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From The Editor-in-Chief

“What goes up has to come down. There is no point being overtly upset with the

Return from Investment A different way of convincing business.

current situation. We need to stay focused, act cautiously and prepare for the future.” That’s what my pal K.T., a pharma CIO, told me when I brought up the issue of whether ROI was getting more important given the slowdown. If anything, he seemed charged up and ready to go. On quizzing him on this, he told me straight up that when money was easy there was no pressure to work smarter. Slowdowns, however, he felt were a great occasion to showcase how IT could enable the entire organization to be more efficient and productive. “More juice from the same fruit, boss” is how he put it. In fact, this sunny IT helmsman observed that more than return on investment, which was a forward-looking approach, the real way out of this should be to look at ‘return from investment’ based on past experience. “What would the company’s position be today if the solution had been implemented earlier? CIOs could take past data and live data and model scenarios,” he observed. One way out could be to That’s an interesting way to go about model scenarios based on convincing business about its need to past data and demonstrate continue to invest in IT even when the what an IT solution could money situation is tight. have achieved. Next, K.T. was vehement about getting business to actually lead and push IT investment. “Let it be a decision which, for instance, a sales head takes. Much like he would do with a product launch or market expansion, he ought to grasp how much it will cost and what he’ll get in return.” He made a strong case for CIOs to push back and pin down responsibility, since only then would it get the requisite impetus and attention. This led to a fascinating discussion on how then should IT be positioned. A support function? Nope. CIOs, K.T. believes, should press on with IT as being a value creator by helping bring products to market faster; reach a larger pool of customers; facilitate customer retention, and of course, enable the right product in the right quantity at the right time, cost and location. He also believes firmly that CIOs ought to get serious about quantifying what they do and then blowing the hell out of their trumpets. That, he said, would help transform a ‘Why?’ to a ‘What else?’ Do you agree with K.T. on this? Write in and let me know.

Vijay Ramachandran Editor-in-Chief


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content decemBeR 15 2008‑ | ‑Vol/4‑ | ‑issue/03

Pravir Vohra, senior GM and group CTO, ICICI Bank, went where none of his banking peers in India have gone: he virtualized a significant chunk of his servers and broke a record on the way.

Server Virtualization

Executive Expectations

COVER sTORY sERVIng IT shRunk| 20

VIEW FROm ThE TOp | 28 Akash Passey, MD, Volvo Buses India, says that in a company with a focus on quality, IT has a role to play in maintaining transparency, ensuring constant feedback from the frontline and keeping things simple.

CoVEr: dESI gn by bI n ESh SrEEdhArAn I P hoto by k AP Il Shroff | A CCESS CCESSo o rIES r IES C o U rt rtES ESy y ES ESt t U d I o I nt E rn rnA At I o n A l.n l.nE Et

Christmas came early this year at ICICI Bank. A virtualization project is not only making provisioning lighting-fast, but is also saving the bank Rs 1.15 crore. But, perhaps most importantly, it is increasing the availability of 650 applications manifold. Feature by gunjan Trivedi pLus:

Interview by pankaj mishra

Operational Efficiency InVEsTIng FOR ThE LOng hAuL | 38 IT provides the linchpin for a shipping model that integrates ships, trucks and trains.


Feature by stephanie Overby

Want to virtualize 95 percent of your production servers within a year? Here’s how the CTO of logistics company Transplace went from having no virtualization expertise in-house to running the company’s mission-critical applications on a VM.


Feature by Laurianne mcLaughlin 6

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OuTsOuRCIng sERum | 16 Outsourcing can offer CIOs and their enterprises immunity from the challenges of increasing complexity. Column by Alaganandan Balaraman

more » Vol/4 | ISSUE/03


(cont.) departments Trendlines | 11 Storage | Boom Time for Datacenters Quick Take | Vinay Mehta on Succession Planning Voices | Low User Acceptance for Video Conferencing Staff Management | Dangers of Being Nice at Work Open Source | OSS Policy Needed Opinion Poll | Fishing for Key Skill Sets Technology | Use RFID to Track Servers and Laptops Environment | Surfing On the Green Alternative Views | Who Should Drive IT-Business

Alignment: Business or IT?

Essential Technology | 52 Mobile Applications | Tools to Take You Mobile

By Michael Fitzgerald Pundit | Cloud Computing’s Coming

By Bernard Golden

From the Editor-in-Chief | 2 Return from Investment

By Vijay Ramachandran


3 4

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 Pumping it up | 34 In a fiercely competitive petroleum industry, keeping partners happy is an imperative. But HPCL was facing the heat from its dealers. Until an elegantly simple SMS solution helped the company improve efficiency and saved the day.

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Feature by Snigdha Karjatkar

Think Tank Lights, Camera, Innovation? | 18 What CIOs can learn from Hollywood’s history of dissing new technologies. Column by Scott Kirsner


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Advertiser Index

Abnash Singh

Publisher Louis D’Mello Associate Publisher Alok Anand

Editor ia l Editor-IN-CHIEF Vijay Ramachandran

Resident Editor Rahul Neel Mani assistant editors Gunjan Trivedi,

Kanika Goswami

Correspondents Snigdha Karjatkar, Sneha Jha,

Chief COPY EDITOR Sunil Shah Copy Editors Deepti Balani,

Shardha Subramanian

VP-HR & Process Architect, Britannia Alok Kumar Global Head-Internal IT, Tata Consultancy Services Anwer Bagdadi Senior VP & CTO, CFC International India Services Arun Gupta

Creative Director Jayan K Narayanan

VP & CIO, Mahindra & Mahindra

SENIOR Designers Jinan K Vijayan, Jithesh C C

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

P C Anoop, Prasanth T R

Photography Srivatsa Shandilya Production Manager T K Karunakaran

DY. Production Manager T K Jayadeep Mark eti ng and Sa l es VP Sales (Events) Sudhir Kamath GENERAL Manager Nitin Walia Senior Mananger Siddharth Singh, Rohan Chandhok Assistant Manager Sukanya Saikia Marketing Priyanka, Patrao, Disha Gaur Bangalore Kumarjeet Bhattacharjee, Arun Kumar, Ranabir Das Delhi Saurabh Jain, Rajesh Kandari Gagandeep Kaiser Mumbai Parul Singh, Hafeez Shaikh, Kaizad Patel Japan Tomoko Fujikawa

USA Larry Arthur; Jo Ben-Atar Events VP Rupesh Sreedharan Managers Ajay Adhikari, Chetan Acharya Pooja Chhabra



CA Canon Cisco

IFC 9 31







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

Vinoj K N, Suresh Nair Girish A V (Multimedia)

52, 53 & 54

Customer Care Associate & CTO, Shoppers Stop Arvind Tawde

Lead Designers Vikas Kapoor, Anil V K


Alaganandan Balaraman

Des ign & Productio n Lead Visualizer Binesh Sreedharan

President, IT Operations & Center of Excellence, UCB Pharma

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





Microsoft M-Tech


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

All rights reserved. No part of this publication may be reproduced by any means without prior written permission from the publisher. Address requests for customized reprints to IDG Media Private Limited, Geetha Building, 49, 3rd Cross, Mission Road, Bangalore - 560 027, India. IDG Media Private Limited is an IDG (International Data Group) company.

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

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

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

Group CIO, ITC


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Boom Time for Datacenters Datacenter growth will be driven by increasing domestic requirements from sectors such as financial institutions, telecom operators, manufacturing and services. While large financial institutions and telecom companies are likely to build datacenters for hosting their growing data storage needs, datacenter hosting providers will also put significant investments into growing their capacities to fulfill demand arising from small and midsize users. The growth in storage demand has resulted in existing datacenter capacities being fully utilized and, consequently, the need has arisen to build significantly more capacity. Companies are also investing in additional datacenters to enhance or meet disaster recovery and business continuity requirements. —By Channelworld staff

IllUStratI on by pc anoop

S t o r a g e Total datacenter capacity in India is expected to reach 5.1 million square feet by 2012 and is projected to grow 31 percent from 2007 to 2012, according to Gartner. The datacenter industry in India is expected to double its capacity in the next two years, and captive and hosted datacenters capacities will grow at comparable rates. In the long term, India has the potential to become a hub for

datacenter hosting for nearby markets such as the Middle East, East Africa and Southeast Asia. There is enough capacity and diversity of network connectivity to these regions to allow applications to be managed out of India. "There has been a significant increase in storage demand in India, growing from one petabyte in 2001 to more than 34 petabytes by 2007, thereby increasing the datacenter uptake in companies," said Nareshchandra Singh, principal research analyst, Gartner. "The potential for Indian datacenters is large with the external-controller-based (ECB) market expected to grow by over 22 percent in 2008, making India the fourth-largest market for ECB storage in the Asia/Pacific region."

Quick take

Vinay Mehta on Succession Planning LeaderShip

Succession planning is on the radar of all forward-looking organizations. A well-structured succession plan has strategic implications. It ensures leadership continuity, long-term organizational stability and generates leadership talent effectively. Sneha Jha spoke to Vinay Mehta, CIO, Escorts Construction Equipment, and here’s what he had to say:

Should the IT department be the only source for the next CIOlevel executive? It is most beneficial for the organization if an internal resource from the IT department can be identified as the successor, since it ensures a smooth transition. However, if the requisite profile is not available, external sources should be tapped.

How critical is a CIO's succession plan for organizational stability? It is extremely critical to ensure continuity of IT strategy and on-going initiatives. CIOs are a highly mobile community and unprecedented events force them to leave projects mid-way. Many projects fail or get delayed due to a CIO’s absence.

How should a CIO cultivate the next set of leaders? CIOs must ensure that a successor has adequate exposure to all the facets of IT— business processes, hardware, software, etcetera. And. that he or she should also be involved in activities that develop leadership qualities and inter-personal skills.

Should organizations push for a formal succession plan for CIOs or is it the CIO’s job? The organization must push for a formal succession plan not only for the CIO but for all critical functions. While every CIO must plan for a successor, the organization must also ensure that it is being done.

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Vinay Mehta

Why, in your opinion, are succession plans rare? There are no formal succession planning processes set-up by the HR function in a lot of organizations. With the high rate of attrition in the IT function, most CIOs are pre-occupied trying to fill up vacancies and ensuring continuity of existing systems. Personal insecurity could also be a factor. REAL CIO WORLD | D E C E m B E R 1 5 , 2 0 0 8


Why is User Acceptance for Video Conferencing Low? Video conferencing is garnering corporate interest as a critical business tool. Geographicallydispersed organizations are betting big on this collaboration technology. However, end-users still fight shy of a face-tovirtual face conference. Sneha Jha spoke to some of your peers to find out why:

C o L L a b o r at i o n

“It requires a cultural change in our society; our perception is that face- to- face interaction is more effective. Also, affordability is a hindrance in its deployment.” trendLineS

“Consistent quality doesn’t exist across geographies. Its high cost and the absence of special campaigns from key vendors around gaining end user mindshare is another reason. "

p pankaj sindhu Director-It, t, Fulford India t

“It needs systematic and well-co-

coordinated IT and logistical support. Preference of physical meetings comes from a feeling of low involvement, coupled with the ineffectiveness of presentations during video conferencing.”

cto, reliance life Insurance

lend YouR


Write to 12

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m a n a g e m e n t If you're a nice person, you probably think that being nice works to your advantage in the office. Right? Not necessarily. What nice people may not realize is that being too nice can seriously stymie their career growth and success, says Russ Edelman, CEO of Corridor Consulting, and co-author of Nice Guys Can Get the Corner Office: Eight Strategies for Winning in Business Without Being a Jerk. "The people in business who suffer from nice-guy syndrome are not achieving their true potential," he says. The problem with nice, according to Edelman, is that you run the risk that people will take advantage of you. Nice is not just a problem for individuals. It's a problem for businesses, too. Employees who are too nice cost their companies time and money. In a survey of 50 CEOs, Edelman asked about the impact of being too nice on their businesses. The CEOs said that, on average, being too nice has the potential to cost them eight percent of their gross revenues. In other words, they believed their companies could have earned more money by being more aggressive. Edelman notes that managers who are too nice are reluctant to make decisions on their own. They fear confrontation or hurting the feelings of others, so they include everyone in their decision making. That wastes time and can lead to missed opportunities."If you appease everyone, if you fear hurting people's feelings, you do a disservice to whatever project you're working on, to yourself and your business," he says. Softies need to toughen up, says Edelman. "I'm not advocating that people become jerks," he says. "But they need to find a balance to stay true to their nice nature while also being appropriately assertive and protecting their interests."

S ta f f

G. RadhakRishna pillai cIo, Srl ranbaxy

c. Mohan

The Danger of Being Too NiCE aT WoRk

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—By Meridith Levinson

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need eed for openpen-s source software policy olicy mission-critical situations. Of the large number of application software projects, respondents indicated a higher rate of using Open-source software as a replacement for commercially available products while using mostly Open-source software components for their infrastructure development, said the research company. In areas where OSS projects are most mature, IT departments appear comfortable with using Open-source software components to enhance existing infrastructure environments, the Gartner survey indicated. However, in the less mature areas of application software, Open-source software is more readily used as a replacement for commercially available software, probably because of the cost and sophistication level required to customize many application products. According to the survey findings, respondents cited the following as the top three reasons for using OSS: lower total cost of ownership (TCO), reduction in development of cost-prohibitive factors, and the ease to embark on new IT projects or software initiatives. Some respondents indicated that they also use Open-source software as investment protection against a single

vendor 'owning' the entire IT department, said Gartner. Governance, or the lack of it, was the number one challenge for Open-source software users in the survey, followed by conflicting terms and conditions and the availability of too many license types and forms. "Understanding when and how an OSS alternative may be used is a frustrating process, especially when there are so many license types and forms from which to choose," said Wurster. The Gartner survey also revealed that customer service continues to be the leading business process for which OSS projects are used, followed closely by enterprise integration, finance and administration, and business analytics. Sales and marketing, customer analytics, field service, ERP and CRM solutions are also moving up the adoption ramp, further increasing the influence of OSS in many enterprises, said the research firm. The survey was conducted in May and June 2008 and included 274 end-user organisations across various countries and markets in Asia Pacific, Europe and North America.


open SourCe A survey by Gartner has shown the pervasiveness of Open-source software adoption across firms. According to the study, 85 percent of companies surveyed are currently using Open-source software in their enterprises and the remaining 15 percent are expecting to in the next 12 months. According to survey findings, 69 percent of companies surveyed still have no formal policy for evaluating and cataloguing Opensource software use in their enterprise. This opens up major potential liabilities for intellectual-property violations, said the analyst firm. "Just because something is free doesn't mean that it has no cost," said Laurie Wurster, research director at Gartner. "Companies must have a policy for procuring Open-source software, deciding which applications will be supported by it, and identifying the intellectual property risk or supportability risk associated with using Open-source software. Once a policy is in place, then there must be a governance process to enforce it." Interestingly, the survey results indicate that OSS in new projects is being deployed nearly equally in mission-critical and non-

—By Zafar Anjumw

Fishing for Key Skill Sets Database Management Network Administration


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Windows Administration


Desktop Support


In Fograp hI cS by Un nIk rIShn an aV

Wireless Network Management

A study of more than 1,400 US CIOs found that 11 percent plan to hire additional staff in the fourth quarter, while 3 percent expect cuts. What are some of the most sought skill sets?



*CIOs were allowed multiple responses. Source: Robert Half Technology

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accurate, well-planned and highly targeted rFID deployments in tandem with It-driven t t-driven data-integration plans can deliver substantial benefits, according to a slew of recent surveys and analyst reports. First, a survey of 186 global organizations by abI research found that rFID is being used or evaluated for applications across a swathe of vertical industry sectors. "Virtually every economic sector and industry where data needs to be collected or objects need to be tracked holds the potential for rFID applications," notes abI research Director Michael liard. organizations are also increasingly using and evaluating rFID systems to improve the tracking of objects, assets, goods and materials within corporate yards and property, on campuses and in open-loop environments, according to abI. another abI report finds rFID moving into companies' datacenters. "It assets are key infrastructure for any modern business, and It managers need to be certain that equipment is documented, traceable and secure," notes the report. rFID "can deliver quicker, more detailed and more accurate day-to-day management of these important operational assets." this is where rFID makes sense — high-value items that need to be tracked. "Managing and auditing this equipment is a serious pain point for It departments, and automating those applications with rFID can drive clear roI," states abI principal analyst Jonathan collins, in the report. he notes that "the density of valuable equipment within a restricted area limits the cost and increases the efficiency of an rFID deployment." one last note comes from vendor odin technologies. t Its It asset tracking report shows that within the last six months, passive rFID technology delivered increased performance on servers, laptops, blades and other high-value It assets. For instance, It staff using rFID tags could inventory a rack of 40 servers in 12 seconds or identify all It equipment within a typical cubicle five times faster than manual methods, with 100 percent accurate data entry. —b by thomas Wailgum




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Surfing On the Green Is there a greener way to surf the Web? You bet, according to Robert Hansen, CEO of SecTheory: just tweak your Web browser so it doesn't run a lot of flashy Web graphics. In an admittedly unscientific study, Hansen took a look at the 100 most popular sites on the Web to see which ones burned the most power on his laptop. The winner?, followed closely by The sites that consumed the most power tended to use JavaScript or Adobe Flash animation, often cycling through a series of graphics over and over again. "Those technologies just were hogging all the resources on the computer," he said. "Flash banners actually seem to be the worst," he added. Even sites that appear static can sometimes quietly draw more power than expected.'s Hot News Headlines banner, for example, uses up CPU power every time a new headline is generated, he said. Just how much power do these sites require? Hansen said that when he used Firefox's NoScript and Adblock Plus plugins to disable the moving graphics on the worst of the sites, the power consumption of his computer dropped by about 10 watts. That's more than green computing consultant Tom Block expected. "Ten watts seems like a lot when all we're doing is pulling a Web page," said Block. Hansen isn't the first to study this. Last year, launched, saying that people could save energy by switching their home page from to a page with a black background like Measuring a visit to against Google. com, Hansen said he didn't see much of a difference in power consumption, an observation that has been echoed by others. The idea that your Web browsing habits could save energy "sounds kind of silly," said Harry McCracken, founder of Technologizer, a Web site covering personal technology. "Maybe [it's] something you should only worry about after you've sold your car, ensured you never leave a light on unneccesarily for even a millisecond," he said via instant message. PC users could save much more power by simply turning off their PCs or putting them into sleep mode when they're not in use, said Mark Bramfitt, a principal program manager with Pacific Gas and Electric. " He called Hansen's research "interesting," but added, "I think there are bigger fish to fry." —By Robert McMillan


IllUStratIon by MM Sh an Ith

Use RFID to tRack seRveRs anD Laptops

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alternative views B Y K a n i k a G o s wa m i

driving IT-business alignment IT vs Business

Sanjay Kotha CIO, Bharti Retail

business-IT alignment. IT teams and the CIO are change warriors. They are the ones who are blessed with two things: IT wisdom and business knowledge. Since it’s important that technology is leveraged for better business output, it should, of course, be driven by IT. I think business alignment is getting IT to move from a support function to a business enabling function. In this role, IT should look for a revenue stream. I see a clear role for the CIO to create a path for business process advancement. Of course, business heads have to be involved because if IT has an agenda to change something on business' turf, it will not be taken positively. I think business teams can provide process support and create expectations from IT. I think it is important that IT should — along with business — start driving change, and that IT should be the change leader. Once an initiative is decided, IT plays a critical role in driving it forward. Even convincing the CEO or the CFO should be IT’s responsibility. The CIO should work to align IT with the CFO’s interest — and show him exactly how the TCO works out in every project.

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have domain expertise." Sebastian Joseph VP, Mudra Communications

I think IT-business alignment should be driven by business teams, since domain


I'm convinced that it is the prerogative of the IT department to drive

“IT-business alignment should be driven by business teams, since they

expertise lies with business and they know what the business challenges are. Until these are articulated in clear-cut terms, identifying the challenges and what needs to be rectified will not be clear. The business has to articulate it otherwise an application will not make sense. The business challenge and the need for an application should drive an application. The onus of clearly stating what they need and what they expect IT to solve lies with the business processes team. Until technology applications bring in some kind of productivity; it is not going to work. Obviously, the responsibility thereafter, of implementing, should be on both, because the business manager needs to initiate the change process — with the help of IT. They work as a team and solve a particular business challenge. But in the initial phase responsibility is entirely with the business head, because he is the person who understands and knows what's needed. After that the onus is on IT to properly design and deliver. Then the responsibility will completely lie on the IT head. The users are business guys it is in their interest to champion and drive initiatives. IT should be responsible for a smooth implementation.

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Photos by Srivatsa Shandi lya

“I'm convinced that it is the prerogative of the IT department to drive business-IT alignment."


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Scott Kirsner

Think Tank

Lights, Camera, Innovation? What CIOs can learn from Hollywood’s history of dissing new technologies.


Il lustration by unnikrishn an AV

he movie industry is full of prima donnas, overpaid incompetents and people who talk endlessly just for the pure pleasure of it. Nothing like your industry, is it? Hollywood, with its glittery red carpet premieres, may not seem to have much in common with banking, health care or auto manufacturing. But I believe it shares a key trait with every large, well-established industry: how it responds to new business models and technologies. For more than a century, every time an important innovation knocked on Hollywood's door, the industry treated it like a homely auditioner — giving it the cold shoulder and trying to show it the door. The movie industry ignored or tried to stave off sound, color, television, home video, computer animation, and digital editing and cinematography before realizing that each revolution would help grow the business, ensure its cultural relevance and expand the creative possibilities. New ideas always threaten the status quo. Business people worry how they'll affect today's predictable revenue streams. Everyone else worries about how they'll affect their standing in the organization: "Will I be less of an expert when this new tool or technology takes over?" When innovations arrive in an industry, they split it into three groups: innovators, preservationists and sideline-sitters. The innovators develop, support and find applications for these new ideas. Preservationists seek to preserve the status quo, often battling the innovators. The sideline-sitters simply wait to see how things will pan out. CIOs, in my experience, can find themselves in all these roles. Sometimes a CIO is an advocate for a new technology


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Scott Kirsner

Think Tank

Win stakeholder buy-in before implementing something new. Dropping a technology on users without letting them influence how it works is a recipe for disaster. or business model; sometimes he's on the sidelines or campaigning to preserve the status quo. The CIO might lead the charge on storage virtualization, watch a standards battle play out or explain to sales why storing company data on a new Web-based application is a bad idea. Here are the behind-the-scenes stories of three movies that marked turning points in Hollywood's technological history. Each offers lessons for anyone trying to identify or introduce powerful new innovations.

Take one: Embrace Risk Most cinephiles remember The Jazz Singer, starring Al Jolson, as the 1927 movie that brought synchronized sound to the silver screen. Few recall that others, including Thomas Edison, tried earlier to link the pictures on screen with a sound track. But the technology wasn't good enough — the audio wasn't clear, or it veered out of sync — so most people concluded that movies were meant to be silent forever. But the Warner brothers were persuaded to explore a new technology developed at AT&T's Bell Labs. The technology, dubbed Vitaphone, was far from perfect. It relied on easily scratched records (new ones had to be shipped to theaters weekly). The projectionist had to be an expert at changing film reels and cueing the record at precisely the right moment. But the technology was just good enough to deliver a thrilling new experience to audiences — especially when Jolson shouted, "You ain't heard nothing yet, folks!" The Vitaphone technology was eventually replaced by something more reliable. But adopting it catapulted Warner Bros. into the top tier of movie studios. Net profit jumped from $2 million (about Rs 1,000 lakh) in 1928 to $17 million (about Rs 8,500 lakh) in 1929, the year the studio received an award at the first Oscar ceremony for helping to introduce talkies. The lesson: innovation and smart risk-taking go hand in hand. After everyone concluded that audiences didn't want to watch movies with sound tracks, and that the technology wasn't good enough, the Warner brothers proved the conventional wisdom wrong. Their willingness to take a risk to innovate enriched their business and helped turn the movies into a truly mass medium.

Take two: Pay attention to the Customer Hollywood studios scrambled in the 1950s to respond to the new medium of television, which delivered free entertainment to American living rooms. Many of the strategies involved offering an experience that couldn't be duplicated at home: movies in 3-D, Smell-o-Vision and Cinerama, which relied

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on three projectors (and an army of projectionists) to create a panoramic, immersive image on the screen. One technology that stuck was CinemaScope, developed by 20th Century Fox. It succeeded because Fox's president had been a theater owner and understood how acutely costconscious they were. The technology was cheaper and simpler than its competitors (relying primarily on a special projector lens that expanded the image across a wider screen). Fox offered it in two flavors: one with standard monaural sound, and a pricier version with four-channel surround sound. Its first movie to employ the technology was The Robe, a biblical epic starring Richard Burton. Within a year of its release, about half of US theaters were equipped to show movies in CinemaScope, and every studio — aside from Paramount — had licensed the technology from Fox. The lesson: innovations like Cinerama may have been more dazzling than CinemaScope, but simplicity and low-cost often create an insurmountable market advantage. Understanding the user's mind-set is also crucial.

Take three: Build Buy-in As he revived his Star Wars franchise, George Lucas decided to explore digitally projecting Star Wars Episode I: The Phantom Menace, so the movie's 1,000th showing would look as good as the first. He turned to projectors from Texas Instruments (TI) and Hughes-JVC. Today, almost 100 percent of the digital projectors in US movie theaters rely on technology from TI. The Hughes-JVC projector proved temperamental, but TI also had a better strategy for winning industry buy-in. It held a series of demos at which directors and cinematographers watched movie clips shown with prototype projectors and gave feedback. After each demo, TI improved its digital light processor technology and brought it back for another round. The lesson: win stakeholder buy-in before implementing something new. Dropping a technology on users without letting them influence how it works is a recipe for disaster. Today, Hollywood is trying to assess how the Internet and devices like cell phones and the iPod will affect the business. Many are in full preservationist mode, complaining that cinematic spectacles don't look very good on a Saltine-sized screen. Getting behind the right innovations, I'd argue, is what will ensure the industry's continued profitability and survival. And that's not too different from the role a CIO plays in his company. CIO

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12/15/2008 5:58:28 PM

Alaganandan Balaraman


Outsourcing Booster Outsourcing can offer CIOs and their enterprises immunity from the challenges of increasing complexity and the speed with which the environment is changing.


believe that IT departments must and will increasingly outsource the work they do. I would go so far as to say that 90 percent of IT work should be outsourced and as completely unscientific as that number is, it demonstrates the extent I believe in outsourcing. That said, it’s the 10 percent that CIOs retain in-house that is critical. Why is this scale of outsourcing important? And why is it urgent?

Expectations that Breed Complexity

Illust ration by MM Shanit h

Those who have been in IT for over 15 years will agree that the world has changed dramatically. The simplicity of user expectations and technology platforms are things of the past. Today, enterprises want IT to be accessible over the Internet or cell phones; we want alerts wired in; we want apps and data to be secure and auditable, we want data served from across apps that were never designed with the other in mind and we want everything at a month’s notice. To address the needs of the enterprise, our vendors have thrown up increasingly complex technologies that make even storage an arcane subject and makes you long for the simplicity of DAS. If we accept that this is the world IT works in, then we must accept that the simplicity of delivering solutions is a thing of the past. There are teams needed to handle aspects of hardware technology — though nothing is pure ‘hardware’ anymore. We need teams to ensure data integrity, teams who can work with more agility, who can deploy across multiple locations and ensure good administeration well. And, if we accept that we should be doing all of this, we must know that it is simply not possible to do everything in-house. The demand for skills and the subsequent low levels of manpower utilization make the concept unfeasible. 18

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Alaganandan Balaraman


The Blurring Speed of Change The problem of complexity is compounded by the speed of change in our technology environment. The principles of faster, better and cheaper that have been the bedrock of the IT industry have ensured this. While these principle have customers well, today, that speed worsens complexity. We’ve tried to tame it with interoperability standards and layering our technologies, but competitive pressures force vendors to create unique, ‘marginbuilding’ solutions that are very seductive. This forces IT organizations to retrain people in new areas that have half-lives, an investment that is hard to justify. Complexity and speed exacerbate each other. As an example from the consumer goods industry, we worked on an app to track the retail placement and sale of a new product on a daily basis. The need was for a simple system that the field force could use when not connected to the Internet, but could upload and integrate with a central database for analysis and graphing. We were given three weeks of lead time. Security, data consistency and ease of use were assumed. When users did upload, it had to be done on simple dia- up speeds. The solution required a surge of skills to access central databases, create pre-formatted spreadsheets for download, to put in place logic that prevents data duplication and trap errors, that could provide access over a secure portal — and yet be easy enough so that training was unneeded. The skills needed for this (database technology, usability, Web service calls, spreadsheet integration) were completely different from another project we were running in parallel, which required an ESB connection from a central application to remote applications on a real-time basis. And, these were but two of about twenty different projects, large and small, that were going on simultaneously. Most medium-to-large companies won’t find this figure surprising. In-house staffing to meet demand across all these projects would have meant excessive cost and a risk of benching people later. Staffing more conservatively would have delayed projects. The obvious answer was aggressive outsourcing.

Outsourcing Design Like any other piece of management, outsourcing needs to be designed well. It helps to avoid buzzwords like ‘strategic outsourcing’, which tend to confuse more than clarify. What is needed is a sourcing plan that looks at various required capabilities and the capacity needed to be build in each. Makebuy decisions need to be based on that profile and the length for which it will be needed. At the heart of any IT establishment is architecture and core application deployment processes. The design of these should be retained in-house. They are needed over a long period and must span different vendors. Decisions like standards, data architecture, base platforms, storage philosophy, requirement finalization standards and usability standards need to be held

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You should not outsource because you don’t know what you want. You should outsource for point capability, better time-to-market and sheer volume of work. closely. You can view them as the foundation on which vendors can build or as boundaries within which vendors must deliver. Hardware maintenance is commonly outsourced, but application development and maintenance also lends itself to this. The outsourcing of hardware has become popular because manufacturers comply strictly to standards and that has ensured that maintenance engineers can be deployed interchangeably. To do the same with software applications, we need to ensure a similar level of standards compliance. A few years ago, we had a vendor who was developing a portal and another who was developing an application to run on the portal. The first vendor used IBM’s Web Sphere and the second BEA’s Web Logic. The final deployment was on Web Logic. The brief was to maintain compliance with a specific version of J2EE. There was tremendous anxiety when the integration testing took place on a Web Logic platform, but it worked fine. The fact that it was going to run on a different platform ensured greater care by the vendor and better standards compliance for us. The documentation of the project and testing standards compliance helped to make maintenance more transferable across vendors. Adopting this approach to outsourcing is challenging because the core that needs to be retained inside the company requires very high-quality people. You should not outsource because you don’t know what you want or how to do it. You should outsource for point capability, better time-to-market and sheer volume of work. So, there will have to be a small, but skilled team in the company. Recruiting and retaining such people is not easy. Along with high in-house skill levels, there is a need for strong vendor management capabilities. This ranges from vendor identification, vendor team evaluation, project management, communication and reward management. These skills can make or break a project. Most vendors in India deploy their A-teams on international projects, but with the current economic scenario, it might be a good time to lock good people in to your projects. If you manage IT, it is important to think through and articulate your outsourcing strategy. Normally, the overpowering focus areas are business requirements and costs. But it is important to look at capabilities and where you can source them. If this is built on sourcing and maintaining capabilities over your plan horizon, your outsourcing plan will be based on sound business logic. Call it strategic outsourcing, if it helps sell the idea better! CIO Alaganandan Balaraman is VP-HR & process architect at Britannia Industries. Send feedback on this column to

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Cover Story | Server Virtualization

Pravir Vohra, Senior GM and Group CTO, ICICI Bank, and his team had to do a lot of first hand learning because they were the first in their space and size to virtualize a significant number of servers.

SerVing iT


Photos by k aPil shro ff imagin g by binEsh srEEDharan

Christmas came early this year at ICICI Bank. A virtualization project has not only made provisioning lighting-fast, but is saving the bank a Rs 1.15 crore. But, perhaps most importantly, it is increasing the availability of about 650 applications manifold. by Gunjan Trivedi

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hey say old habits die hard. It’s a adage that’s certainly true for ICICI Bank’s senior GM and the Group CTO, Pravir Vohra. As a man who was part of the team that popularized online banking and helped create a new revenue stream for ICICI Bank, Vohra is already known as an IT leader who can make a difference. He’s also celebrated as a CIO who not only leverages new concepts and technologies to create -mover advantages for his organization, but also adopts solutions at such an unprecedented rate and scale that it advances his bank beyond the reach of its peers. Even solution and service providers have found it hard to keep up. About four years ago, for instance, ICICI Bank was one of the first, at the scale it operates, to successfully leverage enterprise-wide data warehousing

Reader ROI:

Lessons from a virtualization pioneer How downtime can be reduced The green benefits of consolidation

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12/15/2008 7:49:46 PM

Cover Story | Server Virtualization and business intelligence. And now the second largest bank in the country has again scored another first with technology, this time with server virtualization. ICICI Bank’s IT team, led by Vohra, has used virtualization to arrest an electronic infrastructure spill-over at its datacenters. They consolidated 230 physical servers to just five, running a little under 650 applications on a virtualized environment. It required them to develop the unparalleled technology ability to run 60 virtual machines on a single server but it saved the bank over a crore annually in power, cooling and space. The result? While the server count of its closest competitors runs into four or five

digits, ICICI Bank services its customers with just a fraction of that. That’s incredibly low for a bank of its size with assets amounting to Rs 384,970 crore, and with 1,400 branches and 4,530 ATMs across the country.

Big, real Big The business problem ICICI Bank forever grapples with lies at the core of its standardized Windows NT architecture. Any application typically requires a Web tier, an application tier and a database tier — it’s a necessary evil. “Now if somebody asks for a development environment, add three more. Move onto a testing environment, add another three servers. So even if you

Virtualization in Numbers are re you running a superior virtualization effort? y you're ou're going to need the measurements to prove it. a recent study by iDC DC examines metrics that it leaders can use to benchmark how well they're managing virtualization. 15% the amount of it groups that are creating a dedicated team, often called the virtual computing team, that brings together experts from various it disciplines to manage the overall virtualization effort.

85% off enterprises are creating a virtualization management group inside server and/or storage teams.

200 the average Vm-to-administrator -to-administrator ratio, or average number of virtual images per administrator. how ow lean your staff running a virtualized datacenter is an important metric.

About Rs 50 lakh to Rs 100 lakh the he average cost-savings for it groups deploying formal management processes and solutions for their virtual infrastructure. the savings result from choices such as applying itil itil-based -based processes to the virtualization effort. 30% of it groups who are implementing itil-based -based processes are making their virtual infrastructure part of the workflow.

2 years While many enterprises are still grappling with the tactical side of virtualization, business demands for use of virtualization for business continuity and for new applications will mean virtualization management becomes a strategic project within two years of initial deployment. —laurianne mclaughlin aughlin


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are deploying something as simple as a library management system, you have to take nine servers into account. At ICICI Bank, we run about 650 applications. Go figure,” says Vohra. Running that many application has a domino effect. It demands an ongoing investment in servers, power consumption, rack space, switching gear because as all these servers need to be interconnected to storage and networking sub-systems for management, availability and recoverability. “We were actually worried that we were ending in a server or an electronic sprawl,” he says. “It is a kind of an exponential problem. We were not utilizing our servers properly but had to keep them because some development or some testing could happen. Let’s say that without virtualization, I’ll provide a server to run a library, holiday home and collection applications on the same server. But if you run a user acceptance testing (UAT) environment at the same time, you’ll have problems. The world has found a way of consuming the manufacturing it manufactures,” Vohra says. The problem wasn’t new. Though the problem piled up over time, the bank’s IT team had only experimented with different technologies from time to time to seek an effective solution. But a couple of years ago, they started looking at a solution in earnest. “We found an embryo of a solution that we believed could work and improve over time to adequately arrest server, rack and power sprawl. We considered it to be workable enough to start dabbling with. It was a struggle for us,” recalls Vohra. Vohra refers to a two-year-ago old initiative that was fundamentally concentrated on server consolidation. Over the last year, the scope of the project has expanded to include other infrastructure consolidation, and an overall focus to reduce the bank’s carbon footprint. But it’s been a journey of discovery, he admits. “We can’t take credit for scripting a story to a design principle. We found a way as we discovered new things and worked with different technologies. The idea was to improve our IT management capabilities and to reduce power and cooling consumption. It’s about working around a theory of constraints,” he says.

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School of Hardknocks Vohra formed a core team of 12 who were part of the NT admin team in the shared services vertical that takes care of the bank’s datacenters. The team ran a few proof-of-concepts, and started by virtualizing environments that were lower on the showstopper scale. Vohra points out that out of the 650 applications, there are about 200 applications, which nobody would even notice if they were shutdown for a day. For example, a one-day outage of applications such as ATM cash analysis or dead-stock inventory MIS generation would not raise any eyebrows. But as the team started testing in live and more critical environments, they set high-water marks for the thresholds of running applications in a virtualized ecosystem. About 14 months ago, the team managed to run about 51 virtual machines on a single physical server. “We were trying to figure out what we were running out of: compute resources, I/O bandwidth or memory? We’d take say a server of 4-CPUs with 8-cores, running Windows and run a mixed load of applications on 51 virtual machines. Not only did we break Sun Microsystem’s record of running 50 VMs on a server but we topped it. We touched a figure of 60 virtual machines on a single server. Of course, we later determined the optimal threshold at about 35 virtual machines,” says Vohra. As the proof-of-concepts succeeded, turnaround times for the project were defined, allotted and rolled out. The turnaround times for the identification and redressal of problems were monitored closely. “With technology, it is very easy to say that something doesn’t work. It is much harder to make it work. Obviously, it takes effort to make something hard work. But the problem in such cases, is that you don’t know what you are going to do but you discover what you need to do. You do it and take the next step,” he says. As the team scrambled forward with its server virtualization push, it had to pick its way through numerous technical challenges that surfaced. High CPU and memory utilization led to frequent

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“You don’t virtualize for religion's sake. You do it only if it makes business sense.” — Pravir Vohra, Senior GM and Group CTO, ICICI Bank

performance degradation, which were in turn compounded by network bottlenecks. This resource issue was addressed by using dynamic memory and CPU allocation to avoid creating performance chokepoints. Patching and upgrading to higher versions were also undertaken to overcome various technical limitations. “You run into a choke and after some analysis you realize that the internal disks are not good enough or you need a higher I/O bandwidth pipe. Or you might find that the machine is running out of memory for no logical reasoning. The physical machines you’re virtualizing, may add up to only 32GB of RAM, while on a target machine you have 64. Since we were pioneers in implementing such a solution at this scale, there were no easy answers available. Not even with our solution providers. We understood the theoretical concepts well,

but we became experts by living through all the live classrooms,” he recalls.

The Smaller They Are, the Rarer They Fall Today, ICICI Bank runs about 40 virtual machines on a server, with VMware virtualizing the environments of database server running SQL instances; application servers such as Websphere, Pramati and Oracle; and Web-servers. Vohra explains that as a strategy the current implementation has been executed only on 8-CPU dual core, 64GB RAM servers so that the features of over-commitment of memory and CPU resources are leveraged and VMware is able to scale up instead of scale out, taking full advantage of the Bank’s licenses. To decrease the use of multiple network cards, the servers have been moved to the REAL CIO WORLD | D E C e m B E R 1 5 , 2 0 0 8


12/15/2008 7:49:52 PM

Cover Story | Server Virtualization

The consolidation of 230 servers to five has resulted in

an annual opex savings of Over seven figures due to power, cooling and space. The break-even

period, considering capex, has been about six months, with projected savings for five years of about Rs 5.7 crore. same subnet of the NAS storage. This way, the same network card could be virtualized and deployed. This also ensures that connectivity to the storage through iSCSI is consistent and there are not too many hops. “You can now over-commit resources. If I really needed 24 cores to do something spread across 30 applications I can now give them two cores each. That is a total is of 60 cores but physically I have only 24,” says Vohra. The logic is that not all the applications peak at the same time. Some of these systems allow to over-commit resources beyond the boundaries of the physical box. The required disk space on the home server has been provisioned on the connected iSCSI and Fiber Channel-based storage to meet the requirements of hosted VMs. I/O bottlenecks had been avoided by segregating storage connectivity on different network interfaces, says Vohra. This requires separate network cards for individual storage connectivity. The virtualization effort forced various processes to be relooked and improved. It has translated into speedy provisioning that takes no more than two minutes of. This has directly reduced the average downtime of all the virtualized applications. Earlier, though the bank’s IT team could provision five servers as standby for 30 servers it took three hours to bring up those server, in case of a failure. Each server had to be manually configured, loaded and restored. And if the incident occurred at 2AM, it could take as much as five hours to bring up. Now, with automatic provisioning and over-commitment in place, running applications can failover seamlessly and automatically. Feautres such as V-Motion have been employed to transfer applications to higher configuration slice. Such 24

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innovative online fallback mechanisms have led to zero downtime. Virtual machine slices with requisite operating system configurations have been created on virtualized disk space. Cloning feature of such VM slices help in the rapid provisioning of resources when they are required. Downtime has been minimized by provisioning alternate servers with the V-Motion feature for auto failover of the entire system to another base server or for individual virtual machine failover. Though the business is exposed to all 650 applications, not all the applications have been virtualized, says Vohra. There are a few applications (running on 900 servers) that are too critical and too monolithic to be put on a virtualized environment. Applications such as the core banking system and credit card applications demonstrate no advantage even if they were virtualized as they need power-packed servers to run in any case. “You don’t do it for religion. You do it only if it makes business sense. Anything that doesn’t require super-sized servers has been virtualized. All the new applications also are being virtualized. Only about 20-odd applications are running on very old servers. We will either retire them and have them virtualized eventually. They are part of the last mile of the journey,” he says. Such technological advancements have made an impact on the resources and learning skill sets in ICICI Bank’s shared services team. They need to stay abreast with new technologies. It, however, doesn’t affect the application development team. As long as they see a server name, an IP address, they have local admin rights to the server; they don’t know whether that server translates into a pizza box or waferware, Vohra says.

Vohra maintains that given the amount of money a CIO needs to sink in a project like this, it had better make sense and a CIO better believe in what he or she is doing. At ICICI Bank, once the proof-of-concepts were successfully executed, there was no doubt over what would work and what would not. But Vohra warns of peripheral things a CIO can never test, unless they get their feet wet. “We took a considered view. If some of these don’t run, we were comfortable that we had the ability to work with our partners to get upgrades or patches to make them run. When you are a pioneer, you are bound to trip up. But if your relationships are strong, then your partner will also work with you and solve your problems,” says Vohra. ICICI Bank had quarterly targets of how many net servers were de-inducted. Payback was how many physical servers were sold for scrap or sent for recycling. “In the end, we saw clear business payback. Business may or may not see it because for them it is just an event. They will see results only when an application goes down. In the life of a business manager, it will happen only three times. If it is 4AM, he is not bothered. But if it is at 10AM, and if it is a trading application, he would kill you for even 10 minutes of downtime. When an incident happens, a 3-hour or a 30-minute outage hurts business equally. Applications ran reasonably smoothly earlier but now they don’t see any outage at all,” he points out.

Pocket Power Although users are not consciously aware that the applications they use everyday have been virtualized but there are still measurable, demonstrable business

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12/15/2008 7:49:53 PM

Cover Story | Server Virtualization benefits. The consolidation of 230 servers to five has resulted in an annual opex savings of Rs 1.15 crore on account of power, cooling and space, says Vohra. The break-even period, considering capex, has been about six months, with projected savings for five years of about Rs 5.7 crore.

ICICI Bank’s IT team buys servers today based on their power consumption. It is not that one company is worse than another, or that one model is better than another, says Vohra. “You should never generate more heat and consume more power than you can avoid. Would I buy a car, which is

Keys to Virtualization Success With server virtualization being all the rage, it can be very tempting to jump into it with a ‘build it and they will come’ mentality. this his could be risky, as recent surveys have indicated that a sizeable number of adopters aren't able determine if their projects were successful. We shouldn't forget that a virtualization project is no different than any other large scale it undertaking: it takes careful planning, clearly defined objectives, and reliable execution in order to realize the benefits. here ere are a few items to help avoid some common pitfalls:


Quantify projected cost savings with straightforward, easy-to-quantify metrics. y you ou can't determine project success without a yardstick, but stick to hard dollar savings and avoid soft, fluffy or complex tCo/roi calculations.


Prepare to virtualize a substantial number of servers. realizing ealizing the value depends, to some degree, on scale. Develop a formalized target server list and ensure that resources and commitments are in place to virtualize them.


Ensure application owner buy-in. application pplication owners don't like to feel like guinea pigs and may raise concerns over potential service impact. have ave solid resource utilization metrics in place and ready answers for common concerns (e.g., performance, availability). strong executive sponsorship will also help. and, nd, of course, always have a back-out plan.


Create a plan for ongoing operational process integration. this his is where much of the heavy lifting comes. Processes for monitoring and managing virtual machines must be integrated into existing workflows, and it will be necessary to enhance standard procedures and possibly acquire additional tools to better support virtualization.


Re-evaluate capacity planning and resource requirements. Virtualization makes provisioning easy — sometimes too easy — and it's possible to overrun server and storage capacity sooner than expected.


Enlist the right cross-functional resources in the project process. this his is not just a server consolidation, it's a major infrastructure change and the other segments of the infrastructure supply chain, including storage and networking, need to fully participate. —Jim Damoulakis

cheaper but consumes more gas? It is the same thing. At the end, you want to pay a little premium to buy a car that consumes less fuel. There are models of servers that are of similar compute capacity but consume almost two times the power of another,” he says. Today, Vohra is in a position to point this out because he knows. “The electricity bill at my datacenter alone has come down by Rs 70 lakh,” he says. The procurement and indenting process has witnessed a dramatic change, too, after the virtualization revolution at the bank. All the business units in the ICICI Group have been instructed to not indent or procure physical servers. The only unit they are allowed to procure their indent is in cores. Instead of asking for physical servers, they are supposed to ask for a certain number of cores because for every application, the unit of measurement is no longer a computer or a CPU but the lowest measurement unit in commercial terms. “Fundamentally, the DNA of the enterprise has changed. Budgeting is now based on cores. Soon, going forward, we will move over to threads as the unit to indent and budget. The only people allowed to count servers are those from the shared services group who manage our datacenters,” says Vohra. Virtualization and the resulting green IT benefits have effectuated the organization to earn valuable carbon credits. The enterprise intends to encompass various organizationwide green initiatives that go beyond its datacenters to create a meaningful and substantial trust fund of carbon credits that can be leveraged at the right opportunity. “The logic for pursuing this initiative is that it not only addresses the global phenomenon of environmentally responsible business but also leads to efficiency gains and associated cost savings. As a result, we manage to cut flab, evolve lean processes and also benefit from building an environmentally aware organisation,” he says. Like they say, good things come in small packages. CIO Gunjan Trivedi is assistant editor. Send feedback on this feature to

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Cover Story | Server Consolidation

Virtualization at Warp Speed Want to virtualize 95 percent of your production servers within a year? Here's how the CTO of logistics company Transplace went from having no virtualization expertise in house to running the company's missioncritical app on a VM. By Laurianne McLaughLin

Reader ROI:

How to quickly virtualize your entire datacenter Why virtualization can benefit IT and business


any CIOs wonder how far and how fast they can run with virtualization projects. Once you get a taste of the cost savings, flexibility, and speed of provisioning that server virtualization enables, you want to make a fast break for a larger victory. Vincent Biddlecombe, CTO of Transplace, doesn't wonder anymore: he just completed an instructive sprint. Since mid-2007, Biddlecombe has virtualized almost all the production servers at Transplace, a third-party transportation logistics provider. (The company helps customers such as retail chain stores maximize efficiency in their supply chain and shipping activities.) And he's been running his company's most critical app — a home-grown transportation system — on a VMware ESX environment with no major hiccups. By the way, Biddlecombe didn't have any virtualization or VMware expertise in house among his 100 IT staffers when he started this project. "We were a Sun group," he says. To address this issue, he hired a consulting partner, Catapult Systems.

Timing is Everything For Transplace, the 2007 virtualization sprint made sense on both a business and a technology level. The business desire: Transplace works with its customers via Softwareas-a-Service (SaaS), so the company needs the best scalability, availability and manageability

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Cover Story | Server Consolidation system that handles 4 million shipments per year, or about $2.75 billion (about Rs 12,375 crore) in transportation spending annually, the first month of its virtualized run proved pretty uneventful, Biddlecombe says. The systme was developed in-house using Java and it runs on BEA WebLogic app servers and Oracle for database work. Biddlecombe has dedicated 50 VMs to support the components of the transportation system running on WebLogic, and 50 to 60 VMs for some other components and everything else. To determine the right number of VMs and balance workloads on the servers running crucial VMs, the IT team did extensive prototyping. But they had an advantage that not all companies have with their ERP systems: since the system was developed in-house, Biddlecombe's team knew its performance quirks. "We're intimately familiar with what our software needs," says Biddlecombe, who has been with Transplace for three years and served as CTO for fifteen months. Interestingly, Biddlecombe has not found it necessary yet to invest in any new thirdparty management tools from any of the virtualization upstarts, though he is scoping out one emerging need. Favoring a layered monitoring approach, he currently uses HP's Business Availability Center tools at the top level, HP's SiteScope at the next level (measuring factors like memory utilization in every app in every VM) and then network and database monitoring tools. He's also using VMware's vMotion tool to move VMs around as needed. "The one area we haven't addressed is: are all the VMs sized properly?" Biddlecombe says. "I think we've given some VMs more memory than they Source: Burton Group need. Our emphasis to Mission-Critical date has been application App Goes Virtual performance. The last layer will be reducing The thought of running mission-critical VM resources so they have just enough," ERP applications on a VM makes many he says. The IT team can get some of the CIOs nervous — too nervous to try it. But not memory data from the SiteScope tool, but Biddlecombe. As for Transplace's missionthey have to do it one VM at a time, he notes. critical app, a transportation management they can get for hosting customer data. Virtualization appealed for both DR and scalability reasons, Biddlecombe says. On the tech side, Transplace's systems were due for a facelift. In 2007, Transplace decided to move its production datacenter from the corporate office in Plano, Texas, to an offsite co-location facility in Dallas. At about this time, the company was due to upgrade its server hardware, Biddlecombe says, so it made sense to roll out the virtualization effort with that server upgrade. For Transplace's database apps, he switched from Sun servers (on Solaris) to IBM mid-range servers (p570 servers using the Power6 processor and running AIX). For Transplace's middle-tier servers, he switched from Sun servers to Dell PowerEdge 2950 servers, using VMware's ESX Server software for virtualization. (For storage, Transplace chose Network Appliance's FAS 3070 storage systems.) "We wanted an environment where we could have maximum availability between our production and DR datacenters," Biddlecombe says. "By using a combination of VMware with storage, we've effectively copied our servers out to the DR center." Biddlecombe estimates his production environment will be 95 percent virtualized by year's end. That's quite an achievement, says Burton Group research analyst Chris Wolf. "From my experience, organizations that are able to virtualize 40 percent of their servers in a year are doing really well," Wolf says. In total, Biddlecombe's IT group now runs about 110 VMs. The only significant apps he's not running on a VM are his MS Exchange servers and SQL server databases — both known for being extremely I/O intensive.

40% The amount

most companies are able to virtualize in a year if they are doing well.

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This is the need that's making him consider finding another management tool. For securing the virtual environment, Transplace's IT team applies the same security tools (McAfee anti-virus and others) and practices that they would with a physical server, Biddlecombe says.

Provisioning in 30 Minutes or Less As for metrics to prove his success, Biddlecombe says he wasn't able to do many before and after comparisons because so many factors changed at once: a new datacenter location, new hardware and all those new VMs all got wrapped up into the same effort. What he can measure however, is how quickly he can provision a new server or new computing power to the business side. It used to take him a week to provision a server: now it takes 30 minutes. "We have gained a dramatically increased capacity to provision new servers, and more scalability," he says. The ability to scale to add VMs right away helps Transplace deal with any spikes in data throughput from its customers: "Because we're SaaS, our customers benefited immediately," he says. And when IT wants to create a test and development VM, or a business executive needs a new customer demonstration environment, IT can do it within a half hour, he notes. In another benefit of the highlyvirtualized environment, the servers at the disaster recovery site can serve double duty, Biddlecombe says. They can be test VMs one moment, and disaster recovery the next. "We don't have to have 100 servers just standing there waiting for disaster," he says. What's next on Biddlecombe's to-do list with regards to virtualization? He'll continue to ensure that the backup strategy is solid, he says. "There's this concept that I'm putting a lot of eggs in one basket," he says. "We use VMware Consolidated Backup, but you also have to make sure all your OS patches are applied, backups done properly. You want to make sure you're doing the blocking and tackling." CIO

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Akash Passey, MD, Volvo Buses India, says that in a company with a focus on quality, IT has a role to play in maintaining transparency, ensuring constant feedback from the frontline and keeping things simple.

Riding On

Quality By Pankaj Mishra

Volvo quality. That’s the thing when you raise the bar: you become an adjective all to your own. “It’s a Volvo bus” is a deciding criterion for many long distance travelers. When Volvo introduced its first buses in India in 2001, little did the company realize the impact it would have on the public transport sector in the country. Very quickly, traveling by a Volvo bus became a ubiquitous mode of transport for a large chunk of the traveling population. Suddenly, a widening class of people were doing Bangalore to Bombay in a bus — in style. Now that Volvo’s given travelers an alternate inter-state mode of transport, it’s aiming its buses at inter-city travel. By pulling people out of their vehicles, a bus rapid transit (BRT) system can decongest India’s cities, says Akash Passey, managing director, Volvo Buses India. But it will require coaxing passengers to leave the luxury of their cars for an equivalent luxury on a bus. And that’s where IT can play a key role, he says. Ticketing, route planning, traffic management and fuel optimization are just some of the ways IT can make a BRT system so efficient that people will make a switch. But there’s plenty to be done, he warns.

CIO: Is the bus undergoing an evolution in India?

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.


D E C em B E R 1 5 , 2 0 0 8 | REAL CIO WORLD

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Akash Passey: Today, buses need to play a role beyond moving people from one point to another. They need to tackle a city’s growing congestion problems. The problem isn’t that there are too many people in a city; it's that we have too many people wanting to be in the same place at the same time. How much road space can everyone get?

Here, the bus has an important role to play. It has to succeed in pulling people out of their personal vehicles and moving them over to public transport. A good bus-based transport system can achieve this at a fraction of the cost and with higher flexibility than other mass transport options. Now, this idea alone is not enough to change the way people make mobility choices. We have to create the right circumstance for this change to take place.

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View from the Top

At the core of this shift will lie the transport hardware: the bus. A bus has to provide an experience, which is good enough for people to keep their personal vehicles in a parking lot. And, that cannot happen without the right technology, drive comfort, driver performance and, of course, safety standards.

P hoto by Srivatsa Shandi lya

Are luxury buses a step towards decongesting Bangalore? Is this model being replicated? Volvo buses are doing just that. We have established the need for an efficient bus transport system to relieve our cities of acute congestion. However, the job still isn’t over. Research has indicated that most passengers of Bangalore’s Volvo buses are those who would have otherwise traveled in their personal vehicles. For the people who travel in these buses it is not luxury — it’s a preferred alternative of transport. Luxury is having your own car, being the only one inside, and being able to burn fuel for hours while covering a few kilometers. That’s what is special and most appreciated about the Bangalore Volvo buses. It’s no longer about the initial price of a bus — but its lifecycle costs and, in a city, this can be calculated in terms of the social impact our buses have in terms of safety, fuel savings and the ability to enhance urban mobility to avoid costly delays. But, like I said, this is not the end of what is sought — just the start. To fully achieve our goals, we need to provide

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Akash Passey expects I.T. to: Simplify processes Increase the efficiency of its buses Understand the end customer

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View from the Top

high accessibility, traffic planning, a wellestablished network, quick entry/exits — all using IT — to convince users to prioritize the bus over other forms of mobility. Volvo is a part of almost every successful bus rapid transit system in the world. In India, we already have the richest experience when it comes to high-performance bus solutions. The future, for cities like Bangalore, will require a collaborative effort between all stakeholders, one that is marked by courage, creativity and determination. And Volvo is ready.

India is a fast-growing market for Volvo, but do you also have plans to manufacture here? Yes, India’s huge market has been a big attraction for global players for sometime now. For Volvo, India has been both a market opportunity — where we can provide solutions to improve the quality of ‘people mobility’ — and it is also a base that has the potential to make us more competitive globally. The greater a market’s expectation of a manufacturer, the greater are a manufacturer’s ability to provide world-class solutions and standards. This automatically translates into building a base that is good enough to manufacture for exports to even more mature markets.

So, is indian demand pushing the quality envelope for exports?

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market in India, it would not be wrong to say that the more the indian market demands the more they make India competitive as an export base for the world.

“My suggestion to IT leaders is simple: be a true partner.” — Akash Passey Volvo started its operations in India with products that always met global standards. But as customer expectations grew, we have stayed one-step ahead. For instance, Volvo Buses India has established itself as the first complete bus company that offers services from transport advisories to manufacturing. Starting this year, both the chassis and the body will be built by Volvo Buses India. Our new body-building factory is now 10-months-old and in its first year will produce around 500 buses. But, what it’s really doing is raising quality standards even further for customers — and our flexibility to cater to changing market needs. Being a complete bus company, we have integrated ourselves to global production processes and quality norms. This means that we are eligible for exports right away and will do so in the near future. While we always offer standards that will drive the bus

What global best practices you have adopted from the Volvo Group? Started in 2008 Jan, the Volvo buses body-building factory follows Volvo’s global body-building processes and quality standards which are the same in any Volvo Bus plant anywhere. All buses go through planned product audits to evaluate them against global standards. As the latest plant in the family, we have consciously spent a lot of our time incorporating all the learnings and best practices from Volvo bus factories around the world. We also have people working within our company who come from different Volvo plants and each one of them carries with them a wealth of knowledge and practices, making them role models for all new recruits. I’ve had the privilege of being the operational development program initiator for the Volvo Group during my recent assignment in Volvo at Sweden. This remains my passion and it’s natural that I initiate the same exercise here in India.

What does innovation mean at Volvo? Innovation at Volvo constitutes many elements. In our foundation, we have our

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View from the Top

culture documented in the ‘Volvo Way’, which is based on the basic premise that everyone is here to provide their best. Among other points, the ‘Volvo Way’ asks for respect for the individual, passion and energy. Good leadership, teamwork and clear goals are among many other enablers to innovate. The focus is on driving progress for our customers and various other stakeholders and sharing their aspirations. This drives us to find means and ways to do what we have to do. Of course, backing all this are various models and systems to ensure we have all the information to make these decisions.

What role does IT play in all this? Information technology has a key role to play in the modern transport system. When it comes to our product, electronics and information play an important role in supporting the ‘drivability’, performance, safety and diagnostics of our buses. Our drivers have all the help they need in terms of fault reporting and alerts. For instance, our service staff can download engine data allowing them to quickly analyze problems. Or, we can download entire ‘trip operation’ data to improve how our buses are driven. The Volvo engine management system, the electronic suspension, the electronic braking system and much more all depend on various CPUs running a bus. Information technology will play an even more important role when we start creating an efficient city bus

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transport system. Ticketing, route planning, traffic management, passenger information, value-added services, fuel optimization and plenty more are all parts of this system.


Which functions are most benefited by IT at Volvo?


Volvo Buses India headquarters:




RFID at an appropriate time in near future.

As a business leader, how do you cope with complexity?

As a business leader, my job is to enable and coach. Work is done by people who know it better than I do. Of course, it is our culture to work as a team and take joint decisions so that whatever we do, we move forward. Maintaining a transparent culture, backed by clear visions and goals and constant feedback from the frontline, keeps things simple. IT also plays a key role in making this happen.

440 buses a year

At Volvo, we have a business unit — Volvo IT — which is integral to whatever we do across the entire business. In India, Volvo IT has a strong presence, which includes support to all our companies locally. It also supports Volvo companies globally. In the current scenario, it is hard to differentiate. From internal communication to the production floor to global parts management or manufacturing systems — IT is a critical component in the effectiveness of each of these systems.

Many automakers have looked at RFID to achieve supply chain efficiencies. Has Volvo? RFID can certainly introduce benefits and can help the supply chain improve its efficiency, but we have no immediate plans to implement it in our system. While Volvo Buses is the second largest bus company globally, Volvo Buses India is still an infant and we should be looking at solutions like

Many enterprises find it hard to align IT with business. What’s your advice to IT leaders? My suggestion is simple: be a true partner, share the business’ motivation and stress and understand the company’s culture and, most importantly, the company’s final customer and the market place. With this in focus, I am sure the IT industry has the tools and means to bring about immense short-term and long-term benefits. Of course, another expectation of IT is to simplify business. CIO

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12/15/2008 6:35:23 PM


PumPing itt

In a fiercely competitive petroleum industry, keeping partners happy is an imperative. But HPCL was slowly facing the heat from its dealers. Until an elegantly simple SMS solution helped the company improve efficiency and saved the day. By Snigdha KarjatKar


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Case File

They wanted it and they wanted it bad.

IllUStratIo n by an Il t

But some dealers of Hindustan Petroleum (HPCL) just couldn’t get their hands on it: as slick as oil, their requests for stock kept slipping away. also owns and operates the largest lube refinery in the country and produces lube base oils of international standard. The company accounts for over 40 percent of India’s total lube base oil production. For this Fortune 500 company, (it ranks 290 on the list) business comes not only from the metros but also from the remotest corners of the country, from states as far flung as Sikkim. The epicenter of dealer unrest, however, was a terminal in southern India. With the increasing number of complaints it was getting, HPCL knew that if it neglected the problem, it could prove costly. So, the company conducted an internal study and the result has saved it a world of trouble. HPCL’s managers figured that if all indents were recorded correctly the first time a dealer interfaced with the company, then all their grievances would cease to exist. This would mean automating the entire recording of indents and minimizing manual interferences. HPCL needed something that could oil its creaking wheels and it turned to technology for help. Web and IVR (interactive voice response) systems were popular options and would enable smoother indent filing but considering the remote locations of HPCL’s dealers and poor Internet penetration, the company decided to develop an SMS-based system. “I knew that the idea of placing an indent using the Internet would face some aversion from the dealers because not all of them are tech-savvy. But with mobiles being not just tech tools today, we thought that the automation of indents using SMS was an ideal and wise option for all of us,” said Nishi How automation can Vasudeva, executive director-IS, HPCL. increase efficiency Banking on the popularity and the userHow innovation can friendly nature of mobiles, Vasudeva and help you stay in the her team decided to develop an indent reckoning

What was annoying was that the order processing was standard business practice. For dealers, placing an indent — an order which typically holds the amount of oil that a dealer requires — was just another thing that needed to be done every so often. But the process was painful. To place an order for petrol, diesel or other HPCL products, dealers harangued HPCL’s regional offices with repeated requests. Being in the middle of HPCL and the fuel pump owners, the dealers faced the heat from both sides. The problem with this manual process was that it bore the seed of all sorts of possible human errors. For instance, a lack of prompt — or worse, no response — to their phone calls when they placed their requests was beginning to trigger unrest among the dealers. Sometimes, dealers complained that when an HPCL official finally picked up the phone, he or she got their order wrong or recorded it on their systems incorrectly or misplaced their order. The worst was when their indents were not executed at all. Some transporters and dealers were beginning to feel that they were being subjected to unfair treatment — something that HPCL would have found very hard to justify. There were serious discrepancies between the execution of loads and the amount dealers had ordered. This became a bone of contention between the dealers and the Rs 103,800-crore refinery major. At a time when oil companies were fighting for their share of the market, HPCL which holds 16 percent of retail and marketing share was slowly losing its grip. There was a broken link in the ordering Reader ROI: process and it needed to be fixed.

Oiling the Wheels Established in 1952, today, HPCL caters to over 460 dealers across India. The company

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Case File to track indents, create sales orders and management system (IMS) with a mobile invoices automatically in the ERP system on interface to place indents. The IMS, which is execution of indents. integrated with an auto indenting software But getting to this point was not an to receive indents, is based on data from easy task. The system was not devoid of retail automation systems (contains data SNAPSHOT technical glitches. on the location of dealers, retail outlets, HPCL An all-new customized application etcetera). Once a dealer sends a message Employees: 11,300 using Visual Basic had to be developed to requesting for his stock to be replenished, read and transfer messages from a modem it is checked for authenticity. Revenue: Rs 103,800 crore to a PC format. The GSM modem also had a If the SMS is valid, an indent is created ceiling on the amount of outgoing messages and the acknowledgment with an indent IT Team: 150 it could send per minute. The scary part? number — similar to the railway’s PNR — The system had no alert in place to warn is sent back to the customer. Locations: 460 officials of messages that didn’t get sent. “Today, when the dealer wants to place “We had to advise all our dealers to an indent for ‘x’ amount of fuel (petrol, Retail Outlets: 8,329 use an alternate number. It took a lot of diesel or both), all he needs to do is send an effort to stabilize the software and make SMS to an HPCL installation. He has been it adequately fault-tolerant. We made a provided with multiple templates of various provision in the software to simultaneously combinations of different products offered handle inputs from several GSM modems and also send by the company,” explains S.T. Sathiavageeshwaran, outgoing messages with load balancing. The integration GM-IS, HPCL. with the ERP system was also a challenge as this was In the meanwhile, the planning officer views all the the first ERP application to use EDI (electronic data indents that need to be executed. He decides on the interchange),” says Vasudeva. allocation of various products according to the availability of trucks at that point in time. A record of available trucks at an HPCL installation is maintained by cards swipes by truck drivers at the gate. This data is also available with Apart from the tech bit, getting user buy-in was the planning officer. another roadblock, though not a monumental one. Thereafter, the indents are moved forward Many dealers were not comfortable with mobiles automatically to the ERP for order processing. As and found it difficult to communicate via SMS. invoicing is completed by ERP, it is again fed to the They followed up constantly with phone calls. But, IMS for reporting purposes. The IMS is integrated with Vasudeva found a way around it. HPCL’s ERP system to minimize the scope of errors “We conducted one-day training workshops when the data is transferred to the ERP. with the dealers to familiarize them with the new system. We did not encounter much opposition [after that] from the dealers “Earlier, dealers used to constantly as mobiles are no more call and follow-up asking when a technology but an their truck would reach them everyday utility,” and inevitably lots of things were put on hold as the arrival of the truck was awaited. For instance, dealers had to simply keep “Timely availability their porters on stand by of reports to plan further until the truck arrived. But product allocation in with IMS in place, a dealer today’s competitive times now gets an intimation via definitely gives an edge.” SMS about when their truck will leave the terminal and — Nishi Vasudeva he can calculate the time of Executive Director-IS, arrival,” says Vasudeva. HPCL The IMS has not only automated the process but has also enabled HPCL

Tank Full

P hoto by Srivatsa Shandilya

Running Out of Fuel


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Case File says Vasudeva. After tackling those speed-breakers, HPCL and its dealers found themselves on the right end of the ordering process. The IMS has not only HpCL’s ImS has improved efficiency for the company and satisfied dealer queries but has made it empowered its customers. easier for internal planning officers and other officials to review reports from The auTo indenTing SySTeM time-to-time. The system has done what validates the dealer’s number and an it set out to do: pumped up efficiency. acknowledgement along with an indent number is sent back to the dealer. This is extremely important in addressing issues related to delayed indent execution which was earlier straining the company’s relationship with its consumers. With IMS, the planning a dealer sends an officer is fully equipped to handle dealer SMS to the iMS which queries and explain delays in execution to sends it to the auto The planning the concerned party. indenting system for officer allocates “The system also has an additional authentication. indents according to the feature in which dealers can inquire about availability of trucks he the status of their last indent which is again prints the filing slips and an SMS and no manual interface is required. transfers the data to the erp. Also, a dealer is intimated (via SMS) as a truck leaves the installation for the execution of his indent,” says Vasudeva. The system has reduced the huge amount of paperwork HPCL churns out and merged indents electronically with the ERP, which helps in tracking invoices and respective payments. dealerS can place load balancing and indents through the Web For internal users like Y.K. Gawali, GMinvoicing is completed and iVr. They can also in the erp and this O&D, IMS is like a magic wand. track their indents using information is stored in “The issues in the old system were the indent number. the iMS for reporting. dealer dissatisfaction regarding handling and execution of their indents. Complaints regarding phones being not reachable or not getting picked up, handling of large amounts of calls they had to answer from the dealers. This gives physical paper, indents not getting executed or getting them ample time to do their job effectively. IMS has also wrongly recorded, executed or lost were hampering our eliminated the time required for entering sales orders into growth. Claims by dealers regarding discrimination were the ERP system and this translates into a huge saving.” severely affecting our business. All these issues were Sathiavageeshwaran says, “It has now become much addressed once the system was put in place,” he says. easier for a planning officer to screen a request for the indents and execute them accordingly. It has definitely smoothened the operational process. More importantly, our service to the dealer has improved a lot.” There were obvious benefits that helped Vasudeva. With 8,329 retail outlets and 2,232 LPG distributors “The biggest benefit is customer delight, since the whole across the country, HPCL today boasts of a healthy indenting process has become very easy and transparent network of happy and satisfied dealers. for dealers. They get automated confirmation via SMS “Timely availability of reports to plan further product acknowledging the receipt of their indent and another allocation in today’s competitive time definitely gives SMS when a truck leaves the installation after getting an edge. Besides saving productive man hours can be loaded. Further, dealers can also indent their requirement translated into quantitative benefits. And above all a up to one week in advance.” sound customer relationship,” says Vasudeva. CIO Adds Gawali, “Another big gain is the elimination of non-productive activities among our planning officers and Snigdha Karjatkar is correspondent. Send feedback on this feature to sales officers in terms of reducing the number of phone

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In fograP hIcS by Pc an o oP

Stoking Efficiency

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Operational Efficiency

, k c a b e m o c a r o f IT . d s e e s c i i r g p po l n i e e r p u a p f i s g h d s n i a a s o i r s r r l i k o o f c t Ra u n i s r thank the linchp tes ships, t s a e r d g i e v t o in pr t a h t l . s e n d i o a r m and t tep By S

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Feature -02.indd 38

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There's something nostalgic about railroads. The steel tracks To the layperson, little has changed over the years. Those rust-colored tracks lie fixed in their familiar locations. Drivers sit at a railroad crossing, either cursing their luck or counting cars for fun, the way they always have. Kids still learn old railroad songs. Even executives in the railroad industry recognize that, in some ways, freight railroads are untouched by time. "It's still steel wheel on steel rail," says Deb Butler, CIO and executive VP of planning for Norfolk Southern, a company that's 177-years-old. But a funny thing has happened. As the price of diesel fuel soared and highway congestion increased, new interest sprang up in the old form of transportation. "Shippers had been dubious about rail because it has historically been about moving very large finished goods or commodities in bulk," says David Rutchik, partner with sourcing and supply chain consultancy Pace Harmon. As big retailers, manufacturers and even trucking companies themselves started

scrutinizing their skyrocketing shipping costs, railroads began to look more attractive. "It's all about the economic pressure," says Rutchik. Sustainability, too. That old iron horse, chugging along at 49 miles an hour, has suddenly become a ‘green’ option, given its ability to move a ton of freight 423 miles on one gallon of gas. While it's still only carload materials like coal that make a full cross-country trip by locomotive, more and smaller goods are spending the bulk of their journeys on a freight train. In 2004, intermodal business — the transport of truck trailers or ship containers on a railroad's flat cars — surpassed coal as the largest source of revenue for Class 1 railroads (by revenue) in the United States, according to the Association of American Railroads (AAR). "It has been our engine of growth," says Tom White, director of editorial services for AAR,

thanks to big customers like UPS, truckload carriers like Schneider National and J.B. Hunt, and — to a lesser degree — the lessthan-truckload transportation providers, all eager to use their trucks and drivers for short trips and let the railroads handle the rest. The increased demand has been good news for railroads in the short term. But long-term, experts say, demand for rail service could outstrip supply to such an extent that rail capacity becomes severely strained and rail shippers profoundly dissatisfied. The key to future growth and customer satisfaction — in addition to laying billions of dollars' worth of new track — will be new IT systems and technologyenabled business processes, which ensure that the railroads operate more efficiently and predictably.

Imaging by unnikrishnan AV

that rim the American landscape. The familiar ding-ding-ding as the crossing arm descends and the freight train passes. The $200 properties on a Monopoly board.

Reader ROI:

The rise of intermodal transportation How IT improves railroad efficiency and service The limits of technology investment

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12/15/2008 6:10:23 PM

Operational Efficiency Rail carriers, anxious to take advantage of growing interest in their intermodal offerings, are investing in systems to become more flexible, improve on-time performance and increase their virtual capacity. Automated gate systems reduce backups at intermodal hubs, while complex tripplanning systems analyze variables, such as crew and locomotive availability and the weather, in order to reduce bottlenecks on the tracks. The railroads are also updating their tracking systems to provide trailer-level location data and more frequent updates to satisfy a new breed of end customer. Wal-Mart or Kimberly-Clark, for example, wouldn't be satisfied just to know that the train left Seattle on Sunday and is supposed to get to Kansas City on Wednesday. "The key to growth, service levels and getting the most capacity out of the railroad is using IT," says Butler.

railroad's growth engine The use of wooden railways to move goods and people, by some accounts, goes back to ancient times. But it wasn't until the late 1700s that metal was used for the wheels and track. Steam replaced horses for powering locomotives a few decades later. And in 1815, Colonel John Stevens was granted the first railroad charter in North America. The railroads dominated long-haul freight nearly until Eisenhower established the Interstate Highway System in 1956. Shippers found they could move goods faster and more flexibly on the open road. Railroads chugged along, nevertheless, carrying coal, lumber and other commodities, all which remain an important component of railroad revenue. "[Those customers] need only limited visibility and transit times and are able to deal with the inherent dynamics of the infrastructure, which is that the railroad doesn't always take the shortest distance between two points," says Marc Tanowitz, principal with Pace Harmon. But in the past few decades, the railroad industry has experienced two big shifts. One has been consolidation. In 1980, there were 40 Class-1 railroads — defined today as those with operating revenue exceeding $346.8 million in 2006 (about Rs 1,560 crore) operating in the US. Today there are just seven: Burlington Northern & Santa 40

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IT helps BNSF move containers between trucks and trains faster, improving service to trucking companies, says CIO Jo-ann Olsovsky.

Fe Railway (BNSF), Canadian National Railway, Canadian Pacific Railway, CSX Transportation, Kansas City Southern Railway, Norfolk Southern Railway and Union Pacific Railroad. The other change has been the explosive growth of its intermodal business. Intermodal volume has grown 400 percent since 1980, according to AAR, from 3 million units (trailers or containers) to 12 million. Today, chances are much of the stuff of people’s everyday life — cell phones, cereals, car s — rode the rails at some point on its way to their doors. BNSF is one of the world's top movers of intermodal traffic. Half of BNSF's volume and 33 percent of its revenue comes from moving truck trailers and ship containers. That's probably because BNSF owns the shortest route between Southern California ports and Chicago distribution centers. (More railways come together in Chicago than in any other city.) BNSF CIO Jo-ann Olsovsky says her company has forged partnerships with trucking companies for 25 years. There's a natural synergy between fulltruckload carriers and rail because the trailer is headed to and from a single location. One intermodal train can move as much freight as 280 trucks. That's why intermodal shipments accounted for one-third of truckload carrier Schneider National's $3.7

billion (about Rs 16,650 crore) in revenue last year. Steve Van Kirk, VP of intermodal commercial management with Schneider, says the business it gives its two biggest rail partners, BNSF and CSX, will grow "due to driver shortages, rising fuel costs and growing sensitivity to the impact of different choices on the environment." The intermodal option gives truckload carriers chances to cut costs and provide additional solutions for customers, Van Kirk says. "We're in it for the long haul, and we see it increasing in some places it was never used before," he says. "As fuel costs have gone up, rail is a more viable alternative for 800-mile or less trips." Even less-than-truckload (LTL) carriers with their trailers of mixed goods headed for different destinations have been eager to take advantage of rail service. "We don't want to have to jack up prices because diesel is expensive," explains Michael Rapken, CIO for YRC Worldwide. "And with a tight economy and our best customers leaning on us for more concessions, it makes our ability to generate a margin on that business tougher and tougher. We use rail as much as possible," he says, though YRC considers cost and capacity in its calculations. Doing so is possible thanks to improved rail service reliability in certain corridors. "Certain high-density (rail) lanes have results close or equal to long haul trucking,"

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Operational Efficiency Van Kirk says. A trucker doing 500-miles-aday solos takes four days to get from Chicago to Los Angeles. An intermodal train can usually make the trip in four or five days. Whether to ship by road or rail comes down to how Schneider's network matches up with the available rail networks and what the end customer's expectations are. "If you're talking about something going from Chicago to L.A., it works," Van Kirk says. The railroads want to expand intermodal capacity in high-demand areas. Intermodal has been the fastest-growing segment of Norfolk Southern's business during the last five years, accounting for 20 percent of its $9.4 billion (about Rs 42,300 crore) in revenues last year. "We have initiatives under way to create corridors that are natural magnets for trailer and container traffic," says Butler.

Creating virtual Capacity The industry has finally run out of excess capacity, enabling rail lines to raise their prices 30 percent or more, according to Morgan Stanley research analysts William J. Greene and Adam Longson. But the railroads must make significant investments in capacity and service to take advantage of the situation long-term. (Potentially, railroads could take business away from trucking companies.) The US Department of Transportation forecasts that freight railroad demand will increase 88 percent by 2035. If capacity is not added, as much as a third of the country's 140,000 miles of track will be so congested as to cause widespread service breakdowns. The DoT report concluded that $148 billion (about Rs 666,000 crore) must be invested in railroad infrastructure expansion. Here's where IT comes in. Although the Class 1 railroads, including BNSF, CSX and Norfolk Southern, are actively investing in physical infrastructure — laying new track, building new terminals and expanding flatcar capacity — the average railroad spends nearly 80 percent of its capital

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Enterprise System (TYES) tracks the movement of railcars and locomotives. Norfolk Southern employees use the Operating Plan Developer (OPD) to model railcars into blocks, blocks into trains, trains into schedules. Additional models predict locomotive and crew requirements for the train schedules. But railroads have begun to make IT investments for their intermodal business. Consider BNSF's Hobart Yard in Los Angeles, which processes 1.2 million lifts (the movement of a ‘box’ — one container or trailer — to or from a railroad car) a year, or Logistics Park, Corwith and Cicero facilities in the Chicago area executing more than 2 million lifts annually. Managing these transfers requires technology to schedule movements efficiently and keep Building for What's shippers and receivers informed of the around the Bend boxes' whereabouts. Hundreds of trailers One of the rules of railroading has always and containers must be transferred on and been, ‘You are where you go’. A railway's off trains. value proposition has always been tied up Both BNSF and Norfolk Southern are in where it has chosen to lay track. But today implementing automated gate systems around BNSF's Fort Worth headquarters, at their intermodal terminals to help the you'll more likely hear the phrase "building trailers descending on those facilities for where we need to be." make their trains. Norfolk Southern is also The company is expanding its intermodal using the gate systems to improve safety, hubs and laying additional track. It is also reduce gate processing time and reduce spending about a third of its IT budget on the time drivers spend inside the terminal. new investments. Some of that investment "That helps our trucks coming onto the goes into software for improving what BNSF railroad property drive through without calls 'overall velocity’. A movement planner delays, which improves our productivity," from Siemens, for example, schedules trains Schneider's Van Kirk says. throughout the BNSF network, benefiting The systems use optical character carload and intermodal customers. Likewise, recognition, digital cameras and voice-overNorfolk Southern's Thoroughbred Yard IP-enabled communication kiosks. They scan the trailers for identifying information and send them to the right location for transfer, transforming a system that The key to increasing previously required people railroad capacity “is with ruggedized computers to using information and technology,” says spend 20 minutes processing Deb Butler, CIO with each idling semi into one where Norfolk Southern. truckers can drive through in three minutes. In an industry where a day without a workplace injury is rare, the gate systems also reduce the chance of someone being run over by expenditure budget just maintaining the track it already has. A rail company spends 17 percent of revenue on capital investment, compared with 3 percent for the average manufacturer. But IT can help the railroads more efficiently route trains and process freight at intermodal terminals, enabling them to increase capacity without spending as much to lay track. "The entire industry is putting more focus on IT systems as a way to streamline operations," says Morgan Stanley's Longson. When a train is moving down the track, there's little work for anyone but the conductor. But when it pulls into the station, there's a flurry of activity that can be more efficiently managed with IT.

REAL CIO WORLD | D e C e m B e r 1 5 , 2 0 0 8


Operational Efficiency an 18-wheeler, says Kathleen Meisinger, BNSF's director of technology services and application development. Jerri Parks, director of intermodal and automotive systems for Norfolk Southern, says her company plans to use the system to process trucks remotely in and out of terminals in the near future. Containers on an ocean vessel are often stacked 10 high, and managing them is relatively simple: first on, last off. But because of the complexity of transfers at the intermodal station, railcars often carry just one container, even though a locomotive can move double-stacked containers. BNSF has invested in giant cranes — 284 feet wide, spanning seven loading tracks and three truck lanes — to load double-stacked cars. They worked with Kone, a Finnish marine software vendor, to develop workflow optimization software that uses GPS coordinates of containers and incoming trains to automatically guide a crane operator. Norfolk Southern's Strategic Intermodal Management System (SIMS)

Steve Van Kirk, vice president of intermodal commercial management with Schneider National, exchanges shipping data with railroads using EDI.

creates a load plan for moving trailers and containers onto a train, so that they can be efficiently unloaded at their destinations. SIMS also supports train planning, inventory management, equipment storage and EDI communication with customers and other railroads. CSX has built a wireless tool that allows truckers to verify billing with the terminal before arrival. The smartphone-enabled application lets drivers know whether they will be able to offload the trailer without any 42

D e C e m B e r 1 5 , 2 0 0 8 | REAL CIO WORLD

issues, says Frank Lonegro, president of CSX Technology, the business unit responsible for IT. The driver can reconcile problems by phone en route, saving time and money. Those systems that improve productivity will only become more important as East Coast carriers like CSX and Norfolk Southern go after the short-haul market, where trucks continue to dominate. Norfolk Southern is moving more freight in the 500mile and 250-mile lanes, like the route from the Port of Savannah to Atlanta. "We want to continue to grow this business," says Jim Bolander, assistant VP, intermodal pricing and development for Norfolk Southern.

Better Data for Customers New IT systems aren't limited to increasing operational efficiency, they're also critical to improving customer service. It's something few railroads had been known for in the past. Tools like the automated gate system at the intermodal hubs help. "When you're moving millions of containers a year, saving 17 minutes on the in- and out-gate translates into improved service and improved recoverability [after delays]," says Olsovsky. But more visibility of container movement and progress is necessary to meet the real-time data needs of intermodal customers. And the increased number of touch points involved in intermodal freight movement — versus single trips by one mode of transport — means that more data is being generated. For truckload carriers, "it's no longer pick it up, drive it, deliver it — one driver, one assignment," explains Schneider National's Van Kirk. "There's the arrival dray, the rail component and the destination dray, and each movement has three separate activities." The big railroads currently use electronic data interchange (EDI) to share data directly between their systems and those of their intermodal partners. "When one of our

drivers picks up a load, we have a satellite system in the truck that sends a macro to say they picked up the load and to generate a waybill that lets the railroad know they have a load coming," explains Van Kirk. "They go through an automated checkpoint (at the intermodal station), and the railroad provides EDI status updates for different events." Most railways also provide the data and the ability to generate reports via their websites, which trucking or retail customers can use to update their customers. Norfolk Southern and other railroads have installed automatic equipment identification (AEI) tags and readers on their tracks at close intervals to monitor the movement of railcars. The AEI readers relay each railcar's location. That data can be viewed online or sent to a shipper's system. "It's one thing to know your trailer departed Atlanta and the next stop is Birmingham," says CIO Butler. "It's another thing altogether to know where between those two points it actually is." Real-time tracking data from Class 1 railroads has improved over the last few years, says Dave Howland, VP of intermodal rail management for Schneider National. There is "better reporting of trains delayed between reporting points due to derailment, washout, etcetera, on a real-time basis," Howland explains. "Before, they wouldn't update until the train reached the next reporting station, a day or two after the fact." If the railroads want to grow their LTL business, they must invest more in streamlining business processes and communications, says Tanowitz. They also need to keep better track of their own assets. Tanowitz says 1 percent to 2 percent of railcars show up as "in unknown locations" on railroad systems. Railroads won't be making huge investments in IT systems like the barcode scanners that UPS uses. But, he says, they could invest more in GPS tracking of railcars and integrate that with their existing networks to keep closer track of trailers and containers than they do with the AEI tags and readers. To help trucking companies manage their trailers, CSX has developed an IT-enabled empty-equipment-relocation program. It allows carriers that have unloaded a trailer at an intermodal station in an area where

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they're unlikely to pick up another load to, for a fee, put the empty container on a train to a destination where there's greater opportunity to load up again. "It allows carriers to have better driver utilization in their hot markets," says CSX's Lonegro. But not every customer is thrilled with the rail offering as it exists today. In the early days of intermodal, the railroads wooed customers with free rides for empty trailers to someplace they could load up again. Not today. "The problem is, they haven't added a lot of rail capacity in the last hundred years, and the service isn't as good as it used to be," says YRC Worldwide's Rapken. "They don't reposition our empties anymore. They've raised their prices. While YRC understands the market dynamics guiding railroads decisions and says it isn't moving away from rail, it is moving more of its long-haul lessthan-truckload trailers on 18 wheels rather than steel wheels. The railroads will tell you they've simply decided to focus on their core competency of moving trains and are concentrating on volume. "Over the years, railroads have tended to focus more on providing transportation service and less on equipment management," says BNSF spokesman Patrick Hiatte.

the Limits of rail Then, of course, there is the need for speed. In the railroad industry, there's a business metric everyone keeps their eyes on: delays. Everyone is trying to limit it — 20 percent of Norfolk Southern's incentive compensation is based in part on a composite service metric that includes goals for train performance, connection performance and compliance with operations plans. But keeping the trains running on time is hard to do. For example, the Midwest floods this summer "made for a tough couple of weeks," says Schneider National's Van Kirk. Union Pacific rerouted its trains on BNSF tracks, but such cooperation between railroads is used only in emergencies. Mostly, railroads can't reroute trains on the fly. The rail providers themselves are the first to point out these shortcomings. The risk factors listed in their annual reports will mention that more flexible truck lines will continue to affect their ability to compete for

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Chugging Less DieseL Although railroads are the most fuel-efficient form of surface transportation, they're hurt by rising diesel prices. Investing in more fuel-efficient locomotives helps, but now rail carriersare employing fuel-optimization systems. In 2006, norfolk southern began installing a system that calculates the optimum speed to run a train, depending on topography, the curvature of track, a train's length and weight and other conditions. "It's rare in our territory that you're operating a train over a straight path," says Deb Butler, norfolk southern's evP for planning and CIo. the system is integrated into another system which utilizes data communications, positioning systems and onboard computers tied to a train's braking systems to enforce speed and operating limits automatically. Last year, Bnsf rolled out a fuel mvP Program to encourage engineers to use fuel-efficient train-handling practices. the company had a scorecard to track each engineer's performance, but It automated the process using the railroad's 37 wireless base stations. the stations gather data from a trains' onboard computer and transfer it to an enterprise data warehouse. Bnsf calculates each run's fuel efficiency and displays the data online. thanks in part to the program, Bnsf's fuel efficiency increased 8.3 percent between 1996 and 2006. In 2007, the company's fuel efficiency further improved by nearly 3 percent. —s.o.

deliveries of non-bulk, time-sensitive freight. Rail remains a no-go for those managing just-in-time inventories and operations. "A growing segment of the logistics marketplace is small-volume, high-value finished goods," says Tanowitz. Shippers of those goods want "package-level details on their shipments," and railroads today can't provide that. The railroads also need to provide more precise forecasts for train departures and arrivals, Tanowitz adds. CSX Technology's Lonegro says that if retailers provide SKU-level details to their intermodal customer and the intermodal customer includes that information in its shipping instructions, the railroad could modify its systems to allow everyone to have full visibility. But others, like BNSF and Norfolk Southern, say it's just not worthwhile to offer that level of detail today. Says BNSF's Hiatte: "Our truckingcompany or ocean-carrier customers know what's in a trailer or container, and our tracing systems provide the location of the trailer or container." The IT projects in the Norfolk Southern pipeline are focused on increasing overall productivity and decreasing costs. These

include a new dispatch and traffic-control system to improve scheduling, transit times and service, as well as the next generation of a tool to optimize railcar-trip planning and provide dynamic routing. Some wonder whether the railroads want to improve their services to compete more directly with trucking companies. "Investment in a truly integrated intermodal supply chain has been a lot of talk but not a whole lot of investment," Rutchik says. "The question is whether this is an incremental change based on an exceptional spike in fuel prices or this is an area they're going to really invest in and become a more viable third-party logistics provider." The numbers tell the story, counters Butler of Norfolk Southern. "If customers didn't see value in intermodal as it exists today, they wouldn't be using it," she says. "We have the capacity and it's lower cost. Rail does not move as fast, in general, as highway traffic, and we have a lot of work to do. But our expectation is for continued intermodal growth." CIO stephanie overby is a freelance writer based in Boston. send feedback on this feature to

REAL CIO WORLD | D e C e m B e r 1 5 , 2 0 0 8



The Year ahead

These are inTeresTing Times. Few generations can say that with more truth than the present one. And it just got more intriguing. Businesses and their CIOs face an exceptionally demanding year, filled with many uncertainties. So, what better way for CIOs to start preparing for 2009 than with their peers, learning from each other how to meet the challenges of the future? In its second edition, The CIO | 09: The Year Ahead program did just that. It brought together India’s most influential CIOs in Singapore and created a platform for them to meet. To help with new solutions and perspectives on 2009, the program introduced industry and domain experts. Over four days packed with knowledge sessions, CIOs were exposed to ideas to help them navigate 2009. When the day was done, CIOs let their worries slip away, for a while. See what they experienced.

i n d e x

InnovAtIon @ Work toMorroW’S technologIeS enterPrISe InfrAStructure StorAge InfrAStructure SecurIty InfrAStructure green It

Presenting Partners

domain experts Dr. subir gokarn, chief economist, Standard & Poor’s, Asia Pacific, shared new perspectives on the slowdown and calmed many fears about the challenges of 2009. As a macroeconomist he also showed many CIOs how to manage 2009. One piece of advice that stuck? "Make yourself indispensable to the customer. When he cuts expenses you must be at or close to the bottom of the list."

Prof. ravichanDranIIM Ahmedabad, looked ahead by looking back. Using a case study of a company evolving over the past 40 years and plenty of humor, he asked CIOs to look at the environment they operated in when making decisions that could help their businesses. He also categorized companies by the products they offered and told them what they could expect in 2009.

Prof. r.T. krishnan, IIM Bangalore, presented on ‘Cracking Alignment’. He lent insights into the purpose and value of strategy and how it should offer distinctive value to customers. He showed the three ways organizations can achieve this: operational excellence, customer responsiveness and performance superiority. IT he said was an important enabler of organizational alignment.

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innovaTion @ Work

CoolToWn, Cool TeCh HP Cooltown opened the eyes of many CIOs to the power of new, cutting-edge technologies. CIOs hung on to every word as they experienced first-hand what technologies like RFID and telepresence had to offer.


e a participant in your own rescue,” was the refrain in the first presentation of the first day by Ramesh G., senior product manager, Windows Client, Microsoft. The first day’s theme was ‘Innovation at Work’ and Ramesh pointed out that the way forward was to utilize existing resources that Microsoft technologies offer. He said innovative technologies can aid in economizing at no extra cost. The trick was to identify the optimal bundle of applications. Being creative with existing solutions could help ensure rapid costs savings. In his presentation ‘Co-create for the Future’ Sunil Joshi, president, Enterprise

Business Unit, Tata Communications, pointed out that the key to coping with the future is to create new markets, collaborate to change the industry and outstrip earlier performance. “Being creative and thinking unconventionally in low business times helps to fight conventional

downturns,” he added. Options like job flexibility and telecommuting, supported by technologies like virtualization and unified communications can contribute to saving all around and should be the way forward.

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giving it a whirl: The dazzling lights of Singapore. brought out the adveturous streak in CIOs.

Our panEl OF ExpErtS

FrOM lEFt: Sunil Joshi, President, Enterprise

Business Units, Tata Communications; Ramesh G., Senior Product Manager, Windows Client, Microsoft

Presenting Partners:

Associate Partners:

Knowledge and Other Partners:



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Presented by

TomorroW’s TeChnologies


n the opening presentation, Eric Lauzon, CIO (Asia), Nortel, detailed 'Changing the Business Beyond IT' said, “Hyperconnectivity is an emerging technology trend. Simplifying the business is the best way forward,” Vinod Kumar, president and COO, Tata Communications, echoed some of that thought in 'Putting Technology to Work Harder for Your Business,' and said “CIOs should seek opportunities to optimize spending. They should innovate for tomorrow’s technology.” Anil Sharma, business manager, India/SAARC, Compuware while discussing 'End User Experience – The Missing Link' said, “With increasing competition, poor service is not an option. End-user experience is a critical aspect of business.” “There is a need to look at business differently. Companies should do more with less,” said Ashit Panjwani, director marketing, SAS, in his presentation 'Strategic imperatives of Business Analytics.' Dileep Kumar, director, product management, ADC Krone, talked about 'Solving the CIO puzzle' and said a CIO's top priorities are integrating existing systems and processes, datacenter optimization and identifying new technologies. Hemal Patel, CEO, Elitcore Technologies, in his presentation 'Everything Needs Identity' said that CIOs are constantly balancing business security with risk management. The

The lighTer side

first deals with data security and compliance. The second is about improving end-user productivity. Making identity an integral part of security can help achieve that balance,” he observed. Apart from finding that balance, organizations also need to secure their networks. Bikash Barai, CEO of iViZ in his presentation 'Next Generation Cyber Attacks' said that organizations are ill prepared to counter security threats. He revealed that iViZ discovered multiple security vulnerabilities in popular security products. “There is insecurity in security solutions,” he said.

Burning up: The Night Safari

was preceded with a fire show. Both provided plenty of excitement and stories to write home about.

Our panEl OF ExpErtS

FrOM lEFt: anil Sharma, Business Manager, India/SAARC, Compuware; ashit panjwani, Director Marketing, SAS; Bikash Barai, CEO, Iviz; Dileep Kumar, Director Product Management, ADC Krone; Eric lauzon, CIO, Asia, Nortel; hemal patel, CEO, Elitcore Technologies; vinod Kumar, President & COO, Tata Communications.

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enTerprise infrasTruCTure any scope for innovations or strategic needs.” His presentation called Adaptive Infrastructure, highlighted the challenges of a good datacenter as it shrinks response time at optimal costs. Datacenters, he said, need to have lower TCO and provide higher quality data at greater speed, and still remain energy efficient. “You need an adaptive infrastructure maturity model designed on the maturity of the infrastructure and the needs of the business,” he said. The smart way was to asses the maturity of infrastructure and ascertain if it was adaptable enough for apps of the future.


he three presenters of the enterprise infrastructure track shared two common ideas: the need for adaptive infrastructure, and the need to asses its maturity in order to be ready for future apps. “IT organizations need to develop adaptive infrastructure,” said Shrikant Shitole, VP, Sify, in his presentation ‘Managing Infrastructure in the Current Economic Climate’. Outsourcing non-core functions could be a part of strategy, he said. Adaptive infrastructure would be able to manage change, network infrastructure and simultaneously ensure energy efficiency. Its optimal nature would ensure that costs are aligned with the use of innovative technologies. Looking ahead, it will also take care of the challenges thrown up by virtualization, the adoption of key technologies like convergence, storage and energy optimization solutions. Peter Juffernholz, head global MPLS services & global IP & VPN services, Tata Communications, followed with his presentation ‘Application Performance Visibility Service Successful Delivery of Enterprise IT Applications across Offices'. He pointed out the need for balancing internal business needs with customer wants. “Poor app performance can bring

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down revenue by up to 9 percent,” he observed. Bridging the app and network gap needs solutions that optimize network performance An end-to-end Our panEl OF ExpErtS network and app performance monitoring service helps reduce costs and optimize performance, he said. Continuing with the need for an infrastructure drive, Durgadutt Nedungadi, director, marketing & alliances, FrOM lEFt: Durgadutt nedungadi, Director, Marketing & Alliances, HP,added, “For datacenters, HP; peter Juffernholz, Head Global MPLS Services & Global IP & VPN the cost of operation overrides Services, Tata Communications; Shrikant Shitole, Vice President, Sify.

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hi! i'M...: After catching up with their friends, CIOs quickly pulled out their cards and made new acquaintances.

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sTorage infrasTruCTure


Suvarna, country head, India-SWD, HP India, in his presentation 'Bridging the Gap Between Data Explosion and Storage Infrastructure' provided some insight on how to tame information explosion. Information, he said, is one of only two mission critical assets businesses have under their control. Businesses that can leverage information more effectively than their competitors — customer, market, financial or competitive information — will win,” he said. So, while information is growing exponentially and data is changing rapidly, the challenge that companies face is that of turning data into “intelligent business information” to make decisions. Virtualization and tiered storage are two important trends emerging in storage technologies to specifically address some of these business challenges, he pointed out. And there's plenty of information being created. Steven Leonard, president, EMC Asia Pacific /Japan, in his presentation 'The CIO-from an Implementer to a Corporate Strategist' said that with the rise of an information economy the volume and density of data has increased. “By 2011, we’ll all be producing 1.7 zettabytes of information a year. We’re in the middle of a profound shift to a new type of economy; a world where information becomes the dominant form of creating value.” “IDC states that 70 percent of the world’s information will be created by individuals

like you and me — our reports, our files, our pictures, our recordings — the records of our professional and personal lives. All of it described as ‘unstructured data’ — and not nice, neat transactions,” he added. Data is the lifeblood of business. “A CIO has to manage and govern information assets as if they were digital wealth. Perhaps, one of the biggest shifts we see coming over the horizon is the role of IT itself. The CIO has a new role, he is the CFO of information,”

he said. When companies start focusing on information governance, their chief concern would be information security. Risk is the first thing on everyone’s mind because security breaches are increasing, he said.

The lighTer side

Our panEl OF ExpErtS

FrOM lEFt: Manoj Suvarna, Country Head, IndiaSWD, HP India; Steven leonard, President, EMC Asia Pacific /Japan

tucKing in: All the brainwork at the sessions required sustenance. Every meal was also a chance to catch up with speakers or peers.


Conference focus

seCuriTY infrasTruCTure


uring the security track, the presentations aimed at risk management and security compliance for new-age applications and infrastructure. “Today’s business operation models have undergone a paradigm shift compared to a few generations ago,” said Anand Naik, director, system engineering, Symantec India, in his presentation titled ‘New Age Security’. Regional interests have made way for a global workforce and compliance isn’t as simple anymore. Risks have also evolved, from being mere security threats to process threats. Today, he said, we have terabytes of data which need to be secured and yet

remain accessible. The next generation of security solutions will not only have to mitigate risks but also balance between risk and opportunity. It will need to be policy driven and information-centric. These solutions should run with policies, configured for workflows, and have quantifiable metrics. Under these conditions, they can help drive down costs, ensure protection and establish IT as a business partner — not a cost center, he said. Which is where Sameer Shelke, co-founder & COO,

Aujas, picked up from. “About 60 percent of CIOs feel that security policies are not aligned to business objectives,” he said, speaking about ‘IT Risk Management & Compliance – The Real Life’. Every organization, he said, has its own approach to its risk management and its set of corresponding challenges. Organizations need to understand the risk management process and define its objectives and gains. It has to be correctly positioned, with clear definitions of the objective and implementation challenges. “We have a lot to do as far as IT governance and risk management are concerned. The roadmap should have the correct design options, driven by best practices and standard accepted functionalities during implementation,” he said. The thing to remember is that the control framework should come first, he advised. “One has to watch out for the tool trap. Tools only drive the application, they cannot replace the framework of the process that needs to be deployed.”

The lighTer side

Our panEl OF ExpErtS

FrOM lEFt: anand naik, Director, System Engineering, Symantec India; Sameer Shelke ,

taKE it away!: CIOs lined up for a cable car ride to the famed Sentosa Island. New surprises in the form of a water and pyrotechnics show left everyone awestruck.

Co-founder & COO, Aujas

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green iT


handrashekar Balasubramanian, country manager-infrastructure management services, IBM in his presentation, 'Balancing Business Innovation and Operational Excellence with Green IT' said, “Today, 80 percent of CIOs believe they are a valued member of the senior leadership team. With a presence in the executive suite, CIOs are now challenged to lead tangible transformation initiatives at the business level. The result is a balancing act, as CIOs pursue both operational excellence in IT and IT innovation for business impact.” Peter Quinlan, director-managed telepresence service, Tata Communications, in his presentation 'Maximizing the Benefits of Green Technology' focused on tele-presence as a green initiative. “Today companies need to have virtual meetings and telepresence addresses this need effectively,” he said. Underlining the numerous benefits of the technology he said that it reduces global carbon footprint, boosts productivity and Our panEl OF ExpErtS

real-time communication. “Most companies face the challenge of maximizing the benefits of tele-presence and use it to the optimal level for gaining a business edge,” he added. Throwing some more light on green initiatives, Durgadutt Nedungadi, Director- Marketing and Alliances, HP spoke about building the next generation datacenter. “Over the next five years, power failures and limits on power availability will halt datacenter operations in more than 90 percent of all companies,” he said. Adaptive infrastructure offerings are designed to move an organization from high cost IT islands to low cost pools of IT assets. Saving energy is the prerogative of enterprises, especially in trying times. And that’s where virtualization plays an important role. Edgar Dias, leader data networks (Asia), Nortel, in his presentation 'Watts up? Energy Efficient Network Architecture' talked about green IT from a networking

standpoint. End-to-end virtualization is about network, intelligent services and computing. “Network design flexibility helps build a greener campus,” he said. The first attribute of enterprise network virtualization is that it should be energy efficient. His presentation also highlighted the fact that convergence, unified communications and virtualization are cost-effective and energyefficient technologies.

The lighTer side FrOM lEFt: chandrashekar Balasubramanian,

Country Manager, Infrastructure Management Services, IBM; Durgadutt nedungadi , Director, Marketing and Alliances, HP.

iDEa cEntral: In the four days of

packed sessions, CIOs still found the time to pull out pen and paper and come up with solutions for each other.

FrOM lEFt: Edgar Dias, Leader Data Networks, Nortel Asia, peter Quinlan , Director, Managed Telepresence Service, Tata Communications.


technology There's help, and some tools, for IT departments challenged with taking enterprise departments wireless.


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DEC e m B ER 1 5 , 2 0 0 8 | REAL CIO WORLD

From Inception to Implementation — I.T. That Matters

Tools toTakeYou Mobile By Michael Fitzgerald Mobile applications | E-mail is no way to run a cafe. Au Bon Pain VP of IT Randy Burkhart knew that on weekends, managers were logging in to e-mail multiple times, checking for potential issues at their stores. Even a BlackBerry was too slow to let them respond to problems quickly. But a couple of years ago, Burkhart noticed that smartphones were becoming powerful computers in their own right. So about a 18 months ago he started deploying corporate apps on Windows Mobile cell phones, such as a daily P&L report and alerts that inform managers about staffing or supply shortages. The initial application was deployed in six weeks. Managers can pick between Motorola Q and Treo phones. The result has been a quicker response time for all kinds of problems. When an Au Bon Pain catering van ran into a customer's car in a parking lot recently, an area director didn't depend on slow e-mail. He used his phone to take pictures of the accident and send it to concerned people. "There is a time value to data," Burkhart says, and smartphones let his company get more value for their time. Au Bon Pain is not alone. Many other companies that got their feet wet with wireless e-mail with the BlackBerry are primed to move other apps onto smartphones, says Andy Seybold, a veteran wireless consultant.

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essential technology

Improvements to smartphones themselves (more memory, better processors) and to wireless networks (they're faster) make such projects more viable, even for small companies. Frost & Sullivan predicts that the use of mobile phones for field-service applications will increase from 1.5 million subscribers this year to 11 million in 2013. But there are obstacles that remain. For example, for the most part, wireless carriers aren't used to selling enterprise systems to companies because enterprises require different types of support than carriers are normally set up to deliver. Companies are better at getting data into and out of their core apps than providing mobile access to that data. Nevertheless, data integration with enterprise systems poses other barriers. Phones have vastly different capabilities and user interfaces. "There's a stream of devices," says Terry Stepien, president of Sybase's iAnywhere, which helps companies make apps work better for remote and mobile workers.

of middleware platforms, such as the iAnywhere's Information Anywhere suite, or they can turn to mobile-oriented integrators to do the job.

Wireless Three Ways Au Bon Pain chose to go the integrator route. It got help from Enterprise Mobile, which is backed by Microsoft and works primarily with companies using Windows Mobile. Its main work is shepherding companies through the quirks of the cell phone market, such as helping them choose from idiosyncratic cell phone plans. Enterprise Mobile helped Au Bon Pain with security and user-interface questions, like what to do when a phone is lost and how to present data on a 2-inch-by-2-inch screen. Delta Air Lines, meanwhile, used iAnywhere's Information Anywhere suite, which includes the Afaria mobile management tool and Onebridge development environment and middleware products, to develop a solution for its field

Improvements to smartphones and wireless networks make moving applications onto smartphonesmore viable — even for small companies. "Some will have keyboards, some won't. Some will have GPS, some won't. They'll have different operating systems. It's a heterogeneous world and it looks like it's going to stay that way," says Stepien. Companies can try to build their own interfaces to extend applications to mobile phones. They can use a variety

Essentisl Tec.indd 53

operations workers to use handhelds, instead of network-attached PCs to check their e-mail or update service tickets. The tools, deployed in late 2007, let Delta's field-service workers exchange data directly with the company's back-end servers, using Motorola mc35 Windows Mobile handhelds, says Rich Meurer, advisory engineer at Delta.

94% The amount

of companies in the United States that have at least one mobile data application. In the early part of 2007, that figure stood at 74%. Source: Gartner

In a different project, Delta Air Lines added a mobile application for baggage tracking this year, using Motorola m9090 handhelds, which use a different version of Windows Mobile. Where as iAnywhere's tools are geared toward developers who are writing specific applications from scratch, Vaultus — which is used by Genzyme — has developed a series of templates that an IT department can customize. Other mobile dleware providers take different approaches: for example, Vettro specialized in putting hosted applications on mobile phones, and Syclo is focused on manufacturing apps. Genzyme decided to choose Vaultus as the way forward when it decided to bring its

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European sales representatives online. The company was already using the BlackBerry and was looking to them to provide its sales representatives in Europe with e-mail. Executives decided to make Genzyme's customer relationship management system (Sage Sa leslogix by Sage Software) available on the devices as well, says Seppo Beumers, application manager at Genzyme in Naarden, the Netherlands. The sales representatives typically work as field advisers. They need to make notes on questions and requests for follow-up and then put those into a CRM system. But they typically don't have enough time with a doctor to use their notebook computers. While Vaultus says a typical installation takes between three and six weeks and costs from $20,000 (about Rs 8 lakh) to $200,000 (about Rs 80 lakh), it took Genzyme about 10 months to deploy the application. The company spent about half a million euros, including the cost of about 200 BlackBerrys. Beumers said the extra time was needed to translate documentation and training materials and find time to train the sales representatives. The company got a return on its investment in about 18 months, based on time saved by sales representatives. Now Genzyme in Europe is looking at using Vaultus to add more applications to the mobile phones, probably starting with corporate reporting tools. "I'm thinking that these mobile devices will be more important than your laptop," says Genzyme's Beumers. CIO

The Future of Mobile Malware

Four years ago, F-Secure Chief Research Officer Mikko Hypponen was talking about malware infections on mobile phones while few others were paying attention. With the growing use of Internet-enabled phones, particularly Apple's iPhone and RIM's Blackberry, he sees more opportunities than ever for malicious activity. But, surprisingly, he sees a quiet mobile malware landscape at the moment. "It's quite quiet on the mobile side. We now have over 400 known mobile phone viruses and Trojans, but most of those target the older smartphone systems," he says. "Most of the current systems have improved built-in security." Hypponen believes the most likely mobile risk today isn't mobile viruses or Trojans, but mobile spying tools like FlexiSpy, Neocall or Mobile Spy. These commercial tools run fine even on the latest versions of Symbian, Windows Mobile or Blackberries, he says. Meanwhile, iPhone has been the target of some attacks, but it still has a miniscule market share globally compared to the big boys like Nokia. That means a smaller bull's-eye. But as that market share increases, he expects more attacks to materialize. In the short term, Hypponen is looking at some of the more notable events of 2008 for clues on what will happen in 2009. "The defining moment in 2008 was the change from smtp to http," he says. "Now the miscreants' preferred way of infecting net users is no longer e-mail, but Web-based drive-by-downloads. Today you're more likely to get infected by surfing the Web than reading your e-mail." The explosion of malicious SQL injection attacks on trusted websites, combined with the mass creation of new malicious websites means that in 2008 the Internet was more dangerous than at any other time in the past, he says. "Also to be noted, many of the attack-in-depth attacks being deployed from these sites don't just target vulnerabilities in the operating system or the browser, but increasingly they target vulnerabilities in browser plug-ins and add-ons - which people rarely Update," he says. Andrew Storms, director of information technology at nCircle Network Security, is more convinced that bigger phone-based threats are around the corner. One of the biggest shifts in the threat landscape is the proliferation of iPhones and Blackberries. "The biggest consequence of the proliferation of mobile devices is that enterprise data is more and more dispersed, but the IT and security teams have no eyes or ears for these devices," he says. Sensitive corporate data on smart phones will probably draw only a small number of very targeted attacks; but it only makes sense that security pros expect attack trends on mobile devices to mirror trends for all other computing environments, he says.

– Bill Brenner

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Selling Cloud Computing What your CFO will love about cloud computing and what you could hate. By Bernard Golden

| Forrester just released a report outlining the CFO-ish benefits of cloud computing. The report, entitled Talking to Your CFO About Cloud Computing is aimed at communicating the benefits of cloud computing to him or her. (Someone a bit more cynical than me might say a companion report, to help you communicate cloud computing's benefits to a CIO, is in order as well). A couple of things about the report stood out for me. First, Forrester emphasizes the fact that use of cloud computing matches cash flow to system benefits more appropriately than the packaged software use model. In the old way of doing things, a large investment is made early in the project prior to system

Cloud Computing

This mirrors use of Open Source software versus proprietary software and, in fact, that's no accident. Cloud computing infrastructures are built, by and large, from Open Source components. After all, the cloud providers don't want to make large investments upfront without knowing the financial outcomes, either. One might say that cloud computing is a proxy for end user Open Source adoption, since it acts as a middleman to ‘civilize’ Open Source for end users. The second thing that stood out for me: the report makes the argument that cloud computing provides a way to outsource noncritical applications to organizations better suited to run them, allowing IT to focus on critical applications. This makes a ton of sense

process than outcomes and therefore insistent on controlling (and running) everything. One thing Forrester does not address is the, perhaps, logical outcome of making a case for cloud computing to CFOs: if cloud computing is so good and more efficient and responsive than central IT, why not bypass IT entirely and use an outside service provider to deliver cloud-based systems? This approach, sometimes labeled ‘shadow IT’ (usually by the disgruntled, bypassed IT organizations) is, perhaps, the biggest IT organization challenge posed by cloud computing. By removing infrastructure ownership from IT, suddenly IT no longer has control over key business resources, making it possible for someone

Cloud computing matches cash flow to system benefits more appropriately than the packaged software use model. build out, and well before the business benefits (presumably financial in some shape or form) are realized. This model is even more troubling given the risk factors associated with IT systems: they are notorious for failing to deliver their promised benefits, and a large percentage of projects end up scrapped due to poor user acceptance. By contrast, cloud computing is a payas-you-go approach, in which a low initial investment is required to get going, and additional investment is incurred as system use increases. In this way, cash flows better match total system cost. 56

j a n u a r y 1 , 2 0 0 9 | REAL CIO WORLD

and is already applied throughout companies in many different areas. For example, many companies use outside service providers to run their mail rooms and copy centers. Other companies use fleet management services to run their vehicle fleets. Cloud providers, according to the report, are more efficient at IT operations, using fewer manhours for standard tasks. In addition, cloud providers get better pricing on hardware because they buy in such volume. This core vs. periphery discussion is a longestablished one; perhaps the biggest challenge to it is IT organizations more focused on

attuned to a cost/benefit approach, like, say, a CFO, to cut down IT's power. Cloud computing definitely holds the potential to upend the long-established organizational pecking order and certainly puts IT in a much more precarious position. Any time the case for a technology innovation is made to the CFO, you know things are going to get interesting. CIO Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of Virtualization for Dummies, a best-selling book on virtualization.

Vol/4 | ISSUE/04

CIO December 15 2008 Issue  

Technology, Business, Leadership