Area, Nerul.Navi Mumbai 400 706

CTO FORUM thectoforum.com

21 JANUARY 2010

I BELIEVE

BY G N NAGARAJ | CTO, Religare Enterprises THE AUTHOR HAS over 18 years of experience in leading technology teams of large and next generation financial services companies in India

Stay hungry, stay foolish Following Steve Job’s golden rule, CIOs need to be excited, focused and diligent in their day-to-day work.

WHAT I believe in defines me. What I believe in dictates my actions and the decisions I take. I believe that Google has hit the glass ceiling in its ability to innovate in a manner that relates to the customer. I believe that Apple will belt out one wonder after another and have customers

CTO FORUM 21 JANUARY 2010

thectoforum.com

CURRENT CHALLENGE DOING SOMETHING DIFFERENT THAT THE WORLD WILL SIT UP AND NOTICE

eating out of their hands with their classy lifestyle products. I believe that we should all go about conducting our business and managing all our relationships each day as if every day was the last day of our lives. I believe in being unreasonable and unstoppable in everything I do. I believe that when we discuss we should do so without carrying the burden of either accepting or rejecting whatever is being said. This creates the space for listening well. Eventually we all accept or reject what is being received by our senses; such actions enable us to learn from our actions. I believe that even if there was a time machine, we should not walk back in time to correct what we notice with the advantage of hindsight, doing so eliminates all the fun and excitement that the ups and downs of life offer. What got me here was just good enough for getting me here and will not take me further, so I need to rediscover and reinvent myself to move up. I have recently joined this highly motivated animal called Religare. I am amazed at the constant turbulence and restlessness in the organisation to do something great, something different that the world will sit up and notice. I am currently in the process of setting up an IT organisation structure for our firm without carrying the baggage of my past experience. I feel the neural energy in me keeps me on my toes as I put a structure in place, organise governance, fuel the teams with quality research and intelligence. Excited, nervous, focused and diligent is what describes my mood these days. I follow Steve Jobs’ golden rule: “Stay hungry, stay foolish.”

The views expressed here are personal and do not represent the company.

LETTERS COVE R S TO RY

XXXXXXXXXX

COLX LA XB XO X XRXAT XX I OX N X

COVE R S TO RY

S P I N E

CTO

“The Mahindra One portal offers ease of use to employees across the enterprise and helps in sharing ideas instantly” —Vijay Mahajan

CTOForum LinkedIn Group

FOR UM

Techno logy for

“Unified Communications has been embraced by all M&M employees and has become a part of the group’s business culture” —Aravind Tawde

Growth and

Govern ance

A QUE STION OF ANS WERS

AT THE HEAR

Not basicignoring

T OF COLL

normssecurity

PAGE 12

ABOR

BEST OF

ATION | AUTO

BREED

Ado

MATION

autopting impermatation ive

What began as a small collaboration effort within Mahindra & Mahindra has now evolved into a fullfledged LAUNCH PAD FOR INNOVATIONS across the group.

PAGE 16

January

| 07 | 2010 Volum e 05 | | Rs.50 Issue 10

By Ashwani Mishra

IMPE

AT THE HEAR Co TOF RATIV

CO C OL OL LLA LL LA L AB A B E | NOT IGNO

RING

THE BASI C

NORM

PHOTO BY JITEN GANDHI

llabora tion

www.linkedin.com/groups?gid=2580450

What now began as a small co come acrosbe llaborat s the groa launch pa ion eff up| PAGE d for inn 20 ovationort in M&M ha s s

CTO FORUM

CTO FORUM 07 JANUARY 2010

thectoforum.com

e 05 | Issue 10

Volum

I BELIEVE

Beyond

07 JANUARY 2010

BASICthe S

Some of the hot discussions on the group are:

PAGE 04

A 9.9

Media

Join more than 200 CIOs on the CTO Forum LinkedIn group for latest news and hot enterprise technology discussions. Share your thoughts, participate in discussions and win prizes for the most valuable contribution. You can join The CTOForum group at:

Public

ation

BETTER ORGANISED The revamped CTOForum not only looks better organised in terms of information positioning but also gives a better look and feel. Content-wise the magazine has remarkably improved over the last few months. B. S. DALAL Joint General Manager IT, Airports Authority of India

USEFUL COVER STORIES The CTOForum keeps us updated about new technology and business processes. The topics covered under the cover story section with quotes from CIOs and business leaders are really very useful. UMESH KHANDELWAL General Manager IT, BMW India

“Change is always for the good. The great effort done by the CTOForum team can be seen in the new look magazine. The information covered in the magazine will help the IT professionals immensely. I congratulate and wish the team all the best.”

What are the key competencies that a CIO should seek to acquire to become a true global business leader?

“Understand business, finance and expenses; never talk Technology but just plain language; implement transferable skills; do it if possible, otherwise explain and convince user; cultivate the habit of questioning; always be proactive and not provocative; accept new ideas from anyone and evaluate with your technical knowledge” —Viswanathan Sundararaman, Vice President (Information Technology) at Clariant Chemicals (India) Limited Which role will die - the CIO or the CTO?

"I would say both will co-exist. This is purely based on the organisational needs and business model. Example: If the organisation is headed towards automation and prioritise internal needs, that might give birth to the role of a CIO if it does not exist. If the organisation is headed towards external focus and product delivery, the CTO role will be crucial." —Raj DN, Head of Database Operations, Sify Technologies Ltd.

CTOF Connect

Govind Rammurthy, MD and CEO, eScan says banks in India need to instill confidence amongst users when it comes to online banking. He talks to Ashwani Mishra on the areas of concern in the online banking space and other emerging security threats. Excerpts from the interview. To read the full story go to:

thectoforum.com/ content/stopignoring-basicnorms

OPINION

BEYOND THE BASICS

SUSHANTA KUMAR LENKA

A CIO has to make an impact and deliver significant value to business.

Mitsubishi Electric Automotive India Pvt. Ltd.

WRITE TO US: The CTOForum values your feedback. We want to know what you think about the magazine and how to make it a better read for you. Our endeavour continues to be work in progress and your comments will go a long way in making it the preferred publication of the CIO Community.

“I believe that just speaking the right language or applying known formulae is not enough to get the CIO home. As a CIO, we have to get around to some basics.” To read the full story go to:

Send your comments, compliments, complaints or questions about the magazine to editor@thectoforum.com

thectoforum.com/resources/opinions S.R. BALA, Exec VP IT Godfrey Philips.

CTO FORUM 21 JANUARY 2010

thectoforum.com

STORY INISDE

Enterprise

Peter Streips of NS Group talks about the top concerns CISOs will face in 2010. Pg 11

ROUND-UP

Juniper Research’s Top Wireless Predictions. Says best is yet to come. traffic explosion to put strain on 3G networks: Though 3G is less than ten years old, 2010 could be the year when 3G networks begin to fall over under the burden of mobile data, due largely to some 33.8m iPhones. Mobile ecosystem starts to go green: 2010 will see a surge in the deployment of high-profile “green” handsets, featuring recycled plastic casings, energy saving modes and preloaded “ecotainment” apps which promote sustainable lifestyles. Mobile heads for the cloud: The emergence of cloudbased platforms where thin clients reside on the handset and data is processed and stored primarily in the cloud will be bolstered by the open standards BONDI OneAPI MOBILE DATA

CTO FORUM 21 JANUARY 2010

thectoforum.com

initiative and HTML5. New category of smart books to emerge: Juniper believes that smart books will create a new category of device, falling between smart phones and netbooks. Mobile social networking to integrate with other applications including m-commerce: With mobile access to the likes of Facebook, MySpace and Twitter becoming commonplace, adding commerce capability is the next step. Smart phones to get augmented reality AR makeover: Until Q2 2009, just a single AR app – Wikitude – was available for a single handset (the G1). However, with a raft of new Android handsets fitted with the key ARenablers – cameras, Internet, GPS, accelerometers, digital compasses these launches will accelerate dramatically.

DATA BRIEFING

23.6% was the year on year growth of PC Shipment in APAC region in 2009.

E NTE RPRI SE ROUND -UP

THEY CHRISTOPHER SAID IT CAPOSSELA Ever since Google started dominating the web, there has been a great tug-of-war between the two giants, Microsoft and Google. The two companies are trying to introduce innovative, user-friendly apps for the fans of Internet but they still get time to shout at each other. Here's one instance:

New Tablets Make a Debut. The gizmos that will make it to the news in 2010 promise amazing features. HP, DELL and Motorola – all have announced competing tablet products (more so in competition to Google) during the recently concluded CES show in the US. Microsoft CEO Steve Ballmer in his keynote address during the CES announced a tablet PC developed by HP, which will run Windows 7. This HP tablet will see the light of the day during December 2010. The device promises to have the portability of a mobile phone, but the power of a PC. Dell also used the CES 2010 to showcase a tablet of its own. It runs on the Android OS. The company is sceptical of a launch date and thus skipped making a commitment. Motorola – not doing so well in the mobile handset space also released a prototype tablet PC, which could be ready to launch later this year. This is also an Androidbased tablet which will primarily be promoted as a media player. The prototype has a 7-inch screen, and will have up to 32GB of external memory.

QUICK BYTE ON WIRELESS BACKHAUL

“We have a ton of competitors, in many cases versions of our old stuff. Google is a company that collects data to sell ads. That doesn’t translate into a strong enterprise player.”

—Christopher Capossela, Senior VP, Microsoft Collaborative & Online Applications quoted in Forbes.

Based on IDC's research on the APAC carrier network equipment market, there will be 30 lakh base stations and over 18 lakh cell sites by 2012 — a growth of 24.3% and 10.7% respectively from 2008-09. Half of these sites will be connected to fibre through Carrier Ethernet. Urban 3G/HSPA base stations will be linked to fibre by 2011 in most markets. CTO FORUM thectoforum.com

21 JANUARY 2010

E NTE RPRI SE ROUND -UP

Need Has Never Been Greater for Entrepreneurial CIOs: Gartner. By 2012, Companies with

the top 25% earnings growth will have an entrepreneurial CIO. THE IMPACT of an entrepreneurial CIO is greatest when the need for productivity leverage is greatest, as in the current economic environment, according to Gartner, Inc. Gartner analysts said by 2012, the companies with the top 25 percent of earnings growth will have an entrepreneurial CIO. Gartner maintains that the distinctive feature of the entrepreneurial CIO is the proactive willingness and courage to take the

high-level risks also undertaken by the business, to provide new or breakaway competitive advantages that translate directly into revenue, financial results and market share. It is this willingness to apply the highest level of creativity available within the organisation to do things in a fundamentally different way that establishes new sources of shareholder value, while also setting new levels for IT productivity. It comes with the

CTO FORUM 21 JANUARY 2010

thectoforum.com

Company Reputation

Regulatory Compliance

Internal Policy Compliance

Economic Downturn

Percentage of respondents who identify the following business issues as the most important drivers of IS spending in their organisation 41% 39% 38% 37% 32%

BC/DR

The Annual PWC Global Security Survey 2010 says the economic downturn has shaken up the normal roster of leading drivers of information security spending.

SOURCE: PWC ANNUAL SECURITY SURVEY 2010

GLOBAL TRACKER

understanding that the business may fail in the attempt, but also that it will surely fail or, at best, attain mediocre performance, if it does not act. “One of the biggest dilemmas facing organisations as we head toward 2010 is how CEOs and CIOs can execute entrepreneurial tasks in the current risk-averse environment,” said Jorge Lopez, vice president and distinguished analyst at Gartner. “As shareholders see the recession recede in their day-to-day actions, they will drive for revenue and earnings growth, and they will expect CEOs and CIOs to perform to heightened expectations.” Lopez advised organisations to check that they have the right CIO for a return to growth. He said that the right combination of vision, risk-taking and persuasiveness is needed to fill the requirements for the job. Gartner believes that the entrepreneurial CIO is the person who, working jointly with an entrepreneurial CEO or business unit executive, marshals the resources under the command of the IT organisation, as well as creatively links to resources outside of IT to define and capture new and growing business opportunities. The primary focus of the entrepreneurial CIO is on new-business impact, and that impact is felt in three major ways by the business: Velocity of change — the ability to influence the velocity of change through the structure of the business, so that a change in strategy can be implemented at a rate that outperforms all other competitors, and, therefore, also draws revenue at an earlier time and at a rapid pace. Improvements in this area lead to gaining competitive advantage quickly in new markets with new offerings. Strategic leverage and extension — capabilities that extend strategy for the enterprise to new markets, new industries and new uses, and that lead to growth in revenue against entrenched and new competition. Operational efficiencies — efficiencies that improve operations to gain breakaway competitive advantage which further increases the rate of revenue and earnings growth. Gaining an improvement that is a factor of 10 or more is key to establishing true competitive advantage in the area of operational efficiencies. —Source: www.gartner.com

E NTE RPRI SE ROUND -UP

Sun Micro-Fujitsu Fire Up SPARC M3000. Promise better performance and ROI.

SUN AND FUJITSU have announced an upgrade to their SPARC Enterprise M3000 Server, loading it with new hardware for faster performance. The single-socket server will be 23 percent faster than its predecessor, with a faster processor and updated memory modules, Sun and Fujitsu said in a joint statement. The server will be powered by a quad-core SPARC64 VII processor running at a clock speed of 2.75GHz. The rack-mount server, which was introduced in 2008, previously

ran on a SPARC64 VII processor at a clock speed of 2.52GHz. The SPARC Enterprise M3000 is a single socket, entry-level server and is part of Fujitsu and Sun's comprehensive line of servers that includes the SPARC Enterprise M4000, M5000, M8000 and M9000 servers. This server runs enterprise applications including database, customer relationship management and enterprise resource planning software. For high uptime, the server includes reliability, availability and serviceability

(RAS) also found in midrange and high-end SPARC Enterprise servers, the companies said. The server will enable consolidation of multiple servers into a compact 2U chassis, that will help companies save space and realize significant savings. The server runs the Solaris 10 OS, and Oracle's database software has been tested to work on the system. Oracle said it welcomes the introduction of the enhanced SPARC Enterprise M3000 server, which is a powerful example of the extensive collaboration between Fujitsu and Sun. “We performed extensive testing of Oracle Database 11g Release2 on Enterprise M3000 servers running Solaris 10," said Andy Mendelsohn, Senior VP of Database Server Technologies, Oracle. "Customers can be assured that the SPARC Enterprise M3000 server runs Oracle Database 11gR2 with high performance and reliability at lower cost." "Launched just over a year ago, the Sun SPARC Enterprise M3000 server with the Solaris Operating System has been a tremendous success with our customers," said John Fowler, executive vice president, Systems Group, Sun Microsystems. —Source: www.sun.com

FACT TICKER

Mainframe Computing. European CIOs call mainframe a safer bet than anything else. THE WEAKNESSES i n d i s tributed computing environments are contributing to resurgence in demand for mainframes, which many European CIOs believe are more secure and scalable. An independent survey of

European CIOs by CA found that organisations using the mainframe as a fully connected resource within the distributed, web-enabled enterprise experience greater benefits than those with a disconnected, comparatively isolated

mainframe environment. Where the mainframe is a fully connected resource, 65% of all respondents report it to be an ‘incredibly secure environment’; 63% state performance levels are ‘excellent’; and 52% say that ‘the system never goes down’. The more the mainframe is part of an enterprise-wide strategy, the greater the role it plays and the greater its level of utilisation – the average amount of business-crit-

ical data administered by the mainframe among all ‘connected’ respondents is 64%. Some 66% agreed that mainframe user will soon start to suffer from a shrinking workforce if the relevant skills are not available. However, 52% agreed that a web-enabled graphic user interface (GUI) would make the mainframe more attractive and help to close the skills gap.

SECURITY BITES

What would be the top concerns for a CISO in 2010? This is a very important conversation for any CISO. I am personally dealing with VP's of Tech, IT Managers, and CSOs alike. My job is to thoroughly understand customer's goals and concerns as they plan IT spending for 2010. Outlined below are the top 5 threats/ concerns that are on my CSO's "I can't sleep at night" list: Remain out of the headlines: CISOs are most worried about the lost laptops, encryption, hacking, etc. Virtualisation - making their current infrastructure work harder for them while spending less . Intellectual Property - making sure their assets stay where they belong and out of harm. Regulations, regulations and more regulations: In US, we have to — until March 1st, comply with the CMR 201 legislation, which deals with protecting, both, electronic and physical data. We make sure they are not just compliant today, but provide them with thorough assessing, auditing, and reporting tools for future regulations. Support - Are vendors or the suppliers better equipped to help when the duty calls? With average annual maintenance fees ranging 20-30%, do they have the staff trained well to keep these costs down or should they seek outside help to assist? — As told by Peter Streips, Owner Network Security Group, USA

—www.siliconrepublic.com ILLUSTRATION: PHOTOS.COM

CTO FORUM thectoforum.com

21 JANUARY 2010

A QUESTION OF ANSWERS

TEH BAN SENG

The enterprise storage business may be heavily skewed towards traditional HDDs as opposed to solid state drives, but Teh Ban Seng, VP & Managing Director, APJ Seagate believes that the initial hiccups have been cleared, and soon will be ready to go mainstream. In an interview with Sana Khan, Seng offers an insight into the highly volatile storage business. Excerpts: 12

CTO FORUM 21 JANUARY 2010

thectoforum.com

TEH BAN SENG

A QUESTION OF ANSWERS

TEH BAN SENG | SEAGATE

DRIVE A HARD

BARGAIN What impact will Solid State Drives (SSD) have on the enterprise storage market? Do you think there is a possibility of SSDs replacing the traditional drives? There is definitely value and space for SSDs in the enterprise market. The superior performance of the SSDs is most visible, and the faster read rate that it offers in comparison to the traditional hard disk drive (HDD) is another great differentiator that goes in favour of SSDs. SSDs also consume lesser power compared to the traditional drives. However, HDDs will continue to hold the bulk of the storage market in the near future, as there are still a few more issues to be resolved before SSDs go mainstream. What are these issues? Flash memory will not really replace traditional memory in the next three to five years. The main

reason for this is the cost of the SSD technology. Moreover, hard drives based on DRAM technology cost much less. Another major reason is the high investment required by enterprises. We are talking about petabytes of data. We also need to keep in mind that storage requirements are application-specific. Also, SSD applies to Tier-Zero, and it is effective for those apps. So, it’s almost impossible for the flash industry to replace the hard disk drives at this point of time. I personally feel that SSDs, rather than competing, will complement HDDs; they will enhance storage architecture.

Isn’t it high time the flash industry considered a downward revision in prices? Cost is bound to come down. There is no question about that. There have been several instances of price erosion in the industry. Historically, the

flash memory business has been a volatile one. While price fluctuation has been a norm in the short-term, the overall trend in pricing trend has been southbound. The question is how quickly the price will erode. Whether the prices will erode by 30 or 40 percent in the next 1-2 years is anybody’s guess. Two years ago, the price erosion in flash memory market was very steep, and there was a lot of hype around SSD taking over the traditional drive market. However, in the last six months, the prices have bucked the trend.

There is significant uptake of SSD in the mobile devices industry because of lower levels of heat, lesser power consumption and steady performance. Doesn’t putting SSD in laptops make a lot of sense? I would disagree with that. There has not been any significant adop-

CTO FORUM thectoforum.com

21 JANUARY 2010

A QUESTION OF ANSWERS

TEH BAN SENG

â&#x20AC;&#x153;SSDs consume less power compared to the traditional drives. However, HDDs will continue to hold the bulk of the storage market in the near future, as there are still a few issues to be resolved before SSDs go mainstream.â&#x20AC;? tion of SSD technology in the notebook space. In fact, the trend is downward compared to what it was two years ago. Price points are not falling in line with industry expectations. Also, performance has been below par. There have been a lot of issues on the quality front. When people pay a higher price, they expect a better quality product. When you add all these factors together, it deters the adoption of the SSD in the industry. It is often perceived that data recovery is difficult from flash-based SSD devices. Is this a deterrent which is preventing the adoption of SSDs in mobile and enterprise applications?

Frankly, we have not faced any such objection from our customers. SSDs largely criticised for its high cost. The offerings do not justify the cost. The biggest of all issues is quality. Earlier there were significant quality issues, but that again has significantly come down. What are the initiatives in place to increase the capacity of the SSD drive? This is a question more appropriate for the manufacturers of flash memory. They are the ones who own the technology. These semiconductor players are working hard to increase the capacity. Their aim is to increase capacity and lower the cost at the same time. Their plan was to increase the capacity by 30 percent

CTO FORUM 21 JANUARY 2010

thectoforum.com

THINGS I BELIEVE IN That there is value and space for SSDs in enterprises. That SSDs will complement and not compete with traditional hard drives. That with increase in quality, adoption of SSDs will grow.

every year, thereby making SSDs more competitive. What are your expectations from the newly launched Seagate Pulsar SSD? Pulsar is the first in the range of products that we plan to launch in the flash-based SSD space. We have 30 years of experience with the enterprise customers and our advantage lies in our understanding of the customer. There are over 90 SSD manufacturers worldwide today, but most of them are consumer-based companies that have very little or no experience in the enterprise space. In our case, we have collaborated with the enterprise customers to understand what they want and designed our next generation SSD products.

BEST OF

BREED

FEATURE INSIDE

A Change of Spirit. Three transformational forces that can change the face of IT in your company Pg 17

I The Advent of the Androids BlackBerry changed mobile technology; Apple’s iPhone and Google’s Android may well drive the next wave of change BY RICHARD GOUGH

n April 2002, I attended the Wireless Enterprise Symposium (WES) held in Atlanta, USA to check the potential of the BlackBerry as a portable email solution for our business. Those days if you wanted to access your corporate email on road, the only real choice was to carry a laptop, modem with access to either a VPN link or an access to the web-based Exchange 2000. The introduction of BlackBerry devices and a BlackBerry Enterprise Server that accessed corporate email changed the course of business communication. The WES 2002 event was primarily a showcase for the capabilities of Research in Motion (RIM), the company behind the BlackBerry brand. In his keynote speech Jim Balsillie, CEO of RIM, gave a fascinating insight into the fortunes and growth of the company. He also gave an indication on why the BlackBerry would soon be called "Crackberry" as he himself was addicted to checking his email all the time. In fact, a corporate IT geek sitting was toying with his BlackBerry instead of paying attention to Balsillie’s address. Out of curiosity I asked him what he was doing. His response surprised me. He said, "I'm discussing the keynote with my colleague who is sitting at the back of the hall." At the time I thought this was somewhat strange and even discourteous to the keynote speaker who was actually delivering a great opening address to the WES event. Little did I know how much would the BlackBerry change our lives. The next few days at the event were an eyeopener for me. I quickly called up my office and confirmed that the BlackBerry was a perfect alternative to the laptops. Looking back at some of the discussions in the BlackBerry development sessions, it's fascinating to see just how far mobile technology has come in the last ten years. In 2002,

CTO FORUM thectoforum.com

21 JANUARY 2010

BEST OF BREED

SMART PHONES

the BlackBerry developers did not feel the need for a colour screen. The concern then was that battery technology was incapable to support 24 hours portable email. Also, the idea of using the device to access browserbased Internet hadn’t surfaced. However, companies like Filefish led the path by providing secure access to corporate files using BlackBerry Wireless Handhelds. "BlackBerry handhelds have become key extensions of the enterprise computing environment," said Edwin Ong, FileFish's Chief Strategy Officer, "We are excited to provide IT departments with the ability to rapidly provide secure file access to their BlackBerry users." So, BlackBerry became this trailblazer in business mobility revolution. Armed with this new found knowledge, I headed back to my company and proposed the idea to my colleagues. Since then it has been an odyssey of sorts driven by this tiny piece of smart plastic not much larger than a paperback novel. As we enter the next decade, portable technology has become really flexible and accessible. An iPhone from Apple, launched in 2007, also revolutionised the mobile phone industry as much as BlackBerry changed things around the turn of new millennium. Written off by the mobile phone industry as an irreverent consumer product, Apple by the first quarter of 2009 sold 3.9million iPhones worldwide. The popularity of the gadget among consumers and business alike has been driven by the compelling user experience delivered by the thoughtful touch screen interface

“Customers are testing their purchasing power to obtain the best technology to support their virtual lifestyle” —Richard Gough and a fine collection of iPhone applications available at the iTunes store. But this is a highly competitive market. While iPhone and BlackBerry gained greater market share in 2009, mobile phone major Nokia lost its market share from 45 percent in 2008 to 41 percent in 2009. It may be an indication of the times to come. But where does Google fit in the scheme of things? Last month, it was widely reported that Google will roll out its own Smartphone. The success of Google Android smart phones in tow with HTC and Motorola has proved that it can take on

Android vs. iPhone: Under the Surface

he Android or iPhone software platform is more than just a core operating system. And really, the differences in their core operating systems are one of the least important factors to users. Both use a Unixderived kernel and operating system environment that few users will ever even see. Android phones happen to use a Linux kernel while the iPhone uses the same Mach/BSD Unix kernel as

Apple's desktop Macs. In the big picture, this doesn't really matter much because neither smart phone platform provides any real access to this layer (either to users or developers), and neither phone platform is designed to run desktop software developed for Linux PCs or Macs. Both systems are examples of well regarded technology that is fully capable of supporting the needs of the smart

phone environment above the core OS. The actual platform environment that matters to users on Android and the iPhone exists well above the core operating system kernel. This is where applications run, where security is enforced, and where the business model behind the smart phone impacts what users can and can't do. —Source www. appleinsider.com

Apple and their iPhone range. If there is any doubt about the capabilities of a Google Smartphone, one needs to check the video demonstration of the Google Maps Navigation system – an internet-connected GPS navigation system with voice guidance. It is available as a free service for phones with Android 2.0, but it is presently only available in the United States on the Verizon Droid phone. What this service clearly demonstrates is the power of a portable Internet connected device backed by powerful cloud computing based services like Google search, maps and imaging. I already use the Google apps to call out my search needs instead of typing them. One really wonders: how long will it take before a Google powered Smartphone could read out a document from Google docs? How long will it take to dictate and record a Google document from our phone? One needs to take a look at the Dragon Dictation iPhone application from Nuance Communications to gather the experience. Google has enterprise power and technology to drive such products, and in the next ten years, Google will become bigger than other major mobile phone companies with Apple coming a close second. Back at Atlanta in 2002, I realised what was in store for corporations. What I could not fathom was the effect of BlackBerry roll out on consumers. According to a recent Gartner report "Consumerisation Gains Momentum: The IT Civil War", customers are testing their individual purchasing power to obtain the best technology to support their virtual lifestyle. The impact of 24/7 computing does present a challenge to IT professionals and the workforce who rely on it. It affects the fine line between personal and professional life due to the ubiquitous nature of email and access to work systems. But in a digital age, society adapts around new technology. RIM BlackBerry kicked off this revolution in the last decade; it is now up to iPhone and Android to take us forward to the next level of portable computing. And I, for one, am sure the next ten years are going to be even more exciting than the last ten! —Richard Gough is a chartered IT Professional and a BCS Fellow.

CTO FORUM 21 JANUARY 2010

thectoforum.com

I T T R A N S F O R M AT I O N

BEST OF BREED

A Change of Spirit

Three transformational forces that can change the face of IT in your company BY KEN OESTREICH

nce in a while, I sit back and think about the real transformational forces that will change how information technology (IT) operates. And recently I've come to a conclusion that there are three fundamental technological movements that will bring about the revolution.

1. Software virtualisation Abstracting software from the underlying CPU yields mobility, consolidation, and degrees of scalability. It also simplifies automated management and portability of workloads through virtual appliances or Amazon Virtual Machines (AMIs). Except for a few managerial kinks, this technology is already a de-facto system in IT transformation.

2. Infrastructure orchestration As I recently outlined, this technology is a perfect complement to software virtualisation; it essentially gives mobility to infrastructure. It allows IT operations to define I/O, storage connectivity and networking entirely in software, resulting in re-configurable CPUs. Egenera was a pioneer in this area, but the market now has a wider choice with the announcement of Cisco's Unified Computing solution. Unified computing or infrastructure orchestration is valuable because it enables a highly reliable, scalable and re-configurable infrastructure. It permits IT to â&#x20AC;&#x2DC;wire-onceâ&#x20AC;&#x2122; and then create CPU configurations (virtual Network Interface Cards, Host Bus Adapters, storage connections etc.) using a unified or consolidated networking practise. Plus, it is a simple and efficient approach. Think of it as a provisioning hardware using software. We'll see this technology catching up.

3. Intelligent software provisioning While I'm not sure what this market segment may eventually be called, it represents the third critical datacentre management component. It gives software mobility and yields infrastructure flexibility.

FastScale is one company that is largely into intelligent software provisioning. Picture an intelligent software provisioning system that knows the minimum amount of software libraries needed to run an OS or application. As it turns out, the provisioning is usually something around 10 -15 percent of the multi-gig bag-of-bits you try to boot every time you bring up a server. And that even includes virtual machines (VMs). The result? Four really nice properties: a) Speed: Getting applications up and running faster. Not having to move as many bits over the network to boot a given server is a real time and money saver. b) Efficient consolidation: With smaller software footprints, more VMs, appliances can fit on a given memory footprint. This means denser consolidation is frequently possible and not to mention dollar savings on those gigs of memory you have to buy when you consolidate. c) Inherent configuration management: With a database of all libraries and bits, you can always monitor configurations and verify compliance. Moreover, you can track what patches went where. d) Ability to provision into any form of container: In other words, this system can provision onto a bare-metal CPU or for that matter into an appliance like an Amazon Virtual Machine AMI if you're using a computing cloud. This intelligent provisioning approach is also highly complementary to existing compliance and configuration management products such as OpsWare (HP) or BladeLogic (BMC).

Summary So what if you have all three of these technologies? You'd have a data centre where workloads were portable and platform-independent; infrastructure was instantly re-configurable and adapted to business conditions; software could be distributed and broughtup in the order of seconds, thereby allowing adaptation to scale and business demand. Pretty sweet, eh? â&#x20AC;&#x201D;Ken Oestreich is Technical VP of Product Marketing at Egenera, US.

CTO FORUM thectoforum.com

21 JANUARY 2010

COVE R S TO RY

ERP 2.0

ERP1.0 IS OVER

â&#x20AC;&#x2122; WHAT S By Ashwani Mishra & Gyana Ranjan Swain

Like any other technology, enterprise resource planning (ERP) is being cannibalised by newer technologies. While the Software-as-a-Service (SaaS) model, cloud computing and ERP based on virtual systems are the future, the economic chaos and business uncertainty of the past two years have made CIOs think again and re-examine the investments made into the systems. CIOs today are caught up with questions they had ignored earlier: What's the cost of deploying and maintaining an ERP? Is there a measurable return on investment (RoI)? Are ERP systems delivering their expected impact? Any investment requires measurable returns, but ERP grabs special attention because of the amount of money and organisational bandwidth it consumes. 18

CTO FORUM 21 JANUARY 2010

thectoforum.com

S P ARYA Vice-President IT, Amtek Group.

THE ARRIVAL OF ERP 2.0

The original version of ERP makes way for the newer edition of the business software â&#x20AC;&#x201C; one that fits all sizes. Turn to Page 20

ERP 2.0

COVE R S TO RY

It may be too early to write off ERP, but the business software has started showing worrisome signs of fatigue

NEXT SURYA BHARDWAJ Vice President, India Applications, Oracle India

BREATHING LIFE INTO THE OLD WARHORSE

ERP needs to embrace newer technologies to retain its old glory Turn to Page 23

So if the changes in delivery models turn towards ERP 2.0, the concerns of the CIOs and thus the changes in how vendors approach the sales of this mammoth software also indicate a tilt towards the new era of how enterprises will compute and work. Debates like whether there should be a â&#x20AC;&#x2DC;single-instanceâ&#x20AC;&#x2122; ERP across the enterprise or it should be specific to locations and geographies need a prominent mention; whether there should be changes in licensing models or not; will the vendors stop defaulting on both post-implementation and maintenance contracts are some of the questions which need a serious relook. CTO FORUM thectoforum.com

21 JANUARY 2010

COVE R S TO RY

ERP 2.0

THE ARRIVAL OF

ERP2.0

The original version of ERP will make way for the newer editions of the business software – one that fits all sizes. BY ASHWANI MISHRA

nxiety and fatigue mar an otherwise cheerful Sudhir Pal [SP] Arya, VP-IT of the Delhi-based Amtek Group. Amidst finalising an ERP for his group, Arya feels challenged at many fronts. “I have been in and out of nerveracking, inconclusive meetings with the stakeholders in the company. Despite the best brains at work, it is taking a lot of time to decide which way to go,” says Arya with a grim face. Unlike the popular instances of ERP deployment, Amtek is contemplating a radically different approach. The company may decide to go in for a third-party managed ERP with overall control in their hands so that they can focus on keeping IT aligned with the core business values. This is the challenge facing many companies today primarily due to the reduction in IT budgets and a conscious desire to extract maximum return on investment (RoI). Ground realities have significantly changed and in the last 12-18 months the ERP, in its original form, has taken a backseat. Yet another case is that of the international airline British Airways (BA). The loss-making airline has cautiously delayed its global ERP rollout. The deployment was delayed despite BA completing the procurement for the new ERP and was just a week away from selecting the vendor in late 2008. This was projected as one of the biggest ERP deployments in the Europe. “When we looked at this (ERP) initiative, we

CTO FORUM 21 JANUARY 2010

thectoforum.com

realised that it would cost us a huge amount of money. There was absolutely no doubt in my mind that we had to postpone this deployment. It was a long-term investment that would not pay us back immediately,” says Paul Coby, CIO, British Airways. ERP investments involve huge budgets. According to analyst reports, the total cost of an average SAP deployment can go as high as $ 16.8 million. Oracle charges $12.6 million. Microsoft is less costlier at $2.6 million. The second rung of ERP providers such as Baan and Infor charge around $3.5 million. And if such spending guaranteed that businesses would increase their efficiency and reduce costs, at least the CIOs of large enterprises would have gone ahead with the deployments despite the recession. Whatever fresh ERP deployments happened in the last 18 months were in the small and medium enterprises.

REALITY CHECK One positive outcome during the economic turmoil is that businesses of all sizes, across all industries and geographies took the time to conduct a meticulous re-examination of their ERP investment and strategies. According to a Forrester report in November 2009, the frustration over maintenance fees and upgrade costs for ERP and emphasis on business intelligence (BI) and CRM applications notwith-

standing, an ERP suite is still considered the "backbone" of an enterprise. The software supports core functions of a company such as operations, sales and distribution, besides sustaining administrative functions of finance and procurement. But all this comes at a price which most of the times appear prohibitive for any user company. In any given board meeting, CIOs are asked to justify the cost of these huge investments and have to show the real ROI before implementing these applications. “We examined our past IT investments in ERP in the last few years to explore our cost management options in the long run. The good news is that our ERP system sustained itself and the strategy stood reinforced,” says Arun Gupta, Group CIO, K Raheja Corp. The industry at large has started revisiting their ERP spend after a recent study tolled the death knell of the enterprise software. According to US-based Panorama Consulting Group, 65 percent of ERP projects went over budget. 93 percent took longer than expected time. Implementation cost in most cases exceeded the original estimate by 50 percent. “Any ERP implementation should be viewed as a strategic initiative and not an operational one. The foremost thing required for its success is a strong management buy-in,” says Hilal Khan, Head Corporate Strategic Information Systems, Honda Motor India Pvt. Ltd. Khan adds that ERP is not about deploying a technology, but it is about managing people, conflict, expectation and change. “If one can manage all the four factors effectively, one can do wonders with the ERP and justify the investment,” he adds. For many large enterprises that had implemented ERP a few years ago, the focus was to capture and manage end-to-end business transactions in an integrated manner. Today, the CIOs feel that it is important for them to stop focusing merely on transactions. They say it is high time they focused on how these transactions can be effectively used. Organisations need to start with the implementation of an ERP and gradually move towards data warehousing and BI. But in an IT environment where multiple systems have to be networked together, can a ‘single-instance’ ERP hold

ERP 2.0

ERP MARKET is witnessing a lot of churn. This will benefit CIOs who have looked at it as a strategic initiative. “Companies that haven’t exploited the entire range of ERP offerings will now STRETCH THE SOFTWARE.” SUBHOMOY SENGUPTA Director, Microsoft Business Solutions Limited

“We are DEPLOYING A SINGLE-INSTANCE IMPLEMENTATION for our client Metito in Sharjah, Dubai, Egypt and Indonesia.” RISHI BANSAL

VP, Global Business, Merino Services

“It is time that companies move on from the multiple systems their companies use today onto ONE ERP SYSTEM” SYSTEM SURYA BHARDWAJ

Vice President, India Applications, Oracle India

“ERP will continue to exist in mission-critical applications like finance, production, and sales. Other CUSTOMERORIENTED APPLICATIONS LIKE CRM WOULD STAY HYBRID” S. R. BALASUBRAMANIAN

EVP, IT and Corporate Development Godfrey Philips India.

COVE R S TO RY

the promise? Many industry players think that ‘multiple-instance’ implementation is the way to go. They believe that enterprises can achieve efficiency without having to use a unique system that manages the entire business landscape. This may be true for their western counterparts, but back home in India the CIOs vouch for single ERP across the enterprise.

ONE SIZE FITS ALL With ‘single-instance’ ERP, enterprises get an extensive view of their business activities. Take the instance of LG Electronics. The white goods major has over 100 subsidiaries spread across the world and each subsidiary had its own ERP installed nearly two years back. But, as the company understood the technology nuances between ‘singleinstance’ and ‘multiple-instance’ ERP, they opted for the former. “In order to address business challenges in different countries, we decided to adopt a ‘single-instance’ ERP that could standardise our operations across the 100 subsidiaries worldwide,” says Daya Prakash, Head IT, LG Electronics India. The company believes a 'single-instance' ERP helps in streamlining the operations like supply chain planning. Once the system is implemented, the company can have a bird's eye view of its operations around the world from its headquarters in South Korea. “India is in the fourth phase of deployment and the 'single-instance' rollout will begin by February-end 2010 and finish by December,” reveals Prakash. Similarly, New Delhi-based auto component manufacturer Amtek Group is betting on 'single-instance' ERP to integrate its ever-expanding business. In the last six years, the group has grown organically and inorganically. The company’s product portfolio consists of an extensive range of components for 2-3 wheelers, cars, tractors, LCV, HCV and stationary engines. “There was a need to bring in all group companies on a common ERP platform to bring agility in business processes. This will definitely help the group in quick and easy financial consolidation, process integration and automation,” says Arya. Besides ‘single-instance’ ERPs making inroads into India Inc., other trends that are

CTO FORUM thectoforum.com

21 JANUARY 2010

COVE R S TO RY

ERP 2.0

fast catching up are: advances in middleware offerings; tools that allow integration between databases and infrastructure; and Software-as-a-Service (SaaS) applications that can be deployed wherever necessary. The industry refers to it as a hybrid model.

CHANGE IN FORM The primary reason for the buzz around the hybrid model is that most companies are upgrading their old ERP applications. CIOs are now evaluating if they need to stick to the older version of the enterprise software or move to the newer models such as SaaS or cloud computing.

“ERP is not about deploying a technology, but it is about managing PEOPLE, CONFLICT, EXPECTATION AND CHANGE”

mentation issues related to manpower and technology,” says Khan who is determined to look at the models as they mature. "I would surely look at them as possible addons to the company’s existing ERP," he says. The current downturn has also changed the rules of the game. With IT spending going down, the opportunities of revenues for ERP providers have also shrunk. In fact, many traditional vendors are now providing SaaS as a value addition to their offerings and making up for lost revenues.

MORE BANG FOR THE BUCK CIOs are negotiating tooth and nail to get a fair deal. Many enterprises objected to software maintenance fees levied on traditional on-premise applications. In fact, a leading

“When we looked at ERP, we realised that it would cost us a huge amount. We had to postpone this deployment as THERE WAS NO IMMEDIATE ROI” PAUL COBY Chief Information Officer, British Airways, India.

HILAL KHAN Head Corporate Strategic Information Systems, Honda Motor India.

“ERP will continue to exist in missioncritical applications like finance, production, and sales. Other customer-oriented applications like CRM would stay hybrid,” says S R Balasubranian, Executive Vice President, IT and Corporate Development, Godfrey Phillips India. For CIOs, it is the high licensing fees along with support and maintenance costs that make them look for greener pastures in the hybrid model. The SaaS model offers numerous cost benefits, including no up-front costs, no licensing fees and rapid deployment. “SaaS or cloud computing model has the potential, but providers need to clear imple-

CTO FORUM 21 JANUARY 2010

thectoforum.com

enterprise support contracts at the 2009 level of 18.36 percent. The plan to gradually increase that price will resume in 2011, bringing enterprise contracts to 22 percent by 2016 instead of 2015. However, some CIOs offer a word of caution. “We may consider ourselves smart by negotiating terms of implementation and price of licenses, but they (ERP vendors) will do everything possible to hook you in. Once you fall in the trap, there is no way out,” says the CIO of a leading manufacturing company. That is one of the reasons why Arya of Amtek says that he is open for new delivery models like managed services and

“In order to address business challenges in different countries, LG decided to adopt a ‘SINGLE-INSTANCE’ ERP TO STANDARDISE OPERATIONS” DAYA PRAKASH Head IT, LG India Electronics.

ERP giant gave in to customer demands to call off their hike in enterprise support fee. Business software leader SAP recently stepped back from its plan to move its customers to enterprise support contracts priced at 22 percent (of the sale price of the licenses) per year. Instead, it will adopt a two-tiered system that reintroduces a standard support option set at 18 percent and a slightly higher price to the customers who want advance support. SAP also froze prices for existing

SaaS with an assurance that the model will safeguard the company's investment in ERP. There is no doubt that the ERP market is witnessing considerable amount of churn. This will certainly benefit CIOs who have looked at it as a long-term strategic initiative. With the economy showing signs of recovery, CIOs are hoping that their ERP strategies can pack the much needed punch in the future, and yes, without any questions asked.

—ashwani.mishra@9dot9.in

COVE R S TO RY

ERP 2.0

OLD WARHORSE BREATHING LIFE INTO THE

The age-old mammoth application needs to embrace newer technologies to retain its old glory. BY GYANA RANJAN SWAIN

hen research firm Gartner introduced Enterprise Resource Planning (ERP) way back in 1990, little did anyone know that one day it will become so ubiquitous that businesses cannot do without it. Created as an extension to Materials Requirements Planning (MRP), ERP has come a long way in the last two decades. Though ERP applications have gained prominence across enterprises, web-enabled and open source technologies have emerged as serious challengers. Industry players say the future of ERP really lies in coalition. Gone are the days when a single technology could monopolise over the market. End-to-end integration no longer means only integration of logistics, financial and HR processes. ERPs have come up with products in the areas of customer relationship management (CRM), supplier relationship management (SRM), product lifecycle management (PLM), manufacturing optimisation, environmental health and safety, etc. and

the trend points towards industry micro vertical specialisation. Also, it has been witnessed in the past that with the advent of service-oriented architecture (SOA), increased flexibility of interfacing has made choices more open for customers. The increased penetration of business applications in the mid-market has also helped compress the time taken for ERP implementation. And this helped mid-size customers whio cannot afford to tie up their resources in protracted implementation.

WHAT’S NEXT? The evolution of new technology is reshaping the product offerings in ERP and enriching user experience, increasing flexibility, and providing better insight. Software-as-a-Service (SaaS) is starting to gain traction as a viable deployment option in some ERP markets including India. Riding on the success

of the best-of-breed CRM and human capital management (HCM) applications, ERP application providers are creating an environment where ERP is becoming a must-have for even mid-size businesses. Keeping the drawbacks in the earlier versions of ERP in mind, it is fair to say that model-based, configurable applications based on SOA will be the next big change for ERP applications. The key here is the shift of focus from the enterprise applications to the end-to-end business process, and that is what will drive the market in the future. The new business processes will be mapped against today’s ERP functionality, but will be more than just transactions – they will have rich analytics and will be supported by structured and unstructured data. Also customers will be able to exploit the applications to their maximum extent. “Companies that haven’t

30%

of new enterprise application license purchases (in APAC excluding Japan) will be in form of SaaS, or delivered through the SaaS model

CTO FORUM thectoforum.com

21 JANUARY 2010

COVE R S TO RY

ERP 2.0

THOUGH ERP applications have gained prominence, Industry players say the future of ERP really lies in coalition “We examined our past investments in the ERP. The good news is that the SYSTEM SUSTAINED ITSELF AND THE STRATEGY STOOD REINFORCED” ARUN GUPTA

Group CIO, K Raheja Corporation.

“We will go in for a BUSINESS-CENTRIC APPLICATION DELIVERY MODEL where we limit By end of 2010, ourselves to focus on experts say, BUYERS business objectives” WILL BE A LOT SAVVIER S P ARYA

Vice-President IT, Amtek Group.

ABOUT SOAs, NATIVE WEB SERVICES, WEB 2.0 TECHNOLOGIES, business process platform and other application infrastructure products

“As long as there are provisions in ERP for consolidation across different business units, 'SINGLE-INSTANCE' ADOPTION WILL BE A REALITY” S SUNDERARAJ

Senior Vice President, Indian Operations & Business Consulting Group, Ramco Systems

CTO FORUM 21 JANUARY 2010

thectoforum.com

exploited the entire range of ERP offerings will now stretch the software,” says Subhomoy Sengupta, Group Director, Microsoft Business Solutions, Microsoft India. By end of 2010, experts say, buyers will be a lot savvier about SOAs, native web services, Web 2.0 technologies, business process platform and other application infrastructure products. Major application vendors are eyeing these technologies and will position their solutions as a non-disruptive technology for continued business. SOA is an area where most ERP product vendors have been investing. That is the future. The key objective of SOA is to provide the customer with logical extensions to ERP systems. Players like Infor have also been investing a lot on deploying SOA in its various business solutions.

THE SAAS SAGA Delivering ERP on a SaaS model is a revolutionary approach in enterprise software and offers enterprises of all sizes a viable, scalable and flexible model. This is destined to provide lucrative benefits to the users of enterprise applications. Gartner predicts that by 2010 nearly 30 percent of new license purchases (in APAC excluding Japan) will be in the form of SaaS, or will be delivered using the SaaS model. In a recent survey comprising 1,017 technology decision makers, Forrester found that the worldwide adoption of SaaS in large enterprises is now at 16 percent, up 33 percent from the previous year. While SMEs have a viable option of monthly subscription in the SaaS model, large enterprises do not have many of such flexible alternatives. But there are players who have started plugging the gaps. Microsoft, for instance, has a different view on ERP being deployed under the SaaS platform. “The definition of SaaS has changed from Software-as-a-Service to Software-and-a-Service,” says Sengupta while adding that best end-user experience is delivered through a combination of hosted and on-premise software on a multitude of devices. Reports from various research agencies suggest the worldwide SaaS revenue is expected to reach US$14.8 billion in 2012 and India will contribute the majority of it. The commercial advantage that SaaS

ERP 2.0

offers is that neither do the companies have to make upfront investments in technology nor do they have to devote time and resources on software deployment and maintenance. Although the utility of SaaS is expanding, its growth is driven by horizontal applications across a distributed virtual workforce using the latest web-enabled technologies. Moreover, SaaS can be delivered through a hybrid model. Some core functions of ERP will be on premises and non-core operations can go in the cloud depending on the maturity of a company's IT systems.

THE WEB OF CONVENIENCE Web-enabled technology gives customers an option to extend their access to multiple locations without getting worried about vendor's installation and desktop level management. Further, it offers options to build home pages, portal environments and more content rich pages to give the user consolidated information on one screen. ERP major Infor offers MyDay a predefined web portal with separate home pages for various users like sales manager, account payable user, account receivable user etc. Being SOA enabled, they can be deployed on multiple Infor solutions and it helps individual users to visit their own home page and do the required work. With the Internet changing the rules of communication, business collaboration has brought a fundamental shift in how companies define their processes. Companies no longer look at their business with unifocal attention; trading partners and customers are very much part of the game now. As a result, they need systems that support e-business transactions, which is what web-enabled ERP fundamentally helps them with. Web-enabled ERP solutions have moved the organisational focus from administration to self-service, selfindulgence to a collaborative approach, transactional to business intelligence. The solutions have now brought concepts such as e-commerce, web-based procurement, BI and CRM under their wings. The focus is now on quick and simple reconfiguration of business processes, intuitive interfaces that require no training, real-time or near real-time data access,

COVE R S TO RY

WIRELESSERP W

ireless technology has helped enterprises in many ways. Firstly it has facilitated the stakeholders in getting up-to-date information on enterprise operations as and when required through the use of modern communication devices like smart phones and laptops. Wireless ERP gives best results only if it falls in line with proper communication channels. The communication channels should be improved in the organisation to make it ready for wireless ERP. The obsolete computers should be replaced with the latest smart phones. Mobile

and telecommunication facilities should also be at par with the best standards in the industry. There are times that companies resort to wireless ERP without improving the communication facilities. This does not serve any purpose regardless of how much money is spent in ERP implementation. Moreover, there is another major advantage in improving communication facilities. Apart from dissemination of information and improving productivity it also helps the companies to improve professional standards in

interactive and collaborative features such as real-time chat and white boarding, realtime analysis, and open access to both internal and external users. What is also important is the ability to dynamically re-configure and re-allocate assets on the fly based on current needs.

SINGLE INSTANCE ORDER OF THE DAY As enterprises get acquainted with the ERP appilications, demand for 'single instance' ERP has grown. Of late, enterprises have started preferring 'single-instance' implementation over multiple-instance rollout. “It is time that companies move on from the multiple systems they use today to a single ERP system,” says Surya Bhardwaj, Vice President, India Applications, Oracle India. ERP is an amalgamation of three very important components; Business Management Practices, Information Technology and Specific Business Objectives. ERP consolidation offers a single data store that serves the entire company, irrespective of its size and depth of offerings.

the market. This will also motivate the companies to improve other facilities that directly or indirectly contribute to the working of ERP and make use of facilities like image Enabled ERP system and ERP data capture. Wireless ERP has a huge market potential which is evident from the fact that big players like SAP and PeopleSoft have penetrated the segment. However, major concerns like privacy issues, message persistency, multiple device compatibility and connection speed have to be taken care of before wireless ERP bears fruit.

“Having a common, global and standardised platform not only reduces the complexity of multiple systems, but also gives the required flexibility to expand into new markets,” he adds. Rishi Bansal, the VP, Global Business of Merino Services, a global partner of ERP vendor Infor echoes similar views. “We are deploying a 'single-instance' implementation for our client Metito in Sharjah, Dubai, Egypt and Indonesia,” he says. Though single-instance implementation is being accepted by the organisations gradually, the adoption largely depends on maturity of the organisations. “As long as there are provisions in ERP for consolidation across different business units, 'single-instance' adoption will be a reality,” concludes S Sunderaraj, Senior Vice President, Indian Operations & Business Consulting Group, Ramco Systems.

—gyana.swain@9dot9.in

CTO FORUM thectoforum.com

21 JANUARY 2010

HORIZONS

FEATURES INSIDE

Sense and Simplicity Where simplicity and technology intersect. Pg 30 Customer is Always Right 7-steps to better customer experience in 2010 Pg 31

ILLUSTRATION: SANTOSH KUSHWAHA

I Making Game Theory Work for Managers

A new model generates answers representing the best compromise between risks and opportunities in all likely futures. BY HAGEN LINDSTÄDT AND JÜRGEN MÜLLER

CTO FORUM 21 JANUARY 2010

thectoforum.com

n times of uncertainty, game theory should come to the forefront as a strategic tool, for it offers perspectives on how players might act under various circumstances, as well as other kinds of valuable information for making decisions. Yet many managers are wary of game theory, suspecting that it’s more theoretical than practical. When they do employ this discipline, it’s often misused to provide a single, overly precise answer to complex problems. Our work on European passenger rail deregulation and other business issues shows that game theory can provide timely guidance to managers as they tackle difficult and, sometimes, unprecedented situations. The key is to use the discipline to develop a range of outcomes based on decisions by reasonable actors and to present the advantages and disadvantages of each option. Our model shifts game theory from a tool that generates a specific answer to a technique for giving informed support to managerial decisions. Several factors in today’s economic environment should propel game theory to a prominent place in corporate strategy. The global downturn and uncertain recovery, of course, have prompted radical shifts in demand, industrial capacity, and market prices. Some companies, emboldened by the crisis, have tried to steal market share. New global competitors from emerging economies, particularly China and India, are disturbing the established industrial order.

NEXT HORIZONS

GA M E T H E O RY

They use new technologies and business models and even have novel corporate objectives, often with longer-term horizons for achieving success. These uncertainties can paralyze corporate decision making or, perhaps worse, compel managers to base their actions on gut feelings and little else. Game theory can revitalize and contribute clear information to decision making but only if its users choose a set of inputs detailed enough to make the exercise practical and analyze a range of probable scenarios.

Decades old and misunderstood Game theory as a management tool has been around for more than 50 years. Today, most university business students are introduced to the idea through the classic “prisoner’s dilemma.” This and similar exercises have instilled the idea that game theory generates a single solution representing the best outcome for reasonable players. In academic settings, game theory focuses on logically deriving predictions of behaviour that are rational for all players and seem likely to occur. It does so by seeking some form of equilibrium, or balance, based on a specific set of assumptions: the prisoners aren’t aware of each other’s actions, can give only one answer, and so on. But the real world is messier than the neat environment of the prisoner’s dilemma, and game theory loses some traction when faced with practical, dynamically evolving business problems. Companies using this approach often fail to strike the right balance between simplifying a problem to make it manageable and retaining enough complexity to make it relevant. In addition, decision makers often get a single proposed solution without understanding clearly the assumptions that went into its formulation. This problem is especially troublesome because solutions that seek a universal equilibrium among players in a sequence are sensitive to the initial conditions presented and to the assumptions used in deriving an answer. We have developed a model that addresses these objections. Instead of predicting a single outcome, with all factors balanced, the model first generates a narrow set of strategic options that can be adjusted to account for changes in various assumptions. Instead of solving an individual game, the model automatically involves a

Exhibit 1

Three Scenarios Increase in total demand for rail services1

Incumbent's cost disadvantage

Competitive scenarios

Low 3 Coexistence: Incumbent retains market leadership

High High

Low Low

High

1 Market takeover by entrant Low: Single route/ closed market

2 Incumbent actively blocks entrant

Medium: Network with one center

High: Polycentric network

Relative network advantage of incumbent 1Degree of change in rail's share of all travelers (compared with those opting for other forms of transport) as a result of new entrant in market.

sequence of several games, allowing players to adjust their actions after each of them, and finds the best path for different combinations of factors. As one result, it supports executive decisions realistically by presenting managers with the advantages and disadvantages of the strategic options that remain at each stage of the progression. In a second step, the model finds the “best robust option,” considering its upside potential and downside risks under all likely scenarios, assumptions, and sensitivities as time elapses. This approach is different from attempts to look for equilibrium in an artificially simplified world.

GAME THEORY AS A MANAGEMENT TOOL HAS BEEN AROUND FOR MORE THAN 50 YEARS. Today, most university business students are introduced to the idea through the classic “prisoner’s dilemma.”

Entrant's share of total profit Low

High

Let’s say, for example, that two companies in the global machinery market face an attacker from China planning to open its own multipurpose factory. Depending on myriad assumptions about cost structures, customer demand, market growth, and other factors, the best strategy in one scenario could be for the incumbents to cut prices. In a second scenario, using slightly different assumptions, it could be best to wait until the entrant acts and then to secure the greatest value by reacting appropriately. Traditional game theory delivers the best answers and equilibriums, which could be completely different for each scenario. Then it tries to predict the most likely scenario. But you can’t analyze uncertainty away, and the traditional approach actually offers management a series of “snapshots,” not a recommendation based on the overall picture. Our model, in contrast, examines how assumptions and actions might change and looks at possible gains and losses for each player in a dynamic world. In the example of the machinery companies, the best robust option could be to leave room for the entrant in a particular niche, where the incumbents are weakest and there’s little risk that the entrant could expand into other segments. Our model seeks to balance simplicity and relevance by considering a likely set of actions and their effect on important metrics such as demand and profit. Experience and an understanding of the various actors’ sensitivities to different situations guide the

CTO FORUM thectoforum.com

21 JANUARY 2010

NEXT HORIZONS

GA M E T H E O RY

analysis. By considering only the most relevant factors, the model manages complexity and, at the same time, creates transparency around important break points for the key drivers. One such break point could be how strongly the market must react to an attacker’s move before an incumbent’s best strategy shifts from coexistence to counterattack. The best way to understand the model is to examine it in action.

Game theory and European rail After years of debate and delay, the deregulation of passenger railways in the European Union appears to be gaining momentum. Cross-border passenger service is to be fully open to competition from January 2010. Some member states, including Germany, Italy, Sweden, and the United Kingdom, have taken the initiative and begun opening domestic long-distance passenger rail service to competition, as well. The experience of other deregulated industries provides rail operators with some lessons, such as the futility of price wars, which generally destroy an industry’s profitability. But the unique characteristics of rail make it exceptionally difficult to predict how competition will alter the playing field. In passenger rail service, for instance, network effects are prevalent, as routes connecting passengers to numerous cities and towns tend to be highly interdependent. Certainly, new entrants will try to skim

off some of the most profitable point-topoint routes. Despite significant upfront capital expenditures, these challengers will probably try to use lower operating costs to undercut the incumbents’ fares. Beyond that, it remains to be seen how and where the attackers will attack and how incumbents will defend themselves. Besides mutually destructive price wars, what options do the incumbents have? Should they rewrite their schedules to compete with the attackers’ timetables headto-head? Would it make sense for them to emphasize their superior service or to compete on price by stripping away frills? Should they concede some minor routes to the new entrants in hopes of limiting the damage or fight for every passenger? To address these questions, the model we developed uses game theory to understand the dynamics of the emerging competition in long-haul passenger rail routes. It breaks down the complex competitive dynamics into a set of sequential games in which an attacker makes a move and an incumbent responds. From the perspective of the attackers, the range of options available can be distilled into four main choices. The attackers could imitate the incumbents by providing similar or identical service. They could go on the offensive with a more attractive service—for instance, one that is cheaper or more frequent. They could specialize by offering a niche service, probably only at peak hours,

Exhibit 2

The Influence of Pricing Increase in total demand for rail services1

Incumbent’s cost disadvantage

Competitive scenarios

Low 3 Coexistence: Incumbent retains market leadership

High High

1a Market takeover by entrant

Low Low

High

1 Market takeover by entrant Low: Single route/ closed market

2 Incumbent actively blocks entrant

2a Captive market for incumbent

Medium: Network with one center

High: Polycentric network

Relative network advantage of incumbent 1Degree of change in rail's share of all travelers (compared with those opting for other forms of transport) as a result of new entrant in market.

CTO FORUM 21 JANUARY 2010

thectoforum.com

Entrant's share of total profit Low

High Changes resulting from very high price sensitivity of passengers

that isn’t intended to compete with the incumbents across the schedule. Finally, they could differentiate by providing a clearly distinctive service, such as a low cost offer focused on leisure travelers, with suitable timetables and less expensive, slower rolling stock. Likewise, the range of responses available to incumbents on each route under challenge can be broken down to their essence: to ignore the attackers by not reacting at all; to counterattack by contesting the entry through changes in price, frequency of service, and schedules; to coexist by ceding some routes and learning to share them; or to exit a route by stopping service on it. These initial steps in setting up a game theory model are straightforward. The crucial element is to create a list that is both exhaustive and manageable. But the world is dynamic, and the payoffs for each player depend heavily on the details. Four factors, which must also be included in the rail model, can significantly affect the outcome. Total changes in demand. What will happen to demand with each move by an attacker and response by an incumbent? When offered a broader, more comprehensive choice of rail links, passengers could change their behaviour—for instance, travelling by train instead of car or plane. Cost differences. New players typically have significantly lower operating costs than incumbents, which, however, generally enjoy economies of scale. But a higher degree of complexity and public-service obligations, such as maintaining uneconomical routes, often negate this advantage. Network advantages. Incumbents almost always have a network advantage, since attackers rarely replicate an incumbent’s entire system. (Many routes, intrinsically unprofitable by themselves, are valuable only as feeders to the larger network.) Passengers generally prefer seamless connections a preference that plays to the incumbents’ strengths, especially to and from points beyond the major routes. Price sensitivity. Attackers typically charge lower fares, and the degree of difference needed for passengers to switch lines or modes of transport (from cars to trains, for instance) is critical to the outcome. In the common approach to game theory,

GA M E T H E O RY

analysts look at dozens of permutations of actions and reactions, choosing those they feel are consistent and mutually balanced, as well as most likely to occur. Then they make assumptions about these or other factors. The result is a solution, with one particular set of assumptions, derived from all the interests of all the players. The solution could, for instance, be to fight the new entrant tooth and nail on all fronts. But in looking at the problem, we found several conditions in which the players’ interests could be seen as consistent and mutually balanced. Just as interesting, the results were sensitive to our initial assumptions: in other words, when we slightly modified an assumption about, say, changes in demand, the results would be very different. From this perspective, our model resembles a business simulator, allowing executives to get a clear understanding of the likely evolution of competition under differing conditions. It helps companies to generate the best option as the moves of competitors become clear.

The outcome of the rail analysis What did the model say about European passenger rail? Consider, first, one set of conditions. In this scenario, the incumbent operates a fairly large network and has enjoyed monopoly advantages in particular, relatively high profits. But because of the monopoly legacy, the incumbent suffers from operational inefficiencies and a sizeable cost base. Overall demand is elastic: customers are likely to travel more by rail if service improves and quite likely to accept low-price offers. A new company with a substantially lower cost base considers cherrypicking a few of the more attractive routes by offering improved service. This model suggests that although the attacker enjoys lower costs and seems to have a favorable starting position, it will probably take only a sliver of market share, and that thanks largely to a general increase in rail use. The incumbent will remain dominant. Seeing the likely outcome of the attacker’s specialized or niche entry, the incumbent’s executives should conclude that a strategy of tolerance would be best. Only a small share of the market is at stake, and the incumbent could lose much more if it engaged in a costly battle for this sliver-

NEXT HORIZONS

OUR MODEL SEEKS TO BALANCE SIMPLICITY AND RELEVANCE BY CONSIDERING a likely set of actions and their effect on important metrics such as demand and profit. for instance, by waging a destructive price war or using other expensive tactics. If the attacker is more aggressive, the incumbent’s best answer would be to fight back with tactics including aggressive price competition, targeted marketing activities, and more frequent and better service on the routes under attack. Note, however, that this would substantially lower profits for both players. To cover the full range of possibilities, the model can manipulate each variable. Under certain circumstances (if the demand reaction is muted, the incumbent’s cost disadvantage high, and its network advantage small) entrants have the inside track and could probably take control of the market. When circumstances favor the incumbent a little more (because its network advantage is stronger or its cost disadvantage smaller) it will probably have strong incentives to lower prices preemptively to prevent a possible attacker’s entry. If conditions are more ambiguous, the incumbent may have to settle for coexistence, although it can probably retain market leadership. The attacker’s share of the industry’s profits would vary significantly, depending mainly on the incumbent’s network advantage (Exhibit 1). When we run the European passenger rail model through an array of different situations, a critical factor appears to be the way demand reacts to liberalization. Will the new offerings seduce travelers to take trains rather than cars or jetliners, or will overall demand remain stagnant, leaving rail com-

panies to battle for an unchanged pool of customers (Exhibit 2)? If the attacker’s entry doesn’t stimulate demand, two operators cannot profitably share most routes: high fixed costs make many of them natural monopolies supporting only a certain level of capacity. A weak incumbent for instance, one with major cost disadvantages or few network benefits could be squeezed out by an agile attacker. A strong incumbent could cut fares before the attacker committed itself to any investment, dissuading it from making the challenge. In the end, the competitors will face a winnertakes- all situation, with only one left in the market. When rail demand can be stimulated, players will probably coexist profitably. But the model suggests that even when the attacker enjoys the best conditions, the incumbent is likely to retain market leadership. Reasonable attackers will have an incentive to enter only on a small scale that the incumbent can usually tolerate. More aggressive moves from either side would trigger ruinous price wars or service expansions, destroying the industry’s overall profitability. Finally, at each moment, incumbents almost always have one best robust option that conserves much more of their profits than any other course. Quite often, deviating from that option reduces the entire industry’s profits significantly. But unlike a solution based on traditional game theory a solution optimal only for a single precisely defined future our model generates an

CTO FORUM thectoforum.com

21 JANUARY 2010

NEXT HORIZONS

IT SIMPLICIT Y

answer that represents the best compromise between risks and opportunities across all likely futures. Unlike the answers suggested by traditional game theory, this one does not require all competitors to behave according to a narrowly defined rational equilibrium at each moment. The transparency of our approach helps executives understand the break points of a strategy: how much reality must differ from its assumptions before a new strategy is needed. Although we focus here on European passenger rail, our model shows how game theory can be applied to many complex

environments and produce results informing many strategic decisions. We’ve applied the model to other problems, with similarly enlightening results. In health care, for example, we examined the dynamics of the commoditization of certain drugs in particular, after Asian manufacturers offered higher-quality versions of them. We also looked at the strategic options of companies in the chemical industry in the wake of recent overcapacity and reduced demand. Game theory is a powerful framework that enables managers to analyse systematically the ties among interactions between actors

in a market and to develop appropriate competitive strategies. But it’s helpful only if executives expect a tool that helps them make informed decisions based on a range of market actions by each player, not a single answer that solves the whole riddle.

—Hagen Lindstädt is the head of the Institute for Management at Karlsruhe University, and Jürgen Müller is a principal in McKinsey’s Stockholm office. This article was published in McKinsey Quarterly's Dec 2009 issue. We are reproducing this article with prior permission from McKinsey.

Sense and Simplicity Where simplicity and technology really intersect. BY ANDREW BAKER

he prevailing wisdom says that technology is supposed to be getting simpler all the time. Corporate leaders insist on circumventing expensive technology experts, as technology is getting simpler and better. I touched on this fallacy very briefly in a recent article on information security investments. While technology has become easier to use in many ways, the complexity of technology has actually significantly increased over a period of time. This has also lead to greater challenges in the management of technology infrastructure and technology teams. We are still in the relative infancy of the technology industry. There is a lot of growth to be attained before this industry gets fully matured. It is not unreasonable to suggest that the current pace

CTO FORUM 21 JANUARY 2010

thectoforum.com

of change will continue unabated for at least another 15-20 years. By then we may find viable ways to spread simplicity throughout the entire infrastructure. But that time is not now. For now, all we can do is move the complexity from one place to another. For example, let’s take a look at the microprocessor. In 1999, Intel released the 32-bit Pentium III microprocessor at speeds of 450 and 500 MHz, with 9.5 million transistors on a 128 mm² die, using a .25 micron (250 nm) fabrication process. By 2009, Intel was selling mainstream desktop processors such as the 64-bit quad-core Core i5 family, which was released at speeds of 2.66 GHz, with 774 million transistors on a 296 mm² die, using a 45 nm (nanometer) fabrication process. That’s not an increase in simplicity by any stretch of the imagination. Technology has, over the years, facilitated simplicity for endusers in many ways. It has enabled people who know little about technology to harness considerable power and functionality, which required greater knowledge in the past. It has enabled people to perform simple jobs more rapidly, and granted them the ability to perform complex jobs without understanding the complexity behind the work. We have taken the massive computing power available to us at the desktop, and added more code to make things user-friendly for end users. However, this simplicity of use has come at a price. What we have done is transferred the complexity from the front end of the organisation to the back end. It has not been removed; it has merely been displaced.

NEXT HORIZONS

CU S TOM E R S E RV I CE

As technology improves, the lower end of the food chain becomes commoditised, and can be easily outsourced because it NO LONGER ADDS COMPETITIVE ADVANTAGE

Server virtualisation is a popular area where we can see this transfer of complexity from one place to another. Basically, server virtualisation allows you to take one large physical machine and carve discrete server instances out of it so that applications can be isolated from each other at a logical level. Some of the benefits that come from using this technology include: Faster provisioning of new servers More precise allocation of resources More disaster recovery options Here are just a few of the other things that virtualisation also brings to the table: Greater dependency on network performance More single point of failure scenarios Greater collateral damage because of the system, security or storage problem Increased training requirements for staff An environment where virtualisation is used extensively requires techies who can manage not just networking or servers or storage, but all three. In the event that the staff responsible for the virtualised infrastructure is skilled only in one or two of the needed disciplines, it will be necessary for multiple team members to get involved in all troubleshooting endeavours in order to effectively solve problems in the environment. Needless to say this requires more time and effort, and there is a clear indication that complexity cannot be reduced across the board. As technology improves, the lower end of the food chain becomes commoditised, and can be easily outsourced because it no longer adds competitive advantage. We see this with call centres and desktop support, where the cost to provide the service is much lower

than in-house staff. While this is happening, however, the higher end of the food chain is becoming more complex and sophisticated. Software-as-a-Service (Saas), Cloud Computing, Grid Computing and High-Performance Computing (HPC) require more expertise and skill in planning, architecture, implementation and integration in a variety of technology disciplines. And no matter how you slice it, this means increased costs (for increased benefit). You do pay more, whether in increased wages per IT professional, or in a need for more professionals to cover all the specialised areas. But, the benefits are also huge when you implement these technologies correctly. The investments made in IT professionals will pay back dividends in increased flexibility, improved productivity, additional revenue opportunities, and reduced business risk. As the saying goes, it takes money to make money. This holds true of technology management and deployment. Proper investments in people, tools, and processes will yield solid, sustainable results. Conversely, an excessive focus on cost-cutting will strip the organisation of vital capabilities and flexibility, and ultimately undermine its competitive advantage.

—Andrew Baker is an accomplished IT Leader and former CIO at ARGI, US

The Customer is Always Right

Seven steps to offering a fulfilling customer experience in 2010. BY BRUCE TEMKIN

espite the economic difficulties in 2009, we’ve seen a significant upswing in real customer experience efforts. What do I mean by real? Efforts which address systemic issues like poorly designed interactions, broken processes, outdated business rules, insuffi-

cient customer insight, and cultures that are far from customer centricity. 2010 will likely be an even more active year for customer experience. While many companies will make substantial progress, others will falter. Here is some advice for keeping your customer experience efforts on track this year:

1 Drop the executive commitment facade: It’s very easy for executives to say “customer experience is important.” But it’s much more difficult for them to dedicate the time and energy required to make it a real priority. So in 2010, executives should either get actively involved in customer experience transformation or drop it from their agendas. CTO FORUM thectoforum.com

21 JANUARY 2010

NEXT HORIZONS

CU S TOM E R S E RV I CE

START HERE Develop a customer experience dashboard and manage the results with the same energy that you manage financial results.

2 Accept that you don’t know your customers: When market research teams require long lead times and expensive projects to answer questions about customers, too many organisations go without this insight. But the path to a fulfilling customer experience requires significantly deeper customer insight. So in 2010, companies need to develop voice of the customer programs that provide ongoing and continuous access to customer insights. START HERE Create a voice of the customer programme with a cross-functional team that focuses on four components: listening to customers, interpreting the feedback, reacting to the insights, and monitoring results from actions over time. 3 Keep from getting too distracted by social media. Twitter, Facebook and other social

CTO FORUM 21 JANUARY 2010

thectoforum.com

CUSTOMER EXPERIENCE RESOLUTIONS FOR 2010

eeping up the tradition from 2008 and 2009, I’m providing customer experience resolutions for the New Year: The best time to plant a tree is twenty years ago. The second best time is now. While most executives think customer experience is important, many companies haven’t treated it strategically. That lack of attention will become a serious competitive problem as more companies expand their efforts. With that in mind, here are 10 New Year’s resolutions that your company should consider

making about its customer experience efforts (some are carry-overs from last year)… 1 We shall put in place a robust voice of the customer program 2 We shall stop playing with social media and put it to good use 3 We shall treat customer service as a loyalty-driver, not a cost center 4 We shall go beyond just fixing problems and inspire brand promoters 5 We shall establish clarity in our brand, internally and externally

6 We shall identify a senior executive to lead the transformation effort 7 We shall help new customers get value from us faster and easier 8 We shall improve the usability of all self-service interactions 9 We shall communicate more clearly with customers across all channels 10 We shall make our culture more customer-centric THE BOTTOM LINE: Put customer experience on the top of your 2010 agenda!

CU S TOM E R S E RV I CE

media sites may seem sexy, but they aren’t the only channels for customer feedback. Other channels like call centres can provide richer insight. So in 2010, companies need to learn from social media feedback, but not overreact to it. START HERE Treat social media as one of many listening posts in a comprehensive voice of the customer program that examines both structured and unstructured feedback.

4 Stop squeezing the life out of customer service. My research shows that consumers care more about good customer service than they do low prices. It also turns out that many customer service interactions are critical moments of truth that drive customer loyalty. But companies often treat customer service an unwanted stepchild, focusing almost exclusively on aggressive cost-cutting. So in 2010, companies need to start viewing customer service as a strategic asset. START HERE Measure customer service organisations based on how effectively they

help customers instead of efficiency metrics like average handle times.

5 Restore the purpose in your brand. True brands are more than just colour palettes, logos, and marketing slogans, they’re the fabric that aligns all employees with customers. They represent a firm’s raison d’être. Unfortunately, many companies have lost this sense of purpose in their brands. So in 2010, companies need to redefine their brand and embed it in the hearts and minds of all employees. START HERE Translate your brand into promises you will make (and keep) with customers across every key touch point. 6 Don’t expect employees to get on board. Employees are often the most critical element of any customer experience effort. But firms can’t just hope that everyone will participate in these change initiatives. So in 2010, companies need to actively focus on engaging employees at every level across the organisation in their customer experience efforts.

NEXT HORIZONS

START HERE Communicate why customer experience is important to employees and allow them to participate in defining how to make improvements.

7 Translate customer experience into business terms. My research uncovered a strong correlation between customer experience and loyalty. An average $10 billion company can generate $284 million of additional revenues from customer experience improvements. But most companies don’t fully understand the link between customer experience and business results. So in 2010, companies need to identify how customer experience impacts their financial results. START HERE Engage the CFO to develop a model which shows the impact that customer experience has on customer loyalty.

—Bruce Timkin is VP & Principal Analyst, Forrester Research. The views expressed here are his personal. You can follow him at www.experiencematters.wordpress.com

CTO FORUM thectoforum.com

21 JANUARY 2010

THINKINGBEYOND CHRIS CURRAN | chris.curran@diamondconsultants.com

CHRIS CURRAN is Diamond Management & Technology Consultants’ chief technology officer and managing partner of the firm’s technology practice. He writes the CIO Dashboard blog at www.ciodashboard.com

Can Haptics Touch the Enterprise? If used intelligently, the technology can improve a bigger problem — the miscoding.

I HAD the chance to drive the 2010 Lexus HS 250 hybrid while my car was in the shop. While it’s good to see more hybrids hitting the road, the more interesting thing to me was the new navigation system and the controller that drives it. Aside from several mediocre dial-oriented efforts from BMW, Audi and others, most

navigation systems these days seem to be touch screens, both factoryinstalled and add-ons. The new Lexus controller looks similar at first glance, but it’s a joystick rather than a dial and had a solid but smooth feel to it. The really cool feature is that when you direct the mouse pointer to a control button

WHAT IS HAPTIC TECHNOLOGY? Haptic technology, or haptics, is a tactile feedback technology which takes advantage of a user's sense of touch by applying forces, vibrations, and/or motions upon the user. This mechanical stimulation may be used to assist in the creation of virtual objects (objects existing only in a computer simulation), for control of such virtual objects, and for the enhancement of the remote control of machines and devices (teleoperators). It has been described as "(doing) for the sense of touch what computer graphics does for vision". Although haptic devices are capable of mea-

suring bulk or reactive forces that are applied by the user, it should not be confused with touch or tactile sensors that measure the pressure or force exerted by the user to the interface. Haptic technology has made it possible to investigate in detail how the human sense of touch works by allowing the creation of carefully controlled haptic virtual objects. These objects are used to systematically probe human haptic capabilities. These new research tools contribute to the understanding of

CTO FORUM 21 JANUARY 2010

thectoforum.com

on the UI, the controller “bumps” a bit so you know you are on the button and it feels a little “sticky” when you are over each button. This allows you to glance at the display and then guide the cursor in the general direction while focusing back on the road. When you hit the button, you feel it. Most of us are familiar with this idea whether from the Nintendo Wii controller or the button feedback on a BlackBerry Storm. This concept is sometimes called force feedback or probably more accurately, haptics. Popular Science has a nice haptics video (http://science.discovery.com/ videos/popscis-future-of-haptics. html) that describes some of the applications in the labs.

Haptics in the enterprise how touch and its underlying brain functions work (see References). The word haptic, from the Greek (haptikos), means pertaining to the sense of touch and comes from the Greek verb (haptesthai) meaning to “contact” or “touch”. — Source: www.wikipedia.org

Driving back home from the dealership, I wondered what types of applications would benefit from a haptics-augmented interface. The first thing that came to mind was the ATM. I really hate how most of them out there combine the hard buttons on the machine with the text labels on the screen – they never seem to line up! I think a click feedback on

CIO' S ROLE

the ATM touch screen makes a lot of sense. Maybe they are already a few of them out there but I haven’t seen them and believe me, I’ve used just about every ATM in major airports. Digging a little deeper, what types of applications require the user to focus on multiple things at once (e.g., the road, navigation system) and are prone to errors? How about customer service applications – maybe those in the call centre? My partner Bill Abbott who is an expert in call centre productivity (and coauthors Diamond’s Information Advantage blog) says that one of the biggest and growing issues in the call centre is proper coding of the reasons for calls. He says: I think that this kind of technology could improve another problem we see that is a close cousin of error rates — miscoding. A lot of call centres have really bad coding for a number of reasons; among the reasons is the use of long drop down lists or radio buttons. I wonder if good haptics could improve call coding which in turn fosters great root cause analysis that in turn drives down the incident of calls (suppose you can reduce volumes with better data by 2-5%) or yields insight on reasons and significance for churn. I’m not sure how a design incorporating haptics would address the coding problem, but I’m open to ideas. What I am sure of is that more enterprise UI opportunities will crop up that are candidates for better touch-oriented feedback systems like those on the Lexus Touch controller. As always, I’m very interested in your thoughts and examples you have seen in practice. Thanks for reading.

T H I N K I N G B E YO N D

The CIO Role: One of Influence or Control? CIOs should work towards influencing the desired outcomes. I’D LIKE to thank Michael Krigsman for inviting me to join him in the IT Failures town hall. The focus of our discussion was on the CIO’s role in project success or failure. The angle I’d like to explore a little more is how much of the CIO’s job is to influence desired outcomes versus personally taking control of troubled (or all major) initiatives. Two of the factors at play are: CIO Style, Skills and Personality Organisation Size and Structure

Style, skills and personality I feel there can be a major disconnect if the CIO’s instinctive style doesn’t gel with the major work at hand. Using a behavioural assessment like the Kolbe A Index (similar to the Myers Briggs), you can understand situations in which you and your co-workers will be most productive. When I took this assessment (I’m a 5 3 8 5), it confirmed that I am a multitasker and experimenter and don’t need more details beyond the basic facts. A CIO with my characteristics would likely lean more to a broader influence role than one that’s more hands-on.

Size and structure Unfortunately, many IT organisations are huge. As a result, CIOs are separated by several layers from the people and projects doing the real work. In these organisations, is it even possible for the CIO to take an active, hands-on role in leading a critical initiative? Furthermore, are there any expectations in the minds of the CIO’s peers and boss (CEO, COO) that he/she play such a hands-on role?

It seems like there is a size beyond which the CIO can no longer regularly be hands on. My gut says that this is for companies over the $5-7 billion revenue mark or so. For these organisations, the CIO must be a master of influence.

Influencing project success Influence is more of an art than a science, so these practices may seem a bit fluffy. That said, I think there are some practical things that can be done toward achieving them. Reward problem solvers – One mentor of mine would enter the weekly management meeting for a $100M software overhaul program for a telecom carrier and offer $100 for the best issue. Increase transparency – Long and generic status reports make me crazy. Those that highlight the top 3 management issues and summarize milestones and budgets are better. Publicise accountability – Project managers should have the skills and authority to make decisions and the accountability for success and failure. Emphasise right person for the right job – When an organisation takes on a new vendor or a new technology, by definition it has few relevant skills. An influential CIO can emphasize that hiring new staff or a consultant to assist is not just acceptable, but necessary. As I wrap up this post, I think I have convinced myself that the CIO role is one of influence for larger firms and a balance of influence and control for medium and small firms. —chris.curran@diamondconsultants.com

“Influence is more of an art than a science, so these practices may seem a bit fluffy”

CTO FORUM thectoforum.com

21 JANUARY 2010

M A N AG E D S E R V I C E S

IMAGING: SANTOSH KUSHWAHA

NETWORK OF THE FUTURE

MANAGED SERVICES:

A CIOâ&#x20AC;&#x2122;s Perspective Growing number of enterprises are realising the importance of outsourcing the data centre operations to MSPs. BY ASHWANI MISHRA

ITâ&#x20AC;&#x2122;S AN understatement to

say that IT organisations are passing through exceptionally challenging times. For many, budget cuts were worse than expected. Organisations are forced to take a serious look at what is and is not central to internal IT, assessing their teams and moving people to strategic business areas. 36

CTO FORUM 21 JANUARY 2010

thectoforum.com

Organisations, which traditionally kept services in-house, are now evaluating whether to selectively outsource IT functions like monitoring and management to third parties in order to take maximum advantage of the predictable monthly expense that managed services offer. Most CIOs cringe at the thought of spending more on technology each year. For this very reason, even though the slowdown is becoming a thing of the past, enterprises have realised that outsourcing their data centre operations is a good way to get more out of their existing IT infrastructure. With enterprises facing issues such as manpower retention, deployment of complex applications, 24x7 monitor-

The biggest benefit of outsourcing data centre operations to managed service providers is lower total cost of ownership.

M A N AG E D S E R V I C E S

ing, security, business continuity, etc. along with the growing need to provide quality services both to customers and employees, outsourcing data centre operations to third party providers is becoming a key driver to survival. “Data centres are becoming necessary evils and fast gaining mindshare in management woes due to the high capital and running costs. Costs are increasing due to levels of redundancies required to be built to ensure high availability. Scarcity of fundamental resources like power and space are a major challenge. Managing legacy data centres has become challenging due to an unoptimised environment within them,” says Anil Jaggia, Head-IT, HDFC Bank. According to a Gartner report, data centre capacity will grow from 1.3 million square feet in 2007 to 5.1 million square feet by 2012 with a compound annual growth rate of 31 percent in this period. With this growth, the shift from captive to third party data centre service providers is increasingly making more sense for companies who want to focus on their core competencies. Companies require huge investments in order to maintain support infrastructure, whereas third-party outsourcing takes away the burden for doing so. Having an in-house data centre calls for huge IT investments. Besides, it requires significant time, IT infrastructure and expertise. And this does not end here. Companies would incur further costs in managing and maintaining the data centre, with growing complexities. With data centre operations outsourced, CIOs could take a breather and forget nagging daily concerns. Issues such as power supply, reliability, bandwidth and storage space become somebody else’s problems. Stringent service level agreements will ensure that a high quality of service offered by outsidecompanies is a contractual obligation. Industry experts say that the reasons cited above are the key drivers for managed data centre services. By outsourc-

ing data centres to Managed Service Providers (MSPs), enterprises not only save on costs but also have a huge advantage in terms of access to some of the latest technologies such as WAN optimisation, virtualisation, cloud computing, disaster recovery (DR), etc. through the MSP's who provide these services / technologies. Today, India has twice as many captive data centres as the third-party ones. According to research agency Data Monitor, in the next three years more than 90 percent of the estimated seven million square feet of additional data centre space will be occupied by the third-party providers. Studies reveal that enterprises would typically save anywhere between 15-40 percent in operational cost by outsourcing their data centre operations and increase the uptime to 99.995%. But can these cost savings be calculated in detail?

Can outsourcing make costs predictable? There is no doubt, and CIOs would agree, that data centres today are the most expensive components of real estate. In addition, the presence of servers results in the consumption of vast amounts of electricity and requires even more power to run the cooling systems to keep the data centre and its equipment from overheating. Research suggests that 60 percent of the power used in the data centre is used for cooling. Many data centre service providers believe that outsourcing of operations can make costs predictable for enterprises. The biggest benefit of outsourcing data centre operations is lower total cost of ownership. By outsourcing to MSPs, enterprises don’t have to spend more money on deploying the necessary IT infrastructure, hiring skilled manpower and spending on requirements like power and air conditioning. For example, with some cloud computing services, companies are able to cut costs by at least 20-25 percent. This is a significant amount

NETWORK OF THE FUTURE

Studies reveal that enterprises would typically save anywhere between 15-40 percent in operational cost by outsourcing their data centre operations and increase the uptime to 99.995 percent. for companies who can invest these cost savings in other critical areas. Moreover, data centres have IT and non-IT components requiring domain knowledge in various areas like electrical, mechanical, air-conditioning, fire fighting, networking, systems and security. The knowledge in all these areas may not be feasible for many enterprises to acquire and maintain in a cost effective manner. Also, as part of service delivery or SLA, a stringent monitoring and management mechanism is put in place. Frequent reports can be extracted from these tools to help enterprises better monitor their infrastructure. Capacity reports and analysis could also help predict costs better in majority of the cases.

Enterprise demands Traditionally, firms chose to outsource their data centre activities purely for cost reduction purposes. Today the investment focus has moved toward choices that will move the business closer to its suppliers and customers and shift IT's role from delivering tactical benefits to strategic contributions. “While selecting a partner, it is important to figure out whether data centre hosting is their core business and there are enough resources and planning done for building it for high availability. It is important to know whether the setup is future-proof with ease of adaptability to new technologies,” says Rajesh Nair, CIO, Maersk. “It is also imperative for providers to have tie-ups with vendors/partners for technology support to meet all kind of business needs through easy integrations,” he adds.

CTO FORUM thectoforum.com

21 JANUARY 2010

F NO HOLDS BARRE D

NIAMH SPELMAN

ujitsu may be a small player when it comes to the server market in India. But what makes it different and unique is its approach to dynamic infrastructure and end-to-end solution offerings. Niamh Spelman - Senior VP, Sales Cluster, Emerging Markets, Fujitsu speaks to Rahul Neel Mani on how Fujitsu is addressing this space. Excerpts:

How do you see customers in India reacting to solutions offered from Fujitsu as the market already has the presence of bigger global technology providers? Our interaction with customers, partners and analysts so far indicate that there is room for Fujitsu in the existing market as there is a huge requirement for infrastructure in India. Behind this entire infrastructure lies IT, which acts as an enabler. This is what differentiates India from other markets. How do you engage with your customers or in other words what is Fujitsuâ&#x20AC;&#x2122;s go-to market strategy? Our business strategy focuses around dynamic infrastructure. We believe customers are looking for professional guidance to meet their business demands. India is a very good example of this kind of solution. The skill is certainly there among customers to take all the components and integrate them and create the solution for their business. So, it is not a question of skills, but it is all about speed. The rate of implementation that customers want to create and grow, leads them to miss out on time. We have seen this in some Euro-

pean markets. Lack of time is something that hits IT organisations. When a business needs something, they need it as urgently as yesterday. They are not bothered about the IT plans, designs etc. The economy over the last year and a half has been bad, and that has resulted in trimmed IT budgets. There is a strong need for IT to have standardisation, integration and hunger for new concepts that will allow CIOs to be agile and quick to deploy solutions. This is where we see dynamic infrastructure meet enterprise requirements. A few other vendors are also promoting dynamic infrastructure to the enterprises. How different is Fujitsu? Dynamic infrastructure for us is an umbrella under which we have a large portfolio. You can look at this as a set of components that fit into a solution and a delivery model. So you have various levels of integration that happens within the dynamic infrastructure and then you have different models of delivery. Are you talking about models like infrastructure-as-aservice (IaaS)? There are various choices. They can either own the infrastructure

CTO FORUM 21 JANUARY 2010

thectoforum.com

or lease it. They can also have the infrastructure delivered to them in models that suit their business needs in terms of usage or by capacity. We also have a managed services model that is based on service level agreements (SLAs). How would you offer IaaS from the initiation to the delivery of service? In different ways. In some cases, it can be done end-to-end, while in another cases it can be done with the help of our partners. It also depends if a company only has local presence or whether it has a global reach. The services would be based on customer needs, their location and the kind of service suites they require. Customers can look at their infrastructure as a single datacentre delivering a whole set of services and applications or they could see the infrastructure in logical groupings. Within these groupings, we could have selective outsourcing etc. How would Fujitsuâ&#x20AC;&#x2122;s dynamic infrastructure support the continuous development of IT within enterprises? We have a broad view of our dynamic infrastructure offerings which is evolutionary in nature. To have a

NAME: Niamh Spelman DESIGNATION: Senior VP, Sales Cluster, Emerging Markets ORGANIZATION: Fujitsu PRESENT JOB ROLE: Respopnsible for growth in the emerging markets (CIS & Russia, Middle East, Africa & India PREVIOUS JOB ROLE: Led company's Nordic region and before that was the MD of Fujitsu Ireland

NIAMH SPELMAN

NO HOLDS BARRE D

DYNAMIC INFRASTRUCTURE IS THE

NEW CHOICE OF CIOs

DOSSIER

CTO FORUM thectoforum.com

21 JANUARY 2010

NO HOLDS BARRE D

NIAMH SPELMAN

fully integrated, virtualised stack across all layers in the data centre and with the right kind of tools that ease management is a huge task. I cannot think of any provider in the market who can deliver this kind of end-to-end solution. Our dynamic infrastructure would take the complexity out of the customer’s data centre. However, I must say that we are still in the process of developing some tools that can take this complexity out and make life simpler for enterprises.

this platform. This is the gap. Any traditional vendor will be good in individual building blocks, but to translate that into a SLA-based platform is not easy. Typically, this job is carried out by a third-party system integrator. The problem with such type of system integrators is that they have their own approach and one implementation might be different from the other. There is no standardisation and many customers perceive this as a risk in their IT stack.

What is the ultimate value that you are trying to bring through this offering? If you look at the market today, there are building block providers who have platforms like storage, servers, clients etc. There are service partners providing application level services etc. We feel that there is an important layer in between where people struggle. If you talk to CIOs today, you will find that they are not interested in building blocks anymore. What they are interested in is that their business runs on an IT platform, and they want to define a set of service levels that they expect from

How does it help CIOs? The value that we bring is the set of pre-packaged hardware and software that allows customers to translate their platform into a service level based architecture. Our product Resource Coordinator allows enterprises to manage both physical and virtual environments. The solution allows orchestrating resources, moving applications from physical to virtual and vice versa and managing the environment through a single window. The value proposition is strong because we are hypervisor agnostic. Resource Coordinator is a layered product that sits on top of

“There is a strong need for IT to have standardisation, integration and hunger for new concepts that will allow CIOs to be quick and agile.”

CTO FORUM 21 JANUARY 2010

thectoforum.com

the hypervisor. Take the example of SAP. In the last seven to eight years, Indian enterprises have adopted the SAP ERP, but no one went for a full-blown set up of the solution. Everyone deployed it in modules. The CIOs could have chosen the same provider or a different one, but the fact is that each application module has an underlined hardware that is different from the next one. What we see is various types of SAP modules with different hardware and each one of them sub-optimally utilised. Now if you want to share information, say using a SAP NetWeaver, between these various modules there are issues. In conjunction with SAP, we developed a product called ‘FlexFrame’, which allows users to have a single pool of storage with high-availability built-in. This is 1: n or high availability that means that even if a customer has eight to ten servers, he would require only one or two spare servers. On top of this we can deploy SAP application either on a physical or virtual environment with the flexibility of moving applications from one environment to another. Customers can benefit from this as they can perform their test and development in the virtual environment and move the tested application into the physical environment. Any examples? We deployed this solution in two large media houses - The Times of India and Hindustan Times. There has not been a single instance of unscheduled downtime in the last three years and also the cost of managing the environment has reduced. Any change in the SAP environment is a cause of worry. For example, if you want to put a new upgrade, applications can become unstable. We are trying to provide one single image of the operating system across all the servers, and you have one copy of the application that is common across the servers.

T E CH F O R G OVE R NAN CE

V U L N E R A B I L I T Y M A N AG E M E N T

POINTS

WATCH OUT FOR: VULNERABILITY SCANNING

IMAGING : BINESH PS

PCI DSS SCANNING MANAGED INTRUSION DETECTION

The Devil Lies

in the Details Smart tips for CIOs to shop for the vulnerability management software BOZIDAR SPIROVSKI

CTO FORUM 21 JANUARY 2010

thectoforum.com

REPORTING AND FIX TRACKING

V U L N E R A B I L I T Y M A N AG E M E N T

Vulnerability and compliance

management offerings are springing up like mushrooms. There is a beehive of activity among Software as a Service (SaaS) companies focusing on vulnerability management to extend their reach. Most companies in this market call their SaaS service as “on-demand solutions" for security risk and compliance management. There are five key players who are setting the rules of the game: Random Storm, OutPost24, McAfee, Tipping Point and Qualys. Bear in mind that this list does not include all relevant vendors, so you may want to extend your search. But it’s a representative sample that will help you to review what the competition is offering. The offerings The services are usually delivered as dedicated black box appliances that are placed within your infrastructure. They perform the scanning or IPS/IDS (intrusion prevention system/intrusion detection system), but the results are sent to the cloud where reports are generated. Most companies are offering the usual set of services: VULNERABILITY SCANNING: The basic offer of vulnerability scanning may not be great shakes, but it is definitely comparable to your local vulnerability scanner. PCI DSS SCANNING: Payment Card Industry Data Security Standard (PCI DSS) was an important differentiator of SaaS vulnerability scanning. PCI DSS required a scan certified by the PCI group and performed by a certified company. So the SaaS Vulnerability Management companies got certified and created PCI DSS scans. But for your everyday job, your local vulnerability scanners have the same PCI DSS scans. All you need is to commission the scan four times a year for the PCI DSS audit. MANAGED INTRUSION DETECTION: Much like vulnerability scanning, this is more or less what your local IPS/IDS does, but in this case, the results go out and get

analysed and compared in the cloud. REPORTING AND FIX TRACKING: This element may be one of the differentiators, but local vulnerability scanners are catching up. In a SaaS solution, all results are kept as reports, and you can easily create comparative baseline reports, or even assign tasks to persons for fixing some vulnerabilities. The

T E CH F O R G OVE R NAN CE

system will automatically send reminder e-mails to those persons and re-scan after the configured deadline for fixing. Vulnerability management - Local or managed? In conclusion, both local and managed solutions are existing quite well at the moment. And functionwise they are comparable. So which one should companies look at? The local solution can easily be reconfigured and directed at different targets. It is very flexible and because it is usually installed on a laptop, very portable. It is an excellent choice for anyone who needs to perform scans from different positions in the corporate network. This would include IT security teams, penetration testers, external auditors and consultants.

TippingPoint and Qualys Partner to Integrate IPS with Vulnerability Management Integration offers easy-to-use, automated and accurate “out-ofthe-box” threat mitigation

ippingPoint and Qualys late last year announced a partnership that will provide the ability to quickly defend their networks against the security attacks. TippingPoint Intrusion Prevention System (IPS) will be integrated with Qualys’ QualysGuard Vulnerability Management (VM) solution, allowing organisations to simulate the results of IPS configuration changes against identified vulnerabilities and make the needed changes. The resulting mitigation reports show IT administrators how to remediate these vulnerabilities, which gives them more time to test and deploy patches in a structured manner.

A recent report issued by the SANS Institute, TippingPoint and Qualys found that organisations are extraordinarily vulnerable to attacks at the application level – this includes attacks targeted at customised Web applications or from unpatched user-side applications like PDF readers. Attacks aimed at these applications are often very damaging and are also very quick to impact business operations,

making it critical for organisations to be able to respond quickly to protect themselves. QualysGuard Vulnerability Management actively monitors the network access points on an organisation’s networks to determine where it is vulnerable. The TippingPoint IPS provides active vulnerability protection through its Digital Vaccine Service. Customers of both TippingPoint and Qualys will – in a matter of seconds – get a combined view of their vulnerabilities mapped specifically to the Digital Vaccine filters that virtually patch these vulnerabilities, protecting them from being exploited by the latest viruses and worms.

CTO FORUM thectoforum.com

21 JANUARY 2010

T E CH F O R G OVE R NAN CE

T H R E AT M O N I T O R I N G

The managed (SaaS) solution is stationary, fixed and quite cumbersome to move around. It usually exists in the datacentre as a black box probe, or in the managed service provider as an external scan. It can be configured with the required targets, scheduled to run at regular intervals and perform regular controls. It is a good choice for internal auditors, security officers and

compliance officers, as there is no need for maintenance; it is all handled by the managed service provider. Calculate the optimal price or performance as the SaaS versions are usually yearly subscriptions charged per number of IP addresses to scan. This price may be quite significant, and you are fixed to the block of the IP addresses. On the other

hand, the local scanners require hardware to run on, and you still pay a subscription for the updates of vulnerabilities. So you need to calculate your optimal cost based on your requirements and expectations. Bozidar Spirovski of Information Security Short Takes is an expert on security issues. This article is published with prior permission from www. information-security-resources.com

Big Brother is Watching Shared threat monitoring protects enterprises

ecently, Larry Clinton of the Internet Security Alliance presented information to Congress regarding security and protecting privacy in cyberspace. First of all, it is encouraging to hear that these kinds of discussions are being presented. Thanks to Larry Clinton and his team for representing these very important issues. I agree with Larry’s suggestions that compliance cannot resolve our concerns, and more practical means must be established to achieve the needful. If this is so, I would recommend ongoing monitoring as the key. And if monitoring is the key, how does this affect businesses, individuals, and personal privacy? And what role does government play, if any? Can we balance good monitoring and security with privacy? My laptop is monitored constantly by security software. In return for the service, I voluntarily give up some information. However, this information is about my system and not about my credit card data. Do you think a similar solution could be implemented to keep businesses free from harmful attacks? Perhaps compliance, in such a case, would be gained by agreeing to opt in to the monitoring system. Going along with one of Larry’s future objectives – information sharing – threats exposed in such a system could become immediately beneficial to other businesses that are hooked in. Some companies are already attempting this strategy. The general concept is to create a sort of “reputation” around the data elements of the transaction. The more unique the data elements and the more clients use the reputation, the more valuable the reputation becomes. Reputation

CTO FORUM 21 JANUARY 2010

thectoforum.com

BY MICHAEL O’CONNOR

can be tied to elements such as an IP address, a client device ID, or a credit card number. Ostensibly, the most unique and valuable data element would be the client device ID. It provides a much more concrete identification mechanism than the other, dynamic and changeable elements such as email address, shipping/billing address, name, phone number, etc. Thus, gathering these – and especially sharing them – would provide an excellent foundation for a monitoring system. Ideally, both government and private sectors would contribute to the system, which would provide real-time updates and warnings concerning devices that were previously known to be used in fraudulent activities. But what of privacy concerns? An intrinsic benefit of CDI is that it does not hold Personally Identifiable Information (PII) within it. You’re just looking at the device – and ideally the reputation surrounding it – rather than the person or private information behind the device. Granted, any client looking at the transaction has private information on their end (a retailer looking at the invoice, for example), and they could easily connect the PII and CDI together for their own purposes, but the PII portion would not be shared within the overarching monitoring system. Moving full circle to the role of government, were they to adopt such a monitoring system and expect businesses to take part in it as a requirement for a new kind of security compliance, we might see a positive shift from the paper-based compliance of the past. Michael O’Connor is President of IronClad Consulting. This article is published with prior permission from www.information-security-resources.com

LITTLE GIANTS

MIRC ELECTRONICS

Ramesh Janarthanam CIO, MIRC Electronics

COMPANY DASHBOARD PRODUCT PROFILE: Electronics and white goods with Onida and IGO brands PRODUCTS AND VARIANTS: 500 BRANCH OFFICES: 33 CUSTOMER RELATIONS CENTRES: 208 DEPOTS: 41

PHOTO BY JITEN GANDHI

REVENUE (JULY 2009): Rs. 1491 Crores

ECONOMIES OF SCALE

MIRC Electronics eyes substantial gains by adopting ERP and business intelligence tools BY VINITA GUPTA

CTO FORUM 21 JANUARY 2009

thectoforum.com

KEY TECHNOLOGIES DEPLOYED: ERP, BI, Demand Management and Price Management Systems

MIRC ELECTRONICS

IERCE COMPETITION continues to mar the

manufacturing sector, intensifying the price war, customer churn, thin margins and limited cash flow. At the same time, customers continues to demand variety, quality, superior service and lower price. MIRC Electronics, a manufacturing company with two flagship brands Onida and IGO and about 500 product Stock Keeping Units (SKUs), faces a daunting challenge in managing product life cycle management. Estimating the demand of these products at each retail outlet and ensuring availability on time is a big concern for the company’s management. “Each challenge faced by our company is supported by an IT initiative like ERP, BI, demand management and price management system. The IT systems help in managing these challenges if not fully eradicate them,” says Ramesh Janarthanam, CIO of MIRC Electronics.

MANAGING DEMAND Demand management from a SCM (supply chain management) investment ensures that sales are predicted closer to the actual sales, thereby helping to manage Work in Progress and Finished Goods inventory within benchmark levels. It has also increased the fill rate of MIRC Electronics from 65 percent to 80 percent. The company has put a price approval system in place to approve the price increase or decrease and monitor the buying efficacy. To have better control on sales schemes run by the company, MIRC has implemented a unique tool on rebate management. In a market where a customer’s preference is the top priority, the ability to make changes in the design of a product without affecting production schedules is crucial. For instance, if MIRC wants to make a small change in the design of a product without affecting the assembly line, it achieves by using a Product Life Management (PLM) concept named Product Dossier designed and developed by a Pune-based software company. The company is extensively using VPN/VSAT connectivity to connect all its plants and branch locations.

LITTLE GIANTS

“We are highly focused on improving our partners’ IT infrastructure and information systems. As competition is growing and margins are shrinking, sharing business insights helps partners in managing their operations efficiently,” says Janarthanam.

ERP AND BUSINESS INTELLIGENCE The company started its ERP implementation in the late 1998 and went live in January 2000. MIRC also developed tools and methods to monitor and govern the performances of each function of the organisation, thereby providing a means to continuously evaluate them with objective measures of Key Performance Indicators (KPIs) using ERP. Having created the ERP culture, the company wanted overall productivity gain in many of its critical business processes like sales, cash collection, treasury management, inventory management, procurement, price management and other such operations that are run within the set working capital norms. “We have put a credit control system which revolutionised our sales operations. This system ensured continual working capital through value addition, thereby limiting the need to borrow funds,” reveals Janarthanam while adding that in 2008 MIRC saw Rs. 80 crores cash flow improvement (saved by using the process) as outstandings (number of days) were significantly reduced BI initiatives have significantly improved the company’s performance by providing actionable intelligence to their operations. Business intelligence has given MIRC a better sales visibility and understanding of the value chain. These include solutions for cost and profitability analytics and solutions for operational planning and budgeting.

WE HAVE PUT A CREDIT CONTROL SYSTEM WHICH REVOLUTIONISED OUR SALES OPERATIONS. IT ENSURED CONTINUAL WORKING CAPITAL THROUGH VALUE ADDITION

IT FOR CHANNELS It’s true that IT plays a crucial role in the growth of a manufacturing company. But what’s the use if suppliers and partners are unable to leverage the technology? Keeping that in mind, MIRC implemented a price management system, where dealers could know the net landing cost and Maximum Retail Price (MRP) of the product so that they can be flexible in offering further concessions to their customers.

LOOKING AT QUICK ROI MIRC Electronics’ IT budget for 2009-10 is Rs. 6.34 crores. The company wants to adopt technologies that improve operations and guarantee faster ROI. It plans to deploy virtualisation, green initiatives and replace all CRT monitors with LCDs this year. The company has recently upgraded all its SAP servers from RISC-based processors to the latest power-saving Itanium (server) processors. “We have 12-15 servers running on a non-Unix operating system, and by adopting server virtualisation, we are sure we can save 800 units/day of electricity that in turn will save around Rs. 8-10 lakh every year. Also, we have around 240 CRT monitors, and if we replace all of them with LCD screens, we can save another 26 units per day,” concludes Janarthanam. —Vinita.gupta@9dot9.in

CTO FORUM thectoforum.com

21 JANUARY 2009

Author: Stephen Denning

HIDE TIME | BOOK REVIEW

“Through story we can put an end to the worry, the fever and the fret.”

Leading through stories How leaders inspire

action through narratives WE’VE all grown up with stories. In India the ancient epics of Ramayana and Mahabharata still resonate in our minds, as do the stories we heard on our grandmother’s lap. But we’ve generally assumed that storytelling is to be relegated to the realm of childhood, and we must move away from it towards responsible adulthood. Now we’re finding that that’s not the case. Stories capture our attention like little else and are remembered for years after. Stories can be used to convince, to motivate, to get everyone on the same track, and thereby to facilitate change. Several areas of study, especially the social sciences, have formally realised the value of storytelling – and now it’s the turn of management. “Stories are the single most powerful weapon in a leader’s arsenal,” said Harvard development psychologist, Howard Gardner. Now Stephen Denning in his book 'The Leader’s Guide to Storytelling: Mastering the Art and Discipline of the Business Narrative' (2005) tells us how to use the singular power of storytelling to succeed as leaders in our business lives.

Stephen Denning, a lawyer by training, has spent most of this life at the World Bank in a string of management positions. At the end of this stint, he published his first book The Springboard: How Storytelling Ignites Action in KnowledgeEra Organisations. But his idea is described in a fully evolved and usable form in his latest book, The Leader’s Guide to Storytelling. In this direct and practical book, Denning begins by describing four elements of business storytelling: a style that is focused, simple, and direct; an ability for the storyteller to present the truth and the audience to understand it as such; preparation in the form of designing the story and rehearsing it well; and the delivery. He then describes in detail what type of stories and storytelling can be used to accomplish eight business objectives: sparking action, communicating who you are, transmitting values, communicating who the firm is (branding), fostering collaboration, neutralising untrue rumours, sharing knowledge, and leading people in the future. He finishes by summarising how to use a narrative to become

CTO FORUM 21 JANUARY 2010

thectoforum.com

ABOUT THE REVIEWER

Ranjani Iyer Mohanty is a writer and business editor based in New Delhi. Ranjani can be contacted at ranjani_mohanty@ yahoo.com

a more effective leader and transform an organisation. As expected, Denning’s writing is easy to understand and attractive, with interesting concepts such as Tolstoyan leader, interactive leadership and disruptive innovation. Interestingly, he likens storytelling to not just another management tool, but to a discipline pertaining more to leadership than management alone. Organisational storytelling is a nascent discipline, with all the associated pros and cons: excitement, creative thinking, flexibility as well as a crop of self-proclaimed gurus on the topic and the tendency to see it as a cure-all. “In unsettled times like these, when world cultures, countries and religions are facing off in violent confrontations, we could benefit from the reminder that storytelling is common to all civilisations,” said English poet William Collins in the 1700’s, but it could be just as true today. Something as socially and culturally fundamental and powerful as storytelling will be ignored at our peril – and that would be a sad story indeed. —Ranjani Iyer Mohanty

HIDE TIME | CIO PROFILE

Serious Regard For Business SATISH PENDSE A SHORT answer to a short question posed at the CIO of Hindustan Construction Company (HCC) was no. CIOs cannot operate in silos. This might seem paradoxical at first since people at the helm of technology are generally preoccupied with their datacentres and server racks. Satish Pendse, however, thinks otherwise. After spending 15 years in technology business and five years as a CIO in HCC, Pendse thinks technology is just a means and not an end in itself. “Earlier IT departments worked in isolation, and it was a huge challenge to align IT with business,” says Pendse as he walks down the memory lane. “When I started my career, IT was at a nascent stage in India and job opportunities with lucrative salaries were limited. Moreover, I was not too keen to leave my country,” says Pendse. In fact, Pendse exudes a lot of old school idealism. He is soft spoken and down-to-earth. He hails from a middle-class family. His father was a government employee and mother a teacher. “While I wasn’t brought up in

AVID READER: He likes to read books on management, leadership development, fiction, journals, magazines, newspaper etc. “The subjects can vary. The language can vary. However, the book should be able to keep me hooked,” says Pendse. He is interested in the stock market and other financial issues. TRAVELLING IS REFRESHING: He loves to travel with family and friends. He has travelled extensively within

India and abroad. “I prefer remote places and interiors of India. I love to capture nature with my camera,” says Pendse. EXERCISE A STRESS BUSTER: Pendse has a daily exercise routine. He says, “The kind of work-life and stress we have in our lives, it’s very crucial to keep up with a rigorous health routine.” Seven hours of sleep and one hour of work out every day is his mantra for healthy mind.

CTO FORUM thectoforum.com

21 JANUARY 2010

PHOTOS BY JITEN GHANDHI

CIO, HCC

HIDE TIME | CIO PROFILE

Snap Shot luxury, my parents gave me with the right education, a positive mindset and the required value system,” says Pendse. Born in the Raigad district in Maharashtra, Pendse was brought up in Mumbai. He did his engineering from the prestigious Victoria Jubilee Technical Institute and MBA from Narsee Monjee Institute of Management Studies (NMIMS). He specialised in IT education from National Centre for Software Technology (NCST). His brush with IT was more by chance than by design. During the campus interviews at NMIMS, he got selected by the IT division of Godrej & Boyce. The work excited him so much that he never looked back. Pendse has worked for distinguished companies such as Johnson & Johnson, Jet Airways, Marico, and Kuoni. Pendse feels fortunate to have come across well wishers who encouraged him at different stages of life. “Their views provided me with the right perspectives to face challenges and made my thought process multi-faceted,” A cost accountant wife and a 12-year old son makes his family complete. “Looking back I feel I have taken life much more seriously. Perhaps in future I would like to be a little casual, and have a fun-filled approach to life. There are many other facets of life I am passionate about. These include photography, playing musical instruments etc. However, everything took a backseat because of professional needs. In future, I would like to find out ways to nurture them,” he concludes. —By Vinita Gupta

CTO FORUM 21 JANUARY 2010

thectoforum.com

Firm advocate of Karma-yoga. He believes that almighty has assigned him a job, and he needs to perform it in the best possible way. He should be able to do justice to his work. This desire motivates him. Dream to see India as a developed country. He wants India to be a superpower and a developed country. He wants the income dispartity to be eradicated. India should have good governance.

Trust and nurture team-members. He enjoys nurturing young team members and feels very satisfied when he sees them grow. Many of his teammates have become CIOs and this is quite satisfying for him. He had realised that if the leader has trust in his team members they will surprise the leader by surpassing their expectations.

VIEWPOINT DYLAN PERSAUD | dylan@eval-source.com

The problem with relationships. Social

CRM may be a great concept, but it is tough to bring a customer and a company together on a social platform. WHAT DOES the term Social CRM mean? According to Peter Greenberg, the author of "CRM at the Speed of Light", social CRM is a philosophy and a business strategy, supported by a technology platform and designed to engage a customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It’s the company’s response to the customer’s ownership of the conversation. CRM has incorporated a social aspect to a business tool by adding the features and functions of social networking sites. Contact management now includes customer interaction, internal and external collaboration, locating experts, soliciting feedback, extended customer service — these are some of the social aspects that are evolving out of traditional CRM with social components. One of the problems faced by organisations is how to incorporate these benefits of SCRM and manage it accordingly. These problems stem

from the additional administration, storage, meta-tagging, archiving and content management. Traditional CRM vendors are trying to adapt to this new business model and enterprise software. As put by fellow analyst Jeremy Owyang, SCRM vendors can’t cut the mustard. There are a few categories that are mainly considered social CRM: Traditional CRM with Social integration Community platforms offering CRM Brand monitoring offering social CRM Social media with Twitter capabilities Social Customer experience Sales 2.0 and Social graph aggregation CRM applications and plug-ins Social networks and others These are considered the main categories in social CRM. As organisational usage increases, vendors will vie for the attention of companies until the market matures. Then mobility on top of this is a rapid evolution that will occur within this software arena and how they react

CTO FORUM 21 JANUARY 2010

thectoforum.com

ABOUT DYLAN PERSAUD: MD of Eval Source, Canada, Dylan is also a business analyst and project manager with ERM, Retail, Supply Chain, Manufacturing, CRM, PLM, social media, HCM, BPM, and enterprise systems including Oracle- retail, SAP and many major WMS vendors. He has consulted for large companies such as Indigo, Nike, Sears, GM, Ford, IBM, IDC etc.

may make or break the market. As any software matures, newer vendors will enter, yet traditional vendors will have the advantage of brand recognition on their side. Whatever changes occur in this space, organisational usage evolves and differs from company to company. It still becomes an exercise in finding the best fit for the organisation and catering to the specific functions you are looking to solve. A software evaluation methodology will still need to be considered, as it just keeps getting more complicated and sometimes unnecessarily so. This is a software name that is ahead of the actual software being delivered for now. Organisations should create, review, monitor social network strategies and policies, as there is no magic formula to convert buzz to ROI. Even if there are ways to convert buzz, it can be detrimental as well as a waste of time for C-level employees.