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From The Editor-in-Chief

Recruit. Groom. Retain. Three words that can give insomnia to the most resolute

Outsourcing Imperatives Outsourcing is getting to be an interesting tool in the IT department’s workbench.

of CIOs. Market research firm Gartner states in a recent study that annual attrition of 15 to 20 percent in IT departments is leading Indian organizations to choose outsourcing. In fact, so steady is the churn that Gartner has forecast that the Indian IT Services market will grow to $10 billion by 2011. Wow. That’s some number. I’ve heard arguments to this effect earlier. I’ve also been informed that the only way CIOs can combat attrition at junior levels is to outsource all non-value add activities. A CIO from the manufacturing vertical was clear: “Outsourcing is good, because one need not invest in certain skill sets. Low-end roles like facilities Acquiring skill sets, beefing management are easy to outsource, so up capacity and cutting costs also high-end skills where training and are par for the course. What retention may become an issue.” about attrition? He admitted that since outsourcing comes at a price, he maintained a balance between what to outsource and what to keep within. So far, so good. Imagine my surprise then when a couple of our Advisory Board members had a contrarian view on this. “Internal churn is not the primary factor for considering outsourcing, however it is one of the contributors if attrition becomes unmanageable,” pointed out one. The other board member was even more specific that outsourcing should be viewed as another tool in the IT department’s arsenal. Thus, he said, organizations should outsource to acquire a new capability, ramp up capacity, increase agility and cut costs. Both added that even with an outsourcing relationship in place IT teams should look for performance improvement, knowledge acquisition and retain a firm control on long-term planning. Not too much talk of combating attrition, is there? Upon my asking whether it was easier to outsource all activities that didn’t require domain expertise, the Bharti-IBM relationship was evoked. This one single deal has challenged what in an organization is core and what isn’t. What was now being defined to me as the ‘core’ of the IT-business interface covered the ‘design of the service model for best delivery of IT services, the technical architecture and governance mechanisms’. Do you agree with our Board members on this? What would you choose not to outsource? Write in and let me know.

Vijay Ramachandran Editor-in-Chief


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content february 1 2008‑ | ‑Vol/3‑ | ‑issue/06

I P hoto by Srivatsa Sh an dilya

2 6 Digital Manufacturing

Executive Expectations

COVER STORY | Driving down cost| 26

VIEW FROM THE TOP  |  38 Ponnapa P.G., MD, AOL India, says that technology rarely points to the direction his portal should take. He says that IT doesn’t head strategy — the market does.

Price and time-to-market: the two great differentiators in manufacturing. By employing digital manufacturing, Tata Motors excelled at both and they have the Nano to prove it.

Cover: desi gn by bin esh sreedharan

Feature by Gunjan Trivedi

Interview by Kanika Goswami

Staff Management Consensus Builder  |  22 Your rules for running IT should derive from the people who have to live with them. Column by N. Dean Meyer 

RFID The Wrong Medicine  |  42 Big pharma’s RFID trials aim to keep fake drugs out of your medicine cabinet — but the technology has significant limitations. Feature by Sarah D. Scalet

more »


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(cont.) DEpARTMEnTS Trendlines | 11 survey | Young and Disillusioned Quick Take | Bhupendra Shah on Attrition IT Management | Teleworkers Are Party Poopers Voices | Is Business Alignment Over-rated? Open source | Linux Forges Education Revolution Opinion Poll | Where Have all the Vendors Gone? By The numbers | Trouble With Collaboration Tools CIO Role | Follow the Loser Research | Get Ready For M&A Activity

Essential Technology | 56 Analytics | BI in All the Right Places

Feature by Galen Gruman Pundit | Work in Progress Column by Michael Hugos

From the Editor-in-Chief | 2 Outsourcing Imperatives | Outsourcing is

getting to be an interesting tool in the IT department’s workbench. By Vijay Ramachandran

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


Case File QuALITY FInDs BALAnCE | 32 Quality or speed? It’s a tradeoff many companies accept. But in its attempt to staunch the flow of adulterated petrol, BPCL needed both. Here’s how IT helped balance quality’s yin with speed’s yang. Feature by Kanika Goswami

1 8

Supply Chain Management TOTAL RECALL | 46 There have been more products lately than ever before. Will your supply chain be ready when you have to run it backward in order to track, trace and collect a recalled product? It had better be. Your company’s future may depend on it. Feature by Kim s. nash


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Publisher & editor N. Bringi Dev

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

assistant editors Balaji Narasimhan

Gunjan Trivedi

Abnash Singh





Group CIO, Mphasis Alaganandan Balaraman Vice President, Britannia Industries Alok Kumar Global Head-Internal IT, Tata Consultancy Services

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Advertiser Index







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President & CIO — IT Applications, Reliance Industries





Manish Choksi Chief-Corporate Strategy & CIO, Asian Paints M.D. Agrawal Dy. GM (IS), Bharat Petroleum Corporation Limited





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Rajeev Shirodkar VP-IT, Raymond Rajesh Uppal Chief GM IT & Distribution, Maruti Udyog Prof. R.T. Krishnan Jamuna Raghavan Chair Professor of Entrepreneurship, IIM-Bangalore S. Gopalakrishnan CEO & Managing Director, Infosys Technologies Prof. S. Sadagopan Director, IIIT-Bangalore S.R. Balasubramnian Exec. VP (IT & Corp. Development), Godfrey Phillips Satish Das CSO, Cognizant Technology Solutions Sivarama Krishnan

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

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Y ung and disillusioned Yo The issue managers are faced with retention, not hiring. That means the work environment is not living up to the employee's expectation. For instance, many younger workers expect to get an office immediately or be paid at a rate higher than entry level. Millenials expect their employer to be socially responsible and take part in

community or philanthropic ventures, which is a good thing, Harrington says. Twenty-three percent of respondents said retaining existing staff is the top concern, while 22 percent said they struggle to find new qualified candidates. Many are saying pay will increase with demand. Some 45 percent of survey respondents said they expect salaries to increase in 2008 for non-certified IT staff. About one-third said staff training in new technologies was their first priority, while 68 percent ranked training in their topthree priorities. There are also other try-beforeyou-buy options for potential employees and employers, which could help balance out those expectations for young workers. —By Denise Dubie

IllUStratIon by pc anoop

S u r v e y Young IT employees pose a challenge to many managers who say the Millennial generation holds employers up to unrealistic expectations and makes unreasonable demands for their services. Millennials — employees between the ages of 18 and 31 — represent the top challenge for IT managers, according to survey results from Atlantic Associates, an IT staffing company. It polled more than 100 Massachusetts executives on the challenges they face and more than 50 percent of respondents described those teen and 20-something employees as the 'toughest generation to manage.' Generation Xers (ages 32 to 42 years old) placed second with 17 percent of respondents saying they pose a management challenge.

Quick take

Bhupendra Shah on Attrition S t a f f m a n a g e m e n t CIOs face a lot of attrition because IT staffers prefer working for large IT companies. So, how do they manage to hold on to people? Balaji Narasimhan spoke to Bhupendra Shah, CIO, Arvind Mills, on attrition and how CIOs can tackle it.

We see attrition as one of the biggest issues that CIOs face. How do you retain talent? We faced this problem when we tried to implement SAP R/3. So, we hired local people who were more keen on staying on, as opposed to high caliber people who might move on to other jobs quickly. My technique for retaining people is to empower them. Give them freedom, and you can retain them. I have been with Arvind Mills for over three decades, and I have retained around six people for about 15 years. The most senior person has been with me for around 25 years.

My team consists of a mix of seniors and freshers. I have a good buffer, so even if people quit, I still manage. What are the major reasons for attrition? The biggest reason is compensation. Arvind Mills has a strong brand image and people therefore want to work with us — but if they get more money elsewhere, they quit quickly. Techies seem to prefer working for IT companies. What can CIOs do to keep their teams from quitting for more money? Even though they have respect for me and my company, if the salary difference is high, they will leave. To counter this, we have a separate IT performance scheme for IT people. We also use training to retain people. We have provided people with the ability to have challenging job opportunities.

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Is Business and IT Alignment Over-rated? a l i g n m e n t Everyone talks of marrying business and IT. But should the focus move to more effective project management for faster project turnaround time? Kanika Goswami asked three CIOs. Here’s what they had to say:


“Certainly, there is no doubt that there should be more focus on turning over more projects. IT needs to identify business processes, step in and make it work without any conflict.” trendlineS

V. Balakrishnan cIo, polaris

“It is necessary to have ‘quick wins’ that lead to benefit realization. But not at the cost of designing disintegrated IT enablers. A framework in tune with the enterprise mission should be put in place. " s. chandrashekhar Deputy GM, ashok leyland

“In the government of India and PSUs, business-IT alignment is at a minimum. Projects are

called ‘IT- Initiatives’. IRCON focuses on business — IT is a support service. Though, competition has pushed us to introduce new technology like ERP, IT is definitely not an emphasized area.” ashwani dayal DGM-It, Ircon

lend your


Teleworkers Are Party Poopers

i t m a n a g e m e n t Much has been made of the impact of teleworking on the careers of those who work outside traditional office environments. But what about the impact on those left behind in the office? A new study by a management professor at Rensselaer Polytechnic Institute in Troy, NewYork, looks at that issue and finds that high numbers of telecommuters in an office can damage traditional workers' job satisfaction and increase the likelihood that they'll leave a company. Timothy Golden, associate professor in the Lally School of Management and Technology at Rensselaer, studied 240 professional employees from a midsize company. He found the greater the number of teleworkers in an office, the less others in the office are apt to be satisfied with their jobs and remain with the company. In addition, non-teleworkers may have weaker emotional ties to coworkers and generally feel less obligated to the organization. "While reasons for the adverse impact on non-teleworker's satisfaction are varied, it potentially could be due to coworker's perceptions that they have decreased flexibility and a higher workload, and the ensuing greater frustration that comes with coordinating in an environment with more extensive coworker telework," Golden said in a statement. "In addition, it may be that with a greater prevalence of teleworkers in a work unit, non-teleworkers may find it less personally fulfilling to conduct their work due to the increased obstacles to building and maintaining effective and rewarding coworker relationships." For managers who want to mitigate some of the damage, Golden's research suggests a few options, including trying to ensure greater face-to-face contact between coworkers when employees are in the office, and giving employees greater job autonomy. He also recommends companies take into account the broader impact of telework on others in the office, particularly within team-based work environments, and exercise caution when implementing or expanding this work mode based purely on individual desires to telework. Industry research, meanwhile, continues to show telework adoption is on the rise. A recent survey of HR managers by outsourcing provider Yoh found that 81 percent of companies have remote-work policies in place and 67 percent of respondents said they expect telecommuting will increase in the next two years. —By Ann Bednarz

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Linux Forges Education Revolution The PCPS program started around 2000. Five years later it was discovered that a lot of computers were not being used because nobody knew how to use them. A company, Advanced Solutions (ASI) asked Gonzalez to help as it was preparing to do bids for 1,000 schools. But, this time it would not be only desktops, but one server, 10 desktops, and Internet in every school. "We wanted to use Fedora 5 and it went all the way to office of [the Filipino] President and they kept passing it around saying; 'Why would they offer something for free, and how will they support and teach it'," Gonzalez said. "The project dragged until Microsoft matched the price by offering Windows XP for Rs 800 a copy and Office for Rs 1,200, but we still came out cheaper. Microsoft was also providing free training to high school teachers." ASI finally got the contract and all 10,000 computers. "Because we saved

so much we gave the government 3,000 additional units," Gonzalez said. However, the Philippines' Linux education story is just beginning. Before Gonzalez left for linux.conf. au, the company got a contract to do another 1,000 high schools over the next 12 months. With 7,000 islands in the Philippines, the task at hand is no mean feat as the team had to install the systems, test them, do integration work, ship the computers out, ensure it was installed correctly, and provide training to the schools' principal and head of IT. "If you look at it from a third-world perspective I'm very pleased," Gonzalez said. "For us it's one of the biggest Linux installations in the Philippines. The question is if it's free does it work, but with Linux it does work and it's free." —By Rodney Gedda


O p e n S o u r c e Providing high school students with PCs is seen as a first step to preparing them for a technology-literate future, but in the Philippines many schools cannot afford to provide them. So, after a successful deployment of 13,000 Fedora Linux systems from a government grant, plans are underway to roll out another 10,000 based on Ubuntu. Independent open source consultant Ricardo Gonzalez, said there were a number of factors that led to Linux being chosen over Microsoft Windows. Gonzalez says Linux became popular in the Philippines soon after the 1997 Asian financial crisis when open source was investigated for its value proposition. The Department of Trade and Industry and the Department of Education launched the PCs for public schools (PCPS) program that aims to provide one PC for each of the 10,000 public high schools in the country.

Where Have all the Vendors Gone? In case you haven’t noticed, the big fish enterprise vendors have been gobbling up the little fish faster and faster as of late. And it isn’t slowing down anytime soon.


of actively acquiring companies say that they “expect to maintain or increase current-year levels of M&A activity in the coming 12 months.”


Imagin g by ANIL T

of those companies expect to increase M&A spending.

Source: The 451 Group survey of corporate development and strategy professionals.

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B Y c . g . ly n c h

The eT Trro rouble With Collaboration Tools


collaborative ollaborative technologies are great and all, but right now we’re not terribly satisfied with them at our business. That’s the report from more than half of 400 CIOs and IT decision makers surveyed by Avanade, an IT consulting firm, about the use of collaborative technologies. Examples covered in the survey included e-mail, instant messaging, video conferencing and intranets. In most cases, respondents gripe about a lack of integration between the collaborative applications, which in turn frustrates end users, says Larry LeSueur, Avanade’s vice president of technology infrastructure solutions. “Only 11 percent of them had some strategy around how to implement these technologies with their existing environments,” he says. “Its not that e-mail isn’t driving value or that IM isn’t. It’s that both those technologies aren’t integrated.” As a result, he adds, end users deal with too many windows on any given workday. “The information worker really bears the brunt of these technologies not being integrated,” LeSueur says. CIOs also struggle to find the value of collaborative technologies with hard numbers like ROI. “It’s the hardest thing to quantify,” LeSueur says. “Sometimes you can get a hard number but it only tells a piece of the picture.” It’s also tough to measure worker productivity gains as a result of these technologies being present. But while collaborative technologies don’t always give the business (or more specifically, your CFO) the hard ROI typically demanded for IT investments, 95 percent of CIOs say they see an increase in worker productivity, LeSueur says. That alone should encourage further investments. “Right now, it can be hard to justify,” says LeSueur. “But in the end, they know these technologies are paradigm changing,” he says.

Best Practices 1

start smart. before you invest in collaboration, take a sober assessment of your other productivity applications (even e-mail). If complaints exist, you might want to tie up those loose ends first.


emphasize integration. try to think of collaborative t technologies as one big picture or even as one application. More and more vendors design systems to be agnostic toward other software.


play up soft benefits. Hard roI will be tough. one simple way to quantify value will be speed: perhaps a group can use an IM chat room to devise work plans in an hour instead of taking a day using e-mail.

Unhappiness With Technology, lack of Strategy the he problem

planned lanned Fixes

Just 45% of companies say they are currently satisfied with the impact of collaborative and communication technologies.

71% of companies say they need to add new technologies to enhance their digital collaboration capabilities.

one contributing factor: only 11% have a fully documented and implemented collaboration and communication strategy across the enterprise.

For example: 79% will implement enterprise search tools, compared to 59% that say they have these implemented today.

68% will implement virtual work spaces,compared to 48% that say they are using them today. 14

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Follow the Loser Follow the money. A careful review of IT spending and service levels may reveal opportunities for consolidation, renegotiation or other improvements. Remember to include outsourcing agreements in your review. Blame problems on your predecessor. For the first six months, you get to blame any problems on the idiot you replaced and (rightly) claim that you are just cleaning up the messes he left. Use this honeymoon period to create an objective assessment of departmental strengths and weaknesses. Rebuild the IT team. If your predecessor was an incompetent leader, some changes will probably be required. Your best staffers may be jumping ship, and people who opt to stay may be in the wrong jobs. Gain instant credibility. If your predecessor is considered a failure, you

Get Ready

For M&A Activity R e s e a r c h Developing a strategy to deal with a merger or acquisition is becoming an increasingly important area of expertise for CIOs, according to new research. In a survey of its membership, 54 percent of CIO respondents said they had been involved in up to three M&A transactions, with 42 percent reporting involvement in four or more during their career. The majority of CIOs surveyed (58 percent) said that they should be involved in any merger plan right from the outset, and 46 percent reported that their organizations already gave them this responsibility in the area of systems infrastructure. As mergers got underway 77 percent took responsibility for carrying out due diligence of the target company, with 81 percent of CIOs reporting it was also their responsibility to negotiate with any new business over deadlines and budget levels. When it came to the impact of IT on M&A, CIOs believe they are delivering for the business. Almost half of CIOs (42 percent) reported IT merger costs accounted for less than 20 percent of the total M&A integration costs and 54 percent believed that


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are granted credibility just because you have a pulse. Then you can earn real credibility over time by helping others solve their problems. If your predecessor was viewed negatively, the IT organization's reputation may be badly tarnished. Initially, this may be uncomfortable, but it can work to your advantage. Investigate the company's perception of your predecessor before taking a new job. For long-term success, don't play follow the leader — play follow the loser. —By Bart Perkins

Illustration by MM Shanith


CI O Ro l e If one of your New Year's resolutions is to find a new job, consider an often-overlooked criterion: the reputation of your predecessor. You might want to pass up the post that was previously filled by an individual who was valued and respected. Instead, choose the job where your predecessor was perceived as a failure. You will work harder during your first year, but you'll have a better chance of succeeding in the long run. If your predecessor was held in low esteem, you start the job with multiple advantages. Here are some things you can do: Capitalize on quick wins. Most IT organizations have overlooked opportunities to save money or improve service. If your predecessor was incompetent, distracted or scrambling to save his job, he probably ignored some opportunities.

IT was responsible for delivering at least 20 percent or more of any post acquisition benefits. But the business IT specialists were critical of post acquisition and merger measurements. Although 92 percent of CIOs said their organizations undertook some form of review to measure the performance and success of M&A IT projects, one in five (19 percent) reported there were no accurate measurements of IT integration costs or post acquisition benefits across the organizations. The global nature of M&A was also borne out by the research, with 25 percent of respondents having been involved in projects in the emerging economies of Brazil, Russia, India and China, 19 percent in Eastern Europe and 12 percent in other countries. "Indeed, those surveyed believed these business and people skills were considerably more important for the CIO than technical or operational management skills, which most respondents felt could be delegated to members of their team." But Kirkland said one key concern cited my many was the lack of accurate measurement of IT integration costs and post acquisition benefits. "Without proper measurements, it is very difficult to improve efficiencies or processes for future M&A activity, or even to judge the merits of such activity," he said. —By Computerworld UK staff

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Martha Heller 

career counsel

Path to the Corner Office It's never too early to start preparing to become the top executive. Here's how.


Illust ration by un n ik rishn an AV

emember back in college, when you blew off your study group in favor of an all-night party? Or when you decided you could live with a 3.2 GPA if it meant meeting more girls? Most likely, you've experienced some remorse over strolling through those four expensive years and not making the most of every learning opportunity. How would your life be different if you actually took advantage of all that your college had to offer? The good news is you have another chance at greatness. Your CIO role, if managed correctly, can be the perfect place to prepare for becoming a CEO. And it's no wonder. With their unique role in the enterprise, CIOs are well positioned to develop the attributes of a great CEO. As Michael Capellas, former CIO and CEO of Compaq, former CEO of MCI and currently, CEO of First Data, puts it, "CIOs have to be experts at solving complex problems. They have to be precise and experienced planners, they have to spring into operational mode, and they have to be more global than their peers." Those CIOs who take advantage of the opportunity to build on these foundational skills — rather than strolling along in their current role — may well find themselves in the top corporate spot. So what can CIOs do now to prepare themselves for the corner office? I asked four CIOs-turned-CEOs to share their perspective on what it takes to become a CEO. Learn to balance internal and external demands. "The CEO has a much larger group of external constituencies including the board, investors, partners and customers, and has to know when to prioritize the internal versus the external," says Capellas. "When I became CEO of Compaq, my first priority was to be the voice of the customer and to go on 100 customer visits and see 18

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Martha Heller

career counsel

them all. I thought that it was absolutely the right thing to do until I realized I was on the verge of being an absentee leader." CIOs have a tendency to prioritize their internal demands over their external constituents. If that is the case, you will have to work on striking a balance. Change up your management style. As CIO, you manage people with different skill sets — application developers, operations people, project leaders — but most of them have a direct relationship to IT. "As CEO, you have a far more diverse group of people to manage — HR, finance, product development, sales — and you have to learn to relate to them in different ways," says Capellas. CIOs who find that one management style fits all will have to work some variety into their routine in order to meet the CEO's management challenge. Run IT like a business. For CIOs who truly aspire to the CEO seat, Capellas offers an exercise. "Think of yourself as the CEO of your own business with two truly unique attributes. Demand for your services will always be higher than your ability to supply them," he says. "And everybody is an expert in your consumer business but nobody understands your enterprise business." According to Capellas, if you can manage those significant business conflicts in a way that keeps all your customers happy, you will have developed the relationship and sales skills to make it as CEO. Develop your ‘minors’. As a CIO with a ‘major’ in technology, you may have quite a few ‘minors’ to develop before you are ready for general management. Just ask Michael Curran. During the late '90s, Curran was promoted from CIO of Scudder Stevens & Clark (now Zurich Scudder Investments) to a series of general management roles, including COO. In 2001, he became CIO of the Boston Stock Exchange, and in 2005, he became its CEO. "All CEOs have a major in something and they've had to build their knowledge of other functions off that core," says Curran. CIOs should do the same, he says. "Take a course in contract law and negotiation, learn balance sheets, learn something about marketing. If you're working globally, read a book about each country you're visiting, learn a foreign language." With a pretty serious day job on your hands, you cannot expect to develop expertise in each of these areas, but you can, according to Curran, "get good enough so that you don't embarrass yourself." Scale your conception of systems relationships. "If you can scale the notion of interdependencies to a broader level that includes boards and governance, product management, people, services and sales, you will be able to adopt the CEO mindset," says Curran. Plan a transitional move into general management. From 1996 to 2000, Chris Lofgren served as CIO of trucking

company Schneider National. At the same time, he became president of its logistics business. In 2000, he was promoted to COO. He became president and CEO two years later. "With the exception of a technology company, it is highly unlikely that a company will promote a CIO directly to the CEO position," he says. "It makes more sense that a CIO would aim for a role running a business unit — one that is driven more by information — before attempting the CEO role." Expand your approach to time. "When planning major technology projects, CIOs think about a one-three year

CIOs have a tendency to prioritize their internal demands over their external constituents. If that is the case, you will have to work on striking a balance.


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timeframe," Lofgren says. "When CEOs think about their company, their shareholders and leaving a legacy to the next generation of leadership, the time frame expands to a decade." As challenging as technology forecasting is, if you start working long-term goals into your plans now, you will be better prepared when your job demands it. Report to the CEO. In 1998, John Andrews, CIO of CSX, left the Rs 38-crore railway company to get into the start-up world. After a few years of launching technology companies, he became CEO of Giga Information Group in 2002 and President and CEO of Evans Data Corp. in 2003. From his experience on both sides of the IT leadership fence, he believes that reporting structure has a major impact on whether a CIO can gain the right experience for the CEO role. "If you report to the top and have a seat at the table, you have a much better perspective of what it takes to be a CEO," says Andrews. "You have a broader view of the business and an opportunity to collaborate at his or her level. If you are reporting to the CFO, you are one layer removed from where the action is and you need to make a change." Be sure you want the job. "While the CIO role does have similarities to the CEO role, the CEO role is a major step up in terms of scale, pressure, constituency influence, time commitment and external visibility," says Andrews. "You don't want to make the leap before you're ready." If you quake at the thought of having your every move — your acquisitions, sales forecasts, hirings and firings — scrutinized by shareholders, the government, Wall Street and the public, you may want to think again about vying for the role. CIO

Martha Heller is managing director of the IT Leadership Practice at ZRG, an executive recruiting firm in Boston. Send feedback on this column to

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N. Dean Meyer 

staff management

Consensus Builder Your rules for running IT should derive from the people who have to live with them.


anny was military, and he makes sure you know it. His colleagues grumble that he acts like he's the commander. Danny likes discipline and controls, especially when he's the one with his hand on those controls. As assistant to the CIO, Danny was put in charge of policy. He was dubbed the ‘policy czar’. Danny set about violating my Golden Rule of Organizational Design: never separate accountability from authority. In doing so, he set himself up as a policy decision maker rather than, as he should have been, a policy facilitator.

Who Decides IT Policies?

Illustration by pc ano op

Policies are constraints on the way we work — a ‘how to’ procedure or ‘you must’ requirement. The dictionary defines policy as a definite course or method of action selected from among alternatives and in light of given conditions to guide and determine present and future decisions. A policy, once established, narrows one's choices about what to do, how to do it or which alternative to choose. Danny, as you can see from the following exchange, enjoyed his authority to prescribe choices for the rest of his organization. During a leadership-team meeting that I attended as a consultant, I asked Danny which policies he felt he was responsible for. His answer was, "All." (I was disconcerted that he neglected to add ‘sir’ to the end of his terse reply. I thought that was policy.) "All?" I asked incredulously. "All," he replied assertively. "Even those that apply to a single line of business, like the policy on what gets connected to the network?" I queried. 22

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staff management

"Absolutely," Danny answered. He seemed annoyed that I'd had the insolence to ask. Undaunted, I pressed on. "How do you go about setting policies?" I inquired. Danny described a process that was essentially this: 1. Danny decides which policy to work on next, setting priorities from among a list of potential policies that he generates, as well as considering requests by others within the department. 2. Danny drafts the policy, perhaps drawing on his peers as subject-matter experts. 3. After a private briefing by Danny, the CIO approves the policy (in some cases with the input of a steering committee representing the business units). 4. Danny enforces compliance.

The Problem With Top-Down Policy-Setting I looked around the room at Danny's peers, and then asked one final question. "Danny, you said you are responsible for all policies, even those that affect only a single line of business. Who here is accountable for the safe, reliable, efficient operation of the network?" Without hesitation, Danny pointed to Rob, the head of the network operations group. Andnowweseethecruxoftheproblem:howcanRobbe held accountable for the quality of service of his network, while Danny is deciding policies that dictate how Rob does business? This is a violation of that Golden Rule. Rob, with accountability but without concomitant authority, wasn't empowered to run his business his way; yet he was still held accountable for results. A cynic might say that he was set up to become a victim and a scapegoat. On the other hand, even if Danny accepted Rob's input on the policy, Danny's power to write the policy (and his de facto power to get it approved) gave him authority over Rob's business. With authority but no accountability, Danny could easily become a tyrant. His peers feared exactly this. Compounding this problem, the managers didn't have the authority to establish the policies they needed to run their businesses. Danny became a bottleneck; he could work on only a few policies at a time, and he chose his priorities. Whatever he didn't think was important enough sat at the bottom of the list. For example, Allie is responsible for intranet services. Her clients have asked for an enterprise instant messaging service, but she has delayed deployment for two years, awaiting a policy regarding its use. Her proposed policy is still in the hopper awaiting Danny's consideration.

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The key to effective policy-making is to make all parties accountable for policies within their respective businesses and provide them with policy facilitation function. The need for policies was not in question. This IT department had grown in size and complexity, and it needed to mature. It needed to improve its consistency, safety, reliability, efficiency, resource controls and business focus. Policies were necessary to facilitate all these goals. But the way Danny implemented them demoralized the staff and threatened the performance of the entire IT organization.

Ways Policy-Setting Can Be Distributed IT's problem centers on who has the power to decide policy. If Rob is be held accountable for the quality of service of his network, then Rob — and only Rob — should be empowered to determine policies on its operation and its use. In general, according to the Golden Rule, policies should be determined by the individual or team that is accountable for whatever business is constrained by these policies. For example, some policies apply to the entire enterprise. Think about security policies for passwords, and the rules for using the corporate intranet. Policies that affect the entire enterprise should be decided by a consensus of the leaders of the enterprise. As difficult as that may be to achieve, it's the only way to ensure that the policy reflects everybody's input and is by far the best means of gaining enterprisewide compliance. Other policies apply to the IT department. A policy for getting IT to work on your projects might state that if you wish to do business with IT, your project must either be funded through an established portfolio-management process or you must show up with cash in hand. Such policies affecting one department should be decided by the head of the department, ideally with the consensus of his or her leadership team. A third group of policies applies to a specific line of business within a department. For example, the network operations group may establish a policy that says that if you don't meet certain safety requirements, you cannot connect to the backbone network inside the corporate firewall. One could even use the word policy to describe the operating procedures within a group, such as how problems are handled in a call center and which design tools and methods are used to engineer applications. Policies that affect a single group should be decided by the leader of that group. Policies that affect a number of groups within a department, though not the whole department, should be decided by a consensus of the leaders of those affected groups.

The Role of a Policy Group Can Danny's approach work elsewhere? Consider those policies that are departmentwide and hence should be decided by the CIO and, ideally, her leadership team. 24

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Even here, Danny had it upside down. He declared himself the ‘prime contractor’ for policy development and considered the subject-matter experts his ‘subcontractors’. That is, Danny felt that he was accountable for the delivery of policies, and others were there to help him do so. Danny was selling other people's expertise (in the form of the content of policies). However, the purpose of a policy group is to help others translate their expertise into policies, not to do it for them (or to them). An effective policy group ‘sells’ the following products and services to its peers: Policy process facilitation. A policy group can help an organization's leadership team accumulate, prioritize and come to consensus on departmentwide policies, and it can facilitate enterprisewide consensus on enterprise policies. In this role, the policy group is strictly a process facilitator, not an author, decision maker or ‘czar’. Policy editing and advice. It can help subject-matter experts craft well-worded policies, providing expertise in how to define and phrase an effective policy. This expertise can help everyone write policies that are practical and effective without being bureaucratic, inflexible, disempowering or expensive to administer. Policy library. It can maintain a repository of policies, communicate their availability, and help people access and interpret existing policies. A policy group should not be responsible for the content of the policies or have any authority over that content. And it must never be involved in auditing compliance. This would be a conflict of interest. No one can both serve others (policy facilitation) and stand in judgment of others (audit) without undermining the teamwork between the policy group and its peers.

Why All This Work Is Necessary Policies are inherently risky. They reduce people's choices and can make an organization less flexible, more bureaucratic and less creative. But in many cases, policies are necessary. A well-chosen and well-written policy does more good than harm by establishing a consistent, meticulous process or necessary constraints that help leaders run an efficient, customer-focused, safe and reliable business. The key to an effective approach is to make all parties accountable for policies within their respective businesses and to provide them with the help of a policy facilitation function (not a ‘czar’) that serves its peers rather than attempting to control them. CIO Send feedback on this column to

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Cover Story | Digital Manufacturing

driving down Price a nd tim e-to-m manuf arket: acturi the tw n g . By e o grea Motor mploy s exce t diffe ing dig l rentiat l e d a i t t By G u a b ors in l o manuf th and njan Triv a cturin they h edi g, Tata ave th e How Nano t digita l ma b e t te r o prov time-t nufacturing o-mar ca n The im e it . ket po Read er


r t a n ce of digit factur al ing in Why m reduc ing co anufa sts ct digita l manu urers can e mploy factur rewor ing to k reduc e manu

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Two kilos. That’s how much Tata Motors shaved off the weight of the Nano by using tires without tubes. When Tata Motors recently created history by launching its people’s car, the Nano, the media covered almost every innovation that helped make it special. Reams were written on the price difference, which is certainly astounding: the Nano costs less than half of its closest price competitor. The Nano’s engine size, where it was placed, how it was placed were all talked about. Every conceivable story angle was covered, except how IT helped bring the Nano's price tag to Rs 1 lakh. It isn’t a mean amount. IT helped with a 20 percent reduction in the cost of manufacturing planning process. And IT offers the same cost efficiencies to many vehicles in the Tata Motors stable. But that’s not all. Piggybacking on digital manufacturing, the Rs 24,000-crore Tata Motors has been able to refine its innovative ‘design to manufacturing’ approach. Digital manufacturing not only introduced Tata Motors to ‘concurrent engineering’ but also gave its assembly lines the ability to adapt to multiple automobile variants. It permitted Tata Motors to churn out a wide spectrum of vehicles not only at lower costs but also faster too. Here’s a rundown on Tata Motor’s version of digital manufacturing (DM) that gives its plants control and flexibility, whether they produce a heavy commercial vehicles or passenger cars like the Nano.

EntErprisE in First gEar Tata Motors was introduced to DM about three years ago. Compared to other IT initiatives at the organization, DM’s the new kid on the block. Tata Motors graduated from a 10-yearold bouquet of function-specific apps to a centralized ERP & CRM platform. It also worked a 15-year-old implementation of homegrown product lifecycle management (PLM) applications before it adopted a sophisticated suite of PLM solutions. IT was an old hand around Tata Motors before DM was identified as a way to make manufacturing processes more efficient. But what really gave DM its push is how it shortened time-to-market. 28

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“For an automotive company, a key competitive advantage is its ability to introduce new products in a very short span of time. Compressing time-to-market is a function of effective and efficient plant design and manufacturing processes. We realized that the design of our existing manufacturing process was slowing us down,” recalls Probir Mitra, senior GM-IT at Tata Motors. Mitra is referring to practices that involved manual effort to conceptualize, create and maintain processes, plants and product designs. Manual meant that the organization faced difficulties as it figured out the right tools to be used in a new plant. Even in existing plants, manual processes resulted in longer lead times to choose the appropriate tools for an operation and create programs for assembly line robots. Creating such robot programs manually was timeconsuming and error prone. All this delay was costing business. Longer planning meant data used to plan a vehicle became useless over time. Or when Tata Motors tried to schedule the assembly of two different products on the same line, there was no clear understanding of the bottlenecks that would crop up. The absence of tools to do ‘what-if’ analysis slowed the enterprise down if it introduced a change in the product mix or it rolled out a new product on an existing line. Take for example, a plant that rolls out 500 vehicles a day. What happens when — anticipating increased market demand — the organization decides to increase production to 750 a day? Will the plant be able to scale up?

Each facility in the plant is created with a certain throughput including specific turnaround-time and capacity, says Mitra. “When you scale up, the sum totality of increased manpower and the entire infrastructure needs to be considered,” he says. Digitally simulating the factory with DM allows the organization to conceptualize what is needed for a plant to produce 750 vehicles a day. And it’s particularly helpful when the organization wants to plan for a 5,00,000-car facility, but only wants to invest in a 1,00,000-cars set up at the start. “There was little clear understanding of the overall plant design, especially the interaction of different components in the assembly line for the smooth functioning of the plant,” recalls Mitra.

planning on cruisE control That’s when Mitra and his team decided to turn to Dassault System’s Digital Enterprise Lean Manufacturing Interactive Application (DELMIA) solution for digital manufacturing. The DELMIA rollout, which began in July 2005, was completed in four months. It was first deployed for Tata Motor’s sub-one ton truck called Ace. It was then graduated to a new version of the Indica, and then to the Nano. DM automates processes in product design and production engineering planning. It not only helps plan manufacturing processes and design a plant’s layout, but also virtually simulates the repercussions of those plans. Digital manufacturing covers many areas including product design, plant layout, time measurement, process planning,

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Cover Story | Digital Manufacturing ergonomics, robotics and simulation of the whole plant. It's output is taken for process documentation, which is considered as a manufacturing blueprint. DM integrates with SAP to provide process-timing data which is used to cost out a product. Data flows from the DM to ERP, which costs out a product, an assembly or a subassembly. “Or, when you produce items in sequence, you have to book your production into the system. When you do this, the system knows how many hours of efforts will be consumed. There is a seamless integration between various systems,” says Mitra. He adds that with DM, planners can also simulate the movements — and fatigue levels — of people working on the shop floor. Because of the repetitive nature of assembly-line work, a badly-created process can impact efficiency. “It costs a lot of money to make a physical prototype. And, after you’ve made it, you might find that changes need to be made. In physical world, the costs of making those changes could prove quite expensive, particularly if your facilities are very large,” Mitra points out. T.N. Umamaheshwaran, CTO (engineering automation), Tata Technologies and the person who headed the DM program at Tata Motors, agrees. “Using DM, on simulated basis, the costs of making such changes are much lower. You can actually see and walkthrough your facility even before you have laid the first foundation stone. You can simulate all the operations even before the first of machines are installed,” he says. “DM is a means of time travel. We cant't imagine what would take place at a new plant, if we did not have DM tools. Two years before the first stone of a plant is laid, we already start working on it. We don't even even know where the site will be, but we know what it will take to make 750 cars a day. That’s the kind of simulation that gives management a comfort level,” he says. The solution is also easing retrofit pains at the assembly-line level. “The new Indica project is seeing a lot of benefits from DM. Earlier, only after we had made prototypes did we realize that we had overlooked some practical problems. Maybe it was an operator who could not reach or see a part

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“changE i s constan t. with dM thE Focus , is on FlEx ibility; to bE ablE to changE w ith nEw rEquirEM Ents, EspE cially iF t can cut c hEy osts.” —P

robir Mit Senior G ra M-IT, Tata Motors

Cover Story | Digital Manufacturing comfortably while assembling. But it was too late to do anything then. Now, we are able to figure out such problems at the desktop and take corrective measures,” says Nitin Rajurkar, GM (technology & production services) at the passenger car business unit of Tata Motors. Umamaheshwaran adds that simulation movies are filmed for review by different teams. Each team appends their comments according to their area of expertise. “To test a new product we need to make a large number of prototypes. That's like a minifactory. The number of tests is huge, as we need to go to multiple target markets and need to comply with several regulations,” he points out. But Tata Motors didn't invest Rs 6 crore in DELMIA just to create prototypes.

More Maneuverability DM can do more. It can also optimize an existing factory layout by adopting new manufacturing techniques and technologies. And it can simulate a change of product on an existing line.

“Take the Ace product for example. On the same Ace line, we want to release a new oneton Ace, which means that the line has to adapt to a new product. Or take the Indica’s plant. On the same assembly line, the weld lines are different for different variants of the Indica because we bring out an old Indica and the new Indica on the same line,” says Umamaheshwaran. “Within the Indica platform, we have the Indica hatchback, the Indigo sedan and the Indigo Marina. Variety management is important,” he adds. DM has a solution to this. It allows ‘what-if’ analysis and can create different scenarios. And it offers more. Umamaheshwaran underscores the importance of DM for a tighter supply chain and logistics. Say a car’s dashboard is outsourced, he points out. DM simulation can help Tata Motors understand how modular the entire instrumentation panel is. With the help of DM’s simulation of a complex process, process planners and decision-makers realized how much the organization could save in inventory space and reduced turn-around-times by outsourcing the panel.

“In the old days, people planned for manufacturing facilities with very long time horizons. It was something that was created and then forgotten about it except for minor changes — until you got a new platform,” says Mitra. “Today, change is constant. Frequent changes are in much higher demand now with so many new products and variants being brought out. With DM, the focus is not on building a one-time infrastructure. The focus is on the flexibility; to be able to constantly change with new requirements, especially if changes to process can cut costs.” And DM is helping do exactly that. By automating process planning and engineering, Tata Motors has taken a sickle to costs and time-to-market. The ability to simulate facilities and processes has reduced the cost of physical rework, which translates to lower TCO. There has been a 30 percent reduction in manufacturing and facilities planning timelines, with a 20 percent reduction in cost of the manufacturing planning process. “In fact, the time to design an entire process end-to-end has — for certain functions — reduced by

Sharpening the Supply-chain In the last half-decade, Tata Motors has seen exponential growth both in india and abroad. In the area of commercial vehicles alone, the auto manufacturer has launched about 55 new models in last four years. Naturally, such rapid growth had a compounding effect on the volume of supply transactions — in terms of development and receipt transactions. “During the same four year period, the number of goods receipt notes increased by a whopping 250 percent,” says Probir Mitra, CIO, Tata Motors. To manage this huge increase in the supply-chain workload, Mitra and his team decided to reengineer the entire business process and introduce smart IT enablement. It was the only way to contain the throughput of the supply chain without increasing the manpower. And supplier relationship management (SRM) born. The SRM solution integrated all aspects of the vendor interface seamlessly, while maintaining the enterprise’s database of vendor capabilities and product catalogues. SRM also consolidated 30

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the organization’s sourcing requirements. “It provided us with a platform to not only conduct reverse auctions but also to empower potential buyers,” says Mitra. SRM straightaway reduced the processing time to get acceptance from a supplier by about 24 to 96 hours, depending on the transaction. It reduced manpower requirements by a 104 heads, resulting in savings of about Rs 3 crore. SRM has allowed Tata Motors to introduce the Kanban system of material replenishment for 2,000 items. When materials need to be replenished, the SRM notifies the supplier, which enabled just-in-time inventories. “SRM ensured real time availability of schedules, enabling suppliers to plan much better. An improvement to our payment performance also helped us to improve our payment terms and overall relationship with our suppliers and vendors,” says Mitra.

— G.T.

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Cover Story | Digital Manufacturing over 50 percent. In terms of costs, certain functions have managed to cost less by 50 percent,” says Mitra. Other advantages associated with DM reflect the non-stop nature of manufacturing. “You can’t afford to shut down for five days, make your changes and come back in. You need to have information so that you can simulate, work out the smallest window of downtime and execute,” asserts Mitra. “Earlier, we used to have a separate cell to take care of robot programming,” says Umamaheshwaran. “Programming was done while the robots were online and this caused downtime. So, we were forced to make changes during the Diwali holidays or during a planned shutdown. Now, we don’t have to wait. A lot of robot programming to adapt it to new products happens offline,” he says. The result? There has been a reduction in time-to-market for passenger cars by at least six months. DM has helped quickly identify areas of 'work overload' and constraints while balancing lines to adapt to different vehicle variants. And the business can’t get enough. “At the Pune plant, our facilities were designed around the Indica. But today if I want to introduce a new product into the current facility, the designers have to work around the facility and not the product,” says Rajurkar. "Here’s where the difference lies. They have to design with constraints. DM helps them a lot here. We are now able to predict bottlenecks, biomechanical problems and other constraints much more in advance — avoiding a lot of rework. This helps keep the car’s cost down, because reworking problems late in the day is expensive.”

Riding Top Down Rajurkar says that DM doubles up as an excellent tool to help justify investments in capital-intensive equipment and technologies to senior management. “Earlier we used to implement something without understanding the whole picture. Because of this we’d run up against un-anticipated problems. Now I can make five different proposals based on simulated scenarios and select the best one,” he says. “Honestly, our process planning department was more of a process

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Sharing Know-How As Tata Motors saw explosive growth in its business, owing to increased demands and the way market was expanding, its CIO, Probir Mitra, and his team realized that they should tap into explicit and tacit knowledge and experience locked among the employees of the organization. This resulted in a knowledge management (KM) system. With KM, Mitra sought to leverage market data gathered from the sales and marketing teams at Tata Motors. “Knowledge-based engineering is our own intellectual property, captured through the KM portal called K-Guru, in terms of the cumulative wealth of knowledge and experience that we have in-house,” says Mitra. K-Guru captures knowledge from the market and the shop-floor. The knowledge-based engineering (KBE) application captures and stores knowledge on product and process design, which is in turn harnessed by designers in the product design function and manufacturing planning team responsible for planning facilities. The KM portal was conceptualized and implemented on the existing SAP-SRM platform meant for integrating suppliers, without any additional investment. Tata Motors has reaped a lot of quantifiable benefits from the KBE and K-Guru portal. There has been a 60 percent reduction in design cycle time for key components and aggregates, and 40 percent reduction in time spent on routine tasks. Using knowledge from K-Guru, over 10 innovations covering breakthrough ideas in logistics, maintenance and repairs, manufacturing, productivity and manpower planning have been replicated across all locations. —G.T. documentation department because it used to document what happened on the shopfloor. Now, the documentation is system generated, and when a planning person is free he uses his time to plan processes,” says Umamaheshwaran. Going forward, Umamaheshwaran would like to create videos from the simulations, which can be used for operator training. “It’ll give us the ability to make everyone understand what they are supposed to do at every station,” he says. It will also help get around a language problem at the pan-Indian company. “We do everything in Hindi and when go elsewhere, we need to translate [training manuals] into the local language. Simulation movies are much easier than making a plethora of translations,” says Umamaheshwaran. “I can’t say that we are using DM to its full potential,” adds Rajurkar. “I don’t know how

DM will perform when multi-model complex operations are to be done at the same facility. We haven’t yet validated that. We want to know how the system will cope with complete line balancing to take care of multiple variants,” says Rajurkar. “Digital manufacturing helps the teams working on product and process design to work on a common, seamlessly integrated platform. DM has given us tremendous benefits in terms of simulation, concurrent work, product design work and envisaging smaller facilities as a part of the larger footprint we want to have tomorrow,” says Mitra. CIO Gunjan Trivedi is assistant editor. Send feedback on this feature to

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Case File

Quality Finds balance

Reader ROI:

How to run a project spanning multiple departments How an online system can create unexpected results


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Quality or speed? It’s a tradeoff many companies accept. But in its attempt to staunch the flow of adulterated petrol, BPCL needed both. Here’s how IT helped balance quality’s yin with speed’s yang.

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Case File


dulterated fuel is a big business. It’s so big, it’s worth killing for. In November 2005, S. Manjunath, a sales manager for the Indian Oil Corporation, was murdered by the fuel mafia because he had detected and shut down gas stations selling adulterated fuel in Lakhimpur Kheri in Uttar Pradesh. Thinning down fuel is not good for anyone, certainly not for consumers or the oil companies. But this did not stop the fuel mafia. In 2006, the situation got bad enough for the government to step in and lay down the law: it set deadlines for oil companies to piece together a mechanism to create fuel markers, have more surprise checks at petrol pumps, use global tracking to monitor petrol trucks, and increase sample testing. Because of the number of times that petrol changes hands on its way to the consumer, testing fuel samples is among the most obvious and direct methods of ensuring quality. India’s third largest oil company, the Rs 1,07,452 crore-BPCL, has such a program, too. The organization takes its sample testing seriously. It has a large operation dedicated to quality assurance — 3,000 staffers big. But like all large operations, BPCL’s quality control initiative was riddled with inefficiency.

IllUSt ratIon by MM Shan Ith

Efficiency Breakdown BPCL products, like fuel and lubes, make four pit stops as they travel through the distribution channel. From BPCL’s refineries, products move to manufacturing plants and are then transported to depots via pipelines or trucks. From the depots, products are moved to filling stations or distributors of lubes.

customer complaints, and the tracking of In order to ensure quality, samples of samples were all handled by people — by BPCL’s products have to be tested at each people who took vacations, who left office of the four stops by the Technical Service at 6 p.m., and who were human enough Department. With over 120 depots and to be prone to making mistakes. Chasing 8,000 retail outlets, the department has a down test results that were sent via email huge job on its hands. and fax (in the form of worksheets) made “As per operating processes, practices the process even more cumbersome. Added and guidelines, product samples are to this was the pressure of deadlines. collected from retail outlets, oil depots, The organization had thought of a tankers, and state and government solution — but it had only been used at agencies. Sample collections also originate BPCL’s refineries. It came in the form of a from customer complaints. Apart from this, software solution from US-based Thermo we do random sampling in cases of leaks, Fisher. The refineries used a Laboratory accidents, confiscation in transit,” says Information Management System (LIMS) M.D. Agrawal, deputy GM (IS), BPCL. to test products at intermediate stages of To create a mechanism that could handle production. “LIMS is very high-end and this load, BPCL did what most companies complex. It’s not suitable for enterprisewide would do if they wanted to speed up the application,” says Dr. Narasimham PVSL, process of sampling: they created more test labs. At last count, BPCL had 23 testing centers and 22 mobile labs spread across the country. But throwing more labs at the “It was a challenge to problem didn’t send it away. It conceptualize a system still took about plenty of time to turnaround a sample. which would meet “External customer samples benchmarks for both — that normally came to us functionality and value.” with a note from a local sales — m.D. agrawal officer — would take 25-30 Deputy GM (IS), bPCl days [to test]. Sometimes

Photo by SrIVatSa ShanDIlya

By KaniKa Goswami

we would have to resend the reports because of various inefficiencies,” says Subramanian R, deputy manager, QC, at BPCL’s Shivdi office in Mumbai. The problem was the volumes of data being generated at the QC headquarters was swamping the manual system that BPCL had set up. Test results,

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Case File of the large business impact of the solution they were trying to create, the IT team knew that after this point the project would belong to SNAPSHOT many departments, a recipe LIMS for disaster. Staff in quality assurance: So, they appointed TCS 3,000 as project manager and Samples tested a responsibilities were handed year: out. IT would be the key driver 150,000 for the LIMS project, which Labs: meant that project drafts and 23 stationary, 22 ‘activity initiation’ were the mobile responsibility of Agrawal Geographic and his team. They were spread: pan India also responsible for vetting other vendors, pinpointing Depots: 128 necessary i nt e r f ac e s and fixing integration Retail outlets: +8000 challenges. In addition, database administration Test types: 3,000 and feasibility studies on customer complaint modules Cost: Rs 70 lakh were given to the IT team. BPCL’s QC department, however, were designated process owners. They would identify and isolate the applications that would run on LIMS. Agrawal and his team started attacking the The refinery’s IS team, which already had problem with some serious shovel work: experience with the Thermo Fisher LIMS, they looked hard for similar deployments in was made project co-coordinator. They India. Much market research helped them would also play an important role in the locate a few in Hyderabad, but their sizes procurement of the solution and providing were no match with the 1.5 lakh samples interface support. that BPCL’s labs churned out every year. The deployment, it was figured out early, They could not find a reference site that would need co-ordination between almost had integrated a multi-purpose laboratory all the operations of sales. So a retail team information systems into a single solution. also provided with data for budgeting the They would have to conceptualize their own solution. The ERP and corporate IT teams system — a tall order. And it would have to were made available for support with be done while designing the system and interfacing with other existing systems like planning for challenges that integration mail servers. with existing facilities would pose. Work on the project began September The IT department evaluated various of 2006. The project kicked off with the solutions for functionality, platform objective of synchronizing the labs of BPCL compliance, performance over WAN, at enterprise level. A cross-functional team scalability and robustness. After was formed with members from each of the thoroughly scrutinizing solutions from stakeholder groups, users and IT. A pilot multiple vendors, Agrawal identified the was commissioned by in December of 2006 best fit for their needs and Hyderabadand was completed in three months. based Caliber Technologies was identified The system was built around three basic as the technology partner. BPCL’s IT team but key modules: the sample manager, the had crossed the first hurdle; but it was one resource manager and the system manager. they knew they had control over. Because

senior manager, QC. “It would not solve our problem.” Besides, the Thermo Fisher LIMS cost over Rs 2 crore for eight user licenses. To create the efficiencies they were looking for, BPCL required over 1,000 users to have access to the system. What they needed was a system similar to LIMS to automate various processes and integrate all their labs onto an online collaboration system. It would also be required to manage information, test results and the quality at the labs. And it could not be expensive. “It was a challenge for the IT department to conceptualize and provide a system which would meet benchmarks for both functionality and value. We had to think of the economics,” says Agrawal.

Backseat Driving


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These three really support the workflow of the laboratories right from the time when samples are registered to when test reports are released. They also help ease communication when the Technical Services department redresses complaints from customers. To stay in line with the international ISO/IEC 17025 requirements, it was also important to use bar codes on samples. These technical challenges, however, were only the beginning.

Planned Ride As with any implementation of this size, the project team faced change management problems. “There will always be issues,” says Narasimham. “Fortunately, we already had experience with this while implementing SAP earlier. I was the change management coach on that project, so we anticipated most problems and ensured that the preparatory ground was done in advance. Sometimes we needed to push — where we needed, we did. But once people started seeing the benefit of the system, the take-on was much faster.” However, pushing was not a method BPCL could use with its clients. For the project to take off, it was vital to get external customers to register on the LIMS. This is where both internal and external customers faced a similar challenge: an early version of the system required them to register information on both SAP and LIMS — especially for product batch tests of Lubes. The double work was creating pushback and BPCL’s IT team solved this by deploying a smooth seamless LIMSSAP interface — gaining much standing. Many parts of the system also faced connectivity problems, but precious little could be done about it. “The problem is some of the labs are connected on low speed VSAT and some via VPN. The network is also on high speed LAN. We also use lease lines. We have to provide seamless performance even with so much variation on the network. The software needed testing to see if while operating in real time, it could meet our expectations,” says Agrawal. Since this was an enterprise level deployment, based on ASP.NET, it was also a challenge to ensure it was well

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Case File

Fuelling Speed Once the code is entered, a lab analyst runs one of 3,000 tests.




Using LIMS, BPCL has halved the time it takes to turnaround a sample for testing.

Data Entry

The lab analyst is also responsible for uploading test results.


Infograp hics BY pc ano op

maintained and had minimum downtime in a worst-case scenario. It also needed to respond to centralized control. This challenge was met by running the system on an intranet-based platform. The integration with diverse systems that already existed, like SAP, Active Directory, etcetera, could also raise a challenge. Other problems that could loom up were that of the humungous volumes of sample and testing data, a long list of testing procedures, and standardizing various processes. In addition, there was the added task of tracking test history to assure prompt responses expected for customer queries. This was a huge deployment, and unless handled pragmatically, crosscurrents could create more trouble. Fortunately, none of these challenges posed a threat to the deployment and Agrawal’s team with Narsimham’s department, assisted by TCS and Caliber’s project team implemented LIMS successfully.

Speed For Sure The LIMS implementation met all the expectations that the QC and sales quality control could have thought of. In addition to providing the standard benefits that it was designed to provide, it improved

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All test results have to be vetted by a lab officer before they can be viewed by a customer.

The sample is received at one of BPCL’s 45 labs where a lab officer barcodes it to help with tracking.

Case Study.indd 35

Alternatively, fuel samples can be outsourced to other labs. Because of barcoding and LIMS, results are not lost and are returned quickly.


5 sampling

At one of BPCL’s 8,000 petrol bunks, a sales agent sends a fuel sample to a test lab.

communication between labs, between labs and the sales field staff, between labs, depots and retail staff, between labs and customers, and between labs and refineries. It has also helped drastically reduce test cycle and customer responses, from 25 days to less than half of that. The system allowed for easily-accessible database archives of sample data, online customer redressal, etcetera. It built customer confidence not only externally but also internally, among the business units of BPCL that use the solution. And it only cost Rs 70 lakh. “The status of a sample is visible to the user, he knows where it is, which means that one big block of communication costs came down drastically. It captures everything in the lab, everything is stored on it, there are no books and procedures required,” says Subramanian. “With LIMS, customers send us samples and we give reports attached

Test results

A customer can view test results online — in half the time it used to take.

with comments. Customers are much more satisfied,” he says. Even the data from mobile labs is captured in the system. “The mobile labs are now provided with laptops with VSAT cards. They can register a sample from wherever they are instead of waiting to come back.” Subramanian points out that the success of the project had led to business proposals from external agencies interested in outsourcing their lab operations to BPCL. Meeting quality requirements, which is one of the basic policies of BPCL, was the first goal met. But, the LIMS deployment has definitely given the BPCL business an edge over competition. It has helped the company jump past its rivals by renewing customer confidence. Who said oil stains were impossible to remove? CIO

Kanika Goswami is a special correspondent. Send feedback to this feature to

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1/30/2008 6:02:33 PM

Online With the

Consumer By Kanika Goswami

View from the top is a series of interviews with CEOs and other C-level executives about the role of IT in their companies and what they expect from their CIOs.


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

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Ponnapa: You have to look at this question from the perspective of the market. Today, we have roughly between 30 and 35 million people on the Internet. Now, if we expect mobile penetration to be close to 200 million, then we are talking about a growth that will ensure at

least 100 million users in the next three to five years. I would say more than twothirds of the market’s potential is still to come. I don’t think the game is over; in fact growth has just started. We are here at the right time: the market is about to open and we are ready for it. And it is true that the competition has been here much longer. But look at the US market, we are in the top-four there. We don’t see any reason why we can’t achieve that in the Indian market, too, in about three to fours years.


CIO: AOL has come to India at a time when the competition from other portals is thick. Why did you enter so late?

Imagin g by anil t

Every Web portal claims to provide the e-mail service with the most storage, the hottest chatting facility, the most advanced search features — the works. But, only a few live up to it. AOL India wants to ensure that it falls into that category. Launched in 2002 in India, the Web content portal has carved a niche for itself, simply by getting the basics right: it kept a keen watch on the pulse of the consumer. And then some more. Ponnapa P.G., MD, AOL India, says that it’s not just about getting the right product; it’s also about reaching the right people. With a unique video search product, an integrated chat-mail program and joint-portals with HP and MTNL in the offing, AOL India’s technological innovations are on the path that is attempting to change the way India views the Web.

Photo by Srivatsa Shandilya

Ponnapa P.G., MD, AOL India, says that technology rarely points to the direction his portal should take. He says that IT doesn’t head strategy — the market does.

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View from the Top

P.G. Ponnapa expects I.T. to: Help tap an imminent market boom Contribute in putting AOL among India's top four portals

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View from the Top

How is AOL planning to win over users? Will you leverage new technologies? There are two or three aspects to this. First, if you look at the way content is laid out on the portal and the associated experience people have because of this arrangement, it is all of a significantly higher order. People can find content easily, navigate easily and not just on the main page but even the story pages. Then there is the whole user experience on mail. It’s great. Users can change the entire look of their mail, its color and appearance with just one click. People can integrate mail and messenger, which means that they can chat with other people and mail at the same time. And then there are the small things, the details. For example, if you forget to attach a mail, you get a message that will prompt you to do so. Interesting things like these are what make us distinct, it is what people love, and they make a difference.

Does rich media like video help with increased customer acquisition? We already have a lot of video and rich media content. We have a large amount of original video content, which we believe is a unique proposition. We will strategize and leverage that. But rich media does not work at 256 kbps. Which is the way connectivity works in India, it’s there but it is of no use. This year was supposed to be the year of the broadband. Plans are still on, but expectations for the exponential growth of broadband in India have shifted — broadly — to the next year. This delay was due to the procurement of materials like optic fiber, but I think it’s definitely happening next year. 40

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“Technology is not the driver, the market is. There are millions of technologies out there but they are worthless if the consumer doesn’t want them.” — Ponnapa P.G. I think the whole equation is about to change. It’s like suddenly finding highways which make it that much easier. We need to prepare ourselves to where the market is going, rather than where it is today.

Apart from rich media, what unique features does AOL offer its visitors? At a certain junction, when products reach a particular level, there are no distinct USPs that stand out as killer applications. Take for example user experience across a variety of things. You could say everybody has this, but the way ours is done is different. It’s at a click. It’s easy. It’s like changing from first gear straight to the third. These things matter — users like it. It’s not just about getting the right product; it’s also about reaching to the right people.

Truveo is our video search product. It is on our portal. Essentially it is a significant technology piece. It has an embedded visual crawler technology, which enables it to search videos anywhere in the world and serve it contextually. For example, at you have Indian references. Everybody else uses text based stuff to try and do video-based search. This doesn’t solve the problem; it needs a separate technology totally. Truveo is a big differentiator. We have also launched channels quickly. We are already present in that space because we didn’t wait for five years to decide if the market needed it, we know the market is going there.

What promotions do you plan to employ to establish AOL in India? We already have two strong distribution deals in place. One is with MTNL in Mumbai and Delhi. And, going forward, we plan to expand to all MTNL customers. Second, from January this year, we started a program wherein all HP computers are being shipped with AOL as their default homepages. Suddenly, we will have a large number of people for whom the AOL homepage is just a click away. This will make us available to a few million people. Additionally, MTNL-AOL and HP-AOL will be joint portals, with joint ownership, so both will strategize to succeed. If you look at what people like to consume where Indian media is concerned, it’s entertainment, for a large part. The Internet is just a medium through which people consume entertainment. Until now it has been limited, but the moment bandwidth grows, there will be a lot to be explored. So, we have to get the product, the distribution and the screen right.

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View from the Top

What sort of response have you received? For our first six months, we have been extremely happy with the response we’ve got. The next year will be even more interesting with a lot of new initiatives and products coming in. It will be better because that’s when we will be able to add more value to the portal.

What plans do you have around mobile surfing and mobile Internet connectivity? We plan to leverage mobile connectivity. Today, consumers do not differentiate between a laptop and a mobile and if I can get the mobile market in, that’ll be great. These days, the average consumer who comes on the Internet is typically between 16 and 17-years-old. Very often, they start from a cybercafé, they register and get a few email IDs. Most of them get mobile phones around the same time. Suddenly their life changes, they get into SMS. This device is with them 24 hours a day and it’s important to be able to offer services that matter. We need to be able to leverage this. And, more importantly, the question is: how can we get innovative around it? How can we leverage, say, the camera feature? People take hundreds of photos. How can we integrate this with the desktop? How can a photo taken on a mobile phone be shared with a friend, be stored on a desktop or somewhere on the Web — and all be integrated seamlessly. These are battles we are planning for over the next 24 months. We already have a strong mobile platform, we have a short code, and we’ve got a bunch of innovative products aimed at youngsters right now. We want to add more product features. This is a consumer space and a large number of technological

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innovations have happened. But, other companies catch up quickly. It’s a game of packaging, of understanding the needs of the consumer, of communicating better with the consumer, of serving the consumer better. This is where we are doing a very good job with the mobile.


AOL Hits:

110 million unique visitors a year *

AOL Messenger:

67 million users * Indian HQ:


I am optimistic that connectivity will improve significantly over the next two to three years.

What is the role of your CIO in your market initiatives?

We act from the consumer’s perspective and then work backwards to the tech end. We believe that technology You have a will very rarely tell us background what to do. The CIO doesn’t with N-Logue, head strategy, the market which focuses on Head IT: need does. taking the Internet Rajeev Jain It is more prudent to be *Global figures this way, to ensure that we to rural India. keep our finger on the pulse What are AOL's of the customer. Technology rural plans? is not the driver, the market is. There are millions of technologies out there but they As far as AOL is concerned, we launched are worthless if the consumer doesn’t in urban India. The first 12 to 18 months want them. we will focus on this. Then, we will start looking at semi-urban and rural areas. We have done some work to figure out what What are AOL’s immediate we need to do in that space. plans for the future? We haven’t launched an initiative yet because we need to get our basic foundation Our biggest challenge in the short-term right. But we have the advantage of is to build a brand. We are doing work here, knowing what they need. I believe that AOL with ads on television, to create that hype will do something in that space in roughly and excitement. Once that is done, then two years. distribution and user experience all fall in place. CIO Offerings in India:

Video and video search, channels dedicated to Bollywood, cricket, education, Hollywood, news, sports, international music.

When you do start, do you think connectivity will be an issue?

It will be a challenge. Connectivity has been an issue in rural areas. However, with all the noise that people have been making, something will be done soon enough. We are going to connect. Three years ago, mobile phone connectivity was abysmal in villages. Today, at least 25 percent of villages are connected — something that nobody would have expected three years ago.

Kanika Goswami is special correspondent. Send feedback on this to

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


1/30/2008 3:38:45 PM


Wrong Medicine The

Big pharma's RFID trials aim to keep fake drugs out of your medicine cabinet — but the technology has significant limitations. By Sarah D. Scalet

For well over two years now, every single bottle of

OxyContin that's bound for either Wal-Mart, the world's Reader ROI:

What RFID can’t do

largest retailer, or H.D. Smith, a midsize drug wholesaler, has been slapped Why RFID’s success as a security

with a special label that's hailed as the solution to the world's counterfeit drug problem. device banks on an ecosystem


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Hidden inside each ordinary-looking label is a radio frequency ID tag that is supposed to allow Purdue Pharma, manufacturer of the controversial painkiller, to track the drug's progress throughout the supply chain — regardless of how many pills are poured into how many bottles and stacked into how many cardboard boxes whizzing by on a conveyor belt. The idea is that distributors could quickly scan all their bottles of OxyContin, learn the complete provenance, or ‘pedigree’, of each one, and reject any that could not be traced back to Purdue. "It's efficient, it's accurate, it does what we want it to do from a security perspective, and it doesn't bog down the distribution system," says Aaron Graham, VP and CSO of Purdue Pharma, adding that the infrastructure investment for the pilot project was Rs 8 crore and each tag costs between Rs 12 and Rs 20. If what Graham is saying sounds familiar, right down to the numbers he cites, that's because he's been saying the same thing for years. Yet, even now, he can offer remarkably little detail about how the system has prevented counterfeit OxyContin from being sold. Purdue, after all, has never had a problem with counterfeit OxyContin. What the company has had instead is a problem with stolen and diverted OxyContin, along with pressure from the government to get better control over a highly addictive drug that has received much more media attention for its abuse than its use. Indeed, Graham acknowledges that the main security advantage of Purdue's RFID system is that investigators can scan a seized bottle or box of OxyContin and pinpoint exactly where it came from. To really stop counterfeit drugs, Graham says, would require a central information clearing­house where every distributor and pharmacy checked and validated the pedigree of every drug — a far more complex task than tracking one type of drug going to two different outlets, as Purdue is doing. The need to prevent counterfeit drugs from being introduced into the legitimate supply chain is acute. The World Health Organization has said that counterfeit drugs represent more than 10 percent of global sales, and they are responsible for some thousands of deaths each year. The problem is that decades after RFID technology was invented, and years after the US Food and Drug Administration started touting it as the most promising

way to authenticate drugs, RFID technology as an anticounterfeiting technology remains just that: promising — yet far from proven. Even as companies like Purdue continue to test the use of RFIDs, it remains unclear whether the technology can ever live up to its promises — not only in the pharmaceutical industry, which is at the leading edge of testing this muchhyped technology — but also anywhere else. The reasons go far beyond the technology, standards and privacy issues that are most often raised, and into the very nature of what RFID simply is and isn't, and what it will or won't ever be able to deliver to any anti-counterfeiting program. "We see this in other areas of security," says Roger Johnston, team leader of the Vulnerability Assessment Team at Los Alamos National Laboratory, who has done extensive research on RFID technology and concluded that it may not offer any better security than ordinary bar codes. "Providing good security is a tough challenge, and people are looking for silver bullets," he says. "The problem is that if you simply take an RF tag, slap it on and think somehow it'll magically provide security, you'd be quite mistaken." Why? Here are five reasons. Behind each myth, as you'll see, is a much smaller dose of reality.

RFID tags are anticounterfeiting devices. Call up most pharmaceutical companies and ask to speak with the group most involved in testing RFID technology, and chances are good that the security department will not answer the phone. Consider the RFID efforts currently under way at the largest drug wholesalers in the US. At McKesson, the RFID initiative falls under the pharmaceutical distribution business. At AmerisourceBergen, the point person is in ‘integrated solutions’, which encompasses the testing and implementation of new technologies. And at Cardinal Health, the task falls to healthcare supply chain services, which is part of operations. That's because an RFID tag is first and foremost a tracking device, not a security one. Even the manufacturers of the RFID tags themselves, Johnston likes to grouse, are not security companies. "They're made by semiconductor companies for inventory purposes," he says. True, an RFID tag has potential as a security



the number of companies that say they will invest minimally in RFID until it matures.

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RFID device, when it's incorporated into a larger scheme. But it's not an anti-counterfeiting device in the way that, say, a hologram label is supposed to be. An RF reader cannot simply read information on an RF tag — even an encrypted one — and provide its owner assurance that the product is authentic. RFID technology is either a way of facilitating the documentation required to create a drug's electronic pedigree (the record of a drug's journey through the supply chain), or a component of a much more complicated system known as track and trace, which involves communication with the drug's source, or someone who knows it. Which brings us to point number two.

RFID is necessary to track the movement of legitimate drugs. At AmerisourceBergen, a complex track-and-trace pilot project is under way that would allow the Rs 244,000 crore distributor to check the source of drugs that pass through its distribution facility in Sacramento, California. Funny thing is, RFID technology is just one tiny piece of the project — the one that (hopefully) makes it operate quickly, rather than securely. The component of the technology that actually authenticates drugs is a registry handled by VeriSign, which is known mostly for its digital certificate products. Shay Reid, AmerisourceBergen's vice president for integrated solutions, explains. Drugs that have RFID tags are read with an RF reader, but the crucial part from a security standpoint is what happens next: two-way communication. "If I am the rightful owner, and VeriSign can verify that I

The need to prevent counterfeit drugs from being introduced into the legitimate supply chain is acute. The World Health Organization has said that counterfeit drugs represent more than 10 percent of global sales. did receive [the product] from an upstream trading partner, then they'll give me a certification number that allows me to further distribute the product downstream," Reid says. "If they can't verify that I am the rightful owner, then the transaction will be refused." Here's the catch: typically, products that are marked with RFID tags are also marked with a 2-D bar code, which is similar to a traditional bar code but carries more information. "The 2-D is the backup," Reid explains. That's because the most common complaint about RFID tags is that they're flaky. Read rates as low as 70 percent have been reported, and 44

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accuracy can be especially difficult when liquid medicine or foil wrapping is involved. (To be fair, RFID technology has come a long way in the past couple years, and tests of the latest tags are much more encouraging. Cardinal Health reports that its latest tests showed 99 percent accurate readrates and no ill effect from liquids or foils.) For now, however, the 2-D bar code is generally considered a more reliable marker than the RFID tag — albeit one that takes longer to read, because it can't be scanned through packaging material using radio waves. The crucial point of either marking mechanism is that each container be labeled with a unique, serialized number. That way, once bottle #1894892432 has been received by a pharmacy in Silver City, a bottle with #1894892432 can't also be authenticated by a pharmacy in Brunswick. Otherwise, counterfeiters could simply churn out fake RF tags — or 2-D bar codes, for that matter — as easily as they churn out fake drugs, and there would be no central clearinghouse identifying the duplicates.

RFID can mark pills and tablets. When RFID boosters praise the technology as the solution to counterfeit drugs, here's one objection that Novartis's James Christian is quick to raise: no one is marking drugs, only the packaging. "We have had experience with counterfeit product in genuine packaging, and genuine product in counterfeit packaging," says Christian, who is CSO of the Rs 148,000 crore company based in Basel, Switzerland, which manufactures a variety of prescription and over-thecounter drugs. "The packaging isn't what's important." What's more, he says, pharmaceutical products are routinely and legally repackaged in both the United States and the European Union. "If a pharmaceutical company invests a great deal of money into putting security devices in packaging, the product could easily be transferred legally to a package with no security device," he says. "And now someone has a collection of genuine packaging with security devices that they might throw away or use in another manner." In Christian's opinion, at least, changing the rules that govern how legitimate drugs are distributed could be more effective than using RFID technology in defeating counterfeit drugs. This could mean changing repackaging laws or increasing penalties for counterfeiters. Whether any of this would be easier to accomplish, though, is anyone's guess.

RFID verifies legitimate products. The ultimate goal of using RFID technology as part of an electronic pedigree or track-and-trace program is to allow customers to know that the drugs they have in their medicine cabinet are authentic ones. "The benefit is

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RFID at the consumer end — knowing that the product you're getting came from where it should have come from," says Julie Kuhn, vice president of operations, healthcare supply chain services at Cardinal Health, the Rs 324,000 crore wholesaler based in Dublin, Ohio. Yet no one — not the FDA, and not any of the pilot programs being done by the private sector — is actually proposing a way for consumers to validate the products. In fact, it seems likely that RFID tags will be disabled before the drugs reach consumers' hands. This is largely because of privacy concerns that, say, stores could use the information on RFID tags to know what bottle of pills a customer has in his backpack. Even if the United States does eventually have a track-and-trace program that relies on RFID technology, ultimately the consumer will still be relying on something as old-fashioned as an ice-cream soda: trust in the local apothecary. "Patients put trust in the states licensing the pharmacies, and that pharmacists are only buying legitimate products," says Carmen Catizone, executive director of the National Association of Boards of Pharmacies. But right now, they can't do that, because they don't have a pedigree of where the drug came from.

The pharmaceutical industry is very close to widespread RFID adoption. Given all these challenges and limitations, it may come as no surprise that the move to implement RFID technology to secure drug supply has hit some speed bumps, years after it was first promoted as the next big thing for pharma. The FDA, after delaying for years the deadline for when the industry should have electronic pedigrees in place — ones that it says, most likely, will rely on RFID technology — recently announced its biggest delay of all: it was giving up on setting a deadline. Back in 2004, explains Ilisa Bernstein, the FDA's director of pharmacy affairs, "we thought there would be widespread use by 2007. We're not there. So rather than setting another deadline, we're leaving it to the stakeholders themselves to come up with a deadline." (An injunction of the Prescription Drug Marketing Act, the 1987 law that allows the FDA to set this regulation, has not helped.) Still, the FDA continues to say (as it has for years) that RFID technology is the ‘most promising’ means of authenticating drugs. "We keep saying this is a promising solution," Bernstein says. "We want to say that this is a solution, but we're not there yet because people haven't adopted it. There's a lot of work going on behind the scenes, but you have to cross over the line and just jump right in and start doing it. "In the end, it may turn out that both the RFID boosters and the naysayers are right: RFID technology may in fact be the most promising way to mitigate an unsolvable problem.

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Wants RFID?


Technology resellers and solution providers are poised to add radio frequency identification (RFID) solutions to their portfolios, but their customers have been slow to embrace the technology, according to a survey by CompTIA. The survey found that 84 percent of technology resellers, solution providers, systems integrators, and consultants will or may offer RFID products and solutions in the next three years. But nearly two-thirds of the companies said their customers have yet to implement RFID solutions. Among channel companies with customers who have implemented RFID, most said that less than 20 percent of their customers are using the technology. "The results of our survey are reflective of the RFID market, where rosy forecasts about rapid and widespread adoption have given way to the reality of dealing with a technology whose broader deployment has been challenged by equipment and tagging costs, murky and unclear return-on-investment for supply chain applications, and a workforce skills shortage," said David Sommer, VP, e-business and software solutions, CompTIA. Despite the slower-than-expected adoption rate, companies in the IT channel remain bullish on future opportunities in the RFID market, the survey indicates. Among companies that see their organization offering RFID products and services, 89 percent expect to focus their efforts on hardware installation and maintenance. Just over 46 percent said they will offer software implementation services; 38.9 percent will offer other RFID services; and 31.5 percent plan to focus on software development, according to CompTIA. —Staff CIO Canada

But only time will tell. "We need more customer validation of the solutions that are being used today," says Michael Liard, a research director at ABI Research who studies RFID. "If companies are finding ROI or business benefits, they're hard-pressed to share those because those are now sources of competitive differentiation. So getting them to communicate the benefits that they're realizing is a challenge that we're going to have to address as an industry." CIO Sarah D. Scalet is senior editor. Send feedback on this feature to

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1/30/2008 3:41:21 PM

Supply Chain Management

By Kim S. Nash

At lunchtime one day last January, Jill Hein, an Iowa mother of eight, took a jar of peanut butter out of her pantry. She opened the lid. Everything seemed fine. No funny odor. No odd color.

Reader ROI:

How to limit a recall’s cost and scope What supply chain systems are needed to recall efficiency Why the frequency of recalls is increasing


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

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Hein fed the Peter Pan to one son and one daughter. Within hours, they were cramping and vomiting. Hein’s 3-year-old boy, Bowen, had to be taken to the emergency room the next day. Hein ate some herself two weeks later and was hospitalized for dehydration. And renal failure. Alone or with jelly, peanut butter is as classic as Elvis, who preferred his on white bread, mashed with bananas and fried. Americans eat 700 million pounds of crunchy and creamy each year — enough, the Peanut Advisory Board says, to coat the floor of the Grand Canyon. Hein never expected a simple peanut butter sandwich to go so wrong. Neither did ConAgra Foods, the Rs 48,000-crore conglomerate that makes Peter Pan. One of ConAgra’s oldest and best-known brands, Peter Pan brought in Rs 436 crore in sales last year, says Information Resources, which tracks retail spending. ConAgra also supplies some of Wal-Mart’s Great Value house brand and sells peanut butter

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Supply Chain Management

toppings to companies like Carvel and Sonic, bringing total peanut butter sales to Rs 588 crore last year. But when an outbreak of a rare salmonella strain was traced to ConAgra peanut butter, the company would have to try to get it all back. The Peter Pan recall eventually involved 326 million pounds of its own and Wal-Mart’s peanut butter, plus 99,953 cases of toppings. So far, ConAgra has spent over Rs 312 crore dealing with an estimated Rs 4,000 crore worth of potentially infected product. Its peanut butter sales were down 63 percent in fiscal 2007, the company says. No one knows how much ConAgra will need to spend to re-establish trust in its product. Hiring Tinker Bell to ask people to clap if they believe in Peter Pan won’t fix this.

Why Recalls Depend on the Supply Chain Peanut butter isn’t ConAgra’s only recall trouble, either. The company has had to call back hundreds of pounds of ground beef in the past few years, and this month ConAgra’s Banquet pot pies were recalled when at least 211 people in the US got salmonella poisoning, which the Centers for Disease Control and Prevention links to the pot pies. That recall is ongoing. But it’s not just ConAgra. Recalls are blooming like flowers in spring: Dole’s e.coli bagged salads; Metz Fresh’s salmonella spinach; REI’s faulty children’s bikes; Mattel’s lead-painted and choking-hazard toys, just to name a few. Federal records show at least 628 recalls so far this year, and another 941 in 2006. (For more, check out 'Recalling Through the Years'.)

Globalization accounts for some of this surge. Many US companies depend on overseas production, where quality controls are difficult to monitor. And it’s not just hard goods like toys from China. Food, too, arrives by container ship from other countries, and sometimes it’s contaminated. So far this year, for example, more than 8,660 cartons of cantaloupe from Costa Rica have been recalled for salmonella risks, according to US Food and Drug Administration (FDA) records. But mainly, things go wrong. That’s business. That’s life. “One risk every company faces is a recall,” says Jane Barrett, an analyst at AMR Research in Boston. So if recalls are inevitable, a CIO must help create a supply chain ready to cope with them, she says, by quickly providing the relevant data to facilitate the process. And a



There have been more products lately than ever before. Will your supply chain be ready when you have to run it backward in order to track, trace and collect a recalled product? It had better be. Your company’s future may depend on it.

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Supply Chain Management recall conducted under pressure from federal regulators, an angry public and plaintiff’s lawyers tests every supply chain management decision a CIO makes. Best practice calls for companies to be able to track and trace the pedigree and whereabouts of the raw materials used to make their products all the way through the manufacturing process and out to end-point customers, says Steve David, former CIO of Procter & Gamble. But many companies, for many reasons, don’t have supply chains that can do that, and that becomes evident in clumsy recalls that go on too long, cost too much, and have the potential to damage corporate and product reputations. “The ugliness of bad data management really hits you when you have a product recall,” David says. As soon as the decision is made to recall a product, companies should release consistent, correct information to minimize brand damage, says Joe Barkai, a practice director at Manufacturing Insights, a consulting firm that is a sister company

to CIO’s publisher. “But,” he says, “now [traceability] is mainly a manual procedure. Companies don’t have it automated.” And that’s a problem. ConAgra, for example, had to revise its recall twice as it learned more about how much infected product it could have manufactured and where it might have gone, according to FDA records. The original Valentine’s Day 2007 announcement recalled peanut butter made after May 2006. In early March, ConAgra expanded the scope to December 2005 and added toppings made in its Tennesee plant using peanut butter from its Georgia plant, where the original contamination had occurred. A week later, ConAgra pushed the date back to October 2004 — 22 months before the first reported illness. ConAgra declined to comment on the recall. Talking about how its IT and supply chain managers perform recalls, a spokeswoman says, “doesn’t align with our priorities.” But it’s clear the experience revealed problems at ConAgra. Paul Hall,

When Disaster Strikes Supply chains are your first line of defense. They can also be your Waterloo.

Recalls aren’t the only events that put supply chains to the test. Disruptions of all sorts can provide insight into how robust and efficient your supply chain is. Loose supply chains can hamper companies in interpreting information, says David Simchi-Levi, a professor in the civil and environmental engineering department at MIT. For example, lightning struck Philips Semiconductor’s factory in New Mexico in 2000, sparking a fire that shut down production of its radio frequency chips, which both Nokia and Ericsson were then using in their cell phones. Within three days, Nokia’s supply chain systems detected a slowdown of incoming parts from Philips and alerted plant managers and then corporate managers, says Simchi-Levi, who studied how the companies managed this disruption. Within two weeks, Nokia redesigned its phone to use other companies’ chips and persuaded Philips to shift production of its chip to other factories. Ericsson, on the other hand, didn’t respond to the problem until four weeks after the fire, in part, says Simchi-Levi, because its manufacturing and supply chain systems weren’t programmed to spot risks early enough. Nokia locked up alternate suppliers; Ericsson lost market share that it never regained. By the end of the year, it was out of the phone business. Supply chain problems, Simchi-Levi concludes, 'change markets.' —By Kim S. Nash 48

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vice president of global food safety, gave a talk at the Food Marketing Institute in April, after the recall was under way. The peanut butter recall taught ConAgra lessons other food manufacturers can use, he noted, including knowing where all of your product is going, such as toppings, and assessing ahead of time overall recall and traceability processes across your supply chain. Hall himself is at ConAgra as a result of the recall. The company created a global food safety group after the recall and hired him to lead it.

Lead Paint and Other Horror Stories When your boss sweats through hostile questions from Wall Street or is sworn in to testify before Congress, as were both ConAgra Senior Vice President of Operations David Colo and Mattel CEO Bob Eckert, he doesn’t tap on a keyboard looking for answers from the company’s factory floor software. He’s got a piece of paper in his hands and a trusted adviser whispering in his ear. He’s not working with data; he needs information. IT leaders have to provide it, turning numbers into ideas. For example, in his testimony, Eckert outlined the history of Mattel’s early August recall of those Chinese-made toys containing lead paint. When product samples failed lead tests performed for a Mattel trading partner in France, Eckert said, Mattel product integrity employees in China then inspected the manufacturing records the company requires its Chinese contractors to keep, showing data such as pigment tests that can be matched to specific containers of paint in use on the factory floor. The containers get stickers with batch number, test number and other information. That data must be kept available for periodic audits. By assessing data the factory handed over, as well as data it couldn’t — such as authorization to use paint from a source not approved by Mattel — Mattel tracked the lead to yellow pigment in paint used on some parts of certain Dora the Explorer and Sesame Street toddler toys. “Based on what I saw within the first week of this hitting them, they had a pretty

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Supply Chain Management

How to Turn the Tide Over 628 foods and hard goods were recalled in 2007, amounting to at least 60 million individual items and 33 million pounds of food. That’s a lot of stuff swimming upstream against the supply chain tide. Assume you will get hit by a product recall, and get ready to provide clean, complete data to senior executives working to mitigate the damage. Here are five ways to prepare for the inevitable: Create an R-team. Designate a recall task force of managers from sales, customer service, manufacturing and IT. Tap people from supplier relations or transportation, as needed. Train everyone in querying each other’s core apps, and how their data meshes to tell the story of how a product went bad, the scope of the problem and where it lives inside the supply chain. 2. Study up. Read the investigative procedures to understand what data inspectors will request during a recall. IT should work with plant managers to figure out how quickly and completely they can supply the data. 3. Practice. Do a mock recall. Along with disasters and terrorist attacks, recalls are one of the risks the IT group at Procter & Gamble practices handling, says Steve David, former P&G CIO. Choose a batch number for a real group of products, he advises. Then,

solid contingency plan in place,” says John Quelch, a business administration professor at Harvard Business School. (Mattel declined a request for an interview.) CIOs who want to mitigate risk during a recall must move information to where it needs to be: to the FDA or US Department of Agriculture or Consumer Product Safety Commission. Or to factory employees and to the public, says Rick Blasgen, former senior vice president of integrated logistics at ConAgra. Blasgen, who left ConAgra in 2005 to become president and CEO of the Council of Supply Chain Management Professionals, declined to talk specifically about ConAgra. But during his three years there and his five years leading Nabisco’s supply chain operations before that, he was part of several recalls. “Particularly if there’s a product that can hurt someone,

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Five best practices for product recalls. using supplier, manufacturing, distribution and transportation systems, run reports to try to account for what was made, shipped and received. 4. Study the masters. Pharmaceutical and aerospace companies can trace the pedigree of their finished products back to the component level. They even know what the temperature in the factory was when the widget or pill was made. They can do this because regulations require that level of detail. Evaluate whether practices and procedures they follow could work for you. 5. Reach out. Use the Web to communicate with consumers, taking some of that burden off the retailers. Mattel, for example, regularly freshens its site with information about ongoing recalls, plus images and video to answer consumer questions. This helps divert at least some consumers from bringing questions and old products to Mattel retailers. “The last thing Mattel wants is to have millions of products handed to retailers, causing a huge logistics problem,” says Harvard Business School professor John Quelch. “It’s vital for any manufacturer to minimize negative impact and inconvenience to retailers.” —K.S.N.

you stop what you’re doing and focus on that,” he says. “You want to be as accurate as possible.”

Who Wants Yesterday’s Data? (You Do) Accuracy, unfortunately, is not an absolute. Manufacturing systems commonly fail to feed production-line information into corporate data warehouses, where it could be kept to trace bad products or bad ingredients down the road, says Fernando Gonzalez, CIO of Byer California, a Rs 1200-crore clothing company. Gonzalez has managed IT at aerospace, medical device and chemical companies before coming to Byer, and has been involved in several recalls, including one of railroad car room deodorizers contaminated by bacteria.

“If you can’t tell it was this production line on this shift on these days,” Gonzalez says, “then you’re stuck with an estimate and doing an expansive recall just to be safe.” Manufacturing execution systems, such as packages from Atos Origin or Manugistics, keep that kind of data. SmartOps offers a supply chain dashboard that managers inside and outside the factory can use to watch manufacturing activity and be alerted to problems, such as failures in quality control. On the deodorizer recall, Gonzalez’s company could trace the offending ingredient back to a supplier in the UK. But that supplier didn’t keep records to show whether the raw materials had come in contact with other ingredients. “All we could do was assume that everything from the UK supplier was REAL CIO WORLD | F E B R U A R Y 1 , 2 0 0 8


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contaminated,” he says, adding that the recall cost several million dollars. Sometimes data isn’t stored long enough or outside companies hired to manage your warehouses or ship your products don’t retain their data as long as you do. Barkai, at Manufacturing Insights, remembers wanting to study one year of supply chain activities at a US auto maker. “I was told I would not be able to receive [the data] because they had limited server space, so they purged it,” he says. “Someone decided six months was good enough.” When deciding how long to hold data, factor in the product’s life span, as well as any local health department requirements, federal antiterrorism legislation and the potential for litigation if something goes wrong, recommends a data security manager at ConAgra, who asked not to be named. He said data collection during a recall is 'an arduous task' at the company, but 'not a scramble.'(For more tips, check out 'How to Turn the Tide')

How to Manage a Recall As Blasgen explains, the central goal in a recall is to figure out how much of the bad product was manufactured and where it went. To do that, he recommends starting by querying your manufacturing execution system, which keeps data on production lines, product batches, ingredients and conditions inside the factory when products were made. ConAgra, according to its website and other corporate communications, uses a mix of Manugistics and SAP software in its factories to schedule and monitor manufacturing runs. Next, Blasgen says, IT managers should pull shipping records from their transportation management systems. (Kewill Ship and HighJump Software are typical systems.) Search for date, lot or batch codes to figure out which distribution centers or customers were sent the suspected bad product, Blasgen says.

Then match that information against data in the distribution centers’ and customers’ receiving systems. Those are the steps Blasgen recommends. But most supply chains are not configured to allow a CIO to follow them. “Do you see what’s happening?” Blasgen asks. “Multiple systems with their own ways of querying and no magic ‘recall button’ to press for any of this.”

Fixing a Hole Where the Rain Leaked In ConAgra had streamlined its supply chain with its Rs 1,200 crore 'Project Nucleus' started in 2003 and mostly led by Blasgen. The company closed factories, consolidated distribution centers and standardized on SAP enterprise resource planning software. Blasgen says that any company that reworks its supply chain to be more efficient will make and move products faster. That’s good when the products are good and bad when they’re not.

Recalling Through the Years 1999: Burger King recalls 25 million Pokemon balls in kids’ meals. The tykes could choke if they swallowed them.

2000: Due to tread problems, Bridgestone/Firestone

baby car seats. The handles could release unexpectedly, causing the seat (and baby) to flip.

2002: Kellogg recalls 730,000 packages of Pop-Tarts because they contain undeclared egg, which is an allergen that must be indicated on the label.

2003: Disney recalls 40,000 recalls 6.5 million tires used on Ford Explorer sport-utility vehicles and pickup trucks.

2001: Evenflo recalls 3.4 million 50

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The big, the bad, the ugly

'Woody' dolls with buttons that pose a choking hazard.


manufacturing defects that could cause them to shortcircuit, overheat and dislodge.

Merck withdraws Vioxx, an arthritis pain medication found to increase risk of heart attack and stroke.

United Food Group recalls 5.7 million pounds of ground beef that could be e.coli contaminated.


Mattel recalls 21 million Chinese-made toys because

Disney recalls 12,900 pairs of sunglasses. They contain high levels of lead paint.

2006: Dell recalls 4 million laptops, and Apple 1.1 million, that run on fire-prone on batteries.

2007: Nokia recalls 46 million cell phone batteries for

they contain lead-paint and are choking hazards.

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Supply Chain Management Steve David, the former Procter & Gamble CIO, notes the irony. “You take the bad with the good,” he says. In recent financial statements filed with the Securities and Exchange Commission, ConAgra claims savings of Rs 1,100 crore so far from its supply chain revamp. That pot has helped offset the Rs 312 crore ConAgra reportedly has spent to date on the recall — costs that include customer notifications, installing and staffing a toll-free hotline, consumer refunds, and collecting and disposing of bad peanut butter. Another Rs 60 crore to Rs 80 crore went to overhauling the Sylvester factory. ConAgra bought a new peanut roaster, upgraded finished-product testing procedures, built new factory walls and designed other ways to keep peanut dust and raw peanuts away from already roasted peanuts (heating to 165 degrees kills salmonella). It also put up a new roof and installed a new sprinkler system. Why? Because the company has a theory as to how salmonella got into Peter Pan in the first place. For an undetermined period of time, broken sprinkler heads dripped inside the Sylvester plant while rainwater seeped through the factory’s leaky roof. The moisture from those sources may have awakened dormant salmonella bacteria in peanut dust or in stocks of raw peanuts. That's what ConAgra’s Colo told Congress in April. ConAgra’s finishedproduct tests missed the contamination, Colo testified. The company then trucked jars to distribution centers and from there to Wal-Mart, Dollar General, Kroger and other supermarkets, warehouse clubs, food distributors and restaurants across the US. At last count, the Centers for Disease Control and Prevention reports that 628 people in 47 states got sick. “When we asked people who were sick, ‘Can you take out your jar and tell us the brand and lot code?’ says Anandi Sheth, a CDC doctor who investigated the outbreak, “we repeatedly saw Peter Pan and Great Value and lot code 2111.” That’s the data string ConAgra uses to identify products made in Sylvester.

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Software for Hard Times When good products go wrong, these apps can help. While there’s no such thing as recall software, CIOs can use supply chain intelligence — reporting and analysis capabilities included in or added onto SAP, Oracle, i2 and other applications — to extract key factory and distribution data about products gone wrong. The big vendors don’t showcase these features because recalls are a touchy subject, says Fernando Gonzalez, CIO of Byer California, a $300 million clothing maker. They’re “one of those things you never want to talk about so vendors are not doing any marketing about it,” he says. But i2, for example, offers i2 intelligence, a dashboard to track manufacturing and quality control parameters, such as the rate at which products sampled from the line fail quality tests. Plant managers, alerted when product faults reach preset thresholds, can make changes that will prevent the bad stuff from reaching consumers. i2 intelligence works with i2’s own systems as well as those from Microsoft, Oracle and SAP. SmartOps provides analytic tools designed specifically for SAP applications. Its namesake package can be configured to extract data on quality testing and product returns from SAP’s R/3 systems and analyze it for trends. Technology and supply chain managers can also create reports for compliance audits. Red Prairie offers a data warehouse to track product genealogy so that should a quality issue arise, the company can trace, by lot code, what ingredients went into which finished goods and where those ingredients came from. —K.S.N.

For example, one bad batch was coded '21115055 00 1037A.' After the 2111, the 5 indicated 2005, the year made; 055 was Julian date, for the 55th day of the year; 1037 was military time; and A showed which production line within the factory.

How Recalls (and Peanut Butter) Stick While Peter Pan returned to stores in time for back-to-school shopping in late August, and a new 'Miss Georgia Peanut Festival' was crowned on schedule last month at the annual event ConAgra sponsors, the company predicts sales won’t return to pre-salmonella heights anytime soon. ConAgra CFO André Hawaux told financial analysts in June that peanut butter will be a lower profit contributor next year, even compared with this troubled year’s figure. That’s “due to relaunch investments and lower [sales]

volume planned,” he said. Lawsuits abound. Parents are suing on behalf of their children; a prisoner in upstate New York serving 12 years for manslaughter got sick and he’s suing, too. In another suit, a man says his wife, after eating Peter Pan, had to have her gallbladder removed, which meant he subsequently suffered the loss of spousal and other services commonly provided by his wife. Sixty-seven cases, including that of Hein, the Iowa mom, were consolidated in July in US District Court in Atlanta, accusing the company of, among other charges, negligence and liability for product defects. ConAgra has denied all charges. Hein and her children have recovered, but they no longer eat Peter Pan. CIO

Kim S. Nash is senior editor. Send feedback on this feature to

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Bridging the Communication Gap Unified Communications has crossed interoperability hurdles and has set the pace for improving productivity in enterprises.


eedless to say, the promise of Unified Communications (UC) is amazing. It can change the way employees communicate. It can actually demonstrate quantifiable costs saving, productivity gains, better controls over business processes, improved collaboration among both the stationed and mobile workforce of an enterprise. However, it faces certain challenges too. There are still hordes of questions such as how do you integrate it with the existing infrastructure, or what do you do to overhaul the network you already

Executive Sponsor


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When you deploy UC, you have to do voice, data and video to complete the interaction circle. — Joel Hackney President, Enterprise Solutions, Nortel Networks have to run UC seamlessly, or even how do you address various security and regulatory issues pertaining to different means of communications under UC. These questions trouble a lot of CIOs when it comes to Unified Communications. To find suitable answers to such questions and more, and to share their own experiences and concerns about UC, a number of CIOs representing a spectrum of verticals gathered recently at Mumbai to be a part of a CIO Roundtable Discussion to understand ways to improve productivity by deploying Unified Communications. Joel Hackney, president of enterprise solutions at Nortel Networks flagged off the

discussion with his viewpoint that Unified Communications is still considered as a buzzword, which is more often than not, used as a marketing tool. “If you ask ten different people what UC is, you’ll probably get twelve different answers. For me, it is all about how you apply technology to a business process to drive speed and simplicity such that you can differentiate your business versus your competitor in a meaningful way,” Hackney pointed out. He maintained that the acid test in every single investment decision is: does it have a meaningful impact on speed and simplicity to be able to differentiate. If it does not, we are making a wrong decision. If it does, we are making progress, he said. “IT is a misnomer. It should have been IIT: Information Interaction Technology. We missed the whole point of not going to interaction in IT. I strongly believe that when you are deploying UC, you just cannot stop at voice and data. You have to stop at voice, data and video to complete the interaction circle,” he stressed. Manish Choksi, head of information technology at Asian Paints, agreed. However, he felt that one might not need to go all out to deploy all the aspects of UC. “Different approaches may be employed to solve different interaction problems. You don’t need an all intrusive voice and video approach every time,” he said. He gave an example of his own enterprise, where he looked at the voice and data bit of the UC strategy to begin with. “The first part of the UC strategy is to take the voice part away from the traditional TDM circuits that we typically use, to more of IP networks, and share presentations along with voice communication. That’s what we began with. Looking at the limitations we have on

From top: T.P. Anantheswaran, CIO, Mumbai International Airport; Atul Bansal, Head-IT, BLA Industries; Chitranjan Kajwadkar, Sr. VP-IT, NSE.IT; Manish Choksi Chief (Corporate Strategy) & CIO, Asian Paints

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the policy framework in India, we had to obviously create separate networks, two years ago, to deploy VOIP solutions that would work at both our international and national locations,” he recalled. At present, Choksi is looking at the last bit of the UC strategy: the video communication component. Asian Paints has setup a large technology center about 20 kilometers from the organization’s headquarters in Santacruz, Mumbai, at another suburb of the city. "We don’t want people to travel back and forth to attend meetings," he said. Choksi pointed out to the challenge video poses with the quality of data networks or the size of the data pipes. He maintained that serious video quality requires significant investment. “Within a city it would not be an insurmountable challenge in terms of costs as it would be to do UC across many oceans,” he said. Satish Pendse, CIO at Hindustan Construction Company, substantiated that, as he mentioned the scenario his organization faces: geographical reaches. “In our context, the geographical stretch is so unique that we are dependent on any

and every form of possible communication. We work in geographies that are touching the borders of India and Pakistan, India and China and India and Nepal, both at sea-level and 11,000 feet above the sea level. Because of such a spread, we are left with very limited communication choices. Hence, you need to build your communication infrastructure that mixes and matches all the available technologies. I agree that the cost structure goes haywire as you have to deal with limited choices, but then whatever you have invested, you look at leveraging both from investment and productivity perspective, anything and everything possible,” he asserted. Interestingly, the CIO at Mumbai International Airport, T.P. Anantheswaran faced similar challenge of leveraging returns on investment in terms of cost and productivity but in an opposite landscape. While HCC operated in a geographically stretched area, Mumbai International Airport is obviously concentrated in a single geographical area. On one hand, he believes that with multiple modes of communication, traveling among the multiple terminals has reduced. The speed of decision-making has

improved as communication has become much faster. “We don’t have to move papers or pen-drives loaded with data around,” smiled Anantheswaran . On the other hand, he felt that in terms of UC, his enterprise hasn’t even skimmed the top. “In an airport environment, we think of ourselves more as service providers rather than an enterprise. We are ramping up our network infrastructure, so that we are able to sell our network to airlines and retailers at the airport and run as a profit center,” he pointed out. Anantheswaran is also looking at integrating ground-to-air radio communications with the IP network. “If I have proper authentication, I can use a VOIP-enabled mobile phone to listen to a pilot’s conversation with ATC. That’s where the power of not being available, yet being there can be leveraged,” he said. Prakash Pawar, head of IT at Intrex India focused on the interoperability challenges UC may pose. “In cases like ours, it’s not a compulsion, but we want to stay invested in future technologies. Does interoperability not become a barrier? Data is not time sensitive, voice

From left: R. Muralidharan, CIO, Syntel; Prakash Pawar, CTO & Head of Operations, Intrex India; S. Raghunath Reddy, VP-IT, UTI Asset Management Company; Satish Pendse, CIO, Hindustan Construction Company


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From left: Shridhar Rane, Head of Technology-VP, Barclays PLC; Shirish Gariba, CIO, Elbee Express; Sunil Mehta, Sr. VP & Area Systems Director (Central Asia), JWT Sunil Mehta, director-IT at JWT agreed, information and the speed at which queries is. Data integrity is 100 percent important, “It all depends on the industry and core of a customer (or a passenger, in his case) voice need not be. Addressing discreet business everyone falls into. Many a time, can be addressed with the help of UC, requirements on the same channel may Skype works better than sophisticated, proves to be a great boost to productivity. pose an issue,” he said. costly video-conferencing equipment. In “If an airline is processing a passenger, To this, Hackney replied, “Interoperability our kind of business, we have multiple use can I get all the possible information that I is an issue of the past. Today, we can of UC, which impacts us in multiple ways. need to process a passenger from multiple absolutely interoperate with other UC Today, you want everything on a single sources or agencies within the airport on a solution providers. The promise has been device. Whether we like it or not, whether single device? That’s a massive productivity around for some time. The technology has we are doing it today or not, and whether increase. This also means that you can run finally caught up with the promise.” we can afford it or not, there is no other way more passengers through the terminal. One aspect of productivity of deploying out but to deploy UC.” The capacity of the airport itself increases,” UC is also the impact on the people and “I think you need to build it for a smaller he said. processes of an organization. Pendse is subset of your employees as quick to point out that in his you go about deploying UC case the impact on people rather than saying let’s have is huge. “Our people rarely it for everybody because then feel connected with the it would be too hard to justify central office because of the the cost,” added Choksi. geographical spread. We have “The critical point is quarterly review meetings synchronizing intelligence where the chairman of the with the connection. Many company talks about the next organizations stop at the quarter. His presentation point where they see that happens at the central office everyone is connected. and is seen on a screen about Those companies don’t a thousand or two kilometers get the full leverage of their away at our locations. People investment. Companies actually gather to listen to the get full payback when they presentation. This impact is think through synchronizing unimaginable,” he said. context with the connection,” Anantheswaran points out From left: Tarun Pandey, CTO, ING Investment Management; Ravikiran concluded Hackney. that aggregation of relevant Mankikar, GM-IT , Shamrao Vithal Co-Operative Bank


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technology Think of operational business intelligence as a cool sleuthing tool to help you spot and fix problems as soon as possible.


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From Inception to Implementation — I.T. That Matters

BI inAll the Right Places By Galen Gruman Analytics | It's a frustration every CIO has experienced: business users complain that they're not getting the performance or results they expect from their enterprise applications, yet IT's investigations continue to show that systems are working within specifications. At Freescale Semiconductor, CIO Sam Coursen faced this issue when he joined the chip manufacturer: during the expensive fabrication process, some wafers containing microcircuits had defects that couldn't be traced. Those defects became visible only after the wafers had passed through several systems or factories. "Until we could bring all the systems together for analysis, we couldn't see the pattern end to end," he recalls, "So as a bad process went on, it damaged more and more product. But the causes were not obvious, so we couldn't fix it quickly." Student loan provider SLM Corp. (better known as Sallie Mae) faced a similar problem, recalls Jo Lee Hayes, VP of enterprise technology. Some loan applications didn't get completed, but IT couldn't see what was causing applicants to give up. Each system along the way checked out fine, but only when her IT staff could analyze the end-to-end process did it realize the aggregate state was flawed. Essentially, the underlying business processes weren't meshing well or delivering as expected. A portion of customers would abandon loans being processed and some percentage of those customers would call for support, increasing the cost of loans. The current fix: "With

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essential technology

Tealeaf Technology and Coral8 [analytics software], we can identify specifically which Web page the customer was on prior to calling," Hayes says. Her team gives that data to support agents and analyzes spots where the Web drop-offs occur frequently. One way CIOs can gain operational analytics capability is to use a single app suite that can monitor the data in the right context as it flows through the system. But that's not realistic for enterprises. "Processes don't fit into single systems anymore," Hayes notes. Both IT leaders say they had a revelation: while operational BI requires a common platform on which to do its analysis, that platform need not be an application suite like ERP or CRM. For Coursen, that common platform is his data warehouse; for Hayes, it's her Web-based transaction environment. Both say they were able to bring BI closer to business processes, so business managers and IT staff alike can now detect problems and make decisions within an effective time frame. This approach moves away from the time-honored BI tradition of gathering lots of data and then analyzing it later.

Liberatore, a professor of operations and decision technology at Villanova University, currently leading a new group in BI and analytics. Coursen continues to rely on a data warehouse as the repository of enterprise data, extracted and transformed into common formats, with common context and analytic rules applied. But he differentiates what data is collected, staging time-critical data so it's gathered more often. He also adds operational data that might not have been collected. That lets him update the data warehouse with certain data on a daily or even more frequent basis, then run operationally oriented analytics using Tibco Software's Spotfire tool against just the timely data sets. The production data, for example, travels immediately to the data warehouse as it is generated, so the production analysis tools can run constantly, looking at results from all fabrication stages at once to identify issues. In essence, the data warehouse handles multiple types of analysis while remaining a single repository for IT to manage, reducing complexity. "I can leverage all my previous investments by having the data all in one

While it makes sense to bring some analytics closer to the processes for key operations,CIOs need to be careful not to overdo it — for their own sake as well as for their users. A Smarter Data Warehouse By comparison, approaches like the ones taken by Coursen and Hayes — often dubbed operational BI or inline process analytics — let managers make decisions with little or no delay based on current analysis. What these solutions don't do is replace people as the center of that decision making. Generally, the approach to cross-process operational analytics that Coursen took is the more common one, notes Matthew 58

place," Coursen says, instead of trying to retrofit a common analytics system into multiple applications and keeping them integrated over time. Like Coursen, Gustavo Rodriguez, IT director at Mexican regional airline Aeromexico connect (formerly Aerolitoral), has several key application suites that handle key operations. So, he needed a way to analyze processes across them for the mid-market airline company. Rodriguez also implemented a staged data warehouse

that updates and analyzes maintenance fleet status, commercial and finance data, and several other operational indicators daily. This helps business and operations managers adjust schedules and fares quickly, based on factors ranging from changes in referrals from partner airlines to the effects of bad weather on passenger bookings. Some data — such as passenger information and fare yields — is updated hourly for analysis by Bitam's BI tools. Transportation logistics provider Transplace, also a mid-market-size company, has similarly adopted the staged-data approach, notes CTO Vincent Biddlecombe — but with a twist. Because Transplace has developed most of its transaction systems in-house, it can bring some of the business rules underpinning the analytics as close as possible to transactions themselves. "We can tell someone, 'Stop! You're about to do something suboptimal here,'" he says. (The person retains decision-making authority, since sometimes there's a good reason to make a suboptimal process decision.) Transplace IT accomplishes this by tweaking the apps to update the warehouse more frequently and trigger the analytics using Microsoft's BI tools as part of certain transactions — not as a separate process for IT to manage. "We're trying to blur the distinction between the transaction system and the BI system," Biddlecombe says. The staged-data approach does require some tweaking to the traditional reporting and analysis tools and to the data, says Freescale's Coursen. Most notably, data needs to have an 'as of' date because it's no longer all updated at the same time. Some analyses require several pieces of data be updated at the same time, so the data staging has to take that into account. At Sallie Mae, Hayes took a different approach to achieving a common analysis target. She applied complex event processing technology from Coral8 to the Web-based transaction systems that customers use to manage their loan applications. This let her staff analyze processes in real time based on the user's clickstream data, regardless of which loan

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application or back-end transactional system was processing the loans. (A loan process can touch as many as 13 applications, she notes, and Sallie Mae processes about 20,000 loan applications each day, each of which involves multiple business processes.) The same technology helps detect fraud in real time, such as by comparing a user's IP address against the location stated in the online application form. The limitation of Hayes's approach: it relies on Web clickstream data, which exposes the current transactions' state and associated data so they can be intercepted in real time. Hayes hopes that such capabilities will be more available directly via enterprise service buses or other process-coordination systems as service-oriented architecture (SOA) becomes more widely adopted.

Avoid Data Overload While it makes sense to bring some analytics closer to the processes for key operations, CIOs need to be careful not to overdo it — for their own sake as well as for their users, says John Hagerty, a director at AMR Research. Many processes don't need to be monitored in real time, he notes. "Clients have a hard time consuming information more than daily," Hagerty says. Also, the infrastructure needed to analyze the bulk of enterprise operations in a near-realtime basis is too great for most enterprises to justify the investment, he says. And don't underestimate the human issues, which typically boil down to: 'Can we trust this is the right thing to do?' Davis says. There's reason for that distrust: people still need to make the complex calls. But CIOs can ensure that those calls happen earlier, when they can have the greatest benefit. "It's really an opportunity for IT to be a hero to the business," Hayes says. "Business now has insight into completion rate baselines that they did not have before, as well as improved insight into how our customers are using our online product. As the business absorbs this data, they can begin to optimize our business processes." CIO Send feedback on this feature to

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Work in Progress Creating new systems and laying tomorrow’s infrastructure are parallel processes. By michael hugos Infrastructure | Here’s a challenge for you: balance multi-year infrastructure development work with short, 30-to-90-day projects that deliver business application systems as business needs evolve. And do it so that even as you’re implementing the IT infrastructure, you’re delivering new applications that use this infrastructure. You might think that you might as well try to change the tyres on a race car while it’s still moving. How can you build systems that use a new IT infrastructure until that infrastructure is in place? It’s the role of the systems architect to answer that question, and the answer is one of the most strategic

it takes to complete a big infrastructure upgrade project. The key to the systems architect’s seemingly impossible feat is to use iterative system-development techniques under the guidance of the enterprise architecture standards that have been defined for your company. Combine selected infrastructure components as needed with small chunks of custom code to create new systems. In this way, systems can be delivered and enhanced quickly. What keeps them from becoming an un-maintainable mess is that the systems are all created from the same set of

portal and some middleware all hosted on certain kinds of servers running a given operating system, then installation of those components occurs as needed to support that new system. It is not necessary to install these new components throughout the entire company all at once. Over the course of years, the strategic systems architect will coordinate the expanded installation and use of these components to support the new systems that use them. The migration from the old IT infrastructure to the new one is managed and timed to best support actual business needs.

IT can't keep refusing to deliver new apps until it has installed new infrastructure.Those days are over. things that an IT group can provide for the business it supports. It is clear at this point in the relationship between IT and business that we cannot keep refusing to deliver any new applications until we have installed all the new infrastructure and removed all traces of the old. That used to work: if we told business people to make do with what they had for a few years while we worked on installing and testing new IT infrastructure, they’d shrug and accept our decree, however grudgingly. Those days are over. The world moves too fast and too unpredictably; a company’s whole business model can change in the 18 to 36 months 60

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components. That means that the IT groups trained in using this enterprise architecture can maintain and enhance any system built from those components. A good systems architect also understands that, when done right, these short application-development projects actually drive much of the longerterm rollout of the new IT infrastructure. Most infrastructure components — whether servers, operating systems, databases, middleware, Web portals, SOA tools, packaged software or programming languages — can be rolled out in phases that build upon one another. If a new application system requires the functionality provided by a database, a Web

The idea that companies can carry on as usual while IT groups spend years trying to create a perfect enterprise IT platform before any new systems are built is a quaint notion from the last century. The real-time global economy of the 21st century demands that an effective systems architecture be dynamic, not static. Yes, it is a bit like living in a house while you build it, but that is what a good systems architect is able to do. CIO

Mike Hugos is the author of Building the Real-Time

Enterprise. Send feedback on this column to

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